Relief Seen for Jobless and States in Health Care Plan

by Robert Pear The New York Times published January 27, 2009 in print January 28, 2009 on page A1 of the New York edition WASHINGTON — The stimulus bill working its way through Congress is not just a package of spending increases and tax cuts intended to jolt the nation out of recession. For Democrats, it is also a tool for rewriting the social contract with the poor, the uninsured and the unemployed, in ways they have long yearned to do. With little notice and no public hearings, House Democrats would create a temporary new entitlement allowing workers getting unemployment checks to qualify for Medicaid, the health program for low-income people. Spouses and children could also receive benefits, no matter how much money the family had. In addition, the stimulus package would offer a hefty subsidy to help laid-off workers retain the same health plans they had from their former employers. Altogether, the economic recovery bill would speed $127 billion over the next two and a half years to individuals and states for health care alone, a fact that has Republicans fuming that the stimulus package is a back door to universal health coverage. “It’s raining money,” said Representative Michael C. Burgess, Republican of Texas. The House plans to vote Wednesday on the $825 billion bill, and the Senate is expected to vote on a similar measure next week. As Congress rushes to inject cash into a listless economy, it is setting aside many of the restraints that have checked new domestic spending for more than a decade. The White House said the changes contemplated by Congress would provide coverage for nearly 8.5 million newly uninsured people who had lost their jobs and would protect Medicaid for many more whose eligibility would otherwise be at risk. Of the $127 billion cost, the Congressional Budget Office said, $87 billion would be used to increase the federal share of Medicaid, $29 billion would subsidize private insurance and $11 billion would finance Medicaid for unemployed workers who could not otherwise qualify. Most of the aid is billed as temporary. But Republicans fear that states would get hooked on it, just as they might grow accustomed to a big increase in federal aid to education, also included in the bill. Democrats said the current economic crisis did not allow time for public hearings on the legislation. “This is as urgent as it gets,” said Representative Anna G. Eshoo, Democrat of California. After the House Ways and Means Committee approved its piece of the economic recovery legislation last Thursday, Representative Pete Stark, Democrat of California, said, “We accomplished more today than in the last eight years.” Congressional Democrats developed the package in close consultation with President Obama. Health care provisions of the bill taking shape in the Senate are broadly similar to those in the House bill, though they may prove less expensive. Obama aides and advisers said the president would insist on health insurance assistance for the unemployed as part of a final bill, which he wants to sign by mid-February. The legislation would allow states to provide Medicaid to an entirely new group: those who are receiving unemployment insurance benefits, their spouses and children under 19. Medicaid is normally for low-income people, and for decades it has been financed jointly by the federal government and the states, with the federal share averaging 57 percent of costs. The economic stimulus bill prevents states from enforcing a means test, saying, “No income or resources test shall be applied with respect to any category of individuals” who become eligible for Medicaid because they are receiving unemployment benefits. The federal government would pay 100 percent of the costs for people enrolled under this option through December 2010. Republicans said this proposal would take a big step toward federalizing Medicaid. For their part, Democrats said the changes took a major step toward their goal of coverage for all Americans. At the same time, the legislation would provide a huge measure of fiscal relief to state Medicaid programs, at a time when state revenues are declining and the number of Medicaid recipients is rising because of the recession. The federal share of Medicaid spending now ranges from 50 percent in higher-income states like New York and Connecticut to more than 73 percent in poor states like Mississippi and West Virginia. Under the House bill, the federal share would be increased by at least 4.9 percentage points in every state, and by much more in states with large increases in unemployment. The bill would also offer a lifeline to workers who have lost health insurance along with their jobs. In theory, such workers and their families can keep their group health benefits for 18 months under a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1986, known as Cobra. But laid-off workers are often required to pay 102 percent of the full premium, including the employer’s share, so the cost now can be prohibitive. Under the bill, the federal government would pay 65 percent of the premiums for a year. That subsidy would almost surely increase the number of laid-off workers choosing to continue coverage. Republicans wanted to deny the premium subsidies to people who had annual incomes of more than $100,000 or assets of more than $1 million. They also wanted to prevent people with more than $1 million of family income from taking advantage of the Medicaid option for the unemployed. Democrats voted down those proposals in the House Committee on Energy and Commerce. Representative Nathan Deal, Republican of Georgia, said “the poorest of the poor” had long been subject to income and asset tests when applying for Medicaid. But, Mr. Deal argued, under the new option, a millionaire could get Medicaid benefits, financed entirely by the federal government, without being asked about such matters. The committee chairman, Representative Henry A. Waxman, Democrat of California, said, “It’s highly unlikely that you are going to find millionaires who would like to go on Medicaid.” Moreover, Mr. Waxman said, the purpose of the new options is to “streamline the enrollment process” and speed assistance to people who are unemployed. “It’s going to set up an unnecessary barrier if we have any income test,” Mr. Waxman said, adding that the enforcement of a means test could require “a whole new bureaucracy.” The bill would also create a new option for people 55 or older and for those who have worked for the same employer for 10 years or more. They could retain health benefits under Cobra, at their own expense, until they became eligible for Medicare at 65 or obtained coverage through another job. Under this option, employers said, younger workers could conceivably hold onto their coverage for decades. In a joint letter to Congress, the United States Chamber of Commerce, the National Association of Manufacturers and the National Retail Federation opposed this proposal, saying it would drive up costs for workers already covered by employer health plans. “The people who sign up for unsubsidized coverage under the new option are more likely to have serious medical conditions and therefore to increase the cost of employee health care disproportionately,” said E. Neil Trautwein, a vice president of the National Retail Federation. If states wanted the federal government to pay a larger share of Medicaid, they would have to maintain current eligibility levels and could not adopt more restrictive criteria. But states could reduce benefits or payments to health care providers. Representative Christopher S. Murphy, Democrat of Connecticut, said he feared that such cuts would make it more difficult for Medicaid recipients to find doctors in some parts of the country.