Fifteen years ago, shortly after Bill Clinton’s first election, the country considered but rejected major health care reform.

At that time, health care costs were rising sharply and since then, problems have worsened. Today, a mounting proportion of Americans are elderly, and a growing number are low-income and go without health insurance. Yet, they still need health care. Some are enrolled in Medicare or Medicaid, tax-supported programs for the elderly, disabled and poor. Others wait for care until they end up in hospital emergency rooms, often unable to pay their bills.

With such widespread cost-shifting, the Presidential candidates are addressing health care issues, and the winner of this fall’s election could have a major say in reform of the current system. Meanwhile, active reforms are developing at the state level.

State Initiatives

Unlike the federal government, which can borrow against future revenues (deficit financing), state governments must fund all programs from current revenues. For this reason, sharply increasing state health care obligations are producing a serious crisis in state budgets. Feeling the crunch, states are looking to level the playing field so that employers who offer little or no insurance and individuals who choose to go without become more responsible participants in the system.

Many of the “new” approaches are based on the Hawaii model which has required employment-based health care for decades. In the spring of 2006, Massachusetts adopted legislation requiring everyone in the state to carry health insurance. Vermont soon followed, and the governor of large and influential California has announced a similar plan. Other states are readying their own proposals.

Achieving Universal Coverage in a Private System

The goal of all the state plans is to ensure that everyone has coverage. However, the problem is how to expand and pay for coverage for all those who are now under-insured or uninsured. The states are doing it in a combination of ways, hoping to minimize the taxpayers’ need to fill the gaps.

Require everyone to have coverage under penalty of fines or other coercion. The idea is that, like the owners of cars, everyone who has a body has an obligation to have insurance.

Encourage employers to pay for some of the coverage by imposing nominal “fair share” contributions on those that do not. Touting the tradition that health insurance is part of an employment compensation package, the states hope to steer businesses to contribute significantly to the cost of their employees’ coverage.

Encourage insurers to come up with cheaper, “no frills” insurance plans – for instance, for 19 to 26 year-olds – and assist employers and individuals in accessing such plans.

Encourage doctors and hospitals to institute quality control programs that eliminate unnecessary or inappropriate procedures, improve care and ensure better across-the-board returns on state health care payments

Raise taxes or cut other state services. Even with all these adjustments, some individuals and families make too much to qualify for Medicaid, but not enough to afford coverage. If a gap remains, states – and the taxpayers – must find ways to cover it.

In addition to the funding mechanisms, the states also have to work out enticement and enforcement procedures for the various participating players. An additional problem is the likelihood that neighboring states will adopt different health care reforms – or no reforms at all – contributing to the migration of workers, businesses and jobs between them.

Presidential Politics

The two extremes in national health care reform have been articulated. One extreme encourages the eventual adoption of a national system in which all individuals purchase their own insurance. If achieved, this would put the maximum emphasis on personal accountability, both in regard to personal health maintenance and consumer attention to price and service options in the health care marketplace. In the other extreme, the federal government cuts out the insurance industry, pools all Americans in one system and negotiates rates with all the relevant players.  Both extremes draw biting criticism, so neither is seriously advocated by any of the major Presidential candidates.

A middle ground option adopted by some hopefuls in both parties is to simply encourage the states to take their own initiatives. However, in the long run, the variety of state initiatives is likely to foster a new set of inequities among Americans. Pressure will mount on the federal government to get more involved in order to smooth out the differences. Looking ahead toward this likelihood, some candidates already advocate a national, private, employment-based system in which the federal government adopts the kinds of initiatives now being pursued at the state level.

All the candidates’ positions will be on display through the next few months of presidential primaries. Read, listen carefully and, if health care is important to you, vote accordingly.

[Steve Clark]