Republicans shift focus to Medicaid complaints

A day after President Obama said he would support amending the health-care law so states can opt out of key provisions sooner, Republicans sought to shift the rhetorical battle back to an issue that would be largely unaffected by the president's proposal: the impact of the law's Medicaid requirements on state budgets.

Testifying at a hearing of the House Energy and Commerce Committee on Tuesday, two Republican governors returned to themes that had dominated the discussion at the National Governors Association's semiannual meeting over the weekend.

Mississippi Gov. Haley Barbour and Utah Gov. Gary R. Herbert complained that by prohibiting states from limiting who is eligible for Medicaid, the law has locked them into unsustainable spending at a time of fiscal crisis.

"Worst of all," added Herbert, is the law's mandatory expansion of Medicaid to cover a larger share of the poor beginning in 2014.

"Medicaid is poised to wreak havoc on the state's budget for years to come," he said, "threatening our ability to fund critical services, such as transportation and education."

To buttress that argument, congressional Republicans unveiled a report by the committee's majority staff estimating that the Medicaid expansion would cost states $118 billion through 2023 - a substantially larger amount than recent estimates by the Congressional Budget Office and independent analysts that consider a shorter time frame.

At the hearing, the committee's chairman, Rep. Fred Upton (R-Mich), pronounced the finding "sobering."

But administration officials countered that the additional expense to states will be largely offset because the law also enables states to save on Medicaid.

"It's important to remember that the Affordable Care Act will cover the overwhelming majority of the costs associated with the Medicaid expansion and will, in fact, reduce the amount states spend to care for the uninsured," White House spokesman Jay Carney told reporters.

Massachusetts Gov. Deval L. Patrick, the only Democrat invited to speak at the hearing, sounded a similar note in his testimony. "Federal reform is good for Massachusetts," he said. "It has given us an affordable way to extend the promise of coverage to Massachusetts residents."

Medicaid, which is jointly funded by states and the federal government, now provides health insurance to 53 million poor Americans. Starting in 2014, the law will require states to open eligibility to an anticipated 20 million more people with slightly higher incomes.

At first, the federal government will fully fund the extra cost. But beginning in 2017, the states' share will gradually increase to 10 percent by 2020.

The report released Tuesday - which was jointly produced with Republican staff of the Senate Finance Committee - arrived at its grand total by compiling and extrapolating from separate estimates provided by governments of each state as well as outside experts.

These figures do not appear to include an analysis of several potential sources of savings to states identified by researchers. A recent report by analysts at the Urban Institute calculated these savings could range from $40.6 billion to $131.9 billion between 2014 and 2019.

For example, the expansion of Medicaid coverage to a greater share of the uninsured could enable states and local governments to cut back on funding they now provide hospitals and other providers for treating patients who are unable to pay. Similarly, states whose Medicaid programs now cover people with incomes above the minimum required by the law could shift those people to state-run marketplaces, through which they will be able to buy insurance plans with federal subsidies.

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House Republicans sharpen attack on health-care reform in two Hill hearings

Republicans on Wednesday used their new majority in the House of Representatives to hold the first of what they promise will be a steady drumbeat of congressional hearings to denounce the new health-care law.

During a hearing before the House Ways and Means Committee, two business owners and a prominent economist testified that the law imposes crushing costs that hamper job creation. Republican members also grilled Austan Goolsbee, chairman of the White House Council of Economic Advisers, for nearly two hours, charging that his rosy assessment of the law's economic impact was based on accounting gimmicks.

At a separate, nearly simultaneous hearing before the House Budget Committee, Chairman Paul Ryan (R-Wisc.) heaped praise on his star witness, Rick Foster, chief actuary for Medicaid and Medicare, who has questioned some of the Obama administration's predictions of savings through the health-care law.

"Time and time again, Rick's unbiased actuarial reports have proved difficult to square with the claims made by the law's proponents," said Ryan, adding that such analyses "enabled us to unpack the law's budgetary smoke and mirrors and reveal its true impact."

