With roughly 46 million Americans uninsured, increasing healthcare costs, and a new Democratic Congress with an eye on healthcare, state-based universal coverage proposals are on many states’ legislative agendas for 2007. Governors from California and Pennsylvania have unveiled proposals to expand coverage in their states, while Massachusetts, Vermont, and Maine are in the process of implementing coverage plans.
The move toward state-based universal coverage may have been prompted by the failed national effort in the 1990s; state coverage expansions offer solutions that an overhaul of the entire U.S. system could not. State policymakers can design individual programs that fit the unique characteristics of their populations and their healthcare delivery systems. They can structure financing mechanisms to meet the needs of individuals, employers, providers, and insurers in their state.
Structure & Financing of State Initiatives
State Coverage Initiatives, a national program of the Robert Wood Johnson Foundation, recently published its annual State of the States. This year’s edition includes a review of key features of state-based coverage reforms.1 The structure and financing of the reforms that are currently in place, and in development, are in many ways as unique as the states themselves. Medicaid expansions, premium subsidies, tax incentives, employer and individual mandates, and offset payments are some of the mechanisms that states are using to design universal coverage plans.
For example, under the new initiative in Massachusetts, “Commonwealth Care,” residents must enroll in a health plan by July 1, 2007 or risk loss of their personal tax exemption. The state’s employers share the healthcare burden with its employees by making a “fair and reasonable” contribution toward insurance coverage. Overall financing of the initiative will come from federal matching funds, general fund revenues from the state, and individual and employer contributions.2
Vermont’s “Catamount Health,” with its goal of covering 96 percent of state residents by 2010, will use a combination of financing mechanisms, including a tobacco-product tax, federal funds based on a Medicaid waiver, enrollee premiums, and an employer assessment.3
Maine’s “Dirigo Health,” which has led the way in state-based coverage reforms, is unique in its voluntary nature. Maine’s residents, who have no access to large employer-based health insurance, are now able to obtain coverage under DirigoChoice, a subsidized plan offered by the state’s largest carrier, Anthem. In a project jointly funded by the Robert Wood Johnson Foundation’s HCFO program and The Commonwealth Fund, James Verdier, J.D. and Debra Lipson of Mathematica Policy Research, Inc. are examining DirigoChoice. The research team is not only assessing the program’s potential ability to be replicated in other states, but also examining which features are attractive to small businesses and the satisfaction of enrolled employers with the program.4
Benefits and Challenges
Efforts by individual states to develop universal coverage programs offer one solution to the intractable problem of the uninsured. Many of these efforts are predicated on projected cost savings from reducing the need for costly catastrophic services or uncompensated care.
Despite the obvious benefits of state-based health insurance, implementing these plans has its challenges. A large influx of previously uninsured individuals into the healthcare system could burden the system and lead to reduced access to care and diminished quality in the short term. Moreover, many may find that the financial demands are prohibitive. For example, while some employers in Massachusetts are hopeful that that the new insurance law will help reduce premiums, other employers are concerned that they may not be able to financially support the influx of new enrollees in the heath plans they offer.5 In addition, individuals who are currently insured may have to purchase additional coverage to meet Massachusetts’ minimum standards.6
Even since the launch of Dirigo Health, Maine has continued to explore long-term funding and cost containment methods. On January 29, 2007, the Blue Ribbon Commission on Dirigo Health Reform delivered a report to the governor with recommendations on how to financially strengthen the plan. The Commission proposed increased taxes on cigarettes, alcohol and snacks, as well as the development of employer or individual mandates.7
California Governor Schwarzenegger is facing challenges even as his proposed plan to cover the uninsured is in its development phase. One component of the plan’s financing, fees levied on employers, hospitals and physicians, has raised concerns by those constituencies.8 Moreover, California’s population of 6.5 million, including a large immigrant population, presents a unique challenge in that state.
Future Policy Developments
The National Conference of State Legislatures reports that, “Health reform will remain a priority this year. Several states—including Illinois, Colorado, Louisiana, Maine, Maryland, New Mexico and Washington—have commissions charged with creating recommendations for expanding coverage and reforming health care. Political leadership in other states including California, Colorado, Florida, Indiana, Ohio, Oregon, Minnesota, New Jersey and Wisconsin are poised to act in 2007.”9
Time will tell whether the benefits of state-based universal coverage will outweigh the challenges. Momentum from states’ efforts could also lead to a national plan providing health insurance for all or, as recently proposed by the Administration, a joint state/federal effort, the President’s “Affordable Choices Initiative.”10 Congress is also exploring legislation to provide federal support for state coverage initiatives.11 Regardless of the structure, affordability and sustainability will be the key drivers behind any viable plan to make health care coverage a staple of every American’s life.
Other Related HCFO Research:
Evaluation of Maine's Dirigo Health Reform
James M. Verdier, Ph.D., Mathematica Policy Research, Inc.
Monitoring the Early Experience with Federal Health Insurance Tax Credits
Karen Pollitz, M.P.P., Georgetown University
Sustaining Individual Health Insurance Markets Under Community Rating and Open Enrollment
Joel Cantor, Sc.D., Rutgers, The State University of New Jersey
Expansion of the Evaluation of the Effects of New Jersey's Individual Health Coverage and Access Programs
Evaluation of Reforms of the Market for Individual Health Insurance Coverage in New Jersey
Katherine Swartz, Ph.D., Harvard School of Public Health
The Dynamics of Health Insurance Coverage: 1996 to 2000
Studies of the Working Uninsured, Their Dependents and Insurance Reform on Their Behalf
Linda Blumberg, Ph.D., The Urban Institute
Patterns of Individual Coverage
Andrew F. Coburn, Ph.D., University of Southern Maine
The Fishing Partnership Health Plan: A Model for Reducing the Numbers of the Working Uninsured
Stephen M. Davidson, Ph.D., Boston University
Evaluation of State Initiatives to Expand Health Insurance Among Small Businesses
Gail A. Jensen, Ph.D., Wayne State University, Institute of Gerontology
Uninsured in America: Individual and Community Factors
Barry Saver, M.D., University of Washington
1 http://statecoverage.net/pdf/StateofStates2007.pdf
2 Ibid.
3 Ibid.
4 http://www.hcfo.net/grantees/grant.asp?GrantNo=58012&searching=Yes
5 “Massachusetts Law Threatens Bottom Line of Not-For-Profit Health Providers,” Kaiser Daily Health Policy Report, January 18, 2007. See also, AP/Long Island Newsday, “Many Businesses Fear Health Care Costs, January 20, 2007. http://www.newsday.com/business/nationworld/wire/sns-ap-health-care-business,0,6108052.story
6 The Boston Globe, “200,000 May Need to Get More Insurance,” January 30, 2007.
7 http://www.maine.gov/tools/whatsnew/index.php?topic=Portal+News&id=29304&v=article-2006
8 The Washington Post, “Talk of Universal Health Care Grows,” January 20, 2007.
9 http://www.ncsl.org/programs/health/h-primary.htm#2007
10 The Washington Post, “President to Propose Shifting Health Funds to States,” January 22, 2007.
11 CQ HealthBeat, “Lawmakers Unveil Bill that Would Help Fund State’s Efforts to Cover Uninsured,” January 17, 2007.
