NACoCommentsonSFCFinancingOptions05-29-09 - NACo Response Letter ---

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NACoCommentsonSFCFinancingOptions05-29-09 - NACo Response Letter ---

May 29, 2009

The Honorable Max Baucus The Honorable Chuck Grassley

    Chairman, Committee on Finance Ranking Member, Committee on Finance

    United States Senate United States Senate

    Washington, DC 20510 Washington, DC 20510

Sent Via Email

Chairman Baucus and Senator Grassley:

The National Association of Counties (NACo) is pleased to submit the following comments in response thto the Senate Finance Committee’s May 20 policy options paper entitled Financing Comprehensive

    Health Care Reform: Proposed Health System Savings and Revenue Options.”

    NACo is the only national organization that represents county governments in the United States. Founded in 1935, NACo provides essential services to the nation’s 3,068 counties. NACo advances issues with a unified voice before the federal government, improves the public's understanding of county government, assists counties in finding and sharing innovative solutions through education and research, and provides value-added services to save counties and taxpayers money.

    As you know, America’s county governments deliver physical and behavioral health care directly through public hospitals, clinics, nursing homes and other settings, as well as protect the public’s health through

    local health departments. Counties also contribute to the non-federal share for certain Medicaid services. Furthermore, as employers, county governments provide health benefits to the nearly three million county workers and their retirees nationwide.

    NACo applauds you, the Committee and your dedicated staff for working together through such an open process to develop policy options for providing quality, affordable health care coverage to all Americans in a fiscally responsible manner with sustainable sources of funding. NACo and county officials across the country look forward to continuing to work together to further refine and improve the proposals in the days and weeks ahead.

Disproportional Share Hospital (DSH) and other payments (p. 7-9):

    Under current law, both Medicare and Medicaid provide additional payments to hospitals that train medical residents or serve a high proportion of low-income patients.

NACo believes that revenue streams for the local health safety net built around Medicaid and DSH

    should not be used to as an offset for coverage expansion. Reform legislation must recognize the integral role played by county hospitals and must protect DSH and other supplemental payments upper payment

    limits, and graduate medical education payments for teaching hospitals that enable communities to

    provide quality health care services for their most vulnerable members. County hospitals will continue to be needed to serve those who will remain uninsured and to provide the services that the newly-insured will need to access care effectively. DSH payments are the only Medicaid funding stream through which states are explicitly allowed to reimburse providers for care to the uninsured, although they do not cover

    all the costs of caring for the uninsured. Federal caps on DSH payments have resulted in little growth in state DSH allotments, despite the significant rise in the costs and the numbers of the uninsured and under-insured. County hospitals will continue to be needed to provide critical but money-losing services such

    as trauma and burn care which are vital to protecting public health and ensuring that communities can respond to disasters. NACo believes that it would be prudent to consider changes to DSH and other supplemental revenue streams until we have a full understanding of the impact of federal health reform.

Extend Medicare Payroll tax to all State and Local Government Employees (pg. 30)

    This policy option would extend Medicare coverage on a mandatory basis to all employees of State and Local governments, without regard to their dates of hire or participation in a retirement system. Such employees and their employers would become liable for the for the HI tax.

    Under present law, State and local government employees are covered by Medicare and subject to the HI tax with respect to such employment if: (1) the employee was hired after March 31, 1986; or (2) the employee was hired before March 31, 19865 and either (a) there is a voluntary agreement in effect with the state providing for such coverage or (b) the employee is not covered by a retirement system.

    The National Association of Counties supports current law, which permits state and local public sector workers to voluntarily participate in Social Security and Medicare. This allows states and localities to design, administer and finance retirement plans that best meet the needs of their employees and employment policies. Mandatory coverage of current non-covered state and local public sector workers without regard to dates of hire or participation in a retirement system will generate significant fiscal demands. These concerns primarily focus upon:

    ; The history of the Medicare system, and its provisions involving state and local employees. Many

    public retirement systems in non-covered states have designed their plans in reliance on the

    current exclusion and are structured and funded on that basis.

    ; State and local governments will incur sharp payroll costs increases that will necessitate an

    increase in taxes, a reduction in government services, or some combination of the two.

    NACo believes that participation in Social Security and Medicare should be optional for state and local public sector workers and should be based on the efficacy and soundness of state or local public employee retirement systems. Efforts to fund and improve Social Security and Medicare should not rely on the mandatory participation of state and local workers. Further, NACo believes that there should be no federal restrictions on the maintenance or initiation of separate or supplementary retirement, health or disability systems.

Thank you for this opportunity to provide the views of America’s counties. If you have questions about

    our positions, please contact Paul Beddoe, Associate Legislative Director for Health Policy at (202) 942-4234 or


     Larry E. Naake

    Executive Director

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