Table of Contents


Health Reform and the 112th Congress

U.S. Capitol Dome

Updated May 6, 2011

State Challenges with the Medicaid Maintenance-of-Effort (MOE)

May 3, 2011—The Patient Protection and Affordable Care Act (PPACA) required state medical assistance programs to maintain eligibility standards that were in effect for adults as of March 23, 2010 until a state health benefits exchange is fully operational in 2014. The provision also required eligibility standards for children in the program to be maintained until 2019, but excluded non-pregnant, nondisabled adults from any of the mandates. A failure to comply with this maintenance-of-effort or MOE, which originated in the American Recovery and Reinvestment Act of 2009 (ARRA), means a state risks losing all of its federal Medicaid matching funds. To date, states have not been prohibited from cutting Medicaid provider reimbursement rates or optional benefits, although the Center for Medicare and Medicaid Services (CMS) published proposed rules May 6th that would institute a process for evaluation of provider rate reductions. The MOE places significant restrictions on states during a period of economic recession and rapidly rising Medicaid enrollments when state program expenditures often account for anywhere from 11.6 to 34.6 percent of state budgets.

The Obama administration has provided recommendations for reducing Medicaid costs, but has not agreed to requests to cut eligibility for the program. In January 2011, Republican Governors and governors elect from 33 states sent a letter to the president and congressional leaders formally asking that the federal mandates be lifted and detailing the costs associated with the mandates. Simply put, expenditures are increasing and revenues are down. The NCSL March 2011 State Budget Update reported that 20 states were experiencing cost overruns for their Medicaid or other health programs.  Because of the entitlement nature of the Medicaid program states will be required to maintain support for the program possibly at the expense of other state programs in their budget, such as education or transportation. States are very concerned about their ability to sustain the Medicaid program on its' current path since enrollment has been increasing since October 2007, and the enhanced federal match will end in July of 2011.  

NCSL Medicaid Policy

States have traditionally had three areas at their disposal for modification that resulted in budget reductions: program eligibility, provider reimbursements, and optional benefit packages. NCSL policy opposes the imposition of unfunded federal mandates or regulatory changes that restrict state authority to make necessary program changes or be absolved from the legal obligation to provide services to entitled individuals. Since the Medicaid program is a state-federal partnership states should be consulted as new policy proposals are considered.  

The State Flexibility Act

Several members of congress have been considering alternatives that would provide states with more flexibility in managing their programs. In March Senators Ron Wyden (D-OR), Scott Brown (R-MA), and Mary Landrieu (D-LA) introduced legislation that would allow states to apply for a waiver to opt-out of the major provisions in the PPACA and implement their own reforms following certain criteria. On May 3rd, Senator Hatch (R-UT), Ranking Member of the Senate Finance Committee and Representatives Gingrey (R-GA), Member of the House Energy and Commerce Committee and McMorris Rodgers (R-WA), House Republican Conference Vice Chair held a press conference to unveil legislation entitled as the State Flexibility Act. H.R. 1683 and its companion S. 868 would fully repeal the Medicaid MOE requirements that would restrict a states’ ability to make necessary changes in their programs enabling them to balance their budgets.

Senator Alexander (R-TN) was quoted as saying, "The federal government literally has said that states have to spend money states don't have. And what's the end result of that? They have to find it somewhere else. So when students at the University of California wonder why their tuition goes up 35 percent, it's because of congressmen in Washington who have passed a law saying California has to spend more money on Medicaid that it doesn't have, and then it doesn't have any money for the University of California. That's the story in every one of our states."

Former state legislator Representative Pitts (R-PA) explained something that's too often forgotten, "Nearly every state government in the United States is required to balance their state governments. There's no Treasury Department credit card to help do that. The American people expect much of their state governments. They expect the roads to be paved, the schools to be funded, the communities kept safe and parks maintained.....Right now Medicaid is 31 percent of Pennsylvania's budget. Because of the PPACA, the expansion of this program, this could grow to 60 percent by the end of the decade." 

Senator Hatch (R-UT) stated that he felt the legislation would receive bipartisan support moving forward. According to a Congressional Budget Office (CBO) estimate, the legislation would save $2.1 billion over a 10 year period.

