States Put Their Own Spin on Obama Health Care Law

March 15, 2011 - 4:24 PM

Chicago (AP) - Rancor over President Barack Obama's health care overhaul has largely overshadowed some states' efforts to use the law to help them move as fast as possible to insure more people and increase control over insurance companies.

Minnesota, Connecticut and Washington, D.C., have leveraged more federal dollars to expand coverage of childless adults. Vermont is exploring a single-payer health care system that would phase out most private insurance, a strategy rejected by Congress as too radical for the rest of the nation. Oregon is focusing on preventive care and providing proven treatments.

Time will tell whether these and other leader states see economic benefits from stabilized insurance markets and expanded health care coverage, or if they're haunted by their strides should the law be weakened by congressional challenges or overturned by litigation making its way to the U.S. Supreme Court.

Edwin Park, vice president for health policy at the liberal Washington, D.C.-based Center on Budget and Policy Priorities, insists there's little risk. "States are going to be able to have better functioning health insurance markets and produce significant economic gains in the long run," he said.

While some Republican states are hedging their bets - challenging the nearly 1-year-old Affordable Care Act in court as they accept multimillion dollar grants from it - several Democrat-controlled ones are pushing even further than required.

The law allows for "innovation waivers," which will be granted to states that prove their proposed alternatives to the federal requirements would cover as many people and be at least as affordable. The Obama administration supports proposed legislation that would make those waivers available in 2014, three years ahead of what the law now provides.

Vermont may seek one of the waivers. Its House is expected this month to take up legislation that would put the state on track toward a single-payer health care system, with a modest benefit package for all residents and all payments to doctors, hospitals and other providers coming from a single administrator working under a state contract.

Critics have faulted Vermont Gov. Peter Shumlin's plan to put off until 2013 decisions about how to pay for the legislation, which would create a new state board to design the system. But Shumlin and fellow Democrats who control both houses of the Legislature are pushing ahead with what they say will be a three-year effort.

Oregon has received $48 million as one of seven "early innovator" states using such funds to build the online infrastructure for an insurance marketplace. Democratic Gov. John Kitzhaber - a former emergency room physician - says he hopes to redesign his state's health care system and eliminate wasteful spending by focusing on preventive care and providing treatments proven to be most effective.

"Even if the federal government does something different, we're moving forward with major reform and I'm excited," said state Sen. Laurie Monnes Anderson, a Democrat who chairs the health committee.

Minnesota's shift to a Democrat in the governor's mansion has helped put that state on the health overhaul fast track. The state moved almost 100,000 adults into Medicaid on March 1, switching most from less generous state-paid health care programs while extending coverage to 12,000 uninsured.

Democratic Gov. Mark Dayton ordered the Medicaid expansion upon taking office in January, reversing Republican predecessor Tim Pawlenty, a potential 2012 presidential candidate who had restricted Minnesota's involvement in the health care law.

"From the state of Minnesota's standpoint, 98,000 additional people are receiving better quality health care and importantly, every health care provider - every hospital, doctor, health clinic in Minnesota - is getting a better reimbursement," Dayton said last week.

For some states already innovating, the law has provided federal money to bolster health care efforts.

Maryland has been the only state with "all payer rate setting" for more than 30 years, meaning a state commission sets what hospitals are paid by private insurance, Medicaid and Medicare. The system distributes costs for hospitals' uncompensated care to the uninsured among all insured patients. Medicare is required to pay the state-set rates under a federal waiver.

The state's $6.2 million "early innovator" grant will allow it to integrate an online insurance exchange with its existing systems.

Democratic Gov. Martin O'Malley's administration and the state's Democrat-controlled Legislature are facing Republican criticism for moving too quickly to implement reforms while legal challenges to the federal law are pending. But Lt. Gov. Anthony Brown said the state needs to be prepared to put reforms in place.

"Notwithstanding legal challenges, let's make sure that in Maryland we are positioning ourselves so that we can move forward on reform if in fact it survives the challenges," Brown said.

Four newly Republican-led states also are among federal grant winners in the "early innovator" program in which they'll build the software infrastructure for an online marketplace where consumers would shop for health insurance. Kansas, Oklahoma, Wisconsin and Maine - an "early innovator" grantee as part of a New England consortium - also are suing to overturn the law, putting them in the strange spot of accepting money to implement parts of the law while opposing it in court.

Ed Haislmaier, a health policy expert at the conservative Heritage Foundation, said he hopes conservative states will resist federal pressure to over-regulate the insurance industry despite the grant money.

He said he is urging state lawmakers to figure out what counter-reforms they want in health care and tell the Obama administration "it's their job to figure out how to let you do it."