[Congressional Record (Bound Edition), Volume 155 (2009), Part 18]
[Extensions of Remarks]
[Pages 24505-24507]
[From the U.S. Government Publishing Office, www.gpo.gov]




 GOVERNORS OF MISSISSIPPI AND NEBRASKA EXPRESS CONCERNS WITH UNFUNDED 
                       MANDATES IN HEALTH REFORM

                                 ______
                                 

                            HON. MIKE ROGERS

                              of michigan

                    in the house of representatives

                       Wednesday, October 7, 2009

  Mr. ROGERS of Michigan. Madam Speaker, I rise today to express 
concerns regarding health reform proposals which would create unfunded 
state mandates. Legislation currently before the House would 
dramatically expand the Medicaid program and place over $35 billion in 
new liabilities on state budgets over the next ten years. In addition, 
these proposals would expand the federal government's role in 
administering Medicaid, which would severely handcuff states' ability 
to run their own programs and preempt state authority to manage 
Medicaid eligibility and benefits.
  Over the last several weeks, governors have expressed concerns over 
these proposals. I would like to submit for the Record the following 
letters from the governors of Mississippi and Nebraska:

                                                   August 6, 2009.
     Hon. Gregg Harper,
     Cannon HOB,
     Washington, DC.
       Dear Congressman Harper: As Congress debates healthcare 
     reform, I want to raise a few issues of concern with the 
     policies being considered in both House and Senate bills. 
     Healthcare reform is truly a bipartisan issue; after all, 
     Republicans and Democrats understand that our healthcare 
     system faces significant challenges--from steadily increasing 
     medical costs to confusing insurance provisions. As the 
     national debate continues, it is

[[Page 24506]]

     important that everyone realizes the severe impact the 
     proposed legislation would have on states like Mississippi.
       As Governor, I am particularly concerned about the 
     direction the Senate and House are taking in regards to 
     Medicaid expansion. Instead of discussing policies to reform 
     a broken system, the debate in Congress has shifted to 
     finding ways to fund an expanded Medicaid program at the 
     state level. At the end of the day, both the Senate and House 
     proposals are unfunded mandates, which, for states like 
     Mississippi, would result in burdensome and costly changes to 
     the system.
       For example, when we talk about sharing the cost of an 
     expanded Medicaid program, Mississippi would pay another $333 
     million annually under a larger program covering up to 150 
     percent below the Federal Poverty Level (FPL). A Medicaid 
     program covering up to 133 percent FPL expansion would cost 
     an extra $297 million. In many states, funding the current 
     Medicaid programs robs other critical programs. The same is 
     true for us. Each year we struggle to cover our Medicaid 
     expenses while providing for essential services including 
     public education and public safety.
       While there has been some discussion at the federal level 
     to assist states in paying for this expansion, my staff 
     learned last week that the Senate Finance Committee is 
     proposing to cap the amount of federal money distributed to 
     the states to pay for this expansion at $40 billion over 10 
     years. Estimates show the cost of expanding the Medicaid 
     system to all states at the lowest level, or 133 percent FPL, 
     is $30 billion per year. At 133 percent FPL, states would be 
     saddled with Medicaid expansion costs in the second year of 
     expansion.
       These projections are overwhelming as Mississippi, like all 
     states, continues to grapple with budget realities. Our 
     General Fund Revenue collections for July 2009 are 11.27 
     percent below our estimate. Compared to the prior year, 
     collections for this July are 21.43 percent or $56.3 million 
     below what was collected in July 2008. During Fiscal Year 
     2009, Mississippi's revenue was $390 million short of the 
     revenue estimate, causing most of state government, except 
     for education and Medicaid, to take approximately a 6 percent 
     cut in the Fiscal Year 2010 budget.
       Our Fiscal Year 2010 budget included $523 million in 
     stimulus funds; otherwise, we would have faced even more 
     significant cuts. It will take our state years to catch up, 
     and that's without a $297 million or $333 million Medicaid 
     state-share increase.
       Further, the proposed healthcare reform legislation also 
     includes numerous tax increases to finance significant 
     expansions of government-run healthcare. Different versions 
     of the House legislation incorporate a payroll tax on small 
     businesses. Although the recent House Energy and Commerce 
     Committee agreement included an 8 percent payroll tax for 
     small businesses with an annual payroll of $500,000, previous 
     versions taxed small businesses with a payroll of $250,000.
       This tax will do nothing more than punish wage and job 
     growth, especially when you consider that the tax rate 
     increases as the size of payroll increases. According to the 
     National Federation of Independent Businesses (NFIB), such 
     employer mandates could cost 1.6 million jobs with more than 
     1 million of those jobs lost in the small business sector. 
     That means higher taxes for Mississippians, since 96.7 
     percent of our employers are small businesses. In addition, 
     the Senate HELP Committee proposal requires employers to 
     offer health coverage to their employees and contribute at 
     least 60 percent of the premium cost or pay $750 for each 
     employee that is not offered coverage.
       Language in the proposed legislation also would mandate an 
     individual to purchase health insurance and, should he be 
     unable to afford such coverage, he'll be slapped with a 2.5 
     percent additional income tax for the coverage. But the 
     proposed legislation goes even further, taxing higher income 
     individuals beginning at $280,000 and families at $350,000 on 
     a sliding scale.
       This language generates a massive tax increase on high 
     income filers, more than half of whom are small business 
     owners already being taxed if they do not provide health 
     insurance to their employees. A tax increase in the middle of 
     a recession, with unemployment rising, is not the answer.
       Besides increasing taxes, the House bill cuts Medicare 
     nearly $500 billion. These cuts include reductions to 
     Medicare providers and hospitals, while gutting Medicare 
     Advantage by $150 billion to $160 billion. Admittedly, I am 
     baffled as to why Congress would propose slicing funding for 
     a program that our seniors support and that provides for 
     their health and well-being.
       As Congress heads home for the recess, I urge Members to 
     review the proposed legislation with their state leadership. 
     I am primarily concerned about the effect this legislation 
     may have on Mississippi's financial stability, both now and 
     in the future. These so-called ``reforms'' would severely 
     impact Mississippi's budget and our ability to fund other 
     important priorities, like education and public safety. 
     Before Congress makes such sweeping reforms to our healthcare 
     system, I implore you to first ensure that these changes are 
     efficient and beneficial to our citizens, without burdening 
     our states through unfunded mandates.
           Sincerely,
                                                    Haley Barbour,
     Governor, Mississippi.
                                  ____

