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The States Leap Ahead on Health-Care Reform


America's state governments have plunged into a wave of health-care reform that is without precedent. Recent or imminent action is reported in at least 20 states, some of it breathtakingly broad in scope.

Oregon has received the federal government's OK to go ahead with its revolutionary plan to expand Medicaid to all the state's poor. Health services will be limited to 568 items selected from a list of 688 procedures.

Florida last month passed a plan that attempts to guarantee health coverage for all Floridians through "managed competition" -- the same formula Hillary Clinton's health policy task force is said to favor.

Minnesota, which last year took giant steps to extend health-care coverage to its "working poor," will soon decide on its independent health-care commission's recommendation to go for a full-bore managed competition system.

Washington state may also be poised for action on managed competition -- the idea of letting networks of health-care buyers, including corporations, governments and individuals, pick between the health-care packages offered by competing networks of providers (hospitals, clinics, physicians and insurers).

A three-member commission created by Vermont's legislature is trying to decide which of four models of managed competition to suggest. One would be close to the Canadian single-payer model, with the state government, acting as a single health-plan-purchasing cooperative, seeking the best deal among health-care providers for the state's citizens and businesses.

Tennessee Gov. Ned McWherter is calling for "the most radical health-plan care in America." It would withdraw Tennessee from the federal Medicaid system, then pool federal money and other resources to cover half a million uninsured people.

Maryland seems intent on extending health coverage to many of the state's 600,000 uninsured people by such steps as requiring HMOs (health maintenance organizations) and insurance companies to provide uniform benefits to all small businesses. The state is also poised to regulate physicians' fees, even while making it harder for doctors to be sued for malpractice.

And Kentucky is considering proposals from Gov. Brereton Jones to limit health-care cost increases to the consumer-price index, expand health coverage to 450,000 uninsured people, apply a 3.75 percent payroll tax on employers who don't give their workers adequate health insurance and slap a provider tax on doctors, hospitals and clinics.

Colorado, Maine, Montana, New Jersey and New York are among the other states with active health-care commissions or new programs rolling out. The states, as Justice Louis Brandeis once wrote, are "laboratories of democracy." But why all this action right now?

Do the states want to get ahead of the "feds," to be first in line for waivers and experimental freedom if a national health-care plan is passed this year or next?

Are they trying to save their fiscal skins because Medicaid is devouring their budgets, freezing out almost any other kind of initiative?

Is it to feed gubernatorial egos or what some now call the "brochure effect" -- the allure of glitzy write-ups of what competitor states have done, propelling additional states to try their own versions?

Maybe it's some of all three. Health-care cost inflation is at 14 percent a year; the total bill approaches one-seventh of our gross national product. Many Americans are nervous about losing some or all of their health coverage. Thirty-seven million Americans have no coverage at all.

And for states, Medicaid is like a poison pill. Last year its costs zoomed by another 30 percent; by 1995, 28 percent of all state budgets will go for this single program. Medicaid forces tax increases.

My bet is that this wave of state activity won't slow down -- even if national health action is delayed by the Clinton administration's political problems. The genie's out of the bottle. Physicians, hospitals, insurance companies can no longer quash reform. And for governors, the course of tolerating more budget crises, sitting helpless as health costs go through the roof, leaving vast numbers of their citizens uninsured, no longer looks like safe politics. It looks like the riskiest politics of all.

Neal R. Peirce writes a syndicated column on state and urban affairs.

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