States Should Have Flexibility to Develop Own Health Reform Plans

One issue has generated little discussion during the heated health care reform debate: whether states should have the right to develop their own approaches to universal coverage.

The Health Security for New Mexicans Campaign wants to see language included in the national proposal that gives states flexibility to develop their own approaches to solving rising health care costs and growing numbers of uninsured.

The focus of current health care reform proposals is to create “insurance market exchanges.” These one-stop-shopping insurance exchanges must offer consumers — primarily the uninsured — choices of different insurance products, including some type of public option. A less than robust public option is in the proposal passed by the House of Representatives. The Senate is in the process of negotiating an alternative to the House version.

Unfortunately, the health care reform debate has skirted the issue of whether states can take a different path that reaches the same goals. States always have been laboratories for innovation. Women’s suffrage, civil rights, child labor and minimum-wage laws were developed in the states first and then became federal law. Why shouldn’t states be allowed to continue that role in health care reform?

If a state can develop an approach that is not based on the insurance market exchange model, an approach that still provides comprehensive health coverage for its residents and contains rising health care costs, why shouldn’t it be encouraged to do so?

The recently passed House bill contains no language enabling states to develop anything other than an insurance market exchange. The merged Senate bill now under consideration mandates that by 2014, states must set up an insurance market exchange and experiment with it for three years before requesting any waivers.

Why should states be forced to go through a long, expensive, complex and time-consuming process when they already may be working on approaches more appropriate to their circumstances?

In New Mexico, the Health Security Act offers a different solution from that based on an insurance market exchange. It is a “home-grown” solution that has earned enormous public support — 146 diverse organizations are part of our coalition, and 32 New Mexico counties and municipalities have passed resolutions endorsing it.

The Health Security Act would enable New Mexico to set up its own health care plan that automatically covers most New Mexicans, provides comprehensive benefits and guarantees freedom of choice of doctor even across state lines.

Instead of creating a system of competing insurance plans, each with different provider networks, this proposal would shift the role of private insurance companies to provide supplementary coverage – as they do with the original Medicare program. Any individual, employer or group wishing to purchase additional coverage could do so. A non-governmental, geographically representative citizens’ board would be in charge of the plan.

Two separate studies have concluded that if such a health plan were established in New Mexico, health care costs would be reduced by hundreds of millions, if not billions, of dollars within five years.

Why is this so? Because this approach simplifies a very complex private insurance system with its hundreds of policies, different benefits, co-pays and deductibles, all of which affect administrative overhead of doctors, hospitals and clinics – and which, in turn, negatively affect health care costs.

In a state such as ours, with a small population, it makes economic sense for most residents to be covered under one health risk pool.

Coalitions in other states — California, Minnesota, New York, Pennsylvania, Washington and Oregon, to name a few — have been working on proposals that are not based on an insurance market exchange and are adapted to the particular needs of those states.

Acknowledging these developments, the National Conference of State Legislators recently passed a resolution containing a provision asking that states be allowed to create solutions that go beyond any federal requirements. New Mexico was counted as one of the resolution’s supporters.

In addition, New Mexico State Sen. Dede Feldman and others from the House and Senate sent a letter to our five-member congressional delegation, which included a request that states be given flexibility to develop their own comprehensive plans.

Health care reform should clearly encourage state experimentation. Aside from the need for state flexibility language in the national legislation, the Health Security for New Mexican Campaign believes states deciding to develop their own health plans also should have the right to access the same federal dollars as those states choosing to set up their own insurance market exchanges.

At this critical juncture, Congress needs to tackle this issue.

Bartlett and Aguilar are the chair and vice-chair, respectively, of the Health Security for New Mexicans Campaign.

14 replies »

  1. An important milestone has been made in Pennsylvania. PA Democrats have unanimously endorsed Single-Payer healthcare reform. Republicans and Democrats in the state Senate and House are behind it and Governor Rendell has promised to sign it if and when it comes to his desk. This is the type of program that our country should have been working for but hasn’t, publicly funded, privately delivered health care.

  2. Also, why can different states not learn more Masscussets and implement the successfully ideas or concepts at Federal level.

