Largest number of state coverage expansions in 15 years: report
SAN FRANCISCO (MarketWatch) -- Emboldened by ambitious reforms in Massachusetts and Vermont and spurred by rising voter anxiety, many states are expanding health coverage for their residents in what is the largest effort in 15 years.
Thirty-nine states have passed laws broadening coverage in some form since Massachusetts began its landmark comprehensive health-care reform in 2006, according to a report published Tuesday in the journal Health Affairs.
That's the largest surge in state coverage expansion activity since the period between 1988 and 1993, which helped create the political will that led to President Clinton's health plan, which ultimately failed, and allowed a number of incremental changes in federal laws, said John McDonough, the study's lead author and executive director of Health Care for All, a Massachusetts consumer-health advocacy group. Still, the outlook for state health reform remains unclear.
"Over the past two years, there's been a surprisingly significant amount of activity by states in enacting new laws to expand affordable coverage in a variety of different ways, public and private," McDonough said. Aside from several Northeastern states, "no other state has done comprehensive reform since the spring of '06. At the same time, a lot of states have done a lot of incremental activity."
In the absence of federal action, states have been functioning as laboratories for new ideas, despite a slowing national economy and uncertainty over how the next president will handle health care. Among the developments:
* Twenty-six states have expanded coverage for children, mostly through changes in the State Children's Health Insurance Program (SCHIP), making it the most popular kind of reform, the study found
* Eighteen states have broadened programs that target uninsured adults
* Fifteen states have enacted insurance market reforms, with many allowing children to remain on their parents' plans for longer -- often up to age 25
* Fifteen states are trying to enact comprehensive health-care reform or have done so
* Three states have enacted mandates requiring employers to offer their workers coverage or individuals to purchase it
In 2006, lawmakers, businesses and consumer groups struck a compromise in Massachusetts under which responsibility for health coverage financing was shared among employers, government and individuals. The employer mandate ensures employers offer coverage to their workers or pay into a fund, while individuals have to purchase coverage or face tax penalties. Those who can't afford it can buy a subsidized plan through a health-insurance exchange called the Connector, which also sets minimum coverage standards.
Vermont's reform began soon after the Bay State's. It also created a sliding-scale, subsidized insurance program called Green Mountain Health for adults earning up to 300% of the federal poverty limit. Unlike Massachusetts, Vermont made chronic disease management a central feature of its changes. Maine also enacted health-care reform in 2003, though it offers a single insurer that provides subsidized coverage instead of a number of competing plans and doesn't involve an individual mandate.
It's critical to celebrate states' achievements while keeping them in perspective, said Alan Weil, executive director of the National Academy for State Health Policy, a nonprofit group in Washington.
"This is very exciting stuff, but it is very hard," he said, noting that states often face "higher hopes than reality."
Many governors, state lawmakers and special commissions want to develop solutions, Weil said. "But the number that has made it to the finish line or the intermediate finish line is pretty modest."
California is the most recent example of dogged effort and dashed hopes. On Monday, the state's Senate Health Committee rejected a $14.9 billion comprehensive reform plan on concerns it was financially unsustainable in the face of a $14.5 billion budget shortfall.
The product of months of negotiation, chiefly between Republican Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez, a Democrat, the plan contained many of the same elements proposed by the leading Democratic presidential candidates. Had the proposal passed, it would have been placed on the November ballot for California voters to approve the financing since state regulations otherwise require a two-thirds majority in the legislature, an outcome that appeared out of reach.
"There are millions of people who aren't going to get coverage as a result of this, and millions who are going to be less secure in the coverage they do have," said Anthony Wright, executive director of Health Access California, a consumer group in Sacramento. "It's not good news for those who have 'preexisting conditions' and are at risk of being denied by insurance companies."
The Golden State's experience may be a harbinger of things to come on the national stage, he said. "We have many of the factors that make this difficult on the national level, in terms of size, scale and diversity of the population in terms of not only their ideology but their ground experience with health care."
In a statement released Monday, Schwarzenegger said he wouldn't give up. "One setback is just that -- a setback. I still believe comprehensive health-care reform is needed in California."
What it takes
What makes this round of state activity different from the last big wave is the focus on costs and quality in addition to coverage, McDonough said.
"State policymakers are deliberately...connecting access with cost issues as well. Vermont would be the leading example but not the only example," he said. "The round in '88 to '93 was really focused heavily on just access, expanding coverage."
The idea of value has created a middle ground this time between Democrats who focus on access and Republicans who focus on costs, Weil said.
"The notion of trying to increase value to make the system more efficient is really sort of a bridge," he said. "That has created some political breathing room that has never existed before."
Of course, some states' progress is tempered by previous cuts to programs that expanded coverage. Tennessee, Missouri and Texas all had incremental reforms in the last three years, McDonough said.
"Texas cut over 200,000 kids off their SCHIP program in 2002," he said. "Now they have let a large proportion of those kids back on."
While the Massachusetts reform has succeeded in cutting its number of uninsured by more than half, it's also brought some surprises. More people than anticipated qualified for state-supported coverage, which resulted in budget shocks, McDonough said. And employers realized they have a stake not only in the employer mandate but the individual mandate as well because the state requires insurers to cover prescription drugs, he said.
A stumbling economy so far hasn't deterred states from trying to expand health coverage, Weil said. "It hasn't directly affected the appetite for looking at health care partly because the size of the problem is on the rise. Even if your options are getting harder because of the economy, the demand you're hearing from your constituents to do something is getting louder."
Sometimes state health reform is triggered by attention-grabbing disruptions such as a hospital closure, dangerously overcrowded emergency rooms or a large insurer that pulls out of a market, he said.
But what often keeps reforms from being enacted is a lack of compromise among stakeholders who fixate on only one kind of remedy, McDonough said.
Weil agreed. "It may take a crisis to convince people the status quo shouldn't be their second choice."
In the near term, states may calibrate their health-reform efforts to the outcome of November's presidential election, McDonough said.
"If there is a big national health-reform debate beginning next January, then state reform will come to a halt right away because people in the states will say 'Let's not do anything until we see what the Feds cook up,'" he said. "If there is no health-reform debate because of what happens in November, then we can expect a vigorous rebound of state experimentation beginning next year again."