Obama offers governors some flexibility on healthcare law

By Noam N. Levey, Washington Bureau

Feb. 28, 2011 12 AM PT

Reporting from Washington — Offering increased flexibility to the nation’s governors, President Obama announced Monday that he supported changing the 2010 healthcare law to allow states to move sooner to develop their own alternative plans to expand coverage.

As long as states meet the goals of the federal law, Obama said, he is willing to allow governors to devise their own strategies as early as 2014 — instead of waiting until 2017, as the law provides.

“If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does, without increasing the deficit, you can implement that plan,” the president told governors gathered at the White House. “And we’ll work with you to do it.”

The law allows states, beginning in 2017, to seek waivers from requirements, including the mandate that all Americans obtain health coverage. To obtain waivers, states must show that their local plans would deliver the same benefits for consumers while not costing more money.

Obama’s offer, which drew swift criticism from several Republican officials, underscored the intense partisan maneuvering over healthcare as the 2012 presidential election cycle begins.

Republican officials nationwide are stepping up their criticism that the law does not give states enough freedom to design their own solutions to the nation’s healthcare crisis.

The GOP controls 29 governorships, up from 23. Most of the states they govern have joined lawsuits challenging the law’s constitutionality.

In response, the Obama administration has begun highlighting its responsiveness to state needs without yielding on the basic elements of the president’s signature domestic policy achievement.

“I am not open to re-fighting the battles of the last two years or undoing the progress that we’ve made,” Obama told the governors.

The law already gives states substantial authority to design their own systems, including setting up and regulating their own insurance markets.

Under the proposal Obama endorsed, which must be approved by Congress, states may design a program that would expand coverage for lower-income people using private health insurance instead of relying heavily on the government Medicaid program, as the healthcare law does.

Or it might allow a state to develop an alternative to the controversial individual insurance mandate that would penalize Americans who don’t get insurance starting in 2014. It might even allow some traditionally liberal states, such as Vermont, to explore single-payer systems for expanding coverage.

“The president is serving it up to the governors on a plate,” said Sen. Ron Wyden (D-Ore.), who co-wrote the waiver proposal with Massachusetts Republican Sen. Scott Brown.

Dr. J. Fred Ralston Jr., president of the American College of Physicians, on Monday expressed hope that the proposal “could provide a basis for much-needed bipartisanship.”

States would not be able to eliminate consumer protections in the law, such as the requirement that insurers offer coverage to people regardless of their health. And they would still have to ensure that insurers offer a minimum set of benefits to be set by the federal government, another key requirement of the law.

It remains unclear how many states would seek the waivers, or if Republicans on Capitol Hill would even back legislation to give states the option. There are no plans to vote on the proposal.

Republican governors are already pressing the administration for permission to cut some people off Medicaid, saying they cannot afford to maintain current coverage levels.

Health and Human Services Secretary Kathleen Sebelius has approved a request from Arizona to pare back its program. The administration is offering help to other states as they look for ways to hold together their budgets and struggle with providing healthcare to millions of unemployed workers.

But Republican officials, who continue to push for a full repeal of the healthcare law, have dismissed many of the overtures and called the president’s new offer a publicity stunt.

“I was disappointed,” Texas Gov. Rick Perry said Monday. “Pretty much all he did was reset the clock on what many of us consider to be a ticking time bomb that is absolutely going to crush our state budgets. The states need more than that.”

In announcing the offer, Obama also tweaked former Massachusetts Gov. Mitt Romney, one of his potential Republican presidential rivals.

“I agree with Mitt Romney, who recently said he’s proud of what he accomplished on healthcare in Massachusetts and supports giving states the power to determine their own healthcare solutions. He’s right,” Obama said.

The Massachusetts law signed by Romney, which is a model for the federal law, is considered one of Romney’s major liabilities as Republicans appeal to conservative activists who will dominate the primary election.

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Paul West and Michael A. Memoli in the Washington bureau contributed to this report.