How will election's outcome affect state health care reform?

The outcome of the presidential election could determine how states approach health care reform, and to what extent state disparities in uninsured rates and income eligibility for public programs narrow or widen, according to Lisa M. Duchon, PhD, a senior consultant at Health Management Associates in Washington, DC.

Sen. Barack Obama (D-IL) sees a stronger federal role in expanding coverage and making care more affordable, and shoring up employer-based coverage. Sen. John McCain (R-AZ) would prefer a continuation of state innovations and leadership, with minimal federal involvement, and a shift toward the private, nongroup market, says Dr. Duchon.

According to Kathleen Stoll, health policy director of Families USA in Washington, DC, the majority of states are struggling in the current recession with declining revenues. At the same time, underlying health care costs are rising, and more people are unemployed.

"Many will need a temporary health care safety net for their children and themselves," says Ms. Stoll. "To the extent that voters and the public make health care reform a top domestic priority, then we can expect that federal resources will be brought to bear on the problem."

This includes both the uninsured and underinsured—people with insurance struggling to meet their share of premiums and pay their out-of-pocket costs. "States and the federal government must have a financial partnership that states can rely on," says Ms. Stoll.

States are—and have been for a long time—willing to step up to the plate, she says. "With the federal government also making an investment in health care reform a priority, states will have confidence to move forward."

A federal solution to health care reform will help level the differences between states on the rate of uninsured in the population, and reduce the rate overall in the nation, says Ms. Stoll. Most states are struggling to provide solutions within the revenues available to them at the state level, she adds.

"Some states have more flexibility in their state budgets than other states. But no states can—over the long term—do it alone. We need federal leadership and federal investment," says Ms. Stoll.

Sen. Obama's plan proposes a "hybrid" health care reform plan that blends public and private approaches to health insurance, to maximize the choice of health plans that consumers have available. "This recognizes the importance of building health care reform on top of a uniform foundation—the public programs, Medicaid and CHIP, that serve our very lowest income and most vulnerable populations," says Ms. Stoll.

She notes that this foundation will require a fair state-federal partnership and a fair investment from the federal level. "Sen. Obama's health care reform plan would reduce uninsured rates across all states, reduce health insurance premium increases, and give people choices of health insurance plans," says Ms. Stoll.

Not all circumstances are 'dire'

"With state budgets looking relatively bleak right now, we're not going to see tons of new programs," predicts Sonya Schwartz, a researcher with the National Academy for State Health Policy in Washington, DC. "Without additional federal assistance, states will be challenged to maintain what they have. And I hope they will be able to."

Depending on the election's outcome, however, "we may see a CMS with a different outlook on how they work with states," says Ms. Schwartz. "One issue of concern has been the lack of transparency in the financing and waiver process. States have received very different deals. I don't know if it will improve, but that is one thing we would hope for to change, whether it's a McCain or Obama administration."

Another issue that could impact states is the budget neutrality requirement as part of S. 1115 waivers. "That requirement is not in statute—it is really part of the administration's own initiative. So there is some ability to change that," says Ms. Schwartz. "The Bush administration has tried to move federal Medicaid funds from funding uncompensated care to coverage. When budgets improve, there might be more opportunities for states to use these types of approaches to expand coverage."

Despite budget cuts, "there are some states that are not in a deficit and even have a surplus," says Ms. Schwartz. "And there are some states facing budget challenges that are still making improvements in health care programs. It all depends on whether health care is made a priority."

HIT is key issue

Both nominees support an infusion of federal investment in health information technology (HIT) to advance adoption of electronic medical records. "This may give states greater ability to leverage their own resources for HIT," says Ms. Duchon.

Federal incentives to adopt HIT are critical to moving forward with an interoperable system among all health care providers, says Ms. Stoll. "A much-needed infusion of federal resources will allow states to better target their resources, and provide additional assistance to providers who serve a greater portion of low-income people and have tighter margins that do not allow for investment in HIT."

Contact Dr.. Duchon at (202) 785-3669, ext. 15, fax: (202) 833-8932. E-mail: lduchon@healthmanagement.com. Web: www.healthmanagement.com. Contact Ms. Stoll at (202) 628-3030, fax: (202) 347-2417, e-mail: info@familiesusa.org.