Health Care Reform and the States

Stateline.org has a lengthy recitation of the steps states have taken to accommodate health care spending at during the cash-strapped 2009 budget session. Surprisingly (until you reflect on heavy federal subsidies), they report that 14 states boosted spending for children's health care. Washington is among the 14. They explain how it works.

States have an incentive to invest more state dollars in CHIP [Children's Health Insurance Program] because they only pay 30 cents of every dollar spent in the program; the federal government picks up the rest. By comparison, states pay an average of 43 cents of every dollar spent on Medicaid, another joint federal-state venture that covers low-income people.

Those federal matches come with consequences, as the Stateline.org story suggests.

Medicaid costs, expected to rise as more Americans lose their jobs and employer-provided health care, are a major financial worry for states. Already struggling to pay for their share of Medicaid – which is every state’s largest or second-largest expenditure, making it a ripe target for cuts – governors recently protested congressional proposals for universal health care that would have vastly expanded the program to cover more uninsured and relied on states eventually to pick up the tab.

Drawing on a report by the Washington Policy Center, I wrote a column on the dramatic growth in Medicaid, suggesting it bodes ill for a major expansion of federal government in health care.

What the folks currently bemoaning health care cutbacks (often tightened eligibility criteria and increases in the patient's responsibility) fail to acknowledge is that the rapid escalation of health care spending, frequently spurred by the promise of federal dollars, guaranteed a reckoning when budgets got tight.

Another look at state health care reform comes from Minnesota Gov. Tim Pawlenty, a possible Republican contender for the presidency in 2012. The Boston Herald noticed Pawlenty's recent criticism of the hailed and (at least in some respects) failed Massachusetts health care reform experiment. (h/t Stateline.org) The News Tribune ran the Washington Post op-ed by Pawlenty cited in the Herald story. 

In addition to an accurate swipe at Massachusetts' inability to control costs, Pawlenty cites Minnesota's positive experience with paying for outcomes and increasing state employees' financial obligation when they choose clinics that are deemed more costly. Then he offers his view of the path to a better national health care debate.

There are many common-sense elements that could form the basis for bipartisan health care reform, including: medical malpractice reform, prohibiting coverage denials based on pre-existing conditions, guaranteeing portability, electronic prescriptions and medical records, streamlining billing codes and practices, price and quality transparency, pay-for-performance measures, one-stop primary-care “medical homes,” chronic disease management initiatives, tax equity for health insurance purchases, increased incentives for health savings accounts, creating the ability to purchase insurance or form risk pools across state lines, and much more.

A couple of other good health care reads:

• Arthur Laffer in today's Wall Street Journal makes a strong case for patient-centered reform.
• And Belmont University business professor Jeff Cornwall tells hard truths to small business owners thinking government-run health care might improve their lot in a sharp, short blog post.