The Obama administration responded with a public relations offensive of its own, releasing letters from high-profile economists who back the law, and holding a news conference at which Secretary of Commerce Gary Locke and Costco chief executive Jim Sinegal argued that the law is a lifesaver for U.S. businesses because it will curb skyrocketing premiums.

In a White House blog post, Stephanie Cutter, a top White House official, also took on Foster's conclusions, writing that his analysis "discounts proposals that other independent experts credit with getting at the root causes of health care cost growth."

The latest round of sparring largely reprised arguments made in both the lead-up to the law's adoption last March and the floor debate preceding the House's nearly party-line vote to repeal it last week. However, the vigor with which each side jumped into the fray suggests both are determined to continue attempting to shape public opinion on an issue over which Americans have remained stubbornly divided.

"The hearing today is just our first of many," said House Ways and Means Chairman Dave Camp (R-Mich.) at the outset. "It is my intention to give the American people and employers big and small the opportunity they never had when this law was being written to testify in an open hearing about the impact the law will have on them."

Scott Womack, owner of 12 IHOP restaurants in Indiana and Ohio, told the committee that the law's mandate that he begin purchasing health insurance for his workers in 2014 is simply unsustainable. It will cost him $7,000 per worker to comply, he said, "more money than we make."

The alternative, to pay a $2,000 penalty per worker, would still eat up 60 percent of his company's earnings, Womack added. As a result, he may be forced to forfeit an agreement to develop additional restaurants, for which he has already invested $360,000.

"The goal of providing health coverage is noble, but the restaurant industry can't afford the steep fines and mandates loaded upon us," Womack concluded. "The law is one-size-fits-all for employers, and restaurants don't fit."

Joe Olivo, co-owner of a printing business in Moorestown, N.J., was particularly critical of the so-called 1099 provision of the new health-care law - which requires businesses to substantially expand their reporting of purchases to the IRS. The aim is to help the agency identify tax cheats, but Olivo said with his profits already squeezed to 3 cents on every dollar earned, the cost of complying would be "huge."

Democrats have long expressed willingness to remove the provision, and President Obama reiterated his support for doing so during his State of the Union speech Tuesday.

However, Camp was not mollified. Noting that Obama has called the provision "counterproductive," he said, "I have one simple question today: How is it that Congress passed a health-care bill that is 'counterproductive' to American employers - especially at a time when we need to be looking for solutions that encourage, not impede, job creation?"

Olivo, who currently offers health insurance to his 45 employees, also testified that - in contravention of the president's promise that people who liked their health plans would be able to keep them - his insurer has informed him that his plan will be discontinued. The reason, said Olivo, is that the plan does not offer the level of preventative care coverage required by the new law.

"After 20-plus years of voluntarily providing coverage for my employees, much of it at my own cost, I am now finding out this coverage is no longer acceptable according to the government," he said.

Rep. Bill Pascrell (D-N.J.) questioned Olivo's account, noting that many of the law's minimum requirements for plans do not apply to those already in existence before the law was passed. "It sounds like your carrier may have pulled a fast one on you," he said. "Obamacare was the perfect scapegoat before the law even went into effect."

Democrats also echoed Goolsbee's testimony that the law would prove a boon to businesses. The smallest firms can get tax credits to offset the cost of buying insurance for their workers, he said. Slightly larger companies will be able to buy insurance on state-run marketplaces that can offer the more stable premiums that big companies have long enjoyed, leveling the playing field. And all businesses will benefit from the anticipated curbing of health-care costs resulting from the drop in the large uninsured population - whose uncompensated health-care costs often get passed on to paying customers.

During the White House news conference later in the day, Sinegal said that those savings alone would make all the difference for his company. While Costco is committed to offering its roughly 96,000 U.S. employees generous health insurance benefits, Sinegal said, its ability to do so has been being seriously threatened by double-digit premium spikes each year.

"We either have to have some type of plan like this that helps us rein in costs or we're not going to be able to continue as a business," he said.

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