[Congressional Record (Bound Edition), Volume 155 (2009), Part 18]
[Extensions of Remarks]
[Pages 24510-24512]
[From the U.S. Government Publishing Office, www.gpo.gov]




 GOVERNORS OF SOUTH CAROLINA AND TEXAS 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 10 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 South Carolina and Texas:

                                               September 11, 2009.
     Hon. Lindsey O. Graham,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Lindsey: Thank you for the work you do on behalf of 
     this country and our state.
       With this work in mind I write to respectfully layout some 
     concerns our administration has with regard to proposed 
     health care changes in Washington. I am not writing to second 
     guess your work, or that of Congress, but just to give you 
     the vantage point from the seat I hold--and the consequent 
     implications for taxpayers of this state given the proposed 
     changes' impact in Medicaid administered by our state.
       Like many governors across the nation, our administration 
     is growing increasingly concerned about the financial strain 
     rising health care costs are putting on South Carolina's 
     annual budget. During the National Governors Association 
     meeting in July, many governors joined together in a 
     bipartisan effort to formally oppose the current 
     Congressional health care proposals by issuing a policy 
     opposing unfunded mandates. If these so-called reform 
     proposals move forward, almost all states will have to raise 
     taxes to manage this health care expansion. In South 
     Carolina, Medicaid already receives up to $880 million 
     annually--16 percent of our budget.
       The current House and Senate proposals would expand 
     Medicaid and pass health care costs down to the states. 
     Senate Finance Committee Chairman Max Baucus said that it 
     would be impossible for the federal government to pick up all 
     of the costs for new Medicaid recipients and that states 
     would have to bear additional costs. To help put this matter 
     into perspective, when the enhanced federal medical 
     assistance percentage expires at the end of 2010, South 
     Carolina will

[[Page 24511]]

     be spending $1.2 billion, or more than 20 percent of our 
     state budget, on Medicaid annually. That total represents 
     just one-third of the total Medicaid dollars spent in our 
     state--not counting the costs associated with the proposed 
     changes to our health care system.
       The Congressional Budget Office (CBO) estimates H.R. 3200 
     will cost in excess of $1 trillion over the next ten years. 
     However, the fine print reveals that the true cost would be 
     much higher. The legislation relies on a large tax increase, 
     which is implemented four years before most of the program's 
     spending is ramped up. This delay in implementation is 
     nothing more than a budget trick masking the true cost of the 
     proposal. Even under the CBO projection, H.R. 3200 would add 
     more than $200 billion to the budget deficit in the next 10 
     years.
       This projection is predicated on $219 billion in spending 
     changes that may be an illusion. A strong indicator that 
     suggests that these savings will not materialize is found in 
     a further analysis of the CBO study by Ways and Means 
     Committee staff, which shows that the total price tag will 
     reach $2 trillion by 2024, including roughly $600 billion in 
     deficit spending. These are the significant costs you are 
     contending with at the federal level in times of $2 trillion 
     deficits.
       According to the National Association of State Budget 
     Officers (NASBO), Medicaid expenses nationally will reach 
     $523 billion by 2013--a 56 percent increase in just six 
     years. The proposed changes to the program would increase 
     Medicaid spending by $450 million in South Carolina--more 
     than half of what we already spend on Medicaid. With that 
     significant an increase, South Carolina would be forced to 
     either raise taxes or cut critical services in education and 
     public safety, the two other large spending items in our 
     budget.
       Any state tax increase would be in addition to the proposed 
     federal tax increases included in the House and Senate bills, 
     like huge tax increases in the form of an additional 8 
     percent payroll tax or a 5.4 percent income tax surcharge on 
     small businesses. Even in prosperous times, we would not 
     support the incredible burden of this unfunded mandate, but 
     in the current global economy, that impact would be 
     disastrous for our state.
       The proposal being discussed in the United States Senate 
     has similar problems for South Carolina as, by 2015, this 
     proposal would add more than 400,000 South Carolinians to the 
     Medicaid program. The federal government would cover 
     increased funding only until 2015. After 2015, South Carolina 
     must start picking up the tab. By 2020, South Carolina would 
     be forced to come up with an additional nearly $900 million 
     annually for the increased number of Medicaid enrollees. 
     Federal programs will grow at South Carolina's expense, and 
     will increase Medicaid costs in our state by 50 percent.
       Lastly, if we are trying to make health care more 
     affordable, why exclude tort reform and national insurance 
     markets from the plan? Litigation, and its negative impact on 
     the practice of medicine, significantly increases the cost of 
     health care in this state. South Carolina passed 
     comprehensive tort reform legislation in 2004, partially to 
     stop lawsuit abuse in medical liability cases. Subsequently, 
     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 lawsuits against 
     South Carolina doctors fell almost 90 percent one year after 
     tort reform went into effect. Doctors have stopped leaving 
     the state and no longer limit their practices to avoid 
     lawsuit abuse.
       Likewise, eliminating the interstate purchasing 
     restrictions for insurance would create a bigger market for 
     insurance, thereby giving consumers more options and driving 
     down the price. A national market for health or life 
     insurance means that South Carolinians can purchase whichever 
     policy best fits their needs--whether the policy is from 
     South Carolina, New York or California.
       With all the issues surrounding a government-run health 
     care system, I wanted to bring to your attention the 
     increased taxes that South Carolinians might shoulder on top 
     of the federal tax increases in the proposed bills.
       Everybody agrees that there should be reforms to our health 
     care system, but it should be done thoughtfully. I look 
     forward to working with you on this and other issues.
           Sincerely,
                                                     Mark Sanford,
     Governor, South Carolina.
                                  ____

