State Health Care Funds Drained by New Federal Health Care Law

According to a Kaiser Health News report:

“The new health care law could shift billions of dollars from cash-strapped states to the federal government by changing the way Medicaid prescription drug rebates are treated, according to state and industry officials and an examination of Medicaid spending data.”

Democrats included a provision in the health care legislation that would require greater discounts from Medicaid drug providers. The law increases the minimum rebates that drug firms must offer Medicaid programs from 15.1 percent to 23.1 percent for brand name medications, and these rebates would also increase substantially for generics.

Where as before rebates were divided evenly between the federal government and the states, the law says the federal government will now get 100 percent of the increased rebate funding.

“State officials worry that since states already were getting rebates well above the previously required 15 percent, the change will cost nearly all of them millions of dollars a year. Based on 2009 Medicaid data, states received average rebates of 38.5 percent. ??Officials “are very unhappy that their money is being taken away at a time when the states cannot afford this,” said Ann Kohler, the director of the National Association of State Medicaid Directors.”

Although perhaps too late, many are starting to realize the severe costs and consequences of the government’s intrusion into the health care industry.