Federal health reform delivers long-term benefits to Rhode Island
Friday, May 07, 2010
Like most state governments around the country, Rhode Island is facing painful budget deficits, and some are questioning how the new federal health insurance reform law will affect our state. Some governors, including Governor Carcieri, have even objected to the requirement that states chip in to help pay a fraction of the cost of coverage for their residents. What’s missing from this discussion is the huge influx of federal dollars that will come into Rhode Island and every other state. In fact, it’s no exaggeration to say that federal health reform will be a great deal for states, families and small businesses.
Some have criticized the federal health reform legislation for requiring states to help finance affordable health insurance coverage for some of their state residents. Although the legislation does require state contributions, these are modest. Nationwide, states will be required to contribute an average of 2.2 percent of the federal funds provided, meaning for every dollar Rhode Island spends on health insurance policies, it will bring an additional $45 in from the federal government to our health care system. For business-minded governors who are working to address the needs of constituents, there are few if any opportunities to leverage state funds to this degree. It’s a remarkable bargain when one considers that states customarily match federal Medicaid dollars at an average rate of 43 percent.
Federal reform will bring more than $3.3 billion to Rhode Island government, families and small businesses from 2014, when the new coverage requirements kick in, through 2019. A little more than half of these funds, $1.7 billion, will pay for Medicaid coverage for Rhode Islanders who earn up to one-third more than the federal poverty level. Rhode Island will pay a small share of the costs of this new Medicaid coverage. To cover Rhode Islanders the state has not previously covered through Medicaid, the federal government will pay 100 percent to start and then no less than 90 percent. Federal reform will also mean an increase in the federal share of Medicaid for some Rhode Islanders already covered by the state.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe other $1.5 billion in federal dollars goes directly to families and small businesses to help pay for health insurance. Some 90,000 Rhode Island families will receive tax credits to make health insurance affordable, with the amount of the credit based on the family’s income. Almost 16,000 Rhode Island small businesses will receive tax credits to help pay for their employees’ coverage, starting this year, which is expected to lead to 1,200 new jobs in the state.
Health reform was built on the concept of spreading responsibility among individuals and families, the federal government, and, to a much lesser degree, state governments and employers. For instance, a family of three earning $37,000 a year will pay less than $200 per month for good health insurance coverage with an annual out-of-pocket maximum of $4,000 and no caps on annual or lifetime benefits. This certainly isn’t free, but is exponentially better than what they’d otherwise pay in astronomical premium increases for plans that in some cases lack even catastrophic protections.
For states, contributing 2.2 cents per federal dollar received also is not free, but it is well worth the investment. Enterprising governors will be able to identify offsets to the state match from existing health programs that will become redundant once residents have access to the comprehensive benefits package under federal reform, especially the more than $100 million the state already spends to reimburse hospitals, many of which are struggling, for providing care to the uninsured.
Finally, let’s look at where much of that $3.3 billion will end up: providing health care for Rhode Islanders. That’s money going to Rhode Island hospitals, doctors, nurses, other medical professionals and the medical infrastructure that supports them. Combine that with the fact that about 98,000 currently uninsured Rhode Islanders will have health coverage, and that tens of thousands more will no longer be saddled with burdensome medical debt, and the economic benefits for Rhode Island families and business are a cause for celebration.
Senator Rhoda E. Perry (D-Dist. 3, Providence) chairwoman of the Senate Committee on Health and Human Services, is a retired health care administrator.
