HEALTH : States Seek Own Solutions to Rising Medical Costs, Uninsured Residents

WASHINGTON —  With no sign of any federally enacted health care reforms in the offing, virtually every state Legislature in the nation is pushing ahead with plans of its own to cut costs while increasing access to medical care.

“It has fallen to the states to craft solutions, and they are indeed meeting the challenge,” says Richard E. Merritt, director of the intergovernmental health policy project at George Washington University.

BACKGROUND: The nation’s total health spending now exceeds 12% of the gross national product, and is still climbing. At the same time, some 35 million Americans now have no health insurance, and that number also is rising.

The states have taken a variety of approaches, largely predicated on the belief that one sure-fire way to cut health care spending is to provide near-universal insurance coverage. Because uninsured patients typically postpone low-cost preventive medical care until their conditions require expensive services, those higher costs generally lead to higher premiums universally. Enabling more people to have access to early care would cut costs in the long run, many analysts believe.

Attempts by the states to widen access to health care include spreading the financial burden of treating uninsured patients, most often borne by inner-city hospitals; expanding Medicaid eligibility and benefits, subsidizing private insurance and, in Hawaii, requiring employers to sponsor insurance for virtually all workers.

Together, these disparate actions will serve as “valuable laboratories” for Congress and the Bush Administration in the years ahead, says Dr. Molly Joel Coye, California’s new health director.

In California, even private insurers are looking for ways to increase access to health care. Blue Cross is offering small groups bare-bones, low-cost policies, according to the Blue Cross Blue Shield Assn. here, which represents 74 independent nonprofit state insurance plans.

Many states, though strapped financially, are seeking to expand their Medicaid programs, in which federal dollars match state funds used to pay for hospital, physician and other medical services incurred by the indigent.

But Medicaid has wide gaps. Simply being poor does not entitle most adults to Medicaid assistance; they also have to be pregnant or disabled, for instance.

And Medicaid benefits vary greatly from state to state. The starkest and most controversial example is the state of Oregon, which is seeking to provide a basic array of services for more people by denying coverage of certain high-cost items, even some life-saving organ transplants.

And even states like Hawaii--with a 16-year-old universal health insurance program that now covers 98% of residents--have a severe shortage of doctors willing to treat Medicaid patients, concedes Dr. John C. Lewin, who is Hawaii’s health director and president of the Assn. of State and Territorial Health Officers.

States continue to institute new measures.

Washington has a pilot program that subsidizes enrollment in private health maintenance plans for some 20,000 of the uninsured poor; but that’s only 5% of the state’s uninsured population.

New Jersey reimburses hospitals for the full cost of care provided to uninsured patients to encourage people to seek care before it becomes more expensive. In the short run, the plan is significantly cheaper than buying insurance for the indigent. But a key shortcoming is that hospitals are the most expensive settings in which to provide non-critical care, Coye notes. And the “uncompensated care” fund, about $550 million a year, is increasingly less able to cover the growing numbers of uninsured residents.

Minnesota now insures all low-income children under age 18 for preventive and primary care services. Similarly, New York offers outpatient coverage to uninsured or inadequately insured children under age 13 who are not eligible for Medicaid.

More ambitious efforts to expand coverage have not fared well in the past year.

The Minnesota Legislature, for instance, passed a bill to provide universal coverage by 1997, with the phasing-in of outpatient benefits to 35,000 uninsured residents by October, 1992. But the governor vetoed the bill, calling it a “fiscal atom bomb.”

ONGOING EFFORTS: In 16 states, measures proposing universal coverage through publicly financed and administered programs--such as in Canada--went down to defeat. But proponents say they intend to try again.

In California, a coalition of more than 150 interest groups are lobbying for a state-run health insurance plan that promises to guarantee medical care for every resident, including the 6 million Californians without insurance.

It is from such ongoing attempts to address the worsening health care crisis that the seeds of some eventual national solution will spring, says W. David Helms, a New Jersey-based analyst.