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Role of the States (Page 2)

We Think that Model 3 has the Best Chance of Success.

The federal government would determine both the design, and funding levels, for national healthcare initiatives that would then be administered (and partly paid for) by the states.

Why this model?

Healthcare is one of the federal government’s largest expenditures. It currently eats up about 17% of our Gross Domestic Product (GDP).

As President Obama emphasized in his second publicized news conference on the economy, controlling health care spending is absolutely critical if we are going to reduce our federal deficit.

In other words, it’s in our best interest to attack this issue from a united front at the national level.

The federal government also has more clout than any of the states when it comes to bargaining for lower drug prices, or fighting for other cost reductions.

And if the President is serious about offering public insurance to compete with private insurers, such an option would have to be available to folks nationwide to have the intended effect of reducing private insurance costs.

SIDEBAR: Three Power-Sharing Models

Model 1: Designed and Funded by the States
Model 2: State Design, Federal Dollars
Model 3: Federal Design, State and Federal Dollars
Federal Role Minimal, fed. govt. provides some funding Identify broad goals. Provide funding to states to tackle the goals, and renew funding if states are successful. Determine both design and funding levels for national initiatives.
State Role Come up with initiatives based on available funding and political environment. Design programs to fulfill national goals. Programs may vary widely between states. States implement the national initiatives and help to pay for them.

Finally, allowing the states, or even entire regions, to make decisions about healthcare often produces uneven results in the quality of care received, and the cost of treatments.

Medicare, the popular government insurance program for Americans over the age of 65, is the perfect example.

Since 1965, the Centers for Medicare and Medicaid Services (CMS) has largely left Medicare reimbursement decisions up to 15 regional contractors around the country.

The 15 regional authorities have no financial incentive to withhold reimbursements for ineffective procedures, since they are paid a contracted sum by the CMS regardless of what decisions they make.

It’s not clear to what extent the regional contractors actually examine comparative evidence when making coverage decisions.

As a result, certain procedures are covered in some states by Medicare and not in others. For instance, Medicare pays for a treatment for prostate cancer known as “Cyberknife” in 33 states, but not in the remaining 17.

  • Some experts argue that there is inconclusive evidence about whether this procedure is more effective than older prostate treatments, and that until such evidence exists, the CMS should not reimburse for this costly remedy.
  • Many folks believe that these important coverage decisions should be made at the national level, to both improve health outcomes and cut costs.
  • As we discussed in this post, President Obama included $1 billion in the stimulus package for national, comparative effectiveness research.
  • This research will compare tests, procedures and prescriptions drugs head-to-head to show what works and what doesn’t. Medicare should then use the findings to make national reimbursement decisions.

Bottom Line

We are not suggesting that the federal government cannot learn from the successes and failures of the states. Nor should the states sit back and wait for national reform to come along; we hope that state healthcare leaders actively participate in Mr. Obama’s Health Care Summits and other discussion efforts.

But if we want to see reform on a wide scale, the federal government must take the lead. Only the federal government has the resources to implement a universal coverage initiative, and only the federal government has the ability to negotiate better drug prices, set physician reimbursement rates, and make significant changes to Medicare and Medicaid, both in terms of reducing wasteful spending and revising healthcare delivery models.

And we think that the American people agree with us, which is why they voted to elect a President who is interested in tackling these problems head-on.

In our next As We See It, we’ll do a breakdown of the national reform proposals, their costs and their political feasibility.

This article was written by Julia Nagle.

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