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States Should Reform Health Care

Sean Evans, Chair and Associate Professor of Political Science
Apr 9, 2013

                 Last week, Governor Bill Haslam decided to delay expanding Medicaid because the Obama Administration rejected his request for flexibility.  Under Haslam’s Tennessee Plan, the state would provide subsidies to poor Tennesseans to purchase health insurance while requiring co-pays for those who can afford it, tying medical payments to outcomes, and providing an opt-out if federal payments decrease.

                Instead of rejecting the money outright or expanding a “broken” Medicaid program, Governor Haslam deserves credit for proposing a potentially more affordable, effective program.  However, the big question is why, with governors of both parties leery of the federal government passing on greater Medicaid costs to states, aren’t more governors innovating in health care?

Universal health coverage is a noble goal but President Obama based his plan on Massachusetts’ unproven health care plan.  While 94% of Massachusetts citizens now have health insurance, the plan did very little about costs, which is the greatest problem in the health care system.

Consequently, states should act as “laboratories of democracy” by testing different health care models to see what model provides the best results at the lowest cost.  Just as with welfare and education reform, the best models can spread to the other states or be implemented nationally.

Obamacare already has a waiver process to escape the insurance mandate in 2017 so all that is necessary is to move up the waiver process, make the regulations more flexible, and potentially allow states to combine all Medicaid, Medicare, and health care tax benefits to test their ideas.  

                This reform effort would be beneficial for most everyone.  While most states would probably tweak the current system, like Haslam proposes, these tweaks could improve cost and care. 

                However, the waiver would also provide incentives for more comprehensive reform.  Conservative states could promote their free market ideas and provide subsidies, based on income and health, for citizens to purchase any health insurance plan, create regional health care markets to induce greater competition, require greater price and quality care transparency, and/or enact medical malpractice reform. 

                Liberal states could create a single payer system where the government determines what health care to provide and at what rate.  Or they could let technocrats control health care costs, as Obama proposes, by controlling payments to providers to incentive the creation of Accountable Care Organizations to manage diseases via bundled payments, using more nurse practitioners to provide primary care, and mandating “best practices” in disease treatment.  

The public wins on many different levels.  First, all citizens receive basic health coverage of some sort.  Second, a bad policy is not imposed on everyone.  Third, we could compare cost and health results to see which system works best.  Fourth, we can fine-tune any system before going national. 

The added benefit is that states must balance their budgets so we will see how liberal states ration health care and how the medical community and public responds to that rationing and the level of subsidies for which people are willing to pay in conservative states.  

The major problem is the uncertainty affecting business over the impact of Obamacare would be extended and business in multiple states would have higher administrative costs in complying with different systems. However, business should be willing to bear the costs for a more affordable, quality health care system that improves their bottom line over the long term.

This column originally appeared in the April 7 edition of The Jackson Sun