State Variation in the Context of Federal Reform

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While there may be broad agreement among the many stakeholders in the health care system and across political parties about the overall objectives for health care reform—expand access, improve quality, and contain costs, there is substantial disagreement about how to achieve these goals.

If it can be assumed that national reform will occur in the near future and it will have a federal-state partnership as its foundation, it will be critical to recognize that a national strategy will not lead to uniformity overnight. While working toward equity and less unwarranted variation in the cost and quality of care across states is critical, equity should not necessarily be equated with uniformity in the way that programs are implemented across all states. Understanding the diversity across the country means that any uniform national strategies, especially those targeting the uninsured, will have varying impacts and do not guarantee uniform national outcomes.[i]
One major area where extreme variation exists is in insurance market rating requirements; in essence, there are 50 different health insurance markets, so it will be important to understand how a national plan will affect each of those markets. As another example, focusing on the variation in public program eligibility levels, the effects of a federal policy to allow all adults up to 133 percent FPL into the Medicaid program will vary across states depending on previous efforts to expand coverage to adults. In addition, many of the states that have not enacted prior expansions may not have the financial resources to provide the required state match under such a requirement. 
Three major possible solutions could address this variation in impacts across states; the federal government could: 1) make no attempt to address the variation in impact and let each state fend for itself; 2) provide variable assistance, both financial and technical, to the states based on each state’s need; or 3) recognize that it may need to allow states to comply with the federal guidelines in a sequenced way over time.[ii] A combination of variable assistance and sequencing could be the best method to help states comply over time. Any federal financial assistance should also aim to not penalize those states that have been able to expand coverage recently. While “maintenance of effort” is almost always encouraged when new programs are enacted, those states at the forefront should benefit in some way from any new federal funding that may accompany requirements to increase eligibility.
Arguably, states will always want more funding from the federal government and also maximum flexibility; a huge open question is what are the minimum requirements that should be expected from the states in exchange for this funding and flexibility? The variability between states also impacts this tension between the need for both leadership and flexibility from the federal government.


[i] Glied, S. and D. Gould. “Variations In The Impact Of Health Coverage Expansion Proposals Across States,” Health Affairs Web Exclusive, June 7, 2005.
[ii] State Coverage Initiatives would like to acknowledge Sherry Glied for her thoughts about this issue.