Rants claims Iowa can’t afford cost of national health reform

Republican gubernatorial hopeful Chris Rants weighed in Thursday on the idea of reforming the nation’s health care system, saying Iowa cannot afford the added cost of providing insurance to more Americans.

Rants, a state legislator from Sioux City, said a Senate health care plan would add 335,879 adults on Medicaid, which, if the state was forced to pay its full share for that expansion, would result in a cost of nearly $630 million to Iowa’s state government.

“We are able to establish that number and cost because just a year ago the Iowa legislature commissioned a study by the Lewin Group to analyze the cost of exactly that change,” he said.

The number Rants cites comes from estimates of the number of Iowans who would be eligible for Medicaid under the Kennedy-Dodd proposal, which would lower eligibility to 150 percent of the federal poverty level. However, according to The Lewin Group, while 335,879 would be eligible to enroll, only 177,531 adults actually would.

These figures come from only one of three scenarios examined by the Lewin Group. In another scenario, which involves enacting a six-month waiting period before applicants can be eligible for Medicaid, only 137,108 adults would actually enroll in the program. Rants used the second scenario, where there is no waiting period. A third scenario looks at costs if there is not waiting period and low-income people already enrolled in other income-tested programs, such as food stamps, are automatically enrolled in Medicaid. Under those conditions, The Lewin Group estimates that more than 162,000 would enroll Medicaid.

Rants is not alone in his fear of the effects of health care reform on state budgets.

Because the states and the federal government share the cost of Medicaid coverage for low-income people, any increase in eligibility levels, benefits or payments to doctors would impose new costs on the states unless Washington agrees to absorb them entirely. This, coupled with what some predict will be large gaps in Medicaid funding after 2010 when stimulus money will no longer be available, caused many at the annual convention of the National Governor’s Association in July to worry about being stuck with an unfunded mandate from the federal government.

Democratic Pennsylvania Gov. Ed Rendell told Time Magazine that the changes have the potential to “be enormously destructive to state budgets.”

Under a bill currently in the House, Medicaid would be expanded to cover all non-elderly people with incomes at or below 133 percent of the poverty level, or $29,300 for a family of four. The federal government would pay 100 percent of the costs for the newly eligible.

A version in the Senate Finance Committee has the federal government paying the additional cost for only five years, with the state’s assuming the cost after that.

It should also be pointed out that the organization that conducted the study, The Lewin Group, is wholly owned by UnitedHealth Group, one of the nation’s largest insurers and is part of a subsidiary that, according to the Washington Post, was accused by the New York attorney general and the American Medical Association of helping insurers shift medical expenses to consumers by distributing skewed data.

UnitedHealth settled with the AMA and attorney general for $400 million.

Lewin was purchased by UnitedHealth in 2007.