  3. I think giving stats the flexibility to devleop their own health care reform plans have its owns pros and cons.
    1.At State level there is more control on state budgetary priorities.
    2. State Government can develop programs based on demographics, diversity, etc. depending on state’s population need.
    1. Lack of standardization and thus maintainance becomes difficult.
    2. Why would we want 50 state governments to spend time, when this is a federal level priority and should be dealt at federal government level.
    What every happens, I think health care reform in important and inevitable.

  4. Interesting article and comments. I’m glad to see that Indiana seems to have found a very good solution for health care. There is a report just out by CIGNA that shows empirical data regarding CDHP’s. It showed increased levels of care and reduced health care costs. I’ve been using a book called “Bend the Health Care Trend” to better understand what CDHP’s are about and how they work. They seem to be the future of health care.

  5. Hello
    I like your point about own health reform plans for states.I agree with your points about it in this post.I think this would be very helpful in every way.Thank you very much for such good post.

  6. States should have some wiggle room. Just like each individual is different, states have their own needs and special situations. We are spending a lot on health care now. I understand that a public option is very expensive, but each state knows their specific needed reforms better than the feds.
    It is clear though that if we do not notify the health care industry that they are not providing for the needs of the people they have us to answer to. Government is our only tool to speak out and we have to make sure the health care industry does not “do what they want.”
    The telephone industry was a government mandated monopoly before the deregulation of that industry and you can judge for yourself if the industry has changed or improved since then. The health care industry has not improved as a result of lack of government attention. Why keep doing the same thing if it doesn’t work?
    The health care industry is a strongly independent business that might do well to include some aspect of community involvement. The “hands off” approach has not solved our problems. Most of us complain about rejections, lack of coverage, pre-existing conditions situations, high prices and many other conditions that are prevalent in our current system.
    All I know is that if we do not do something, nothing will happen. We will continue to get the raw end of the deal.
    Whether you are Republican or Democrat you know this issue is not a government issue. It is a personal issue.

  7. “Look no farther than Indiana for an example of intelligent, fiscally responsible reform:”
    Really? So how much did this “reform” lower system costs? Any idiot can buy a high deductible heath plan to lower their premium, but it just transfers risk from the insurance comnpany to the insured. Rearranging the Titanic financial deck chairs has nothing to do with controlling costs.

  8. Yikes, just what we need fifty different solutions composed and managed by the politicians of fifty different states. The states and their mandates and their various insurance laws and regulations are part of the problem not the solution. Take a look at how the states manage the health benefits for their own employees and you will see overly generous plans, mismanagement of funds or no funding and out of control costs driven in large part by public unions. I have evaluated the health benefits for state workers for three different governors in the state where I live and I am now a state employees health benefits commissioner. Believe me you don’t want the states running anything.
    But I can tell you why we can’t seem to solve the health care problem:

  9. Look no farther than Indiana for an example of intelligent, fiscally responsible reform:
    “Governor Daniels, in his first term, won bipartisan support for a program known as Healthy Indiana, which provides health insurance for Hoosiers who aren’t poor enough to qualify for Medicaid but earn too little to afford buying coverage for themselves. So far, 50,000 residents have signed up for the program, under which the state contributes up to $1,100 each year to each enrollee’s individual health savings account. Participants also contribute according to their income, and when the account is depleted, a catastrophic insurance plan kicks in to cover any additional expenses. It’s all paid for with a portion of the state’s Medicaid funds, along with an increase in the cigarette tax that Daniels pushed through a reluctant legislature.
    In fact, Daniels is such a believer in health savings accounts and consumer-directed health plans that he made sure one was offered to state employees. So far, he reports, 70 percent of state workers have signed up — including himself — saving millions of dollars each year for themselves and taxpayers.”

  10. “My wife and I have found a solution that seems to work for us…Health care beyond America’s borders.”
    Yup, I’ve also decided to abandon the U.S. health insurance system – it’s too broke for the corporate funded politicians to know anything about how to fix it – even if they cared. I cancelled my insurance years ago and have since banked the premiums. I can go to Thailand or India, even Canada, for my healthcare and get a vacation thrown in as well. Looking at the present system from the outside is a little like observing the inmates and staff of an insane asylum through a glass cage.

