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NTU Writes in Support of H.R. 567, the "State Health Flexibility Act."

February 7, 2013

The Honorable Todd Rokita
United States House of Representatives
236 Cannon House Office Building
Washington, DC 20515

Dear Representative Rokita:

        On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write in support of H.R. 567, your “State Health Flexibility Act.” By providing states with block grant funding for Medicaid and the State Children’s Health Insurance Program, this legislation would save more than a trillion taxpayer dollars while giving states the authority and flexibility to address the specific needs of their citizens.

       State and federal Medicaid spending totaled $428 billion in 2011 and, according to the CBO, costs could climb to $642 billion as soon as 2014. Though the program is already a budget-buster in many states, enrollment is expected to swell by an additional 17 million people nationwide due to the 2010 health care law. By 2017, 1 in 4 Americans could be eligible for Medicaid. This will add further strain to a program that already receives more funding on the state level than any other – even more than education, according to the National Association of State Budget Officers. Initially, the federal government will pay the full cost of new enrollees, but a later reduction of subsidies to 90 percent will still leave economically troubled states on the hook for billions of dollars, not to mention the fact that this payment scheme could be further reduced in the future.

       Currently, one-third of doctors won’t treat Medicaid patients due to slow and inadequate reimbursements. On top of that, doctors, patients, and states have to wrestle with dense layers of bureaucratic red tape, making the system difficult to navigate and prone to waste, fraud, and abuse. In 2011 alone, GAO reports that Medicaid paid $28.8 billion in improper claims – a jump of $6.3 billion in just one year. This leads to poor quality of care for patients and poor value for taxpayers from a program intended to aid society’s most vulnerable. With millions more to be added to the rolls in the coming years these systemic problems will only be exacerbated.

       H.R. 567 can help to reduce accounting uncertainty and, by maintaining level funding for the next ten years, reduce future burdens on taxpayers by $2 trillion. It can also help to reverse current incentives to boost spending by encouraging states to seek innovative solutions that can improve patient care and ultimately save money. A more efficient Medicaid system will allow states to better address priorities like tax reduction, rainy day funds, transportation, or other state-specific needs.

       H.R. 567 is an important step toward real entitlement reform, one that can begin to put Medicaid on a sustainable trajectory into the future. NTU urges all Representatives to cosponsor your bill and to work toward its enactment in this Congress.


       Nan Swift
       Federal Affairs Manager