Health-care overhaul's costs to Virginia and Maryland unclear

By Rosalind S. Helderman and Aaron C. Davis
Washington Post Staff Writers
Friday, June 25, 2010

In Virginia, where Republicans have steadfastly opposed the federal health-care law, Gov. Robert F. McDonnell says the overhaul will cost residents almost $1.5 billion in coming years. But in Maryland, where Gov. Martin O'Malley has enthusiastically embraced it, his Democratic administration has been quick to estimate that the law will save at least $1 billion.

Who's right?

Maybe both. Or possibly neither.

As states begin implementing the health-care law, they are acknowledging a difficult reality: Their shares of the costs, particularly given that they are set to escalate later in the decade, are exceptionally cloudy. There are several reasons why the law will cost some states more than others. For instance, states such as Maryland with generous health plans for low-income residents will need to spend less to reach new federal mandates than states such as Virginia, which cover fewer residents.

But there are also so many unknowns that politicians can interpret the costs in any number of ways. If government leaders track spending for the remainder of the decade, as Maryland Democrats have done, the law's costs look low. Look a bit further into the future, as Virginia Republicans do, and costs expand quickly. Even near-term, states' costs are constantly put in doubt because they must rely on the federal government to keep its funding commitments -- a fact highlighted Thursday as the Senate fell short of the necessary votes to advance promised short-term aid.

So in states where political leaders have opposed the law, they have circulated analyses predicting calamity to their budgets. That's the case in Florida, where officials have said in a suit challenging the law that it will cost the state billions.

In Virginia, where officials say the overhaul will cost $1.47 billion over the next 12 years, McDonnell has called the law a "historic and unfunded federal mandate on the states" and Attorney General Ken Cuccinelli II has bemoaned its possible impact on the bottom line.

But governors who supported the law have found evidence to show that their states will come out ahead. Leaders in Wisconsin, for instance, say the state will save at least $745 million by 2019.

In Maryland, O'Malley has cast the new law as a fiscal savior that will curb out-of-control health-care costs. The day after it passed in March, he was among the first to estimate it would save at least $1 billion over 10 years. Last week, his health secretary predicted that a more detailed analysis due out soon would show "substantial" savings.

In his campaign for reelection, O'Malley often mentions the savings and his support of the law as reasons to keep him in office. O'Malley's chief rival, former governor Robert L. Ehrlich, Jr. (R), accuses him of inflating potential savings and underestimating costs.

"Every state is making assumptions," said Eric R. Wagner, a vice president for MedStar Health, who said his company is having similar trouble estimating costs for its nine Washington area hospitals. "There is always an element of politics. But I suspect there is also an element of truth."

Fuzzy expenses

Half of the expansion in health-care coverage expected to flow from the new law will come from expanding Medicaid, which is jointly funded by states and the federal government.

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