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John Kerry’s ObamaCare Boondoggle

June 21, 2013


By Kimberley A. Strassel

A bipartisan backlash is growing against another section of President Obama’s health-care law. The president can blame this latest embarrassment on none other than Secretary of State John Kerry.

Everyone remember the origins of the so-called Affordable Care Act? The Cornhusker Kickback, the Louisiana Purchase, Gator-Aid, and other buyoffs for the votes of key Senate Democrats?

Three years on, yet another sweetheart deal has declared itself, this one inserted by the then-senator for Massachusetts. In Congress, it’s becoming known as the Bay State Boondoggle.

At issue are the dollars that Medicare pays to hospitals for the wages of doctors and staff. Before the new health law, states were each allocated a pot of money to divvy among their hospitals. The states are required to follow rules in handing out the funds, in particular a requirement that state urban hospitals must be reimbursed for wages at least at the levels of state rural hospitals.

Enter Mr. Kerry, who slipped an opaque provision into the Obama health law to require that Medicare wage reimbursements now come from a national pool of money, rather than state allocations. The Kerry kickback didn’t get much notice, since it was cloaked in technicality and never specifically mentioned Massachusetts. But the senator knew exactly what he was doing.

You see, “rural” hospitals in Massachusetts are a class all their own. The Bay State has only one, a tiny facility on the tony playground of the superrich—Nantucket. Nantucket College Hospital’s relatively high wages set the floor for what all 81 of the state’s urban hospitals must also be paid. And since these dramatically inflated Massachusetts wages are now getting sucked out of a national pool, there’s little left for the rest of America. Clever Mr. Kerry.

The change has allowed Massachusetts to raise its Medicare payout by $257 million, forcing cuts to hospitals in 40 other states. The National Rural Health Association and 20 state hospital associations in January sent a panicked letter to President Obama, noting that the Massachusetts manipulation of the program would hand that state $3.5 billion over the next 10 years at the expense of Medicare beneficiaries everywhere. They quoted Mr. Obama’s former head of the Centers for Medicare and Medicaid Services, Donald Berwick, admitting that “What Massachusetts gets comes from everybody else.”

Mr. Kerry’s Yankee ingenuity isn’t going down well with . . . most of Congress. Even representatives from the handful of states (nine) that have benefited along with Massachusetts from the new formula realize that mergers in the hospital arena, and changing “rural” designations, mean they could be hit in the future.

Missouri Democratic Sen. Claire McCaskill, an ardent supporter of Mr. Obama’s health law, teamed up earlier this year with Oklahoma Republican Sen. Tom Coburn to introduce legislation to kill the Bay State fleecing. Sixty-eight senators voted for the amendment as part of the (nonbinding) Senate budget resolution in March. That number included 23 Democrats, among them powerhouses of the liberal caucus: New York’s Chuck Schumer and Kirsten Gillibrand, Wisconsin’s Tammy Baldwin, and Minnesota’s Al Franken.

Ms. McCaskill (whose state will lose $15 million in hospital payments this year) is now demanding a binding vote, and on Monday she sent out another letter ginning up names to add to the 23 bipartisan co-sponsors she and Mr. Coburn have for stand-alone legislation. Texas Republican Kevin Brady recently introduced a similar repeal bill in the House, where it already has 36 co-sponsors.

House Chief Deputy Whip Peter Roskam, a Republican co-sponsor, notes that his (and President Obama’s) home state of Illinois has already lost $60 million. “It’s a zero sum game that reinforces all of our worst fears about how the health-care law was drafted. Backroom negotiations, secret deals, and now this long con on Medicare reimbursement rates that is already doing real damage to Illinois hospitals,” he tells me.

The episode is also heaping embarrassment on the American Hospital Association, a cheerleader for the health law that is now robbing most of its members blind. Rather than endorse current boondoggle-repeal efforts—which would require it to publicly admit its mistake—the AHA is hiding behind calls for more “comprehensive reform” of the wage-payment system.

That dodge isn’t likely to satisfy its cash-strapped members for long. Indeed, the fury from state hospitals is growing daily, heaping enormous pressure on members to join this latest cleanup of the president’s rushed law.

If anything, this revolt is illuminating a notable trend. Whether it’s the 2011 repeal of the health law’s tax-reporting requirement, or the bipartisan push to repeal its medical-device tax, or this Bay State fix, the political template has looked the same. Vulnerable Democrats, under pressure from home-state constituencies, want to look willing to “fix” or “improve” parts of a wildly unpopular health law that they supported. This has provided Republicans with the opportunity to recruit them for bipartisan votes to repeal parts of the act.

That template is worth remembering as the law flails ahead into a no man’s land of soaring premiums, rickety health exchanges and expensive mandates and taxes. A lot of home-state constituencies are going to be screaming. And a lot of members are going to be looking for cover.