Most States Seen Getting More Under Health Plan

There would be sharp differences in the amount of new federal money going to individual states under President Clinton’s health care plan, and states that are now the most restrictive in granting medical assistance to the poor generally would be the biggest winners, according to a study released today.

However, most states would end up with more federal health care money than they get now, and pay less out of their own coffers for the medical bills of low-income people, the Urban Institute concluded in an analysis commissioned by the Henry J. Kaiser Family Foundation.

The finding appears to be in conflict with New York Gov. Mario M. Cuomo’s statement last month that the Clinton proposal would cause “definite, measurable and almost immediate” losses--before the state began to benefit, in the third year after implementation.

According to the Urban Institute study of 27 states, conducted by John Holahan and David Liska, if the Clinton plan took effect now, New York would be able to reduce its spending on the Medicaid program for the poor by $79 per resident and would capture $92 a person in additional federal subsidies.

The subsidies would be mixed with state contributions and the mandatory payments that all employers would have to make for their workers, and the aggregate would be used to help the poor and near-poor buy insurance policies.

Each state’s share would be figured under a complex formula that attempts to lock in the amount that it was paying toward the jointly financed federal-state Medicaid program in 1993 and adjusts this amount annually for inflation.

While concluding that all but Louisiana and New Hampshire of the 27 states studied would benefit from more federal subsidies in the Clinton health reform, the Urban Institute study provides evidence that the plan does treat states differently.

Although New York would get more federal payments as a result of the subsidies flowing in to buy health coverage for the low-income population, the state would not gain nearly as much as those with far less generous Medicaid programs.

Alabama, New Mexico and West Virginia would gain $212, $246 and $232, respectively, in federal payments per resident--more than twice as much as New York.

One reason for the difference is the requirement that states continue to pay a direct subsidy for those enrolled in welfare, but not for other poor and near-poor. The federal government--along with employers for working poor--would pay the subsidy costs for the non-welfare population.

As a result, states with narrow eligibility for welfare assistance and low percentages of people on the welfare rolls would have high percentages of poor and near-poor people eligible for direct federal subsidies.

At the same time, The formula that establishes state contributions to the pool of funds for the poor and uninsured generally requires states with the biggest and most generous Medicaid programs as of 1993 to make the biggest payments to the pool.

The disparities can be seen in comparisons between New York and California, the two largest providers of health care for the poor.

California spends $233 per person on its Medicaid (MediCal) program compared to $615 in New York, highest in the country after the District of Columbia and Louisiana. Federal subsidies to California under health care reform would increase by $117 per resident, compared to New York’s $92.