AcademyHealth Stateside - 03/10/2005  (Plain Text Version)

The topics of health care costs and reform remain at the top of many state agendas, as laid out in several of the 2005 State of the State addresses presented by governors throughout the nation. Although still grappling with state budget deficits, many governors have used their speeches to prompt their states to strike out in new and more ambitious directions. As has been the case in previous years, there appears to be no single approach or winning strategy that addresses the challenges faced by states in seeking to maintain and/or expand health insurance coverage while responding to rapidly rising costs.

State of the State addresses in no way encompass all of the options being considered by states, but they can shed light on the priorities of the state administration. As of mid-March, 49 governors had delivered their annual addresses to their states, laying out their priorities for this fiscal year and beyond. Medicaid, prescription drugs, health insurance coverage for children, and addressing the problem of the uninsured topped the list of most governors’ initiatives in health care.

Twenty-seven governors discussed initiatives to bring down the costs of prescription drugs through a variety of strategies. Many states have offered drug discount cards like Michigan’s MiRx prescription drug discount card, which has helped 20,000 families obtain lower-cost medications. California Governor Arnold Schwarzenegger is pursuing a similar prescription drug discount card for low-income Californians. Other states have banded together to form purchasing cooperatives to obtain lower cost drugs. Many states are looking at ways to help seniors purchase affordable prescription drugs through reimportation, wrap-around benefits once the Medicare Part D prescription drug benefit takes effect in 2006, and state pharmaceutical purchasing pools, among other strategies.

Twenty-two governors discussed issues related to Medicaid in their speeches. Across the board, governors addressed the growing and unsustainable costs of Medicaid and the strain on state budgets. As a result, a number of states are looking at ways to reduce costs by creating more efficient administrative processes, changing benefits, and changing payments to providers.

A large number of governors also acknowledged the need to address the problem of health insurance coverage for the uninsured. Twenty-one governors discussed various strategies to reduce the number of uninsured, including premium assistance programs, purchasing pools, risk pools, expanding coverage through public programs like Medicaid and the State Children’s Health Insurance Program (SCHIP), tax credits, health savings accounts, and expansions to targeted populations like working adults. Many states are creating programs targeted to small businesses who cannot afford to offer coverage or whose employees cannot afford to purchase the insurance offered. Maine’s Dirigo program is an example of such a strategy, and in his State of the State address, Governor John Baldacci reported that as of January, the program had enrolled nearly 3,000 people representing  over 250 small businesses and nearly 1,000 sole proprietors.

Despite tough budgets, a few states have found ways to increase budgetary allowances to maintain coverage and/or expand coverage to uninsured citizens. Examples of state plans to maintain and expand health insurance coverage include:

- Alabama Governor Bob Riley (R) used his annual address to advocate for passage of his budget proposal, which will seek to increase state funding for Medicaid in order to maintain the level of health care services it provides and increase funding for the state’s SCHIP program by almost 25 percent to eliminate an existing waiting list.        

- Alaska Governor Frank Murkowski (R) asked legislators to approve his plan to fund Medicare premiums and deductibles for every Alaskan senior with an annual income under $35,000.

- Colorado Governor Bill Owens (R) proposed using part of the proceeds of a tobacco tax increase to create a “sustainable” plan to expand health insurance coverage through expanding enrollment in the state’s SCHIP program, as well as funding certain preventative screening services and a rural health care initiative.

- Hawaii Governor Linda Lingle (R) proposed spending $2.7 million on primary care services at community health centers and $5 million to enroll 6,000 eligible children and 1,000 low-income adults in Medicaid. She also proposed allowing small businesses to pool together to purchase health insurance.

- Massachusetts Governor Mitt Romney (R) spoke of his plans to implement his proposed Commonwealth Care plan, which will offer more affordable health insurance options to the uninsured and small employers.

- Montana Governor Brian Schweitzer (D) promised to use the funds from a $1-per-pack cigarette tax increase approved by voters last November to fully fund Montana’s SCHIP program and provide “targeted tax credits” to small businesses to allow them to join together to negotiate lower-cost health insurance.

- Nevada Governor Kenny Guinn (R) stated that $8 million will be used to expand health insurance coverage for pregnant women and low-income families employed in small businesses.

- New Mexico Governor Bill Richardson (D) is aiming to reduce the rate of uninsured state residents by 10 percent (41,000 people) by allowing small businesses to buy into the state health insurance plan, requiring health insurers to offer companies plans for part-time workers, and providing tax incentives to encourage small businesses to provide insurance to employees. Richardson also proposed a 16 percent ($78.4 million) increase for Medicaid.

- Utah Governor Jon Huntsman (R) said that he has allotted $5 million in his budget proposal for Medicaid funding to restore dental and vision coverage to beneficiaries who recently lost it.

Additionally, children’s health programs were of paramount concern to a number of governors. Eighteen governors proposed or supported initiatives related to children’s health. Many governors continued to pledge support to their state’s SCHIP program and a few discussed further expanding benefits.

In addition to prescription drug costs, children’s health, Medicaid, and the uninsured, 13 governors addressed health promotion efforts in their respective states; 13 governors revealed plans focused on specific health conditions like mental health, substance abuse and cancer; 11 governors described plans to improve long term care facilities through a variety of strategies including state-sponsored, long-term care insurance and awareness campaigns for families; and nine governors spoke of the urgency of passing medical malpractice reforms in order to keep doctors in their states.

The complete text of all 2005 State of the State addresses can be found on stateline.org.