Bernie Horn is policy director at the Center for Policy
Alternatives. CPA is the nation’s only nonpartisan
organization working to strengthen the capacity of state
legislators to lead and achieve progressive change.
The debate over health care reform on
Capitol Hill was quietly reshaped recently when Sen. Russ
Feingold, D-Wis., tacitly admitted that the federal government
isn’t likely to cover the uninsured for years to come. He
proposed instead that Congress support universal health care
pilot projects in three to five states.
I say, it’s about time. Let’s recognize that nothing
particularly good will come out of Washington, D.C., before we
change presidents in 2009—and only Pollyanna would expect
dramatic new enactments even then. Let’s admit that, for
progressives, the action is in the states.
Feingold’s State-Based Health Care Reform
Act would set up a federal task force to select a few
states to implement universal health coverage pilot projects.
The states would be given wide discretion to accomplish the
goal—and $32 billion in matching funds. At the end of five
years, the task force would evaluate each of the pilot
projects in a report to Congress. In other words, to
paraphrase Chairman Mao, let 3 to 5 flowers bloom.
State legislatures have proven that they deserve this
important assignment. Just this year, legislatures have
produced three historic health care laws.
In January, Maryland enacted the Fair Share Health Care
Act, overriding a GOP-governor’s veto. This law requires
companies with more than 10,000 employees to pay at least 8
percent of their payroll cost into a state fund for health
care for the uninsured, with a credit up to 8 percent of
payroll for what they actually spend on health care for their
employees. It is modest legislation, and yet it is a major
step forward for any state to mandate a minimum level of
employer healthcare spending. It’s like creating a whole new
category of a minimum wage.
Then Massachusetts enacted a law requiring all residents to
have healthcare coverage by July 1, 2007. Businesses with more
than ten employees that do not provide insurance must make a
contribution of up to $295 per year per worker to the state.
Insurance premiums for lower-income residents will be
subsidized on a sliding scale. The law is a compromise between
a Democrat-controlled legislature and a Republican
governor.
Vermont enacted its own universal coverage law, projected
to cover 96 percent of residents by 2010. A new coverage
plan—to be offered through private health insurers—has fixed,
affordable premiums, deductibles and copays. Similar to
Massachusetts, companies with more than eight employees would
pay $365 per year per uninsured worker. And like
Massachusetts, insurance for lower-income residents would be
subsidized. But Vermont’s law—also crafted by a Democratic
legislature and a Republican governor—does not mandate
coverage.
Yes, Maryland’s Fair Share Act was recently struck down by a federal judge, but it will
either win on appeal or be fixed in the next state legislative
session. Yes, Massachusetts’ universal health care plan puts
too much responsibility on individuals and not enough on
corporations. And yes, Vermont’s health plan is voluntary and
may involve a bit of wishful thinking.
Nevertheless, states are leading the way. And states would
have a far easier time constructing universal health care
programs with just a little help from the federal government.
But financial participation is not the only assistance they
need.
Federal laws currently stand in the way of state-based
healthcare reforms. The federal Employee Retirement Income
Security Act (ERISA) sets minimum standards for private
employer-sponsored health plans. One provision preempts any
state law that would compel an employer to alter its
ERISA-regulated healthcare plan. That’s the basis for the
federal judge’s ruling against Maryland’s Fair Share Act. In
1983, Congress amended ERISA to provide an exemption for the
Hawaii law that requires employers to make a substantial
contribution toward health insurance for full-time workers.
Other states need ERISA flexibility.
Similarly, federal Medicaid law is being used to block
states from negotiating fair prescription drug prices. In part
due to the Medicaid “Best Price” rule, only federal agencies
and the most aggressive state Medicaid programs pay drug
prices that are similar to those in the rest of the world.
Everyone else pays too much. States can dramatically reduce
drug costs for universal care programs if they have federal
permission to piggyback on Medicaid prices. Of course, the
Bush administration has blocked all state efforts to do so,
arguing that would require congressional authorization.
Americans know that our healthcare system is broken, with
46 million uninsured and 30 million more underinsured.
Individuals, businesses—in fact our whole economy—is
suffering. Even the judge who overturned Fair Share Health
Care recognized that “it is strongly in the public interest to
permit states to perform their traditional role of serving as
laboratories for experiments in controlling the costs and
increasing the quality of health care for all citizens.”
It’s time for the federal government to help some states
incubate the solution.
