01/2003 State Legislative Update

Published January 1, 2003


Governor Mike Huckabee (R) recently proposed increasing the state sales tax by five-eighths of 1 percent to pay for Medicaid. State spending on the Medicaid program is projected to increase by $247 million in the next two years; the tax increase would provide roughly $79 million in general revenue needed for the program in 2003 and $107 million in 2004, according to state Medicaid Director Ray Hanley.

Hanley told The Democrat-Gazette the state needs to increase Medicaid funding to maintain the current level of Medicaid services. He said when matched with federal money, the $247 million increase would provide about $988 million for the program over the next two years.


Governor Jeb Bush (R) and top state House and Senate lawmakers agree medical malpractice reform should be “one of the top issues” for the coming legislative session, according to AP Wire Services. The governor said, “We have a looming crisis that will impede or impact the quality of care and so we have to act. Some degree of litigation reform is necessary to attract insurance into the state.”

State Senator Anna Cowin (R) said “a number of issues” are being addressed by a task force established by Bush, adding, “caps on pain-and-suffering damages would likely be a part of any bill” introduced in the Senate. House Speaker Johnnie Byrd (R) told the St. Petersburg Times, “caps would probably be one of the many solutions that would come up.”


Officials at the Veterans Affairs Medical Center in Togus, and its five clinics statewide, expect a 53 percent increase in the number of people seeking medical services at those facilities over the next 10 years, due in part to an aging veteran population and gaps in health insurance coverage.

The number of patients seeking treatment is expected to increase from about 40,000 currently to more than 60,000 by 2012. Jim Simpson, a spokesperson for the Togus VA center, attributed the anticipated increase to coverage gaps in private health insurance and Medicare. Simpson also said the number of Vietnam-era veterans entering the VA medical system is rising.

While patient volume is increasing, the Togus VA center is experiencing a shortage of providers. Currently, about 5,800 veterans are on the waiting list to see a physician, and some patients must wait a year to receive an appointment, Simpson said.

According to a brief AP report published by the Portland Press Herald, state officials are considering plans to contract with community clinics and hospitals to treat veterans. Last June the Department of Veterans Affairs announced plans to overhaul its health care system and analyze 1,200 VA health care facilities in an attempt to shift funds from aging, inefficient facilities in areas where the number of veterans is declining so the agency can offer additional services in communities with a growing number of veterans. ( See “Elderly Veterans Ignored in Rx Policy Debate,” Health Care News, August 2002.)


The cost of health insurance benefits required by Maryland is nearing a state-mandated cap set to ensure affordability, according to a report by the Maryland Health Care Commission. Once the cap is reached price controls kick in.

Under a 1999 law, the annual cost of a policy covering state-mandated benefits is limited to 2.20 percent of the state’s average annual wage. Maryland requires health insurance plans sold in the state to cover 25 mandates, including diabetes medications, mental health treatment, and hospital services for a two-day maternity stay.

Large, self-insured companies are exempt from the mandates. The report found the cost of a policy sold in Maryland covering only the 25 mandates is $841 per year, or 2.19 percent of the average annual wage. Given that health costs are increasing, the report said the ceiling is likely to be broken this year, even if the state legislature does not mandate any new benefits.


The Detroit News editorialized in favor of free-market health insurance, saying Michigan Governor-elect Jennifer Granholm (D) must “fundamentally restructure [Medicaid] and move it toward a more consumer-driven system” to avoid a crisis in the program.

The editorial states the Medicaid program has become the “biggest budget guzzler” because of the “lure” of federal matching funds. The fund match provides the state with 65 cents for every dollar it spends. This in turn acts as an incentive for the state to increase spending on Medicaid.

The editorial further said “possibly the worst” way to remedy Medicaid’s increasing costs would be to raise taxes. Instead, Granholm should “redefine the eligibility criteria for Medicaid so it is once again, as originally intended, a safety net for the truly needy.”

“Medicaid,” the Detroit News concluded, “should resemble commercial insurance” and “buy umbrella private coverage for medical emergencies and acute health care problems–not to pay for a full slew of benefits.”

Granholm, however, has said she would oppose a potential for-profit conversion of Blue Cross Blue Shield of Michigan because she believes such a move would “dramatically increase the number of uninsured.”

She would also propose measures to expand access to Medicaid; MiChild, the state’s CHIP program; and MiFamily, a state program for low-income adults who do not qualify for Medicaid and cannot afford private insurance. She would also use a greater percentage of the state’s share of the national tobacco settlement for health services.


A taxpayer-funded study by the Coalition for Consumer Justice, a single-payer advocacy group, says a single-payer health care system could cover every resident of the Ocean State and cut current administrative costs for health care in half. Under a single-payer system, one government agency would collect the necessary fees, premiums, and taxes to fund the system.

According to the study, Rhode Island could set up such a system by redistributing the $7.2 billion it currently spends each year on health care. The state spends more than $7,000 per person and ranks fourth in the nation in total health care spending.

Alan Sager, the study’s lead author and a Boston University professor, said he estimates the state would need to spend an additional $1 billion to cover people who do not have health insurance. The study also says more savings could result if the state negotiated discounts on medications with drug companies and if doctors managed care more responsibly. “These are not numbers we made up,” Sager said. “This is the experience of countries where simplified financing exists and where doctors aren’t on the phone negotiating with managed care.”

Christine Ferguson, a representative of Governor-elect Donald Carcieri (R), said the “proposed solution is unlikely to win a following” because people do not “inherently trust the government to do that.”

The study failed to examine the inflationary impact of state mandates like mental health parity and procedural mandates like guaranteed issue and community rating.

The State Legislative Update is compiled from a wide range of news sources, including the National Association of Health Underwriters (NAHU) http://nahu.org; Bizjournals http://bizjournals.com; Stateline http://stateline.org; Kaiser Daily Health Policy Report http://www.kaisernetwork.org; and Lexis/Nexis research.