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States Model for Federal Health Care Reform

States Model for Federal Health Care Reform

By Kyle Trygstad - August 22, 2009

Facing budget deficits and Medicaid costs already on the rise along with unemployment, governors around the country are wary of what federal health care reform could mean for the economic welfare of states. As Congress works to put forth and approve a bill, governors are hoping the legislative body looks to the states for models of success.

At the National Governors Association gathering in Biloxi, Miss., last month, governors sent a letter to the chairman and ranking member of the Senate Finance Committee.

"Governors welcome the opportunity to share and expand upon the innovative reforms we have instituted in our states to expand coverage, reduce cost and improve the quality of health care," the governors wrote. "These reforms should inform congressional efforts and must be preserved and encouraged as part of any national reform."

So far, though, only about a third of states have either enacted or are moving toward comprehensive health care reform. According to the Kaiser Family Foundation, a non-partisan health care think tank, as of last month three states have enacted and begun to implement a health care reform plan that aims to cover nearly all of their residents.

These states are all located in New England: Maine, Massachusetts and Vermont. All three ranked in the top 10 of the Commonwealth Fund's health system performance scorecard, which looks at "access, quality, avoidable hospital use and costs, equity, and healthy lives," according to the report.

Meanwhile, 14 states have proposed or are moving toward comprehensive health care reform, according to Kaiser: California, Oregon, Washington, New Mexico, Colorado, Kansas, Minnesota, Iowa, Illinois, Wisconsin, Pennsylvania, New York, New Jersey and Connecticut. These states have had varying degrees of success in their quest for comprehensive reform.

The common threads in each state's reform efforts are expanding health care to as many residents as possible, while improving quality and lowering costs.

Not included in Kaiser's list is Tennessee, whose TennCare system spends $7 billion annually to cover 1.2 million low-income children, pregnant women and disabled. TennCare's budget had ballooned to $8.5 billion five years ago before being scaled back. As the Wall Street Journal noted this week, the state is often cited by opponents of the Democrats' federal health care reform plan as an example of unsustainable costs.

Maine -- which named its new health care system after its state motto, the Latin word for "I Lead" -- enacted Dirigo Health in 2003 with the goal of providing affordable health care to every resident by this year. According to the Maine Superintendent of Insurance, which by law is required to calculate the savings of the plan each year, Dirigo Health saved the state a total of nearly $160 million in its first four years.

Paying for the plan, which has covered almost 30,000 people, has been somewhat controversial, however. An initiative signed by Governor John Baldacci (D) last year placed a new tax on beer, wine and soda in an effort to provide more money to and expand Dirigo. However, 64 percent voted in November to repeal the new tax, leaving the state to rely on volatile revenue from taxing insurers.

Vermont's Catamount Health, first implemented in 2007, provides a low-cost health care plan to individuals without access to employer-sponsored insurance. Other Vermont initiatives include assistance paying premiums for low income employees with insurance, charging businesses fees for each employee not offered insurance, and "Blueprint for Health," which focuses on support and prevention for chronic conditions.

Vermont's reforms are paid for by insurers, hospitals and a cigarette tax hike. In May, Rep. Peter Welch (D-Vt.) called his state's health care system a "model for the nation," and promised to take its reform ideas to Congress. Upon returning to Vermont for the August recess, Welch said the House bill includes cost cutting initiatives found in the state's plan.

The Massachusetts plan, signed into law in 2006 by then-Gov. Mitt Romney, includes an individual mandate requiring every state resident to purchase health care by the end of 2007. It also consists of an employer mandate, subsidized coverage for moderate and lower income levels, and something called the Commonwealth Connector -- an independent state agency that provides an even playing field marketplace for insurance plans, enabling individuals to more easily compare which plan works best for them.

"Massachusetts has probably gone the farthest of the states in implementing health care reform," said Jennifer Tolbert, a principal policy analyst at the Kaiser Family Foundation. Tolbert also said that the health reform proposals that have come out of the three House committees and the Senate Health, Education, Labor and Pensions committee "reflect" the Massachusetts plan, which "has served as a bit of a roadmap for how to move forward at the national level."

Cost has been a hurdle for the Bay State as well, though. While the Massachusetts Taxpayers Foundation, a nonpartisan watchdog group, argues that reform has had only a "marginal impact" on state spending, Gov. Deval Patrick and state legislators have enacted new revenue-inducing measures to offset increased spending and a down economy. Still, the plan is popular -- a survey by the Harvard School of Public Health last year found 69 percent support it.

In a Washington Post editorial this month, Minnesota Gov. Tim Pawlenty cited his state as a model for a federal plan and criticized Massachusetts and Romney, his potential GOP primary opponent in the 2012 presidential race.

"While the Massachusetts plan has reduced the number of uninsured people, costs have been dramatically higher than expected. The result? Increased taxes and fees," Pawlenty wrote.

Pawlenty also argued that the Democrats' plan in Congress focuses solely on access, and ignores the two other key metrics, quality and cost. However, health care experts, including Brookings' Mark McClellan, wrote a New York Times op-ed last week that contradicted Pawlenty's assessment of the Democratic reform plan. They also indicated that community health care programs, such as at the Mayo Clinic, should serve as models for a federal plan.

"There is a lot of troubling rhetoric being thrown around in the health care debate," they wrote. "We must instead look at the communities that are already redesigning American health care for the better, and pursue ways for the nation to follow their lead."

Polls released this month show that a majority of Americans believe the health care system needs reform, though there is no consensus on how to get there. A recent Marist College poll found that two-thirds of adults believe major change is needed, while a majority is pessimistic about what impact reform will have. A Kaiser survey released Thursday found that Americans favor by a narrow margin moving forward now with health care reform, though only about a third think they will personally be better off.

"The August health reform wars about hot button issues have definitely made the public more anxious but they have not caused public support to unravel," said Drew Altman, president and CEO of Kaiser. "When the Congress returns the debate will refocus on core issues such as how to pay for health reform and meet the public's expectations for help with their health insurance problems."

Kyle Trygstad is a Washington correspondent for RealClearPolitics. Email him at: kyle@realclearpolitics.com. Follow him on Twitter @KyleTrygstad.

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