November 29,2011

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Hatch Says Governors’ Report Shows Need to Modernize Medicaid

Utah Senator Says President’s Medicaid Mandates and Expansion Will Cripple States Already Struggling Under Costs of Medicaid

WASHINGTON – U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, said today that the National Governors Association’s (NGA) Fiscal Survey of the States demonstrates why repealing the Medicaid Maintenance of Effort requirement, first imposed in the stimulus package and again in the $2.6 trillion health spending law, and modernizing the Medicaid programs is essential to allowing states effectively manage their Medicaid programs. 

“As this bipartisan report illustrates, Medicaid’s soaring costs are crowding out states’ ability to support other vital programs like education and transportation.  This situation will become even more unmanageable for states if the President’s health law with its massive Medicaid expansion is forced on the states,” said Hatch.  “Giving states the flexibility they need to manage their budgets by eliminating federal Medicaid eligibility requirements is essential as a first step toward a desperately-needed overhaul of this unsustainable health care entitlement.”

The report released today found that state budget deficits cumulatively amount to at least $365 billion over the next five years and that Medicaid enrollment is up by 17.7 percent with this joint federal-state program making up the largest portion of state budgets.  The NGA also found, “…spending on Medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation or public safety.”

While states are struggling with Medicaid costs now, the President’s health care law is about to make the situation worse when the largest expansion of the Medicaid program in history goes into effect in 2014.  According to a report released by Hatch and House Energy and Commerce Committee Chairman Fred Upton, the Medicaid expansion in the law would cost states approximately $118 billion through 2023. 

While Medicaid was initially designed as a shared federal-state safety net for lower-income Americans, it has been dramatically altered to cover nearly one in four people in America.  As the NGA survey demonstrates, the status quo is simply not sustainable and comprehensive reform of the program is critical.

Furthermore, a “maintenance of effort” (MOE) requirement hidden in the $2.6 trillion health care law is restricting states from modernizing their eligibility requirements, even if a state wishes to do so for program integrity reasons or simply to balance their budgets.  Given the states’ severe budget deficits, a majority of Governors have requested relief from these onerous maintenance-of-effort restrictions. These regulations have hampered state efforts to balance their budgets and forced them to make cuts to education, law enforcement, and other state priorities.  

Hatch has taken both short and long term steps to assist states in managing their Medicaid programs.  In response to requests from a majority of the nation’s governors, Hatch – along with 25 cosponsors – has introduced the State Flexibility Act to repeal the onerous MOE requirements and give temporary relief to burdened states. 

Hatch has also championed efforts to overhaul the Medicaid program.  He believes the highly successful, bipartisan welfare reform of 1996 - where states led the way to provide the best solutions for a broken program - should be the model to modernize Medicaid.   In response to a joint letter from Senator Hatch and Chairman Upton, a majority of the nation’s governors shared specific solutions  for reforming the Medicaid program.  Senator Hatch believes this feedback represents a successful framework for reform of the Medicaid program and is preparing for comprehensive reform of the program. 

The Finance Committee has jurisdiction over the Medicaid program and large portions of the partisan health law.