Fiscal Year 2012 Budget Resolution

April 15, 2011—As part of his 2012 budget plan the Chairman of the House Budget Committee, Representative Paul Ryan has proposed substantial changes related to health care programs including the federal payment structure for the Medicare and Medicaid programs, elimination of subsidies provided through new insurance exchanges along with other related changes, and repeals and defunds the Affordable Care Act (ACA) as it was enacted in March of 2010. The Chairman presented his proposals in a document, The Path to Prosperity, April 6th which met with a great deal of support from his fellow conservatives. Following the release of his proposal the Chairman requested that the Congressional Budget Office (CBO) analyze his proposal for long-term budgetary impacts.

Provisions in Chairman Ryan’s proposal would convert the Medicaid program into a block grant to be allocated to the states by 2013. The total amount would increase annually with population growth. Starting in 2022, Medicaid block grant payments would be reduced to exclude projected spending for acute care services for elderly Medicaid beneficiaries. Under the proposal, CBO estimates, federal spending for Medicaid would be 35 percent lower in 2022 and 49 percent lower in 2030 than is currently projected. States would also have more flexibility on program design but if the costs of services continue to escalate states will have to consider reduced spending on the program. By design, CBO feels the approach would make funding for Medicaid more predictable from a federal perspective, but it would lead to greater uncertainty for states as to whether the federal contribution would be sufficient during periods of economic weakness. H.C. Res. 34 was adopted in the House in a roll call vote of 235 yeas and 193 nays on April 15th.

NCSL Medicaid Policy
NCSL policy opposes proposals to reduce or cap federal matching funds since it would fundamentally alter the state federal full partnership to support the Medicaid program into a limited partnership that shifts both costs and responsibility onto the state government. If the Medicaid funding is shifted to a block grant, there must be a formula to automatically increase the block grant without the need for further Congressional action to adjust for demographic changes, and medical inflation. If a federal cap or block grant is imposed, it must be accompanied by statutory and/or regulatory changes to existing law that would authorize states to reduce or limit services, eligibility and/or payments to beneficiaries. If the states are not authorized to make the necessary program changes, they must be absolved from the legal obligation to provide services to entitled individuals.

Utah Representative David Clark Gives Testimony before the U.S. Senate HELP Committee

March 17, 2011−Utah Representative David Clark (R) provided testimony before the U.S. Senate Committee on Health, Education, Labor and Pensions during a hearing to discuss implementation of state health insurance exchanges and other provisions in the Affordable Care Act (ACA). Representative Clark was asked to report how the Utah health reform efforts might inform the national health care debate. Utah created the second of only two operating exchanges in the nation, which he described as a “farmers market” allowing businesses and employers to shop online for health coverage in that market. “We had to do this a little bit on the cheap,” he pointed out, emphasizing that Utah spent only $600,000 to set up their exchange. He urged the senators to use a “light touch and resist the temptation to fill in too many of the missing details.” while implementing the ACA. He stressed that these missing details provide policy space for flexibility which allows for state innovation and ultimately resolution of problems.

Utah began its health reform efforts four years ago. As the state gathered data, it found that most of the uninsured population was employed, and working for small businesses. As in other states, small businesses comprise the vast majority of the Utah business market, and only 44 percent offer health insurance coverage. In addition, a great number of the individuals uninsured were “young immortals,” or those between the ages of 18 to 34. “It was clear to us early on that, in order to reduce our uninsured population, we needed to find a way to make insurance coverage more accessible and attractive to small employers and employees of small business, even the so-called young immortals.” He went on to explain how the state moved forward through planning and demonstration phases to ultimately offer more choice to employees, a defined contribution arrangement rather than a defined benefit model, and to allow for incorporation of features that were required under the ACA.

Representative Clark also stressed that the ACA failed to grant states the meaningful flexibility they needed to implement health reform. “Rather than trying to impose a national solution, Congress should give strong encouragement to the states to take the lead, allowing them to advance alternative proposals and reward states that achieve the goal of improved health care coverage. This is not a partisan issue or an ideological debate; rather, it is about how to best and most efficiently serve diverse populations and different geographies and about designing state-specific solutions to address state-specific challenges.”
In conclusion he remarked, “We are moving into unchartered territory that requires the humility and restraint to allow one another space to incrementally innovate and learn from our experiences.”

