Wednesday, March 24, 2010

States Sue Over Healthcare Bill That Will Bust State Budgets

President Barack Obama faces a fight over the health-care overhaul from states that sued today because the legislations expansion of Medicaid imposes a fiscal strain on their cash-strapped budgets.

Florida, Texas and Pennsylvania are among 14 states that filed suit after the president signed the bill over the constitutionality of the burden imposed by the legislation. The health-care overhaul will make as many as 15 million more Americans eligible for Medicaid nationwide starting in 2014 and will cost the states billions to administer.

States faced with unprecedented declines in tax collections are cutting benefits and payments to hospitals and doctors in Medicaid, the health program for the poor paid jointly by state and U.S. governments. The costs to hire staff and plan for the average 25 percent increase in Medicaid rolls may swamp budgets, said Toby Douglas, who manages the Medicaid program for California, which hasnt joined the lawsuits.

The states are coming through the worst fiscal period in the history of record keeping, said Vernon Smith, a former Medicaid director for Michigan and now a principal at the research and consulting firm Health Management Associates in Lansing, Michigan. Medicaid is the most significant, most visible and most costly part of this expansion and states fully expect to see increases in their spending.

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