Federal health reform has passed. Now, states respond

Some states are suing the federal government over health reform. Others are gutting health care programs for the poor. Seems like everyone’s in on the act.

You know times are strange when state lawmakers eliminate a wildly popular health care program for low-income kids in an election year. But these are extraordinary times, thanks to the political maelstrom of health reform and the financial strain of the recession tail. In Arizona, where former Republican presidential nominee Sen. John McCain is facing a tough primary challenge for re-election, state lawmakers have proposed eliminating the Children’s Health Insurance Program, a safety net for low-income families who can’t afford their own insurance yet earn too much to qualify for standard Medicaid.

Arizona Gov. Jan Brewer (R) has signed a budget that guts the program, which will leave nearly 47,000 low-income children without health care coverage. The state also will roll back Medicaid coverage for childless adults, which is expected to eventually drop 310,000 people from the rolls. Is this a partisan move, a retaliatory response to health reform and a precursor to the stated Republican strategy of “Repeal and Replace?” Brewer has said Arizona’s dire financial straits left no choice but to cut, and she hopes voters will approve a penny increase in the state’s sales tax that could soften those cuts. Indeed, if Brewer’s playing games, she’s likely betting against the house: Arizona could face further loss of federal dollars for failing to maintain a certain level of health care programs for the poor. And that could lead to more, not fewer, uninsured in Arizona despite the health reform law.

Not that (mostly) Republican attorneys general are content to let governors have all the action. More than a dozen GOP AGs and one Dem have signed on to a group effort to challenge the constitutionality of the health reform plan. Many legal scholars don’t give the challenge much of a chance, other than a chance to make a public point. The effort is being led by Bill McCollum, attorney general of my former home state of Florida. The top lawyers for those states claim Congress overstepped its powers to regulate commerce when it declared that every American must have health insurance or else risk federal tax penalties. Insuring the health of one’s one body, they say, is not commerce.

Meanwhile, Indiana Gov. Mitch Daniels (R) has said that his state will eliminate the Healthy Indiana Plan in light of the passage of the health reform bill. Healthy Indiana is a Medicaid waiver plan, the first of its kind to use Medicaid funds to provide a benefit package modeled after a high-deductible plan and health savings account to previously uninsured adults. The state plans to transition the 45,000 low-income residents currently enrolled in the program onto Medicaid, and Governor Daniels has announced he is capping enrollment for the program while the state phases it out. Daniels has been highly critical of the President Obama’s health reform plan, saying it left little room for innovative programs like Healthy Indiana. He has said the health reform bill forced him to dismantle the program.

It will be interesting to see what everything looks like after all the dust is settled. I understand why states are trimming their own programs in light of the passage of health reform. States have long complained about “unfunded mandates” from the feds when it comes to covering low-income Americans, and they will eventually have to chip in for some of the extended Medicaid under the health reform plan. I just hope health reform isn’t ending one “doughnut” hole – the one involving Medicare drug coverage – only to create another: tens of thousands (or more) of people who go uncovered in the time between the elimination of state health care programs and the expansion of federal ones.

Photo Credit: Marxchivist