                                                September 8, 2009.
     Hon. Roger Wicker,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Wicker: Governors across the nation are 
     growing increasingly concerned about the financial strain 
     rising healthcare costs are putting on state budgets. During 
     the National Governors Association (NGA) meeting in July, 
     governors--both Republicans and Democrats--formalized their 
     opposition to current Congressional reform proposals by 
     issuing a policy opposing unfunded mandates that shifts costs 
     to the states. This will necessarily require almost all 
     states to raise taxes to manage this burden. In Mississippi, 
     the issue of Medicaid expansion hits close to home, since our 
     state's share of the Medicaid program is currently $707 
     million, or 12 percent of a $5.87 billion state supported 
     budget, which includes temporary stimulus funds.
       Nevertheless, the current proposals, both in the House and 
     Senate, will expand the Medicaid program at additional costs 
     paid not by the federal government, but passed down to the 
     states. After a call with the governors representing the NGA 
     Healthcare Task Force and the Senate Finance Committee, 
     Chairman Baucus told the news media it would be impossible 
     for the federal government to pick up all the costs for new 
     Medicaid recipients; thus, states would have to bear some of 
     the costs.
       Why? Although CBO appears to estimate that H.R. 3200 will 
     cost more than $1 trillion over the next ten years, the fine 
     print reveals the true cost would be much higher. By imposing 
     tax increases early in the budget window, before the bulk of 
     the spending occurs, the true cost of the bill is hidden by 
     budget gimmickry. Delaying the implementation of the program 
     until the fourth year also uses budget tricks effectively to 
     hide the immense long-term cost of this proposal. CBO has 
     projected a 10 year deficit of more than $200 billion 
     associated with the bill as is. However, when the full cost 
     of the bill is taken into account after it is fully 
     implemented, the spending in the bill skyrockets to nearly $2 
     trillion over 10 years (2014-23) with a deficit of more than 
     $600 billion. I have included an attachment showing the 
     scoring of H.R. 3200 the only comprehensive health care 
     reform bill CBO has scored.
       According to the National Association of State Budget 
     Officers, Medicaid expenses in 2007 for federal and state 
     government combined were $336 billion. This number is 
     projected to reach $523 billion by 2013, a 56 percent 
     increase in just six years. Should the reforms being debated 
     in Congress become law, Mississippi would be saddled with an 
     average increase of $360 million in additional costs, on top 
     of the already $707 million it costs to fund Mississippi's 
     annual state share of the Medicaid program. These proposals, 
     which would cover all individuals at 133 percent federal 
     poverty level (FPL), will burden state budgets, forcing 
     states to raise taxes. In Mississippi, that would necessarily 
     mean increases in our state income or sales tax rates. 
     Mississippi, like so many states, simply can't afford to pick 
     up the tab for another unfunded mandate passed by Congress.
       Such state tax increases would be on top of the federal tax 
     increases already included in the House and Senate bills, 
     like huge tax increases on small businesses whether in the 
     form of an additional 8 percent payroll tax or a 5.4 percent 
     income tax surcharge. During a deep recession, when most 
     people believe job creation and economic growth should be top 
     priorities, huge tax increases will make it more expensive to 
     employ people; consequently, employers will employ fewer 
     people.
       Medicare, the nation's largest provider of health coverage 
     for the elderly and people with disabilities covering over 46 
     million Americans, is on the chopping block. CBO has 
     estimated that provisions in H.R. 3200 would lead to a total 
     of $162.2 billion in cuts being taken from Medicare Advantage 
     plans. This $162.2 billion impacts 11 million people and 
     represents nearly $15,000 in new costs passed to every 
     Medicare Advantage senior beneficiary. These harmful and 
     arbitrary cuts could result in Medicare Advantage plans 
     dropping out of the program, harming beneficiary choice, and 
     causing millions of seniors to lose their current coverage. 
     Moreover, the bill grants federal bureaucrats the power to 
     eliminate the Medicare Advantage program entirely, making the 
     oft-repeated statement, ``if you like your plan you can keep 
     it,'' ring hollow for seniors.
       Lastly, if we are trying to make health care more 
     affordable, how do you leave out tort reform? After all, 
     litigation and the resulting practice of defensive medicine 
     add tens of billions to the cost of health care. In 
     Mississippi we passed comprehensive tort reform in 2004, 
     partially to stop lawsuit abuse in the area of medical 
     liability. It worked. Medical liability insurance costs are 
     down 42 percent, and doctors have received an average rebate 
     of 20 percent of their annual paid premium. The number of 
     medical liability lawsuits against Mississippi doctors fell 
     almost 90 percent one year after tort reform

