Dear Member of Congress:
On behalf of the362,000 members of the National Taxpayers Union (NTU), I urge you to supportthe State Flexibility Act, introduced as S. 868 by Senator Hatch (R-UT) and asH.R. 1683 by Representative Gingrey (R-GA). This bill would repeal the costly Medicaid “maintenance ofeffort” (MOE) requirements embedded in the Patient Protection and AffordableCare Act (PPACA) and provide states the flexibility they need to deal withlong-term fiscal challenges.
The economicrecession has precipitated unprecedented budgetary shortfalls for many stategovernments, stemming from unsustainable expenditures and temporarily reducedtax revenues as a result of the recession. With every state save Vermont havinga variation of a balanced-budget law, the $430 billion in cumulative deficitsfrom 2009 to 2011 have been closed, to varying degrees of satisfaction foroverburdened taxpayers. Nevertheless, with states’ projecting another $112billion in total shortfalls this year, legislatures will need to make moredecisions to shore up their fiscal position.
Thepassage of PPACA has made states’ budgetary situation much more precarious byunceremoniously removing Medicaid from the discussion. As part of itsimplementation, PPACA included a maintenance of effort provision that preventedstates from altering Medicaid’s eligibility requirements. With the program’stotal state-level spending already increasing by 8.8. percent in Fiscal Year2010, MOE requirements will essentially handcuff states’ from dealing with oneof their primary budgetary challenges. Compounding these difficulties is thefact that just as the MOE mandate kicks in, temporary stimulus funds are beingphased out. In 2009 NTU warned that less prudent states could come to dependupon this infusion of federal cash as a substitute for home-grown budgetdiscipline. Today, this prediction is unfortunately coming true in many areasof the country. Furthermore, even those states that spent their citizens’ moneyresponsibly are now facing unpleasant chances because of the squeeze from MOErequirements.
H.R. 1683unshackles state policymakers from the onerous MOE provision, allowing them theflexibility to adapt Medicaid to changing fiscal realities. Whether it bethrough tailoring the Medicaid program itself, such as amending incomeeligibility thresholds, or enacting money-saving innovations, like shiftingMedicaid beneficiaries into new private exchanges, states must have the abilityto pass reforms free from unfunded MOE requirements. Furthermore, byeliminating the one-size-fits-all approach, the State Flexibility Act allowsstates to make budget decisions with less pressure to impose harmful taxincreases or to seek another federal bailout (one Washington cannot afford).
If states are to successfully grapple with thedire fiscal situations they face Congress must first untie their hands. S. 868and H.R. 1683 are the first step toward accomplishing that goal and thereforeNTU is proud to work for passage of this important legislation.
Sincerely,Brandon GreifeFederalGovernment Affairs Manager
108 North Alfred Street Ø Alexandria,Virginia 22314 Ø Phone: (703)683-5700 Ø Fax: (703)683-5722 Ø Web:www.ntu.org