It’s a waste of breath to say that health reform is a big issue in the states. But is it also the case that health reform in the states is a waste of time?
With health reform experimentation popping up across the nation, conventional wisdom has become, as Massachusetts State Senator Richard T. Moore put it in a blog post for the Commonwealth Fund, that states are “critical laboratories for quality and innovation.”
Yet while Moore is right to say that “common elements of success will serve as a useful learning experience for other states and national leaders in considering more comprehensive health care reform,” there’s another side of the issue to consider: there may be some states that can’t sustain universal coverage without more comprehensive federal reform—no matter how insurance programs are designed. There’s also a danger that failure at the state level could be used to argue that comprehensive health reform is simply an impossible goal.
Among the biggest problems with universal coverage is cost: how can we afford to insure everybody? One answer is to require that everyone buy coverage. By mandating insurance, a state can spread the cost across a larger pool of people that includes low-risk individuals who can help share the burden of insuring high-risk individuals.
Without a mandate, no one would buy insurance until they were sick or elderly; the pool would be made up of people who are expensive to insure, and soon coverage would become unaffordable. The only alternative would be to pass laws saying that if you don’t sign up before you become sick, insurers have the right to refuse to cover you –or to charge you five times what they would charge a healthy person. This is what happens in many states today, which is why one serious illness can send a family into bankruptcy. If we want to say that insurers can’t leave anyone out in the cold—even if they are very sick –then we also have to say that everyone must participate in the system.
The question remains: will mandates work at the state level?
Consider Maine. In 2005, Maine launched the nation’s first experiment
in universal health coverage through the “Dirigo Health Act,” named
after Maine’s state motto, “Dirigo,” Latin for “I lead.” Dirigo is
entirely voluntary, and as a result only 18,800 people (most of which
already had private sector insurance) have signed up for DirigoChoice,
the main arm of the program devoted to small businesses and
individuals. Meanwhile, some 130,000 Maine residents remain uninsured.
A big reason people aren’t signing up for Dirigo is because it’s
expensive. Expensive coverage is unattractive coverage, especially in
Maine where most of the uninsured are single, half are between 18 and
34, and 44 percent make less than $25,000. In other words, a lot of
Maine’s uninsured are young, independent, and poor—the people least
likely to pony up for health insurance.
Click around the Dirigo website and you begin to get
a sense of what a typical uninsured person in Maine will have to shell
out for coverage. A single male with an annual income of $23,000 could
end up paying as much as $3,600 a year (15.7 percent of his pre-tax
income) in out-of-pocket costs. Nation-wide, folks of comparable income
levels are only spending 9 percent of their before-tax income on health
care, according to the Consumer Expenditure Survey.
Certainly coverage would be cheaper if Maine were to impose a mandate
on its entire population, thus spreading the burden. But even then,
Maine would a tough state to insure. Its population is one of the
oldest in the nation and it has a large number of seasonal laborers,
rural workers, and mom-and-pop businesses that can’t afford to shoulder
health care costs. Sure, a mandate would ensure that everyone in Maine
had health care; but the affordability of that care is still in
question. The state would have to come up with large subsidies to make
the plan work.
Many states are in a worse position. Consider West Virginia. The state
is the 4th poorest state in the nation and ranks last in median
household income. Just 15.3 percent of the population has a college degree.
Given the fact that socioeconomic status is the best predictor of
health, you’d expect West Virginia to be an unhealthy state and sure
enough, it has some of the highest rates of cancer mortalities in the
U.S. alongside other impoverished states
like Mississippi (the poorest in the nation), Kentucky (second
poorest), Tennessee (no. 5), Arkansas (no. 6), and Alabama (no. 7).
It’s not just poverty and poor education that’s the problem. By 2010 16
percent of West Virginia’s citizens will be over 65, making it the second oldest state
in the union. While West Virginia is comparable to other states in the
proportion of its population that is under 18 (21 percent) it’s just
that—comparable. There is no surplus of youth to offset the aging
population. Worse still, West Virginia also has the highest percentage
of people who are disabled
of all the states. This is perhaps not surprising, considering West
Virginia’s economy is so dependent on farming and coal-mining, both
By now the picture should be clear: even if West Virginia were to
mandate coverage for all of its residents, it would still be a risky
and very expensive state to insure. As in Maine, even with a mandate,
comprehensive insurance would not be affordable for many of the state’s
residents—and West Virginia just doesn’t have the resources needed to
provide huge subsidies.
Hard to insure states like West Virginia and Maine need to be part of a
larger pool. A federal health care system would provide the number of
people needed so that poorer, riskier states could benefit from
spreading the risk.
Even if we found the perfect state-based model for health care the cost
of reform in a state like West Virginia would be much higher than in a
state like Connecticut, which has a population almost twice the size of
West Virginia’s, the fifth highest median household income in the
nation, and an educated population (31.4 percent of Connecticut
residents have a bachelor’s degree).
While state-level experimentation should continue and we should eagerly
take stock of the mistakes and successes that it generates, we also
need to keep in mind the inequality that exists across the states. For
many states, adapting the blueprint that might work in a wealthy state
isn’t an option. And we haven’t even really
discussed other issues that would contribute to uneven health care such
as state budgets, local politics, and corruption.
Without a broader federal system pulling the nation into one insurance
pool, it’s likely that states like Maine will find themselves hitting
speed bump after speed bump on the road to universal health care—and
states like West Virginia will simply be left behind. In the meantime
those who oppose health reform will point to the failures as a reason
why Congress shouldn’t even try for national health insurance.
In the end, it may be that focusing on state-level health reform is somewhat counter-productive. After all, isn’t
the goal of universal coverage to ensure that health care is there for
every American who needs it, regardless of where they live?