Fourteen percent of Utah’s population is uninsured according to the Kaiser Family Foundation, and the Medicaid budget consists of 23 percent of their general budget.

Additional testimony was provided by:

  •  Steve Larsen, J.D., deputy administrator and director, Center for Consumer Information and Insurance Oversight (CCIIO), Centers for Medicare & Medicaid Services (CMS), Bethesda, MD
  •  Sandy Praeger, Kansas insurance commissioner, Lawrence, KS,
  • Joshua Sharfstein, M.D., secretary, Maryland Department of Health and Mental Hygiene, Baltimore, MD

U.S. Senate Committee on Health, Education, Labor, and Pensions

Efforts to Repeal the Affordable Care Act

House Activity

On January 5th, 2011 the 112th Congress covened with 87 new congressional representatives that are first time elected officials. Realizing historic gains in the November 2010 midterm elections, Republicans have become the majority party in the U.S. House of Representatives. As part of their Pledge to America, the Republican platform committed to repeal health reform legislation enacted in the 111th Congress and to replace it with new solutions to bring down health care costs and protect jobs. To that end, H.R. 2 has been introduced as the "Repealing the Job-Killing Health Care Law Act" which would repeal the provisions of the "Patient Protection and Affordable Care Act", and  Title I and subtitle B of Title II of  the "Health care and Education Reconciliation Act of 2010." Both bills were enacted in March 2010. H.R. 2 was debated on the House floor January 19th and approved in a party-line vote of 245 to 189. Three Democrats-Representatives Dan Boren (OK), Mike McIntyre (NC), and Mike Ross (AR) joined Republicans in support of repealing the ACA.

The Executive Office of the President issued a Statement of Administration Policy regarding the legislation January 6th stating that passage of H.R. 2 would explode the budget, raise costs, and deny an extimated 32 million people health insurance. The Congressional Budget Office published their analysis February 18th projecting the direct spending and revenue effects of H.R. 2 would cause a net increase in the federal budget deficits of $210 billlion over the 2012—2021 period. They added that the projections of the bill's budgetary impact are quite uncertain because assessing the effects of making broad changes in the nation's health care and health insurance systems—or of reserving scheduled changes—requires assumptions about a broad array of technical, behavioral, and economic factors. The estimates in the analysis reflect an assumption that the provisions of the current law would otherwise remain unchanged througout the projection period and that the proposed legislation would remain unchanged upon enactment. 

A document released January 16th from the House Committee on Energy and Commerce lists their key issues for consideration including the repeal of the health reform law as their central focus and include reform of the Medicaid program. The committee plans to solicit the opinions of state leaders on tools they need to better control fraud and abuse in their programs and what flexibility the states need to more efficiently administer their programs. House Republicans are also bringing discussions of medical malpractice to the forefront again this year.

March 21, 2011–The House Medical Technology Causcus launched a new web site in support of efforts to lessen the effects of a provision in the ACA that imposes a new 2.3 percent tax on medical devices to bgin in 2013.  The caucus is supporting legislation, H.R. 436,  that would repeal the provision and prevent an additional $20 billion tax burden on the medical technology industry. The measure was introduced January 25th and has not yet been considered in committee

Senate Activity

Senate Minority Leader Mitch McConnell (R-KY) introduced an amendment to the "FAA Air Transportation Modernization and Safety Improvement Act" that would also repeal the the health reform statutes. The amendment was rejected late on February 2nd in a party line vote of 47-51. The McConnell amendment was followed by two other amendments affecting the ACA including the language contained in the "State Health Care Choice Act", and an amendment introduced by Senator Debbie Stabenow that repeals the 1099 provision requiring employers to complete a 1099 tax form every time they spend $600 on goods and services.  The Stabenow amendment was approved and rescinds $44 billion in unobligated discretionary funds with the Office of Management and Budget tasked with deciding the source of the rescissions. 

