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March 2008

New SCI Report Highlights State Efforts to Rise Against the Inertia of the Status Quo and Advance Health Care Reform

State of the States 2008: Rising to the Challenge outlines the past year’s efforts to think beyond the current paradigm and find new tools to address health care reform, while pointing to historically difficult policy questions that remain unanswered. The report also identifies the top 10 key questions facing states currently considering comprehensive reforms, each with its own series of crucial decision points. They are:

  • What are the goals and priorities of reform?
  • Will different populations require different solutions?
  • Who will pay? Employers? Government? Individuals?
  • Who will benefit?
  • Should health insurance coverage be required?
  • If so, what constitutes affordable coverage?
  • What is the most appropriate benefit design?
  • How can risk be pooled?
  • Do insurance markets need to be reformed or reorganized?
  • What are the best mechanisms for cost containment and overall systems improvement?

State approaches to reform vary considerably, often depending on the political and fiscal environment. Demographic characteristics, insurance market dynamics, and other economic variables also impact a state’s capacity to act. Yet, according to the report, almost universally states are considering health care reform in a very pragmatic way.

 “A single-payer system is generally not considered a politically viable option, but, neither are reforms that rely completely on a free market, consumer-driven health care system,” says Enrique Martinez-Vidal, director of the State Coverage Initiatives program. “Instead, most state reforms look to politically feasible proposals that build on the current, mixed, public-private health insurance system.”

According to the report’s authors, state actions in 2007 demonstrated that, “the status quo is no longer an option.” The lack of national movement to address the issue of the uninsured, combined with growing political will among Governors and legislators fueled momentum for state coverage reforms. Stable financial conditions also played a role, allowing states to move forward in ways that were not possible during the early years of this decade when harsh fiscal conditions forced states to retrench.

Overall, states’ reform activities can be grouped into three categories:

  • Comprehensive reforms. Massachusetts, Maine, and Vermont, forged ahead with ambitious reform programs that aim to provide residents with universal or near-universal coverage. Massachusetts’ implementation of a sweeping reform program that emphasizes shared financial responsibility for obtaining health care coverage among individuals and employers was a major storyline. The state has achieved several milestones including strong enrollment in its low income subsidy program, and launch of the Commonwealth Health Insurance Connector, which helps small employers and individuals purchase affordable insurance.

    While Massachusetts garnered the most headlines, Maine and Vermont moved forward quietly with ambitious coverage reform agendas of their own and significant new coverage proposals emerged from California, Pennsylvania, and New Mexico.

  • Substantial reforms. In 2007, a handful of states moved forward with substantial reforms that not only expanded coverage, but also ensured private market reforms and launched new purchasing mechanisms. Washington enacted significant legislation that provides access to coverage for all children by 2010, and begin a premium subsidy program for families. The state also plans to develop a Massachusetts-style Connector to increase opportunities for employers to offer affordable coverage to low-income workers. In Oregon, Governor Ted Kulongoski specified a detailed timeline for developing a full-scale health reform proposal. A slew of other states are gearing up to undertake substantial reforms in 2008 and beyond.
  • Incremental strategies. Many states moved forward with incremental reforms that expanded health coverage for subpopulations within the uninsured. In 2007, momentum continued for guaranteeing access to health coverage for all children. The Illinois All Kids program, the first program of its kind to guarantee universal coverage to children, exceeded enrollment expectations but faces several challenges as it tries to maintain the momentum of its inaugural year. Following in the footsteps of Illinois, a variety of states are pursuing expansions aimed at children, including Hawaii, Missouri, and Texas. New York created the nation’s highest ceiling for the State Children’s Health Insurance Program (SCHIP) by raising the eligibility requirement from 250 percent of the federal poverty level (FPL) to 400 percent. Connecticut will also be raising its SCHIP eligibility to 400 percent FPL.

    A number of states—Connecticut, Idaho, Indiana, Maine, Maryland, Montana, and Washington—expanded coverage to young adults by changing the definition of ‘dependent’ and extending access to insurance for young adults older than 18.

    Many of these states used Medicaid as a vehicle to expand coverage, taking advantage of the new flexibility offered by the Deficit Reduction Act (DRA) of 2005. States also used SCHIP expansions as a strategy for expanding coverage, although uncertainty in the long term financing of SCHIP may limit those efforts moving forward. (After months of negotiation, lawmakers could not agree on a reauthorization plan the SCHIP program and the program has been extended in its current form until March 2009.)

In addition, a wealth of state activities took aim at system-wide improvements in quality, care coordination, and cost containment. Increasingly, states are coupling coverage expansions with strategies that target chronic conditions, wellness and prevention, the uptake of electronic records, and public reporting of information on quality. With these efforts, states are working to improve quality, control costs and improve the value of public programs.

For an online copy of this free report, visit