  11. If the recent debate on health care has taught us anything…it’s that the consumer is not in the driver’s seat on this.
    Drug Companies, Insurance companies, Hospitals, and doctors…the ones that set the pricing for medical care…all have their high paid lobbyist prowling the halls of congress, dishing promises of golf outings, campaign contributions, future employment and other goodies to the hungry members of congress.
    As long as money is being waved in front of our elected representatives…don’t expect them to pay much attention to voters. After all even elections are won by slick ads that cost money…so follow the money , right?
    My wife and I have found a solution that seems to work for us…
    Health care beyond America’s borders.
    With medical costs a fraction of what the health care industry charges us in the US, we’ve found excellent affordable health care in Thailand, of all places..even without insurance.
    To woo the cash strapped and weary American uninsured and underinsured, The Thais (and Indians, Malaysian, and Singaporeans) have built excellent private hospital system that provide top notch care for a fraction of the costs in the US.
    These hospitals are accredited and follow the same standards as in the US. In fact they outperform US hospitals in service and care.
    Yet you can expect to pay 1/10th to 1/20th what it cost for the same procedure in the US.
    Heart Bypass…US $150,000.
    Hear Bypass..Thailand $15,000
    My minor throat surgery for disphagia…US $2500
    Thailand $100.
    (That was 1 year ago today and I am back in the US… very much alive.)
    In fact in Thailand most people have no use for health insurance. Prices are so affordable that Thais would rather save the insurance premiums and bank it.
    While we in the US get hit twice….once by the insurance company…and the second time by the medical profession. So we pay twice for health care.
    And don’t think that you are safe with insurance in America. Check your insurance policy for hidden costs like deductibles, copays and insurance caps and you will be shocked to find that health care coverage is VERY LIMITED
    The US health care system is a train wreck hurtling down the mountainside with NO hope that anything…even the health care proposals in Congress can fix.
    As long as the people who stand to gain the most profit from health care are calling the shots…people who rely on the US health care system are SCREWED.
    And here’s the rub. People would like you to believe that the American health care system is a free market system driven by competition.
    Nothing could be further from the truth.
    A few giants control the insurance industry and a few medical associations strive to keep competition from putting downward pressure on compensation.
    Like… when was the last time you saw a hospital post it’s rates like a restaurant posts it’s dinner prices???
    When was the last time you saw a physician run a TV advertisement offering lower cost medical care like every hotel, car dealer, grocery chain, clothing store, bicycle shop, and fast food outlet in the United States?
    So while everyone in the United States seems so wrapped up in tinkering around the edges of heathcare with tort reform, purchasing insurance across state lines, living healthier, public options, providing insurance for everyone…..the real culprit is staring us in the face: the people who make a living off of health care.

