- - Thursday, December 27, 2012


Obamacare is a seriously flawed law that makes health care coverage less affordable, costs taxpayers more than advertised and fails to deliver on most of its other grand promises. Because of the results of the presidential election and the Supreme Court’s decision last summer, repealing it during the next two years is highly unlikely.

Yet there is one thing that could ameliorate some of the damage and loosen Washington’s grip on the massive new law — providing governors additional flexibility in how it’s implemented. So far, the level of cooperation the Obama administration has demonstrated to the states has been most disappointing. Moving forward, however, governors may have more leverage than they think. They can count on congressional Republicans as allies in their efforts to secure as much flexibility as possible.

For a variety of reasons, including Obamacare’s basic design and the Supreme Court’s decision to overturn part of it, states will play a pivotal role in the future of the new health care law.

Giving governors more leeway in administering health care could represent a small, positive development in the ongoing saga of Obamacare. Unfortunately, instead of choosing flexibility, President Obama and his left-leaning advisers always default to rigid “Washington knows best” answers. Embracing a robust role for states isn’t something that comes naturally to this president. More Washington programs and enhanced federal control are deeply embedded in his ideological DNA.

The proposed Medicaid expansion could change this dynamic.

Under Obamacare, Medicaid is one of the platforms to expand health care coverage. Roughly half of the people newly “covered” through Obamacare are projected to be enrolled in Medicaid.

Medicaid is the country’s largest health care program, based on the number of beneficiaries, covering nearly 60 million low-income children and parents and disabled and elderly Americans. It is financed through a state-federal partnership, with Washington paying an average of 57 cents of every dollar spent.

It’s also a struggling program, one in which many doctors refuse even to participate and that often is cited for a poor track record on waste, fraud and abuse.

Into this environment, Obamacare hopes to expand Medicaid beyond its current population and potentially cover all adults making up to 138 percent of the federal poverty level. In return, states that expand their programs would receive an increase in their federal reimbursement.

This is a massive new federal entitlement that contributes significantly to the federal government’s 10-year, $5 trillion Medicaid tab. Most shocking is that by 2020, 1 in 4 Americans could be eligible for Medicaid — an already struggling program originally intended for the sickest and poorest among us.

Obamacare compelled states to cover this expanding population or risk losing all of their federal Medicaid reimbursement. But the Supreme Court held this provision unconstitutional. Whether to expand coverage under Medicaid is now a state’s choice.

Enter the governors. They now have a major say in how the health care law achieves its coverage aspirations. If individuals are mandated to have insurance and they don’t get it through Medicaid or an employer, the more costly insurance exchanges may be their only option.

Some say Obamacare proposes the proverbial “offer you can’t refuse” to cash-strapped states, providing generous inducements to expand coverage through expanding programs like Medicaid.

This is a typical big-government, Faustian bargain — buying into it also brings a host of new federal mandates and unprecedented enrollment levels. Obamacare offers little flexibility to states in how to manage the millions of new people in this program.

Nothing lasts forever. The prospect of the federal government cutting reimbursements once the program is expanded should worry governors who know how the federal bait-and-switch game is played.

If states decline to expand Medicaid, the White House will have to rely exclusively on the more costly, federally subsidized exchanges as a way to offer coverage. Providing states the administrative flexibility to manage their Medicaid populations — including how and when to expand coverage — could help governors provide better quality health coverage to their low-income populations.

Enhanced state flexibility is one way to ameliorate some of the errors of Obamacare. On Dec. 4, 11 Republican governors wrote to President Obama requesting a meeting to discuss Medicaid. The governors proposed five “tenets of Medicaid reform,” including flexibility ideas and proposals to streamline funding and improve health outcomes. That letter, along with a follow-up request sent just last week, remains unanswered.

The White House has an opportunity to finally say “yes” to the legitimate and continuous requests from governors to run their Medicaid programs in a way that makes most sense. Moreover, governors have a chance to say “no” to a big part of Obamacare if Washington insists on attaching unreasonable and unworkable conditions. This is a moment of opportunity and leverage states should not waste.

Rep. Fred Upton, Michigan Republican, is chairman of the U.S. House Committee on Energy and Commerce.

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