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Medicaid Twists the Nullification Debate

Mark Trahant
2/7/11

Graph: Largest State Budget Shortfalls on RecordThe Idaho Legislature is considering a bill that would make it illegal to implement the Affordable Care Act in Idaho, the so-called “nullification” approach. The idea is that states can dismiss any federal law that they don’t like. And Idaho (and several other states) really don’t like health care reform. However most constitutional scholars dismiss the theory—even Idaho’s attorney general said states cannot pick and choose which federal laws to follow.

Nullification is an issue because it generates lots of bluster. It allows legislatures to complain loudly—all the while ignoring their real power over federal health care. You see: Legislatures could trump the federal government over Medicaid. But that would mean making real voters, constituents about as angry as can be.

Medicaid is a partnership between the United States and the state governments. It is a voluntary program. A state could pull out and not participate, passing on the federal matching dollars that pay for most of the program.

The story of Medicaid as told in the media is largely about pregnant women, the poor and disabled. Every time a state tries to save money by reducing services (right now they are not supposed to restrict eligibility) then that narrative is unleashed. This lede from Bloomberg captures is a great example: “The Idaho Department of Health and Welfare is poised to make more than $8 million in cuts to Medicaid programs and services for low-income adults with severe mental illness and children with autism and other developmental disabilities.”

If Medicaid was primarily a program for the poor and disabled states probably would give it up. But that narrative misses the complexity. Much of Medicaid pays for long-term care of the elderly. Medicaid represents 40 percent of all nursing home spending, according to the Kaiser Commission on Medicaid and the Uninsured. And what’ more: Even during this time of economic hardship, states have been expanding this line of spending.

That’s why some legislators would rather push for nullification. They are mad at how much Medicaid costs state budgets; resulting in a shortage of at least $125 billion in 44 states and the District of Columbia. Last week Secretary of Health and Human Services Secretary Kathleen Sebelius wrote a letter to governors that said her agency will help “identify cost drivers in the Medicaid program and provide you with new tools and resources to achieve both short-term savings and longer-term sustainability while providing high-quality care to the citizens of your states.”

One of those drivers—and potential savings for states—ought to be the Indian health system. First, remember that Medicaid (and a Children’s Health Insurance Program) is an entitlement, and not an appropriation. That means the money is there for any eligible person. This is money that can expand services for every patient in the Indian health system. Second, and critical for states, the federal government gives a 100 percent match for clients in the Indian health system. It ought to be in states’ interest to enroll as many American Indians and Alaska Natives and spend as much as possible on reimbursable care.

But states have an illogical role in this system. Even the states that embrace this role have to navigate an extraordinarily complicated maze of rules and regulations. What happens, for example, when a young person moves from a reservation community to Haskell or another school? A study by Spokane’s Kauffman and Associates found that to be a logistical “nightmare.” The young people should have remained eligible but were rejected because they were not considered a resident of the state where the school was located. There are many, many more complications in the complicated dance between Medicaid, state governments, tribes and the Indian health system.

One of the most promising ideas in the Affordable Care Act is a feasibility study to treat Navajo as a 51st state. It seems to me this is an experiment that could be expanded, treating Indian Country as a 51st state with direct funding from Washington. It would save money because the reimbursement rate would not change—yet it would streamline all of the separate sets of Medicaid rules written by state governments. And in this climate of state budget shortages, perhaps, states would be willing, no eager, to send this role back to the federal government.

Call this a new spin on nullification.

Mark Trahant is a writer, speaker and Twitter poet. He is a member of the Shoshone-Bannock Tribes and lives in Fort Hall, Idaho. Trahant’s recent book, The Last Great Battle of the Indian Wars, is the story of Sen. Henry Jackson and Forrest Gerard.

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