  12. I totally agree with your column. The Federal Government is overstepping on the healthcare issue. The Feds should just make law changes to end the practices of the insurance companies that deny health insurance and provide a subsidy to help the disadvantaged purchase health insurance. The states can develop mechanisms to control costs. For example some may use a state Medical PSC to control costs. This is how a state Medical PSC could work:
    1. PSC’s will determine the basic cost of each Medical Charge Code used by providers to bill insurance. If the current medical charge code manual is not specific enough for some procedures, new medical charge codes can be added to help narrow these costs. Then these determined costs will be adjusted for inflation annually until reviewed again and a new cost basis set. In addition, the PSC will calculate a market adjusted mark-up percent for fair and reasonable provider profits for the coming year. The provider mark-up percentage will be determined by a new market ‘check and balance ‘ mechanism unavailable until now. More on this later.
    2. Because some Zip Codes have inherently higher costs than rural areas, the co-pays may vary by Zip Codes to offset these cost differentials so the Medical Charge Code cost basis can be leveled across the state. These office visit co-pays would be standard across all insurers in a Zip Code and paid by the patient. These co-pays should not deter patients from seeing their doctor.
    3. The PSC eliminates provider networks and provider service contracts. Thus, competition between providers is increased because insurance no longer delivers a pool of patients. Patients can go anywhere in the state and use their insurance because all insurers pay the same for identical services as set by the PSC.
    4. Insurers now compete solely on the price of their policies because the doctors/hospitals are no longer tied to their networks. All insurance is accepted by the doctors/hospitals because they all pay the same PSC rates.
    5. The elected State Insurance Commissioner may increase insurer competition quickly, if needed, by soliciting outside insurers to come into the state and compete. There are no network or provider service contract requirements.
    6. The PSC can greatly reduce the over prescribing of medical services by the way the provider mark-up (profit) percentage is determined. It can tie the profitability of the providers to the profitability of the insurers. If the profitability of the insurers decline because of the overuse of medical services, then the mark-up percentage for the providers is reduced on every Medical Charge Code. The providers will then think twice about how they prescribe healthcare because it now directly affects their profits. This one feature alone will cut healthcare costs significantly.
    7. Tying the provider mark-up to the net profit margins that private insurers earn in the state creates a healthy ‘check and balance ‘ mechanism. If provider costs go up, profits of both go down. If profits go up above what the average state business earns, the State Insurance Commissioner can intervene and license new outside insurers to compete and lower premiums, if necessary. But both the insurers and providers have a right to earn a reasonable profit, so the elected State Insurance Commissioner will only increase insurer competition when it becomes necessary to reduce average insurer profits for the benefit of the public when these profits noticeably exceed what other state businesses earn.
    Note: If insurer profits surge due to the more efficient delivery of healthcare, then the insurer can invoke a mechanism to reduce gross profits with offsetting insurance policy premium reductions. This results in a lower net profit for the insurers which the PSC will use to determine the provider mark-up percentage for the coming year. Thus by lowering premiums, the insurer gains a direct cost reduction for the coming year from a lower provider mark-up percentage. This allows the insurers and providers to earn fair and reasonable profits and policyholders to pay lower premiums. If the insurer refuses to lower excessive gross profits, then the State Insurance Commissioner may intervene and policyholders may react by dropping the insurer for a new one during the end-of -year sign-up period while retaining their same doctors/hospitals.
    8. The PSC does not make healthcare decisions and does not affect the doctor-patient relationship. The full time job of the state Medical PSC is determining the cost of Medical Charge Codes. The PSC will standardize these codes to make filing claims easier for doctors/hospitals.
    The state Medical PSC concept has amazing potential. Not only does it break the bond between doctors/hospitals and insurance companies, but it relies on a ‘check and balance ‘ system to spread the wealth among providers, insurers and policyholders. Without a doubt, this approach has never been seen before and will position the American Healthcare system to control costs as healthcare is expanded by Washington.

  13. Government inflexibility and Healthcare reform
    At the peak of the national debate on healthcare reform a central fear of ordinary people and healthcare providers remain unaddressed and rarely discussed. Would bigger government role in healthcare make our government even more inflexible in correcting system failures that impact patient care?
    I submit that the government’s past conduct in fixing existing issues is the barometer for things to come. Issues like the VA’s prior authorization for PCP visits in nursing homes (In some nursing home contracts the VA mandates that they pre-approve most, if not all, visits by the patients’ own PCP before they happen) that practically make veterans second class patients.
    Another current unresolved issue is the DEA requirement that nursing home patients not receive medications ordered by doctors unless there is a hard script given to the nursing home, a process that has caused delays in patient care since its enforcement almost a year ago. All efforts by healthcare organizations such as the AMA and AMDA have been fruitless on this issue as no one in government wants to be the one responsible for changing the rules, even if it makes sense to do so.
    We should pause and consider the root causes for this apparent trend of government inability to respond to concerns or to correct rules that are proven to endanger the well-being of patients. 
    Letters to government, including our representatives, are responded to with generic responses, and the big government systems remain unimpressed by the professionals’ protest of government rules that hamper their effort to provide basic care for their patients.
    Nursing home care is out of site and out of mind for most in healthcare and in government, but there is a growing movement to get attention to a variety of concerns that are the creation of the government’s own, often obsolete, rules. 
    Going back to basics in trying to get the attention of our giant, unyielding, government, a petition was published 3 weeks and is so far signed by hundreds of doctors and other healthcare professionals protesting a specific government action in nursing homes. This petition was sent to many government officials in the executive and legislative branches and we await their response. 
    Link: http://www.gopetition.com/online/32305.html
    Happy holidays.
    Jabbar Fazeli, MD

  14. States should not be bowing to the feds for healthcare reform. States rights should preclude massive revenue transfers from state to state.