Blessing or Curse?

There's an old Chinese curse that goes something like this: "May you be blessed to live in interesting times." If interesting times are blessings, then our cup is overflowing!

Over the past few months, I've written about the looming crisis in our state Medicaid program. The situation is similar across the country. Every newly elected governor in this country has Medicaid on their mind, and Governor-Elect Haley is no different. As you will read in this article from The State newspaper, our state is facing the previously unthinkable: a Medicaid program that will be bankrupt in March and unable to pay physicians, hospitals, or other providers. Ms. Haley understands the budget challenges facing South Carolina, and according to this article she intends to share her plan to address the state's budget crisis soon.

Earlier this week, I attended a conference in Charlotte where Jim Bentley made a presentation. I gleaned several important new insights from Jim's talk, and the most important ones concerned the timing of political decisions we should expect in the next few months.

Talk about health care reform is everywhere, but the important action will occur in three places. The first big news will come from the deficit reduction commissions currently developing proposals for consideration by Congress and the President. There are two or three such commissions, and their reports are due in December. (After the election, you will note.) I do not have any inside knowledge about what to expect from these commissions, but they will likely bring forth ideas related to Social Security, Medicare, and Medicaid. I would be surprised if they do not suggest increasing the eligibility requirements for one or more of these programs, such as further increasing the age at which persons become eligible for Medicare. But I am only speculating. If you"d like to read more about the President's bipartisan deficit reduction commission, this article will give you a current overview of that group's work.

The other two places to watch are governors' offices and the Congress. It's hard to predict the timeline, because we're talking about 50 governors and hundreds of members of Congress. But it's not hard to predict what they will do. In the second arena, Congress will debate repeal of "Obamacare," beginning in the House where the Republican majority will almost assuredly vote to repeal. The Senate is still under Democratic control, so it's harder to predict what will happen there. Will they even debate the issue? They are unlikely to vote to repeal...that would constitute a major political surprise. But the House will soon try other tactics, such as de-funding or dismantling unpopular parts of the bill. Whether the Senate will go along with any of these "partial repeal" efforts is anyone's guess. Unfortunately for hospitals, Congress probably won't repeal the cuts to Medicare or the parts of the law that increase quality expectations for hospitals. This debate could get very messy for the healthcare industry, as hospitals will disagree on when to pull the plug on the whole deal. For example, would the hospital field prefer an all-out repeal if the coverage expansions were dismantled (i.e., Medicaid expansion and the individual mandate) but the Medicare cuts were left intact? That's a very hard question to answer.

The third and arguably most critical arena is the governors' offices. Why? Because the governors will be struggling to balance their budgets in the wake of the economic recession, and the biggest impediment for all of them will be Medicaid. Since the majority of governors are now Republican and the U.S. House of Representatives is controlled by the Republicans, don't be surprised if the governors ask the House to delay the Medicaid expansion under the new federal law. Regardless of the outcome of that request, expect the Republican governors to compare notes and share ideas for balancing their budgets. They will find solidarity in the process of making hard decisions. Given that a number of Republican governors want to earn the 2012 presidential nomination, I just hope they don't engage in a competition to see which one of them is the most conservative. We certainly live in interesting times.