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Can States Take Over Health Care? Can States Take Over Health Care?

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Can States Take Over Health Care?

A new report shows how states can lower health costs and deliver care better than the federal government.

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Commission member Mike Leavitt as Health and Human Services secretary in 2008.(ALI ABBAS/AFP/Getty Images)

Federal health care spending has been getting all the attention, but it's the states that are best equipped to reform the system and contain costs, says a new report organized by the University of Virginia's Miller Center.

 

The report—funded by Kaiser Permanente and the Robert Wood Johnson Foundation—outlines measures states can take to improve care and reduce cost. According to the contributors, states have unique tools to take the lead in addressing the issues with the U.S. health care system in ways the federal government cannot.

"The gridlock in Washington will inevitably channel these problems to a place that can find a solution," said Mike Leavitt, the former U.S. Health and Human Services secretary and a former governor of Utah who cochaired the State Health Care Cost Containment Commission, which put together the report. "The economic imperative to find these solutions is far bigger than the Affordable Care Act, or anything happening in Washington. The question is how chaotic is it, or how orderly is it? States will be a place where order will be found, ultimately before Washington."

Former Colorado Gov. Bill Ritter is the other commission cochair.

 

The authors describe five important "policy levers" that states possess to influence the way care is priced and delivered. States control government-sponsored health programs like Medicaid and CHIP, health insurance exchanges, and state employee health benefits; have authority over insurance, provider rates, and medical malpractice; can set antitrust laws and require plans to provide transparent cost and quality information to consumers; can promote population health through public health initiatives; and have the ability, through governors, to engage various stakeholders in finding solutions.

This final lever is emphasized as one of the most important. "In the past, this hasn't been a place governors have played a leadership role," said Robert Reischauer, Medicare trustee and former director of the Congressional Budget Office, and a member of the commission. "[But] this is an opportunity that only governors have as leaders and conveners."

The unique ability of governors to gather stakeholders to find collaborative solutions is the first in the committee's seven recommendations to states, and generally acknowledged as the critical first step to achieving the others.

The six other recommendations for the states are collect data to create a health care profile; set standards and goals for spending and quality; use existing programs such as Medicaid and the exchanges as leverage to accelerate coordinated, risk-based care; increase transparency of plans to improve consumer information and market competition; reform regulations like medical malpractice and scope of practice to increase efficiency; promote population health and personal responsibility through education and wellness programs.

 

The report's contributors emphasize these changes are a long-term process, with a five- to 10-year horizon. Each state will need to decide how to implement changes and determine its own balance between government oversight and regulation and market innovation.

Although the ACA is seen as a national health care overhaul, the way the law has rolled out has placed great deal of responsibility on states, blurring the line between the federal and state role in managing care.

"As the ACA has evolved, we've watched as states made the individual decision to perhaps take a different path, whether they've adopted to expand Medicaid or not, or run their own exchanges or not," said committee member Andrew Dreyfus, president and chief executive officer of Blue Cross Blue Shield of Massachusetts. "Some of the national standardization anticipated in the ACA has not come to pass at the same level, which I think has put a much greater focus on states as the locus of accountability for health care."

Leavitt says the report was written not only for state officials but for the Obama administration as well. For states to take more of the reins in health care, the federal government needs to loosen them.

"We have seen reality set in on the administration and those implementing the ACA, and that is how limited their capacity is to implement a national strategy," he said. "The administration over time has begun to grant greater flexibility to states in order to incentivize as many as possible to become involved."

Leavitt points to the essential health benefits and the Arkansas Medicaid waiver as examples of the federal government granting flexibility to states in how to implement ACA provisions.

"If you're going to have national standards, then neighborhood solutions is the way you implement those. The more you can provide flexibility, the more effective the federal government will be."

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