What We Should Learn From State-Run Health Care Disasters

Plans in Tennessee, Texas, and Massachusetts offer lessons and warnings

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Optimism that health care will pass may be rising, but the ever-contentious health care debate is still surfacing new ideas. The latest, gaining some steam late in the game as reform creeps through the Senate, is to have states design and run their own health care programs. Debate over the effectiveness of state plans hinges on a few past state plans in Texas, Tennessee, and Massachusetts. Are they models to follow, lessons of how to do better, or warnings against more state-run health care?

  • Senator Carper's Plan David Sessions explains the proposal Carper put forth to run state-by-state insurance. "One Senator has a new idea: let the states each run their own government health care plan. The proposal by Sen. Tom Carper (D-Del.) is earning warm praise from centrist Democrats as a way to both expand coverage and spur competition in the private market," he writes. "A plan like the one Carper is proposing could leave health care coverage up to the whims of the governor or the financial condition of the state, and would create a messy situation for people who moved between states."
  • State-Tailored Plans More Efficient Ezra Klein, interviewing Carper, asked, "Doesn't that move us in the wrong direction? Isn't the problem that the system is too fragmented and diffuse?" Carper responded, "That's an argument to consider. But there's something to be said for choice and letting them tailor it for some states rather than for others. What might work well for a state in the Northwest or the Midwest might not work that well in New York or New Jersey."
  • State Plans Failed Peter Suderman, surveying past state-run plans in the Wall Street Journal, says they don't work. "The results have been dramatically increased premiums in the individual market, spiraling public health-care costs, and reduced access to care. In other words: The reforms have failed," he writes. "A 2008 analysis by Kaiser Permanente's Patricia Lynch published by Health Affairs noted that in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey and Vermont 'deteriorated' after the enactment of guaranteed issue. Individual insurance became significantly more expensive and there was no significant decrease in the number of uninsured."
  • The Texas Disaster Cappy McGarr reviews the Texas health care initiative in the New York Times. In the 1990s, McGarr founded and ran a state-run "purchasing alliance" akin to the "exchanges" proposed in Congress. McGarr says it worked well initially but "ultimately failed" because they could not overcome the power of insurance companies. "Texas wasn't the only state to see its insurance exchange fail. Florida and North Carolina were also unsuccessful. And California, which had the first exchange (established in 1992) and the largest market, shut its doors in 2006. All these state exchanges failed for the same reason: cherry-picking by insurers outside the exchange. If Congress now creates new exchanges, as seems increasingly likely, it must prevent this phenomenon by setting two national rules: Insurers have to accept everyone and have to charge everyone the same rates regardless of health status."
  • Will Federal Plan Reproduce Failed State Plans? Tim Pawlenty, the Republican governor of Minnesota, says Tennessee and Massachusetts are warnings. "We have essentially Obamacare that's been deployed in two states in major ways. One is in Tennessee. We have a Democratic governor, Phil Bredesen, said hey, look, we tried this cost savings as a way to fund a major overhaul of health care; it didn't work," Pawlenty said on ABC's This Week. "We have another state, Massachusetts, who tried essentially the same thing. They have the most expensive health care in the country. They have increasing waiting lines, and it's not working."
  • White House Learned From TN and MA Obama's Health and Human Services Secretary, Kathleen Sebelius, rebuts Pawlenty but insists on a federal plan. "The Tennessee experiment is really different from anything that's been talked about here. It's something that really was an attempt to make a vastly over-expensive Medicaid system work. It did crash and burn. It's different than any place in the country, I would suggest, that has done a much better job at expanding care and holding their costs. In Massachusetts, they readily admit that they expanded care and didn't look at the cost side of the puzzle, which is why I think the president continues to suggest that anything we do, it has to bend the cost curve," she said. "We need a national strategy."
This article is from the archive of our partner The Wire.