Can't Make Your Policy Federal? Empower the States.

by Tim Foley

categories: National Health Exchange, Obama and Congress, Public Plan, Single Payer, State and Local Efforts

Published October 01, 2009 @ 05:54PM PT

It’s been a dominant theme in how Congress has handled health care since the creation of Medicaid. Can’t find a way to federalize your policy? Then downscale it to empower states to take it on themselves. That strategy was on full display today as members of the Senate Finance Committee, unable to overcome stiff resistance from a more-or-less unified Republican nay-saying, and the strangely conservative votes of one Sen. Blanche Lincoln, opted to kick it to the states. It’s like sending a baseball player to the minors -- flourish there, and you may actually make it back to the Big Show to become federal law.

Two amendments and one proposal yet to be drafted as an amendment made this “Empower the States” day in the Senate Finance Committee.

Sen. Ron Wyden (D-OR), a creative and progressive force on the issue of health care, got an amendment pass that might well be called the “You show us how it’s done” amendment. In the Baucus bill, states are given a certain amount of federal money to create the Exchanges. Rather than one big Exchange, each state has its own -- granting it greater autonomy in terms of design, making sure all plans abide by state-level regulations, etc. Wyden’s amendment takes it a step further. So long as the states create coverage for all of its citizens that’s as affordable, comprehensive and high-quality as an Exchange would have been, and has all the protections in terms of insurance reform and caps on out-of-pocket expenses that the plans in the Exchange would have had, and the legislature and the governor agree to apply for a waiver to the Secretary of HHS... you can do whatever you want.

So your state could create an Exchange, like Massachusetts. It could add the uninsured into the existing program for state workers and retirees, like Sustinet in Connecticut. It could create a state-level public option. Hell, it could create a statewide single-payer plan like many states (including New York) are already contemplating. Those with long memories will remember this was a scarcely-noticed but important provision of the Wyden-Bennett health care bill as well.  It’s not just punting the tough decisions to the states. It’s giving them the ball and giving them the money to make it happen.

Not quite as comprehensive is the amendment by Sen. Maria Cantwell (D-WA), which passed with the support of all Democrats except -- you guessed it -- Lincoln. Washington State doesn’t have a public option or anything remotely like it. What they have instead is something called Washington Basic Health, where the most likely to be uninsured are eligible to purchase private insurance. Essentially, the State of Washington acts like a mega-employer, with the uninsured below 200% of the poverty line (about $44,000 for a family of four) as its “employees.” The state uses the size of its pool to negotiate great rates on premiums from four insurance companies -- much cheaper than this population could afford on the open market, with better coverage and smaller deductibles and out-of-pocket expenses. The individual or family gets to choose which plan they want.

Cantwell’s amendment allows states to set up their own version of Washington Basic Health. The rest of the Baucus bill already provides Medicaid for up to 133% of the federal poverty line, so this Basic Health plan would cover those between 133-200% where, as Sen. Cantwell notes, “75 percent of the uninsured population lives.” There would be extra protection for individuals -- participating plans would have to spend 85% of the cost of premium on health care, more stringent than plans in the Exchange. The state would get the subsidies that would normally go to individuals of that income range in the Exchange and use them to subsidize the cost of the Basic Health plans. On the plus side, this has dramatically saved money in Washington State, as they’ve negotiated for fantastic discounts. On the minus, if a state set up a Basic Health system of their own, people in that income window couldn’t opt-out and get a plan on the Exchange. The state gets the subsidies, not them. Plus Washington Basic Health itself is demonstrating the problem with relying on a state solution during a time of economic crisis. Go to its Web site and you’ll see a waiting list to get into Washington Basic Health and a warning of jacked up rates – both the results of the state’s fiscal crisis.

Finally, we’re hearing more and more of a proposal by Sen. Tom Carper to empower states to produce state-level public options -- a much less effective version that has popped up from time to time from the likes of Secretary Sebelius, Tom Daschle, and Bob Dole, among others. Carper’s exact plan is as yet vague, but it reinforces the trend of the day.

Relying on state governments for what you can’t push through at a federal level may have some downside, but its biggest upside is it allows the more progressive states the opportunity to lead. We could look to Canada, where their single-payer system spread province-by-province. But better examples are right here in the U.S. After all, Medicaid is set to federalize coverage to 133% of the poverty line -- a threshold that some states have already reached. The concept of the Health Exchange is liberally borrowed from Massachusetts (Utah has its own Exchange, and California tried to get one in its health care reform attempt in 2007-2008). Today’s minor league players may be tomorrow’s rookie of the year.

(Photo credit: http://www.flickr.com/photos/aurenh/ / CC BY 2.0)