Some states propose compact to give them free hand in running health care programs

08/26/2014 7:24 PM

08/26/2014 8:45 PM

Kansas, Missouri and seven other states have signed on to a movement that would wrest regulation of most of the nation’s health care insurance systems from the federal government.

Those state legislatures want to be part of a proposed interstate Health Care Compact. The compact would let participating states use federal funds — in the form of block grants — to design and operate their own Medicare, Medicaid and other health care programs, except the military’s.

Critics say the idea is unworkable and faces long political odds. Indeed, states need Congress to approve any interstate compact.

But the movement has some traction, partly to air grievances with Obamacare and partly because of supporters’ belief that states individually would do a better job managing health programs and expenses.

Expect to hear more about it in the coming weeks as congressional elections heat up.

“I think it’s ginned up now as a campaign issue to try to take the (U.S.) Senate” from the Democrats, said Sandy Praeger, state insurance commissioner in Kansas. “It’s a great talking point for people who don’t understand what it’s all about.”

Eric Burlison, a Republican state legislator from Springfield, Mo., and an early compact supporter, speaks mostly of trying to “get Congress out of the business of controlling the health care industry.”

Burlison, who introduced the Missouri bill, said he believes that tax money kept in the state — instead of being used for federal programs — “is a very simple concept: Each state knows what’s best for its citizens.”

Missouri’s enabling legislation became law three years ago. Kansas approved the legislation in April.

So far, there aren’t many details to explain exactly how the health compact would play out. Exactly what parts of state governments would, for example, run Medicare is unknown. The compact’s general language provides for state-by-state decisions.

And whether the federal block grants would be sufficient to run the programs isn’t known. At this point, compact advocates have suggested federal grants based on the amount of federal money spent in the states on health care in 2010, with the amount to be adjusted annually “for changes in population and inflation.”

The compact’s unofficial “reference” federal block grant for Kansas was $6.985 billion in 2010 and for Missouri, $18.669 billion. Those estimates reflect spending for Medicare and Medicaid in the states.

The base funding suggestions have met strong criticism. The Center for Public Policy Priorities, a think tank focused on issues that affect low- and moderate-income families, has said the 2010 federal spending on health care in many states was too low to meet needs.

But the lure of state control, embraced by Affordable Care Act critics, is strong, particularly among tea party members and some libertarians. One notable advocate, businessman Leo Linbeck III, co-founder of the Campaign for Primary Accountability Super PAC, believes the compact is an answer to “bad governance” and a health care system “that is unsustainable.”

Lure of state control

According to the Health Care Compact website, a clearinghouse for the movement, enabling legislation has been approved in Kansas, Missouri, Texas, Oklahoma, Indiana, Utah, Alabama, Georgia and South Carolina.

The site says legislatures in Arizona, Montana and Minnesota approved health compact bills but were stopped by governors’ vetoes or other action; one legislature, in North Dakota, voted down its health compact bill; bills have been introduced in Colorado, Washington, Michigan, Tennessee, Florida and New Hampshire; and hearings on the subject have been held in Louisiana and Ohio.

In the end, under the U.S. Constitution any compact needs congressional approval. Congress has said yes to more than 200 compacts for a multitude of reasons, such as interstate commerce, wildlife management and reciprocal licenses.

Health compact backers haven’t yet pushed for congressional approval, perhaps waiting for more states to sign on, although U.S. Rep. Tim Huelskamp, a Kansas Republican, has co-sponsored a compact bill in the House.

Crady deGolian, director of the National Center for Interstate Compacts, which manages dozens of compacts for the Council of State Governments, said his organization was not involved with the health compact movement.

Watching from “the periphery,” deGolian said, leads him to believe that the health compact “would be a very tough ask in terms of congressional consent.” And, even if consented to, he said, it would take years to implement, given all of the specific state legislation and administrative details that would need to be put in place.

Political observers say congressional endorsement could depend on whether Republicans become the majority in the U.S. Senate through the November elections, assuming the compact is more popular with Republicans than Democrats.

Such party line support is not a given. In Arizona, for example, Republican Gov. Jan Brewer, an Obamacare critic, vetoed the state compact bill as an encroachment of state authority.

Some constitutional scholars also believe the compact, under the Constitution’s “presentment clause,” could be blocked by the president. A few past interstate compacts have, indeed, been stymied by presidential veto.

In Missouri and Kansas

Missouri was the third state to approve the enabling legislation. Its passage in 2011 followed Georgia and Oklahoma.

Burlison, of Springfield, said he thinks states, which already administer Medicaid programs, have a knowledge base to run their Medicare programs, too, and he expects that the compact would “create a lot of creativity among the states.”

Gov. Jay Nixon allowed the Missouri measure to become law without his signature.

The compact “faces significant hurdles that make it highly unlikely to become a reality for the foreseeable future,” said Nixon’s press secretary, Scott Holste. “So it hasn’t been prudent for the state to devote time or resources to any planning for its implementation.”

Kansas in April this year became the ninth state to approve the Health Care Compact when Gov. Sam Brownback signed the bill, saying that suspending federal health care legislation preserves “individual liberty and personal control.”

Brownback pointed to KanCare, an overhaul of the state’s Medicaid system, as a model for what might be done to the broader health care system, including Medicare. He called KanCare a “pro-patient and pro-taxpayer solution” — a belief countered by some Kansans who have been unhappy with the changes.

Kansas Rep. Brett Hildabrand, a Republican who represents Lake Quivira, Lenexa and Shawnee, introduced the bill, partly because he believes the state can be more responsive to residents than the federal government.

When someone calls his office to complain about a state service, Hildabrand said he connects them with the appropriate office and the issue is resolved within days. “Now imagine that constituent trying to get the same response in a maze of ever-expanding D.C. bureaucracy,” he said.

Questions about details

The enabling laws don’t include specific regulations; they merely empower state governments to draw up regulations.

And given that the states in the compact would remove themselves from federal Medicare and Medicaid oversight, a patchwork of health insurance coverage rules would ensue. Some states would remain under the federal systems.

Critics warn that differences in state policies might cause people to move into or out of certain states.

“When we’ve talked to people about the compact idea, retirees are saying if that happens they’re out of here,” Praeger said of her experience in Kansas meetings. “Potentially we could lose residents.”

Health insurance experts have more questions than answers.

“What would be the timing for the state to take over these programs?” asked Linda Sheppard, former director of health care policy and analysis for Kansas. “Who would operate Medicare for Kansas seniors? Will the block grants cover administrative costs as well? What’s the legislative oversight?”

Sheppard, who joined the Kansas Health Institute this summer and is studying the compact issue, said she worried that “there’s been so little open discussion about this … so many unanswered questions. We need to understand how this would play out.”

To reach Diane Stafford, call 816-234-4359 or send email to stafford@kcstar.com.

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