Economy Takes Precedence as States Rethink Health Care Reform Efforts

Four months ago, at least 28 states had moved forward on plans to reform their health care programs, either through proposed or enacted legislation, or by setting up a task force to formulate a new plan. Today, only about 14 states are pursuing health care reform efforts via legislation or committee hearings, according to the National Conference of State Legislatures.

“Health is still a huge issue for states,” said Melissa Hansen, a researcher for NCSL’s health program. “But there is not as much activity as there was in 2007, as far as broad-based reform efforts.”

Hansen said many states are pursuing incremental changes, such as expanding coverage for children, implementing health information technology or providing assistance to small businesses, she said. “A lot of current bills deal with management of chronic disease, prevention efforts, and health information technology,” Hansen said. “All touch on areas of health reform but each has an element of cost containment.”

Some health care analysts predicted momentum in state reform efforts would slow after California’s bill to provide health care coverage to nearly all its residents died in the Senate in January.

Hansen instead points to a weakening economy and its impact on state revenues as being top of mind for many legislators. “There are real fiscal constraints that legislators have to deal with,” Hansen said. 

Nonetheless, Adam Feinstein, a health care facilities analyst with Lehman Brothers said state-based approaches to health care reform have a better chance than a national approach as far as addressing the problems of the uninsured and bad debt. He estimates that for-profit hospitals could generate nearly $14.6 billion in total bad debt in 2008, up from $12.4 billion last year.

Meanwhile in its 2008 outlook on the not-for-profit health care sector, Fitch Ratings stated that much of the material changes over the next few years will take place at the state level.

“Many of the ideas being discussed at the national level are being proposed, tested, and implemented in various states,” the report said. “Initiatives in Massachusetts, California and other states regarding mandatory coverage could serve as preliminary models at the national level.”

NCSL is a bipartisan organization that serves the legislators and staffs of the nation’s 50 states, its commonwealths and territories by providing research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues.