Thursday, July 10, 2008

Health Care and the States

Currently, the nation's health care marketplace is buzzing with political ads about universal coverage and new proposals from the leading Presidential candidates. This year, health care is the hot topic on the minds of a significant number of Americans. Both the Democratic and the Republican parties each have their own versions of what they think the landscape should be in the new paradigm of health care and insurance. Alot of each plan is pretty scary; and both candidates are purveying on the internet, in speeches, and in other media their plan to make Americans healthy, wealthy, and wise when it comes to health care.

Not to be outdone, several states have gotten into the health care game with their own versions of what health care should be for the citizens of those respective states. Rather than waiting for a national program rolled out at the federal leveral, various state governments are taking the bull by the horns and developing their own health care program, most of which is designed to help the uninsured population in those states. Overall, the latest statistics from the federal government and other sources indicate that over 47 million Americans nationwide are not insured. That translates to about 16% of the total U.S. population that is not covered by health insurance.

The New York Times this month reported what is going on in the health care world. Congress, meanwhile, is considering legislation that, among other steps, would make it significantly easier for small businesses to organize insurance-buying pools. Despite bipartisan backing in both the House and Senate, it is uncertain whether the bills can be passed in this, an election year. But proponents say the legislation would almost certainly be reintroduced next term. Because smaller businesses cannot spread the costs and risks of an individual’s high medical bills over a large work force the way a big company can, they often must settle for less-generous coverage that leaves workers with substantial out-of-pocket medical expenses. Many small employers simply choose not to provide health benefits, which can cost more than $12,000 a year for a family of four.

Universal health care is not a new concept. The Boston Globe online this month spoke to some brief history at the national level starting in 1993. The last time a national healthcare plan was attempted, under President Clinton in 1993, the presidential panel charged with devising a proposal was widely criticized for not consulting enough with Congress, and protracted disagreements erupted, delaying its progress for months and ultimately resulting in its eventual demise. Currently, many see as the political climate as the best chance for widespread changes in the healthcare system in 15 years. Senator Ted Kennedy has a renewed effort that appears to be designed to identify areas of common ground between Democrats and Republicans, business and labor, providers and insurers, and others before the new president takes office.

According to the article in the New York Times today, the states are taking a variety of approaches. To help ease the burden of insurance premiums that have roughly doubled since 2000, some, like Arizona, are extending tax credits to small employers that provide medical coverage. Others, including New Mexico and Montana, are exploring ways to let small businesses band together to amass the purchasing power of big employers. Massachusetts plans to let small businesses benefit from its state-supervised insurance program. And some states, like Colorado, have passed tougher laws governing what insurers can charge small companies and business owners. And who can forget the health care war going on in California? The state of California has had an ongoing battle between "The Governator" and its legislature over state mandated insurance for the uninsured. It will take a while to sort all that out.

But, despite broad interest in the issue, though, making significant changes at the state level can be difficult both politically and practically. Connecticut has had an ongoing problem with this issue with differences between the state legislature and their governor. Connecticut had already taken significant steps meant to help small employers provide affordable health coverage. It was among the first, for example, to pass laws intended to limit the large annual jumps in premiums that tend to plague small businesses. But even Connecticut has yet to find a way to reduce the potential risk to a small company or insurer if even a single employee develops a serious illness and runs up tens or hundreds of thousands of dollars in medical bills. And, Massachusetts, in its widely watched effort to overhaul health insurance, has focused so far on making affordable coverage available to individuals. But later this year the state plans to expand the program to small employers, letting them participate in the state-supervised marketplace set up to give individuals group purchasing power.

The cost of insurance tend to be a bigger burden for a smaller business as reported by the NY Times. And employers that do continue to provide health benefits are tending to ask workers to pay more of the overall premiums. So even when small business owners offer coverage, their employees may not be able to afford to sign up. Many small business owners say it is hard to understand how their insurers are pricing the premiums. State laws now typically make it impossible for businesses to cross state lines to create their own purchasing pools, and small companies have had little success to date in being able to band together in sufficient numbers within state borders. But the federal legislation would let businesses form such purchasing pools more easily, even across state lines. The legislation would also prevent insurers in any state from basing their premiums on the health status of employees — a prohibition now on the books in only a minority of states. The legislation would also offer tax credits to businesses that provide coverage insurance to their employees. The states, meanwhile, will continue experimenting with their own efforts.

Recently, according to the Boston Globe article, a network of Massachusetts advisers assembled for discussion, including healthcare lawyers, economists, nonprofit leaders, doctors, and health insurers who may be asked to work on specific aspects of a national plan. At a recent meeting in Boston, the group discussed how different elements of the Massachusetts approach might work on a national level. Whether the Democrats and the Republicans and myriad interest groups can overcome their differences over the next year remains to be seen, but several of those participating in the discussions expressed optimism about that possibility.

America is moving down the path of universal health care. Although the case in favor of it is strong, wiser heads should prevail to ensure the country does not go to a one-payor system on a federal level. The costs and potential difficulties of administering it will far outweigh the benefits of a government run health care system. Common sense should rise above convenience.

Until next time. Let me know what you think.

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