Jan 01, 2009 Tom Suozzi

Want a fast stimulus? Have feds pick up Medicaid tab

Want a fast stimulus? Have feds pick up Medicaid tab

 

BY TOM SUOZZI

Thursday, January 8th 2009

As chief executive of a county with a budget larger than those of 11 states, I've managed through some challenging situations. But during the current economic crisis, I'm doing everything wrong.

Like Gov. Paterson and Mayor Bloomberg - and hundreds of other executives who are staring at massive projected budget deficits - I'm cutting jobs, eliminating programs and, in the case of Nassau County, reducing capital spending and raising property taxes for the first time in five years.

We have to. Because - unlike the federal government - states and localities must, by law, balance our budgets every year, leaving us no choice but to make difficult decisions that help undo national efforts to stimulate the economy.

In the war to save America's economy, federal, state and local governments are on the same side - but pulling in opposite directions.

It's time to fix this counterproductive dynamic before we do irreparable harm.

As Gov. Paterson so articulately argued on Capitol Hill, hundreds of billions of dollars are being spent to bail out banks, insurance companies and the automobile industry.

Why, then, can't Washington spend $50 billion to help the beleaguered American taxpayer by stabilizing their state and local governments?

It can - by reworking how we pay for Medicaid. I am proposing a plan that would provide immediate budgetary relief to states and, where applicable, local governments that contribute to the cost of the program. Given the rising numbers of unemployed Americans, we would provide a framework for preserving health coverage for the unemployed. And at the same time, we would help fulfill a major policy commitment made by President-elect Barack Obama: to develop a national health insurance plan.

The plan is simple and would be implemented in two phases. First, beginning in 2009, the federal government would start a three-year, phased-in assumption of the state and local share of Medicaid costs. By assuming one-third, or approximately $50 billion, of state and local costs each year, plus inflation, at the end of three years, the Medicaid program would be fully federally funded. The benefit to each state would be proportional to its Medicaid expenditures, resulting in all states being treated fairly. In New York, for example, this proposal would relieve the state of more than $7 billion.

As a condition of participation, states would be required to maintain their current state plans. Bad debt, charity care and other funding programs would continue. States could expand Medicaid to cover those receiving unemployment benefits, either by funding COBRA benefits or granting them Medicaid benefits.

Equally important - and required for any state looking to get federal funding - would be Phase II of the plan: dramatic cost reductions. Medicaid spending has been out of control, especially in New York. Participating states would have to combat fraud and abuse; develop programs to prevent, detect and manage illness; reform long-term care, and eliminate minority health disparities, among other steps. This would be woven in with the development of a national health care program, which the new administration and Congress will be working together to forge.

President-elect Barack Obama takes office in less than one month with a clear mandate to take dramatic action on our faltering economy. His massive infrastructure plan is an excellent idea - but will take time to get up and running. And any short term benefits will be offset by all the "wrong" things local governments are being forced to do. In addition, there are sure to be great and inequitable variations in infrastructure from state to state.

For a modest investment of $50 billion, our new President could deliver real and immediate relief to state and local governments, and ultimately our taxpayers. The benefits would be distributed equally to every state, and we would take a big step toward achieving his vision of a comprehensive health care.

The choice seems clear.

Suozzi is Nassau County executive.