House Majority Performance Goals and Objectives

A resolution introduced by House Republicans,H. Res. 9, was approved January 20th and instructs the House Committees on Education and Labor, Energy and Commerce, Judiciary, and the Ways and Means each to report legislation proposing changes to replace the existing health care law and produce legislation that will, among other key reforms:

  1. Foster economic growth and private sector job creation,
  2. Lower health care premiums,
  3. Preserve a patient's ability to keep his or her health plan,
  4. Provide people with pre-existing conditions access to affordable health coverage,
  5. Reform the medical liability system,
  6. Increase the number of uninsured Americans,
  7. Protect the doctor-patient relationship, 
  8. Provide the states great flexibility to administer Medicaid programs,
  9. Expand incentives to encourage personal responsibility for health care coverage and costs,
  10. Prohibit taxpayer funding of abortions and provide conscience protections for health care providers,
  11. Eliminate duplicative government programs and wasteful spending, and
  12. Do not accelerate the insolvency of entitlement programs or increase the tax burden on Americans

 A specific timeline has yet to be provided for these goals but a vote on the repeal measure is expected in the coming weeks.  

Congressional Committees

Congressional Committees of Jurisdiction 

U.S. Senate

Senate Committee on Health, Education, Labor, and Pensions (HELP)
The Committee's Jurisdiction to be the following: Committee on Health, Education, Labor and Pensions, to which committee will be referred all proposed legislation, messages, petitions, memorials, and other matters relating to the following health related subjects.

1. Measures relating to education, labor, health, and public welfare.
2. Aging.
3. Arts and humanities.
4. Biomedical research and development.
5. Domestic activities of the American National Red Cross.
6. Individuals with disabilities.
7. Occupational safety and health, including the welfare of miners.
9. Public health.
10. Regulation of foreign laborers.
11. Student loans.
The committee will also study and review, on a comprehensive basis, matters relating to health, education and training, and public welfare, and report thereon from time to time.

Chair: Senator Tom Harkin (D-IA)

Ranking Member: Senator Michael B. Enzi (R-WY)

Senate Committee on Finance
The committee concerns itself with health programs under the Social Security Act, including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF) and other health and human services programs financed by a specific tax or trust fund, and national social security.

Chair: Senator Max Baucus (D-MT)

Ranking Member: Senator Chuck Grassley (R-IA)

U.S. House of Representative

House Committee on Ways and Means
The jurisdiction of the Committee on Ways and Means includes:
(1) Federal revenue measures generally.--The Committee on Ways and Means has the responsibility for raising the revenue required to finance the Federal Government. This includes individual and corporate income taxes, excise taxes, estate taxes, gift taxes, and other miscellaneous taxes.

(2) The bonded debt of the United States.--The Committee on Ways and Means has jurisdiction over the authority of the Federal Government to borrow money.

(3) National Social Security programs.--The Committee on Ways and Means has jurisdiction over most of the programs authorized by the Social Security Act, which includes not only those programs that are normally referred to colloquially as Social Security but also social insurance programs and a whole series of grant-in-aid programs to state governments for a variety of purposes. The principal programs established by the Social Security Act and under the jurisdiction of the Committee on Ways and Means in the 110th Congress can be outlined as follows:

(a) Old-age, survivors, and disability insurance.
(b) Medicare.
(c) Supplemental Security Income (SSI).
(d) Temporary Assistance for Needy Families (TANF).
(e) Child support enforcement.
(f) Child welfare, foster care, and adoption assistance.
(g) Unemployment compensation programs.

(4) Trade and tariff legislation.--The Committee on Ways and Means has responsibility over legislation relating to tariffs, import trade, and trade negotiations.

Chair: Representative Dave Camp (R-MI)
Ranking Member: Representative Sander Levin (D-MI)

House Committee on Energy and Commerce
The Committee on Enegry and Commerce has jurisdiction over issues concerning telecommunications, consumer protection, food and drug safety, public health research, environmental quality, the availability of affordable energy, and the continuance of interstate and foreign commerce. It oversees multiple cabinet-level departments and independent agencies, including the departments of Energy, Health and Human Services, and Transportation, as well as the Federal Trade Commission, the Food and Drug Administration, and the Federal Communications Commission.

Chair: Representative Fred Upton (R-MI)
Ranking Member: Representative Henry A. Waxman (D-CA)

House Committee on Education and the Workforce


The Education and Workforce committee oversees all federal eduction and labor programs.

Chair: Representative John Kline (R-MN)
Ranking Member: Representative George Miller (D-CA)


 Congressional Oversight Actions

♦  The House Committee on Energy and Commerce

February 2, 2011—Letter to HHS requesting information and an accounting of the expenditures related to the Health Insurance Reform Implementation Fund, and $400 million allocated by the 2009 stimulus packaeg for comparative effectiveness research.

