The New Health Dialogue

In June's Health Affairs, John McDonough and I wrote a paper (abstract here, full text requires a subscription) that illustrated Massachusetts's impact on national health reform. I'll recap highlights here, but I also want to review efforts and experiences of three other states -- Oregon, Hawaii and Tennessee -- that helped pave the way for "The Health Reform Express."

The Massachusetts initiative had many significant parallels to the national reform effort, including but not limited to:

• Expanding coverage to the uninsured and underinsured both by building upon existing publicly-funded health programs such as Medicaid and SCHIP and by creating a health insurance exchange
• An individual mandate
• An employer mandate
• Effort to deal with quality and cost (still ongoing)

The Massachusetts' and federal experiences also differed in crucial ways. The Massachusetts process was bipartisan; the national one was not. Massachusetts lacked provisions dealing with long-term care and public health; the federal law includes them. Yet Massachusetts, as we describe in the article, was highly influential in setting the stage for PPACA. Big and bold, the state reform was a break with more than a decade of incrementalism that followed the collapse of the Clinton plan in 1994. But as we mentioned, it was only one in a series of significant state-based reforms which helped to shape, and influence timing for, national health reform. Here I review some of the states which got us to Massachusetts and then to 1600 Pennsylvania Avenue.

Oregon

The Oregon Health Plan was the brainchild of then-state senator, Dr. John Kitzhaber (who would become governor). It was a sweeping expansion of Medicaid while also implementing a community-based system to establish limits on provision of care. Oregon ranked 688 medical procedures according to their costs and benefits. The state said its Medicaid program would pay for services ranked 1 through 568. But it would not pay for procedures lower on the list -- the least beneficial and least effective.  Thus, the plan would enable cost-effective coverage for all.

The Oregon health plan added 120,000 new members to the state’s Medicaid program. Costs eventually doubled from $1.33 billion in 1993 to $2.36 billion five years later. The surge in numbers, cost as well as criticism around rationing of care, led the Oregon health plan to close new enrollment and shift to a lottery-based system.

Hawaii

The creation of the State Health Insurance Program of Hawaii (SHIP) in 1989 moved the state towards coverage for all. Hawaii subsequently enacted a strong employer mandate with equally strong state insurance reforms such as introduction of community rating. In 1994, Hawaii took a giant step forward by implementing the Hawaii QUEST program (Quality care, ensuring Universal access, encouraging Efficient utilization, Stabilizing costs, and Transforming the way health care is provided to public clients). QUEST combined three separate state programs, including SHIP, into a single managed-care program administered by the Hawaii Department of Human Services (DHS).

Arguably, Hawaii’s success really came from a strong employer mandate as well as some pure luck around the culture of health care in Hawaii -- low per capita spending, decreased emphasis on specialty care with a complementary emphasis on primary care. Jack Lewin, former Hawaiian commissioner of health and current CEO of the American College Cardiology stated it best:

“The reason Hawaii has the highest incidence of breast cancer of all 50 states, for example, along with the LOWEST death rates for breast cancer, is that Hawaii citizens have access to primary care prevention and surveillance generally.”

Hawaii eventually fell prey to political pressures and other state fiscal challenges, but the employer mandate remains, along with a continued emphasis on primary care and a high penetration of managed care.

Tennessee

In 1994, Tennessee launched an ambitious public insurance program to cover its uninsured. TennCare expanded Medicaid to cover people who couldn't afford insurance or who had been denied coverage by an insurance company.

With an initial budget of $2.6 billion, TennCare quickly extended coverage to an additional 500,000 people by making access to its plans easy and affordable. But the program became so expensive that like Oregon, Tennessee was forced to scale it back in 2005. In an effort to reduce costs, TennCare started to reduce reimbursement rates to providers, which resulted in cost shifting to private plans. Eventually, Gov. Phil Bredesen had to significantly reduce eligibility as well as establish a separate limited insurance option called CoverTN which covered only up to $25,000 in annual costs.

These aren't the only states that have experimented with different health reform strategies. As we implement reform, with its blend of federal framework and state leeway, we can expect another wave of innovation. Which brings us to...

What (I Hope) We Learned

1. Coverage for all is possible but requires tremendous leadership and commitment.
2. Cost containment will continue to be difficult and even in Oregon, where rationing was a construct with a nobler purpose, it became a dirty, dirty word.
3. Change is hard. Celebrate it often.