Health Care

Health Care

States costs for health care — especially Medicaid, state employee benefits and retiree health insurance — are growing at the same pace as health costs for private employers, crushing state budgets. Unfortunately, the federal government has been unable to develop and implement a coherent health care policy so states must take the lead.

Expand Access to Health Benefits and Reduce Costs

Initiatives to achieve health security and provide universal coverage have been introduced in a growing number of states.  Most proposals aim to control costs and strengthen the employer-based health insurance system.  Initiatives include incentives or mandates to provide coverage, new public or private pooling and purchasing options, negotiation of costs, improving quality care and prevention strategies, and tackling profiteering and privatization.  Several states have passed laws to give access to coverage for all residents or the uninsured, especially children.  Promising proposals incorporate AFSCME’s key health care reform priorities:  reducing costs, coverage for all, enhancing quality and fairness/shared responsibility for financing.  Also see AFSCME's Campaign for Quality Health Care.  State reform strategies include:

Encourage Employer-Based Health Care Insurance

Many states have introduced "pay or play" or "Fair Share" legislation requiring large employers who do not provide adequate worker health coverage to contribute to a dedicated fund to help pay for the uninsured.  Maryland and California each passed model bills that were not implemented.   Hawaii has the only state law mandating employers to provide coverage.  Vermont, Massachusetts and San Francisco each passed laws requiring employers to pay a small fee for uninsured workers. Click here for resources

Create Insurance Pools

In 2003, Maine created Dirigo Health Plan, a public/private insurance pool for individuals and small employers.  More than 2,300 employers have joined and contribute to the cost.  California passed, but did not implement, a bill implementing a public, Medicare-style system for all.   Vermont created Catamount Health Care to offer a standardized health package through selected private health plans for all uninsured residents and to help control premium growth for insured workers and employers.  Other states have expanded state and municipal health plan pools.  Click here for resources

Cover All Children

In 2005, an estimated 8.3 million children were uninsured nationwide. To cover more uninsured children and reduce the costs of uncompensated care, states continue to expand Medicaid and their State Childrens’ Health Insurance Program (SCHIP).   Model states currently subsidize children at 300 percent of the federal poverty rate or higher, and offer options for higher income children to enroll. In 2005, Illinois passed All Kids, a program to provide coverage to all uninsured children. Click here for resources

Provide Catastrophic Claims Re-Insurance

Some states are exploring re-insurance, in which the state takes on a portion of employers’ or insurers’ high cost medical claims as a stop-loss mechanism to help lower premium costs.  The most costly 1 percent of health care claims account for 27 percent of all health benefit costs.  New York created a stop-loss feature as part of the Healthy New York program.  Kansas received a grant from the federal Health Resources and Services Administration to establish a statewide re-insurance program.  Click here for resources

Medicaid Reform

Report Cost-Drivers

The federal government has made major cuts to Medicaid and offered states new flexibility to change their Medicaid programs through the Deficit Reduction Act.  State lawmakers need trusted information to combat health cost increases and to target reforms.  One important measure requires states to compile a disclosure report listing employers with disproportionate numbers of workers utilizing Medicaid and hospital charity care.  More than two dozen states have released reports administratively or by law that show hundreds of millions of state dollars spent per year on health care to cover working families of some large businesses that provide inadequate health care.  Massachusetts and Illinois have comprehensive annual reports required by legislation.  Click here for resources

Pool Prescription Drug Purchasing

States have joined together to pool their purchasing of prescription drugs for Medicaid and other state drug programs, and to share research on effective drug treatments and cost-saving strategies. There were five multi-state bulk buying pools, as well as other consortiums and single state-initiatives as of mid-2006.  Some states have also pursued litigation to bring down the price of drugs.  These efforts are especially important since the enactment of the Medicare Part D prescription drug benefit in 2006, which caused states to lose considerable leverage in negotiating with drug companies to purchase lower-cost prescriptions for all their Medicaid enrollees.  The federal Medicare program replaced the states’ Medicaid program as the direct payer of prescriptions for the highest users – "dual-eligible" seniors and disabled persons using both Medicaid and Medicare.  State savings from this Medicare takeover was mostly erased by a "clawback" provision requiring states to pay back most of their savings to the federal government.   Click here for resources

Implement Disease Management (DM), Prevention and Quality Reforms

States are using a range of strategies to reduce costs for high users of health care and increase public access to health information.  Vermont and Maine have created state quality improvement programs as a key part of their plans to expand universal coverage.  There is great variation in both the cost and type of care that different patients receive for the same illness, yet studies conclude that high cost care is unrelated to good quality care. 

Chronic illness is a major cost driver.  More than half of all Medicaid spending may go to treat as few as 4 percent of people with chronic conditions, such as diabetes and hypertension.  DM programs help enrollees manage chronic conditions, which reduces costly emergency care and hospitalization.  Greater access to health information is important to improve quality and prevent costly illness, including electronic record-keeping, reporting of medical errors and better access to information on providers.  State Medicaid programs can review their raw claims data to identify and counsel providers who run up excessive charges by providing unnecessary care.  Private sector review programs have saved as much as 10 percent of total plan costs in one year.  Click here for resources

Implement Prescription Drug List (PDLs) and Step Therapy Programs

Most states have implemented laws to establish PDLs to leverage prescription drug rebates from manufacturers.  The next step is to require new prescriptions paid for by the Medicaid program to be written in a “step therapy” regimen.  Under step therapy programs, following established therapeutic guidelines, a less expensive medication demonstrated to be effective is prescribed prior to more expensive drugs.  If that medication is medically unsatisfactory, it is replaced with the more expensive medication.  Step therapy programs yield substantial cost savings with no decrease in health care quality.  A majority of states have implemented some form of step therapy.  Click here for resources

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Vanetta Lloyd
Council 4, Connecticut

Vanetta Lloyd

"Working families depend on services like student loans and Medicare to get by, so we have to stop budget cuts that pay for tax breaks for the extreme wealthy."