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Bush's Fake Federalism: Health Care

In President Bush's speech on Tuesday, he made a grand pledge to "help the states that are coming up with innovative ways to cover the uninsured." Yet even as he was hailing the innovative role of states in health care, Bush was proposing new federal laws -- the promotion of so-called Association Health Plans (AHPs) -- that would further limit state powers to regulate the health insurance industry. As the bipartisan leadership of the National Governors Association made in a 2005 letter to the US Senate:

AHPs are health insurance companies sponsored by business and professional associations that would be granted a special exemption from state regulation, and would instead operate under limited federal rules and virtually no oversight. Under current AHP proposals, these types of insurers would be exempt from important regulations that our states have designed to ensure a healthy small insurance group market that can deliver affordable care to all participants...[T]his legislation raises important questions about the future ability of our states to regulate health insurance at all.

But this undermining of states ability to regulate the health care industry is par for the course for the Bush Administration. Bush-appointed judges struck down Maryland's groundbreaking law requiring large employers to contribute a fair share of their employee health costs and the Administration has not hesitated to get in the way of state initiatives to reimport cheaper prescription drugs from countries like Canada. While reimportation may be off the table because of Bush Administration stonewalling, another threat in the form of international treaties negotiated by the Bush Administration is emerging that "may constrain state efforts to manage prescription drug and public insurance costs."

Even Bush's pledge of funds to states to help on health care costs is a bait-and-switch. The grants would be funded by redirecting $30 billion worth of Medicare and Medicaid payments that currently go to hospitals that treat large numbers of uninsured and under-insured patients. Hospital groups immediately came out against the proposal, which is nothing more than a classic "rob Peter to pay Paul" scenario.

Looking at these proposals in combination, they are part of the Bush Administrations effort to promote an unregulated private insurance market, while using the rhetoric of federalism and states rights. In his speech on Tuesday, he specifically stated he wanted to support state programs that increase access to "private health insurance," even as his proposal would drain funds from existing Medicaid patients. And even as he's promoting more money for private sector health plans at the expense of Medicaid, he wants to strip state governments of the power to regulate those plans-- a recipe for unregulated abuse and profiteering by those insurance companies. This proposal is nothing more than another kick-back to the private sector at the expense of seniors and low-income children and families.

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