January 20, 2011Letter to the Center for Consumer Information and Insurance Oversight regarding OCIIO transfer from the Office Secretary's to the Centers for Medicare and Medicaid Services. 


 Congressional Committee Activity

Health Reform Legislative Activity

Bill Number
U.S. House
H.R. 2
Repealing the Job-Killing Health Care Law Act
Repeals the Patient Protection and Affordable Care Act of 2010, and Title I and subtitle B of Title II of the Health Care and Education Reconciliation Act of 2010.
Adopted in the House 01/19/2011
H.R. 4
Small Business Paperwork Mandate Elimination Act of 2011

The legislation would repeal an expansion currently scheduled to take effect in 2012 of information that businesses must report to the Internal Revenue Service on Form 1099.

Public Law
"Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011"
Places limitations on filing claims of malpractice after the manifestation of an injury. Places no limit on collection of economic losses, but proposed limits on the collection of noneconomic damages and the percentage of claims recovered attorney's may collect as payment. Does not preempt state law regarding collection of punitive damages if it can be proven that the person acted with malicious intent. Does not preemt state law that imposes greater procedural or substantive protections for health care providers and organizations from liability, loss, or damages, or laws that specifies a particular monetary amount of compensatory or punitive damages.
Introduced 01/24/2011
Instructing certain committees to report legislation replacing the job-killing health care law
Instructs the Committees of jurisdiction to report legislation to improve the nation’s health care system.  
Adopted in the House 01/20/2011
Small Business Paperwork Mandate Elimination Act of 2011
Amends the Internal Revenue Code to repeal a provision (added by the Patient Protection and Affordable Care Act) that extends to corporations that are not tax-exempt the requirement to report payments of $600 or more.
 Introduced 01/05/2011
Healthcare Choices Act of 2011

A bill to repeal Title I of the Patient Protection and Affordable Care Act and to amend the Public Health Service Act to provide for cooperative governing of individual health insurance coverage offered in interstate commerce.

Introduced 01/20/2011
Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011

Repeals certain scheduled expansions in information reporting requirements, and modify repayment requirements for the advance premium assistance credits available to certain individuals starting in 2014 for the purchase of health insurance through health insurance exchanges.

 Reported out of the House Committee on Ways and Means 2/22/2011
H.R. 1213
To repeal mandatory funding provided to states in the Patient Protection and Affordable Care Act to establish American Health Benefit Exchanges

Would rescind unobligated funds appropriated by the PPACA for states to establish American Health Benefit Exchanges.

CBO Cost Estimate

Adopted in the House by recorded vote, 238 yeas--183 nays
A bill to repeal mandatory funding for school-based health center construction

Repeals provisions in the PPACA that provide grant funding to eligible health centers in school-based setting and would rescind unobligated funds.

Reported favorably out of the House Committee on Energy and Commerce
A bill to amend the Public Health Service Act to convert funding for graduate medical education in qualified teaching health centers from direct appropriations to an authorization of appropriations

Rescinds unobligated funds appropriated by the PPACA for health centers to expnd or establish programs that provide training to medical residents.

Reported favorably out of the House Committee on Energy and Commerce
A bill to repeal the Prevention and Public Health Fund

Repeals provisions in the Patient Protection and Affordable Care Act (PPACA) that establish the Prevention and Public Health Fund that provides grant assistance to entities to carry out prevention, wellness, and public health activities.

Adopted in the House by recorded vote, 236 yeas--183 nays
U.S. Senate
S. 17
Medical Device Access and Innovation Protection Act of 2010

Repeals section 1405 of the Health Care and Education Reconciliation Act of 2010 which imposes an excise tax of 2.3 percent on medical device manufacturers and importers beginning in 2013.

Introduced 01/25/2011
State Health Care Choice Act

Allows states to "opt-out" of major mandates included in the ACA including:

  • Expansion of state Medicaid programs,
  • Imposition of an individual mandate,
  • Employer mandates, and
  • Benefits mandates.
Introduced 01/27/2011


 NCSL staff contacts: Joy Johnson Wilson, Federal Affairs Counsel, Health Policy Director at or Rachel B. Morgan RN, BSN, Committee Director, Health at .