Toldeo Health Insurance

Healthcare reforms will cost U.S. states millions

As the U.S. government comes closer to reforming the country's health-care system, states are staring at spending millions of dollars they do not have to provide insurance to more people, officials said on Tuesday.

Bills in both the Senate and the House of Representatives would make more people eligible for Medicaid, the health insurance program for the poor that states administer with reimbursements from the federal government.

At the same time, any bill that makes it to President Barack Obama to sign into law will likely mandate that people have health insurance. That would push more people to enroll in Medicaid and drive those numbers up even further.

For California, already dealing with historic budget problems and rising unemployment, covering the minimum of 1.6 million people it expects will sign up is close to impossible.

"Our number one concern is just the fiscal reality that we can't afford our current program," said Toby Douglas, chief deputy director of health care programs for California, at a conference of state Medicaid directors on Tuesday. "We can't afford expansion."

Alabama projects it would add 200,000 to 300,000 people to its Medicaid roster under the health-care reforms, a problem when the state is "not real sure how we're going to get through tomorrow," said Carol Steckel, commissioner of Alabama's Medicaid agency.

Add to that the crux of the legislation -- a network of state-operated healthcare exchanges -- and the costs are even higher.

Nevada expects to spend $150 million creating information technology for any exchange and will also need to add 100 staff, said Chuck Duarte, administrator of the state's health care financing and policy division.

Some states have already expanded their Medicaid coverage or built up data infrastructure on their own. Others will be set scrambling. Since this summer most have expressed concerns that federal reforms will push their costs up without providing sufficient funds to cover new needs.

One issue all face is creating exchanges that will act in tandem with their Medicaid systems so that individuals are funneled into the most affordable insurance option.

"There is no transition time," said Steckel of how long states would have to set up systems linking to the federal government.

Once a bill is signed into law, "the work is going to have be done by the states," said Carolyn Ingram, director of the medical assistance division in New Mexico.

RACING TOWARD THE CLIFF

And with unemployment rising and driving more Americans onto the Medicaid rolls, states are facing tougher challenges.

The stimulus plan passed in February increased federal reimbursements for Medicaid in order to alleviate the burden, but that funding will likely run out before states recover from the recession. States' economic recoveries generally lag the national recoveryWith unemployment now the highest in a quarter of a century, states are already stretched covering Medicaid costs, the executive director of the National Association of State Medicaid Directors, Ann Kohler, said.

The sudden drop in funds will push many states off of a funding cliff, she said.