States eye health care reform if federal law is overturned

The Supreme Court is ruling on the constitutionality of health care reform, leaving states in the position of having to plan for any eventuality. Letting the states take the lead in health care reform remains a viable option.

With a Supreme Court decision on the Affordable Care Act (ACA) expected within weeks, attention has turned to the “what ifs.” If the law is overturned, in whole or in part, what would replace it? One option is to turn things over to the states, so that they can decide on their own how to ensure health care access to their residents, maybe with some federal dollars to help with the cost.

The idea of letting states run health care is already a major issue for the 2012 elections. Mitt Romney, who has the delegate lead in the Republican primary battle, has argued for replacing the ACA with a state-based approach, pointing to the Massachusetts law that has provided coverage to nearly all residents without federal mandates. (He rejects any comparison of his plan with the ACA, even though key features of the Massachusetts law—subsidies, health exchanges, and an individual insurance requirement—are the same as the ACA.)

A House Republican budget blueprint developed by budget chair Paul Ryan (R-WI) calls for turning the Medicaid program completely over to the states, where it would be funded by federal block grants with very few strings attached, but with a catch. Along with more flexibility, the states would get much less money from the feds.

If the Supreme Court rules that some or all of the ACA is unconstitutional, the push for state-based reforms likely will gain steam. For instance, the court could rule that the federal individual insurance requirement must go but allow most of the rest of the law to stand. In that case, the responsibility of developing mechanisms to bring healthy people into the insurance pool could be turned over to the states, which would not raise the same constitutional issues as a federal mandate.

Even Democrats and the Obama Administration may be open to giving more enforcement authority and discretion to the states if that is what is needed to meet the Supreme Court's ruling and preserve the rest of the ACA. Of course, they would need the cooperation of House Republicans to amend the ACA, which won't happen since the GOP has pledged to repeal the law in its entirety. Any real decisions on changes to or replacement of the ACA will be put off until after the 2012 general election, allowing the voters to decide.

If the Supreme Court upholds the ACA, the idea of giving the states more authority and flexibility over health care will continue to have intuitive appeal to many. They will argue that state governments are closer to the people; have very different populations, cultures, traditions, resources and needs that must be respected; and know better than Washington what their residents need or want.

But here's the problem. There already are huge and unacceptable variations in how well states ensure that their residents have access to affordable health care, in how much such care costs, and in the demographics and wealth of their populations.

Consider this. According the Kaiser Family Foundation, the percentage of the population that was uninsured in 2010 ranged from a low of 5% in Massachusetts to a high of 25% in Texas. In Wyoming, only 42.4% of employers offered health insurance, the nation's lowest, compared to the 87.4% of employers in Hawaii who provided coverage, the highest. (Data from the Kaiser Family Foundation are online. )

The percentage of residents who live in poverty also varies considerably among the states. More than one out of five Mississippi residents live in poverty, the highest in the nation, compared to 7.1% of residents in New Hampshire, which has the nation's lowest poverty rate, according to data from the U.S. Census Bureau.

There also is enormous variation in state health care costs per person. The Washington Post's Ezra Klein, reporting on 2009 data, wrote on Dec. 8, 2011 that “Health care spending in the United States ranges from a high of $9,278 per person in Massachusetts to $5,031 in Utah. On average, it hovers at $6,815 per person ....” Wealthier states tend to have higher health care spending, and states with more uninsured young people have lower spending.

The ACA promises to level out many of these variations by providing all residents, regardless of where they live, the same access to a core package of essential benefits, via subsidized purchase of qualified private insurance through state health exchanges or through Medicaid for the poor and near-poor. If the ACA is to be replaced, either as a result of a Supreme Court ruling or as a consequence of the elections, it is hard to see how turning things over to the states will ensure equitable access to care for all Americans.

Some will argue that that this shouldn't be the goal, that variation in health care is the price of federalism. But as the American College of Physicians argued in its proposal “Universal Insurance for American Health Care” in 1992, “Covered benefits [should] be the same for everyone: all medically effective and appropriate care.” Twenty years later, ACP still believes that access to health coverage shouldn't be a function of where one lives or works.

The Supreme Court and the elections could turn health care reform back to the states, could result in a mandate to stay the course, or could lead to something in between. But if the states are going to have a bigger say, they will need help from the federal government in evening out the differences in resources, spending and demographics that now create unacceptable barriers to affordable health care for millions.