The Future of Health Care Policy Is Not in Washington

The Senate’s halt of efforts to repeal the Affordable Care Act (ACA) saved the GOP from a protracted debate that threatened to expose a chasm in the party even larger than the much-ballyhooed divide between the House and Senate. The bigger split in this debate lies between the federal government and state policymakers, including governors of the same party as the president and congressional leaders, who ultimately have the responsibility of implementing these proposals.

The impasse at the federal level will shift the policy-making center of gravity away from D.C. Companies that want to have an influential voice in the health care arena should be increasing their focus on governors and state legislatures. Day-to-day policy decisions will continue to expand at the state level. As that happens, frustration by these officials, largely due to their perceived lack of impact at the federal level, will continue to motivate them to be more aggressive in setting the agenda.

Here’s what this means for state and local governments:

Devolution: The legislative package that cleared the House of Representatives included a limited block grant program for federal funding. States have long called for this and consider this aspect of the House plan to be a positive as it provides for more flexibility in program implementation, i.e. allowing local approaches to address the needs of local populations. However, most states have already gone through major adjustments required to expand Medicaid coverage and do not want to make huge changes again in such a short time frame. Nor do they welcome the notion of being saddled with expanded costs that were coupled with the new funding mechanisms. The idea of devolution – shifting accountability and costs from federal bureaucracies to state bureaucracies – became very popular with D.C. budget-cutters and fiscal conservatives interested in reducing the national outlays for health care.

Operating on a Tight Budget: Budget writers on Capitol Hill should remember that when addressing potential funding shortfalls, state legislatures have even less wiggle room than the federal government because most are required to live under a balanced budget – an idea long forgotten inside the Beltway. Expansions in state Medicaid coverage and ensuing cost increases must be offset by equal amounts of reductions in services, cuts from other parts of the state budget, or, an anathema to red state law makers, tax increases.

Governors Weigh In: The National Governors Association (NGA), through a bipartisan effort, released a set of recommendations aimed at addressing the needs of the constituents their members serve, as well as the financial constraints that come with public health care programs. The recommendations; however, begin with a general concern regarding the health of the partnership between the two governing levels

To address the troubling precedent in the decision-making framework as it currently exists, the NGA asks for a more active engagement to discuss policy changes. It also calls for a transition period to allow for adjustments to potential changes, and concluded the overarching principles on partnerships with a caution for national lawmakers:

“Supporting vulnerable populations is a shared responsibility between the federal government and states. It is critical that Congress continue to maintain a meaningful federal role in this partnership and not shift costs to states. Significant cuts to Medicaid will impact coverage for millions of low-income individuals and could impede state efforts to address the underlying factors driving health care costs, such as pharmaceuticals, long-term care and the social determinants of health.”

As a leading national grassroots firm, we appreciate the position of the governors and their attempt to expand the dialogue on critical domestic issues like health care to include the local perspective. Repeal, replace, expand or cut. The support of constituents and state policy leaders will be critical for success, no matter what direction Congress chooses.

This blog post was written by Brian Noyes, Executive Vice President, Direct Impact (a subsidiary of Burson-Marsteller).

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