[[Page 24507]]

     went into effect. Doctors have quit leaving the state and 
     limiting their practices to avoid lawsuit abuse.
       With all the issues concerning a government-run health care 
     system, I wanted to warn you of the state tax increases 
     Mississippi will shoulder on top of the federal tax increases 
     in the pending bills as well as my concern for the increased 
     costs our senior citizens will face as Medicare Advantage is 
     cut. Congress must slow down and work in a bipartisan manner. 
     Everybody agrees that health reform is needed, but it should 
     be done thoughtfully. I hope you'll keep this important 
     information in mind when proposals that shift costs to states 
     or to our senior citizens are considered.
           Sincerely,
                                                    Haley Barbour,
     Governor, Mississippi.
                                  ____

                                                    July 21, 2009.
     Hon. Benjamin Nelson,
     U.S. Senator, Hart Building, Washington, DC.
     Hon. Mike Johanns,
     U.S. Senator, Russell Senate Office Building, Washington, DC.
       Dear Senator Nelson and Senator Johanns: I just returned 
     from the National Governors Association meeting and much of 
     the discussion among Governors was about health care. As 
     former Governors, I thought you might appreciate the 
     information that we received from the NGA staff. Attached are 
     seven handouts.
       The handouts and discussion among Governors reflect 
     concerns about funding, cost, Medicaid, employer mandate, and 
     insurance reforms. The single most important concern was this 
     legislation would be the biggest unfunded mandate on the 
     fifty states in the history of our country.
       President Obama has told the Governors that health care 
     reform must not be an unfunded mandate for the states. I am 
     in strong agreement that an unfunded health care mandate 
     would be unfair to state taxpayers.
       In handout 4, NGA Executive Director Ray Scheppach outlines 
     concerns about Medicaid in the context of health care reform. 
     He indicates that if the Medicaid expansion becomes an 
     unfunded mandate, states are likely to reduce their 
     investments in education. That would be very unfortunate and 
     as Scheppach writes ``Reducing state education investment 
     will lower U.S. competitiveness, productivity and real income 
     of U.S. citizens. This is not good long-run policy for the 
     U.S.''
       While I have other concerns about health care reform, one 
     of the most troubling aspects is the potential for an 
     unfunded mandate on the states. I strongly urge you to avoid 
     an unfunded mandate on the states. Thank you.
           Sincerely,
                                                    Dave Heineman,
     Governor, Nebraska.

                          ____________________