                                                     June 5, 2009.
     Hon. Joe L. Barton,
     House of Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Representative Barton: As Congress continues to 
     grapple with the daunting challenge of enacting significant 
     health care reform measures before the August recess, I urge 
     you to contemplate the effects of certain policy 
     considerations on our great state.
       Government-run health care is not the solution to fix a 
     broken health care system, and is financially unsustainable. 
     At today's costs, extending Medicaid benefits to uninsured 
     citizens at or below 100 percent of the federal poverty level 
     would cost Texas an additional $4.6 billion in general 
     revenue per year (equal to a 2.3 cent, or 27 percent, sales 
     tax increase), on top of the $19 billion in general revenue 
     the state expects to spend on Medicaid in the 2010-11 
     biennium. This type of federal government spending mandate 
     would erode the state's economic viability without containing 
     health care costs or improving health care quality and 
     access.
       Health and human services general revenue spending in Texas 
     for the 2010-11 biennium is projected to grow almost 13 
     percent, to $25.3 billion. The Texas Health and Human 
     Services Commission already projects a Medicaid-related 
     shortfall of more than $1 billion in general revenue in the 
     coming biennium, and combined Medicaid and Children's Health 
     Insurance Program caseloads will exceed 3 million people. The 
     number of uninsured Texans also continues to grow, and the 
     state continues efforts to address a critical primary care 
     physician shortage in many areas of the state.
       In 2007, I set forth a comprehensive plan to transform 
     health care in Texas. This reform waiver has been languishing 
     before the Centers for Medicare and Medicaid Services for 
     more than a year. My plan would provide more people with 
     insurance, reduce expensive emergency room visits for basic 
     care, and make it easier for the working poor to buy into 
     employer-sponsored insurance. I am pleased to note that many 
     of the policy proposals in this waiver are surfacing in 
     Congressional discussions on health care reform, including 
     programs that emphasize quality preventive care and reforms 
     that promote a robust, competitive private insurance market 
     centered on consumer choice and affordability.
       The Texas waiver proposal reflected strong bipartisan 
     acknowledgement of the need for reform. Improving quality of 
     care, controlling escalating health care costs and addressing 
     access-to-care issues requires collaboration among federal, 
     state and local governments. A one-size-fits-all federal 
     government mandate will not achieve significant reform. 
     Rather, allowing states and local governments the flexibility 
     to restructure the way health care is financed and delivered 
     is critical to significant reform.
       Texas just concluded its 81st Legislative Session, which 
     was marked by the passage of a biennial state budget with 
     less than 1 percent growth in general revenue spending, 
     leaving intact the state's Rainy Day Fund, which will provide 
     an expected balance of $9.1 billion to address future state 
     needs. However, despite the many legislative accomplishments 
     that will continue to position Texas as an economic leader in 
     this country, the state faces significant financial burdens 
     ahead due to rapidly increasing Medicaid caseload and health 
     care cost growth.
       I urge you to ensure that the momentum surrounding the 
     current health care reform debate is informed by the effect 
     on Texas in a way that protects state flexibility and 
     innovation while guarding against growing federally mandated 
     programs that will be financially unsustainable, not only for 
     Texas, but for most other states and the federal government, 
     as well. No government has ever taxed, or borrowed, its way 
     to prosperity, no matter how laudable the spending goal may 
     have been. I hope you will resist the temptation to finance 
     an item as basic as health care with deficit financing that 
     cannot be maintained.
           Sincerely,
                                                       Rick Perry,
     Governor, Texas.
                                  ____

                                               September 23, 2009.
     Hon. Max Baucus,
     Chairman, Committee on Finance,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Chairman Baucus: Last week, Senate Majority Leader 
     Harry Reid said he was concerned that the health care 
     legislation you have proposed will expand the Nevada Medicaid 
     population beyond what his state can afford. Speaking as 
     governor of a state with a significantly larger caseload than 
     Nevada--a caseload that could double under your proposed 
     Senate Finance plan--let me respectfully say I am troubled by 
     the financial impact on Texas taxpayers and our budget.
       The Texas Health and Human Services Commission estimates 
     that the various federal health care proposals circulating 
     around Congress could add as much as $60 billion to the state 
     budget over the next 10 years, creating twice the number of 
     Texas Medicaid recipients.
       Additionally, these bills place a new tax burden on certain 
     businesses and provide for the federal takeover of some 
     current state insurance functions. These one-size-fits-all 
     government mandates are both unsustain-
     able and unable to fix our broken health care system.
       Instead of government mandates and more deficit spending, 
     successful health care reforms can only be achieved by 
     providing states with the flexibility to develop state-
     specific solutions.
       For example, in 2003, I signed into law medical liability 
     reform that has improved access to medical care in Texas, 
     particularly in underserved areas. Prior to these reforms, 
     Texas doctors were being sued at twice the national average, 
     and many were giving up practicing in Texas altogether. 
     Today, doctors are coming to Texas as fast as they can,

[[Page 24512]]

     with record numbers applying to practice medicine in the Lone 
     Star State. Tort reform is the sort of state-specific, 
     market-driven reform measure that will help provide 
     effective, affordable solutions to our health care woes.
       In addition, as you may know, last month, I wrote to 
     Secretary Kathleen Sebelius to again urge approval of the 
     Texas Medicaid reform waiver, which was originally submitted 
     in April 2008. This waiver--which would promote preventive 
     care, improve quality and access to care, and enable more 
     low-income working Texans to purchase private health 
     insurance--continues to languish at the Centers for Medicare 
     and Medicaid Services.
       I urge you to support our right, as a state, to further 
     explore these approaches, rather than forcing us to implement 
     federal mandates that promise financial hardships for the 
     states and little in the way of benefits for our economy and 
     all of our constituents.
           Sincerely,
                                                       Rick Perry,
                                                  Governor, Texas.

     

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