States Tackle Health Care Problems

In Tennessee, nearly a half-million people are warned they could lose their government-supported health care. In Maine, the move is in the opposite direction — the state is expanding its role and, with reliance on the private sector, aiming to provide affordable health insurance for all 138,000 residents now without it.

The two dramatically divergent paths come together in one way: States are taking a deep breath and tackling the daunting problems of health care, from soaring costs to tens of millions of Americans without regular care from a doctor.

For the 50 million people served by Medicaid (search), the joint state-federal health care program for the poor, the question is which path more states will follow.

Recent years have seen a mix of approaches as states try to rein in costs, but several have looked to Tennessee's solution — drop the least needy from the rolls, deny others from getting on and scale back services.

"Everything's on the table, they're looking at any kind of option to save costs as well as preserve coverage," said Courtney Burke, a senior policy analyst at the Nelson A. Rockefeller Institute of Government (search) in Albany, N.Y. "Any kind of innovation, states are watching other states for that."

Maine is unusual in that it's trying to create universal health insurance, with voluntary commitment by business and by building on the Medicaid system using the leverage the government gets from being a large purchaser of care and drugs. Tennessee also had tried to go beyond Medicaid to get health care to more of the uninsured.

Other states broadened their health care programs too, back in the prosperous 1990s. With encouragement from the federal government, they reached out to try and cover more children without health care — even if their families weren't poor enough to qualify for Medicaid itself.

It worked: The number of uninsured children fell from 10 million when those efforts began to roughly 8 million now, even as the uninsured overall rose, said Howard Berliner, a former New Jersey assistant health commissioner and now a professor at the New School for Public Research in New York.

While those steps cost states money, they're cheaper in the long run, Berliner said.

"The more people that get insured, the greater the savings will be, for everyone. Part of the problem with uninsured people ... is they end up having huge expenses and make everyone's costs rise."

Now, as health care costs rise faster than tax revenues, governors and state legislators say they will soon be unable to save government-supported care from sweeping changes. In recent months:

— Mississippi, with support from GOP Gov. Haley Barbour (search), moved to cut 50,000 from Medicaid rolls this fall, but a court temporarily stopped the state after patient advocates sued. The issue will be revisited in 2005.

— Oregon is aiming to shrink its rolls by some 25,000 people who aren't poor enough for traditional Medicaid. That would cut in half a program that was once one of the nation's most generous.

— New Hampshire had been working on an overhaul of its program, but it may be delayed with the election of a new governor.

"When you look at the state budgets, (the choice is) health or education. But not both," said Ray Scheppach, executive director of the National Governors Association. This year, for the first time, Medicaid consumed a larger share of state budgets than K-12 education. "If it's this year or next year or the year after, states are going to be back in the position where they're going to have to cut benefits or populations."

Since 2001, states have seen Medicaid enrollment grow by almost one-third, a Kaiser Family Foundation study found. In fiscal 2004, 21 states reduced or restricted those who can get Medicaid, and 14 plan to do so in fiscal 2005.

Other cost-saving measures include freezing payments to doctors and hospitals; making patients pay for part or more of their care; reducing benefits; and trying to save money on prescription drugs.

Tennessee came to the brink this month of jettisoning 430,000 of the poor and disabled from the its TennCare system. Gov. Phil Bredesen (search), a Democrat, only agreed to negotiate after patient advocates said they would back off some of their legal challenges to find a compromise.

When the state created TennCare a decade ago, it cited soaring Medicaid costs as a reason. At first it saved money, experts said, but now the program eats up one-third of the state budget. It provides care for 22 percent of the state's population, about 1.3 million people.

Maine, aiming to fill the gaps between private insurance and Medicaid that leave at least 138,000 uninsured, has crafted a voluntary program that relies on state and federal funds, and contributions from employers. It projects savings of more than $50 million a year.

The uninsured will have to pay premiums, though they will be set on a sliding scale based on income — or employers could provide coverage.

The big questions are the costs — the state estimates $90 million for the first year — and how many employers and uninsured will take part. Officials aim to sign up 31,000 people this year, with all uninsured residents getting access to the system by 2009.

Both states are receiving scrutiny from health experts and other states.

"The fact is there are no smiles in this. There's no way to put a bright picture on this," said Berliner, in New York. "If you're asking me which way the country is going to go, sadly it's the way of the Tennessees ... not the Maines."