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States Advance National Health Care Debate with Key Reforms

While the effort for federal health care reform recovers from the withdrawl of former Sen. Majority Leader Tom Daschle to lead President Obama's health care reform efforts, state legislators are moving forward with a medley of health care bills - both incremental and comprehensive in scope.  These reforms reflect key priorities for federal reform and can be tapped to bolster the public's support for the federal effort.

Public Plan Option:  Whether to include a public plan option in federal reform, as President Obama continues to advocate, is already being debated nationally.  In the states, legislators are moving bills that would do just that.  In Iowa, Sen. Jack Hatch wants to allow private small businesses, nonprofits, and municipalities to join the state employee health plan - enabling these small groups to benefit from the increased bargaining power of the state employee pool and potentially cut their health care costs.  The proposal builds on a similar plan passed by the Connecticut legislature in 2008, which was vetoed by their Governor under pressure from insurance companies despite millions in projected savings to Connecticut cities and towns. Sen. Hatch's proposal is a key element of SF48, a bold set of initiatives that promise to increase options for health coverage, improve the quality of care, and cut health care costs for businesses, families and state and local government.  Similarly, New Hampshire State Representative Jill Shaffer-Hammond has proposed HB617 to allow small employers to join the state employee health plan.

According to Connecticut Speaker Chris Donovan, 24 states currently pool local and state public employees.  What these plans would do is enable private small employers to benefit from the same cost-cutting bargaining power of public employers achieved by any large group.

Savings from a Public Plan:  In Washington State, a plan first proposed in 2008 by Sen. Karen Keiser would create a public-private purchasing pool in which consumers could choose from a range of providers and private insurance plans - achieving health care for all residents and administrative efficiency while enhancing health care choice.  Last Thursday, the actuarial firm Mathematica Policy Research testified to Sen. Keiser's health committee that her plan, the Washington Health Partnership, would generate $1.6 billion in new economic activity, save state taxpayers $330 million in spending, and reduce employer health care expenditures by $2.35 billion and family out-of-pocket spending by $1.03 billion.  

Sen. Keiser's plan was modeled after an on-going Wisconsin initiative, Healthy Wisconsin, championed by State Sen. Jon Erpenbach.  Both plans provide guaranteed health care for all residents and generate significant administrative savings by pooling residents while enhancing medical choice.  A 2007 study by the Lewin Group found that Healthy Wisconsin would save the state $1.3 billion in annual health care expenditures. Citizen Action of Wisconsin reported that the plan would save families on average $1,320 to $4,180 each year.  A similar plan, the New York Health Plan, was recently introduced in New York by Assemblymember Richard Gottfried and would likely achieve similar savings.  

Insurance Reform:  During the current belt-tightening of state, business, and family budgets, legislators want to ensure consumers are getting value for their health care premiums.  Called "medical loss ratios", bills have surfaced in Maryland (Del. Heather Mizeur, HB 272) and New Hampshire (Rep. Susi Nord, HF 678) requiring insurers to spend at least 85% of premiums on medical care - a standard that would be the highest in the country.  Lawmakers in Connecticut and Washington are also considering similar standards.

In Colorado, lawmakers are moving several bills designed to rein in the insurance industry; bills which reflect President Obama's and others' priorities for reform and tap into the public's frustrations with the insurance industry.  Highlights include a plan to prevent insurers from charging higher rates to women simply because of their gender, tightening rules under which insurers can cancel a policy, increasing the age young adults can remain covered by their parents' policy from age 25 to 30, and require better coverage of preventive care services.  Similarly, Iowa Sen. Jack Hatch's omnibus health care bill - SF48 - would create an insurance exchange similar to the Massachusetts Connector, require insurers to allow children to stay on their parents' health insurance to age 25, institute a "soft mandate" that all children to 300% of poverty have coverage, and allow undocumented children to qualify for health care programs.

In Wyoming, the Senate approved two bills (SF95 and SF62) aimed at closing loopholes that health insurance companies use to deny coverage - S95 defines when a treatment qualifies as medically necessary and creates an external review process for patients who are denied coverage for a procedure, and S62 prohibits insurance companies from adding discretionary clauses to insurance policies that allow them to easily deny coverage of procedures.

Rx Reform:  As we wrote recovers, states can cut health care costs and promote broader health care reform by targeting Rx.  Sen. Hatch of Iowa has included in his health care reform package several leading Rx reforms that will curb the inappropriate influence of industry marketing over physician prescribing decisions, reducing costs for the public and private sectors.  Model initiatives in Sen. Hatch's plan include: curbing industry gifts to physicians; creating a prescriber education program; ban "data-mining" and protecting medical privacy; and, improving regulation of pharmacy benefit managers to prevent quid-pro-quo between drugmakers and those who manage drug benefits for public and private health plans.  In Washington, Rep. Jamie Pedersen has filed HB1493 to prevent drug makers from obtaining a patient's prescription data and using that information to directly market to the patient - a practice which invades privacy and drives-up Rx costs.  In New York, Assemblymember Gottfried has introduced A2008 to improve regulation of pharmacy benefit managers and the purchase of medications for public and private payers.

Conclusion: This is a brief and incomplete survey of health care reform activity in the states.  Yet, it underscores that states continue to press ahead on important initiatives; initiatives that reflect priorities for federal reform - a public plan option, tightened rules around insurance, Rx pricing reforms, and more. Showcasing state action will help maintain the drumbeat for federal reform within public opinion and ensure that federal reform includes these and other key priorities.

Resources:

Progressive States Network - Health Care for All
Progressive States Network - Health Insurance Reforms to Ensure Fairness and Access to Coverage
Progressive States Network - Rx Policies: Cut Health Care Costs and Promote Broader Health Care Reform
Health Care for America Now - Statement of Common Purpose