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Obama Supports Easing Health Law Mandates for States

Monday, February 28, 2011

WASHINGTON — Seeking to appease disgruntled governors, President Obama announced Monday that he supported amending the 2010 health care law to allow states to opt out of its most burdensome requirements three years earlier than currently permitted.

In remarks to the National Governors Association, Mr. Obama said he backed legislation that would enable states to request federal permission to withdraw from the law’s mandates in 2014 rather than in 2017 as long as they could prove that they could find other ways to cover as many people as the original law would and at the same cost. The earlier date is when many of the act’s central provisions take effect, including requirements that most individuals obtain health insuranceand that employers of a certain size offer coverage to workers or pay a penalty.
“I think that’s a reasonable proposal; I support it,” Mr. Obama told the governors, who were gathered in the State Dining Room of the White House.
“It will give you flexibility more quickly while still guaranteeing the American people reform.”
The announcement is the first time Mr. Obama has called for changing a central component of his signature health care law, although he has backed removing a specific tax provision that both parties regard as onerous on business. The shift comes as the law is under fierce attack in the courts and from Republicans on Capitol Hill and in statehouses around the country.
The bipartisan amendment that Mr. Obama is now embracing was first proposed in November, eight months after enactment of the Affordable Care Act, by Senators Ron Wyden, Democrat of Oregon, and Scott Brown, Republican of Massachusetts. SenatorMary L. Landrieu of Louisiana, a Democrat, is now a co-sponsor.
The legislation would allow states to opt out earlier from various requirements if they could demonstrate that other methods would allow them to cover as many people, with insurance that is as comprehensive and affordable, as provided by the new law. The changes also must not increase the federal deficit.
If states can meet those standards, they can ask to circumvent minimum benefit levels, structural requirements for insurance exchanges and the mandates that most individuals obtain coverage and that employers provide it. Washington would then help finance a state’s individualized health care system with federal money that would otherwise be spent there on insurance subsidies and tax credits.
“It seemed to make sense that rather than have states invest in a system that may not be best for them, you change the date to 2014 from 2017 and give them the flexibility to design it,” said one of several administration officials who requested anonymity because they were not authorized to speak publicly before the president. “But it’s clear that states must do a number of things to qualify for a waiver.”
Mr. Obama’s positioning follows the post-election approach to the politics of health care that he outlined in his State of the Union address in January.
Responding to the Republican takeover of the House, and of many governors’ offices, the president made clear that he would fight those seeking to repeal the law but that he was open to changes that would improve it, including removing the onerous tax provision. The Senate has already approved the tax change, and the House is expected to follow.
“Instead of refighting the battles of the last two years,” Mr. Obama urged Congress, “let’s fix what needs fixing and let’s move forward.”
Public opinion polls generally show that the country remains divided over the health care act, which seeks to insure 32 million Americans by requiring coverage and offering subsidies to make it affordable. But the polls show that only a minority favors repealing the entire act, as the Republican-led House voted to do earlier this year.
In the courts, federal district judges have issued contradictory opinions that are now under appeal. The Supreme Court is ultimately expected to decide whether Congress’s constitutional authority is broad enough that it can require citizens to purchase a commercial product like health insurance.
In a nod to November’s results, the administration has worked diligently to create the image of a president who is willing to listen to Republicans — and the agitated voters who empowered them. Flexibility has become a White House watchword in putting the health care act into effect. The administration has made a series of announcements intended to encourage states to shape the law to their individual needs, even if the possible effect is to reduce the breadth of coverage in some places.
Monday’s announcement may not quiet the cries of Republican governors who are seeking immediate relief from requirements in the law that prohibit states from lowering eligibility for Medicaid until 2014. That is when the law calls for a significant expansion of the joint state and federal health insurance program to include low-income childless adults. Governors of both parties also are chafing at the added cost of the Medicaid expansion, as states will begin to pay a fractional share of the expense in 2016.
In January, 29 Republican governors asked Mr. Obama and Congressional leaders to eliminate the eligibility restriction. Kathleen Sebelius, the secretary of health and human services, responded by outlining provisions already in the law that provide states with flexibility, and by helping them identify permissible ways to reduce Medicaid benefits.
This month, Ms. Sebelius sent a letter to Gov. Jan Brewer of Arizona, a Republican, to inform her that an expiring waiver meant Arizona would not need federal permission to eliminate a Medicaid program that currently covers 250,000 childless adults. On Friday, she informed states that they could raise premiums for Medicaid enrollees without running afoul of the federal eligibility requirements.
The administration officials said the so-called state innovation waivers in the Wyden-Brown bill might allow a state to experiment with ways to entice people to obtain insurance rather than requiring them to buy policies. It also might allow interested states to establish a single-payer system in which the government is the sole insurer. Gov. Peter Shumlin, a newly elected Democrat in Vermont, is pursuing such a proposal.
The officials said Congressional bill writers picked the 2017 date after the Congressional Budget Office said it would take three years of experience to determine how much a state should receive in unrestricted block grants if it opted out of aspects of the law. Otherwise, the budget analysts advised last year, the legislation’s 10-year cost estimate would be about $4 billion higher because Washington would probably have to make higher-than-needed payments to states.
The administration officials said they had not yet discussed where to find an additional $4 billion, but described it as “not a lot of money” when compared with the estimated $1 trillion, 10-year cost of the law. They said they had not yet consulted with Congressional leaders to map a strategy for enacting the amendment.


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