Let States Lead the Way

Congress is on the verge of enacting the largest unfunded mandate in American history. At a time when most states are struggling with rising unemployment, declining tax revenue and the worst national economic climate in 30 years, Congress is demonstrating that it is more out of touch than ever.

The Democratic health "reform" bill in the Senate would require states to expand Medicaid to include all people earning up to 133 percent of the federal poverty level, or $29,327 for a family of four. House Democrats want to require expansion to 150 percent of the poverty level, or $33,075 for a family of four. Even Texas, which has a balanced budget and nearly $9 billion in its rainy-day fund, isn't prepared to absorb this type of blow.

Complaints from majorities of Republican and Democratic governors alike continue to fall on deaf ears. Congress seems intent on forcing a one-size-fits-all mandate on states, some of which actually have solutions to repair their health-care systems that Washington is preventing them from trying.

Congress seems intent on forcing a one-size-fits-all mandate on states, some of which actually have solutions to repair their health-care systems that Washington is preventing them from trying.

Texas, for example, has adopted approaches to controlling health-care costs while improving choice, advancing quality of care and expanding coverage. Consider the successful 2003 tort reform. Fewer frivolous lawsuits have attracted record numbers of doctors to the state as medical malpractice insurance premiums dropped by half. Christus Health, a large Catholic nonprofit system with a significant presence in Texas, spent about $100 million on liability defense payments in 2003. Last year, Christus spent $2.3 million on such payments. Much of that savings has gone into expanding health-care services in low-income neighborhoods.

You might think Washington would be curious about plans to provide more low-income Texans with insurance, reduce expensive emergency-room visits for basic care and make it easier to buy into employer-sponsored insurance. Unfortunately, Washington has failed for 18 months to give Texas permission to use Medicaid dollars for these policies.

Historically, the federal government has paid an average of 57 percent of state Medicaid costs. In a transparent attempt to bribe governors and state legislatures into accepting 15 million to 20 million new people nationwide onto Medicaid rolls, Congress is proposing a series of additional subsidies to states to cover 90 percent of the costs of the newly mandated populations. In true Washington form, these handouts would be debt-financed, through the generosity of foreign bankers, to be paid back by future generations of American taxpayers.

Expanding the Medicaid program in Texas alone to include an additional 2 million people would cost $20 billion to $30 billion over the next 10 years. Regardless of how that cost is shared between the federal and state governments down the road, we believe that level of new mandated spending is grossly unacceptable.

Even more stunning than this fiscal irresponsibility is Congress's disregard for the quality of the Medicaid program and the well-being of the people in it. Medicaid is the lowest payer in the health-care system. It reimburses physicians 20 to 30 percent less than even Medicare, which pays costs at a much lower rate than do private insurers. If a doctor or hospital is facing bills, staff salaries and medical malpractice premiums, it is obvious which patients will get preference.

We note with concern that the Government Accountability Office reported in January that Medicaid made an estimated $32.7 billion in improper payments in 2007, equal to a full 10 percent of the program. Sen. John Cornyn (R-Tex.) pointed out that the average improper payment rate for non-health government programs is 3.9 percent. He introduced an amendment in the Senate Finance Committee that would have prevented expansions of Medicaid until the secretary of health and human services could certify that its improper payment rate was equivalent to that of non-health programs, but that amendment failed on a party-line vote. The rate of improper payments needs to be addressed.

The Democratic health-care proposals do nothing to expand choice, lower costs and empower patients. They would add to, without reforming, bulky, overpriced programs that would in turn add to our already crushing burden of national debt. Reckless expansion would ultimately reduce the quality of U.S. medical care.

Such tragedies can be averted if the powers-that-be in Washington set aside their devotion to centrally planned, debt-financed, one-size-fits-all solutions and work cooperatively with those laboratories of innovation known as states. Otherwise, we'll end up with a one-size-hurts-all situation.

Newt Gingrich is a senior fellow at AEI. Rick Perry is governor of Texas.

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