Stateline Story

Commentary - Universal Health Care: Stopping the Leadership Pendulum

  • January 12, 2007
  • By Raymond C. Scheppach

The goal of attaining universal health care in the United States has been elusive, in part, because the pendulum of national leadership continues to swing back and forth between states and the federal government.

When the federal government's deficit is small and there is no overriding foreign policy crisis, health care leadership often swings to Washington, D.C., as witnessed during the Clinton Administration.

Conversely, when states' financial positions are strong, as they were during the late 1980s and at the present time, the pendulum swings back to states. This has most recently been demonstrated by passage of reform legislation in Vermont and Maine, the enactment of sweeping reform in Massachusetts and the most recent comprehensive plan announced by the Governor of California.

The fastest route to universal care for all Americans is to stop the pendulum from swinging back and forth and empower each level of government to address the needs of the populations for whom they traditionally provide services. For its part, the federal government should integrate the long-term care component of Medicaid into Medicare. This would ensure that once an individual reaches the age of 65, he or she would receive a full continuum of services from Medicare.

It would be necessary to continue to means test the long-term care component as well as find an additional funding source. One option for additional revenues would be to tax all employer paid health care above the national average that accrues to families and individuals. This current tax exemption is one of the few in the tax code that is not capped, and it puts upward pressure on the price of health care.

The integration of these two health care programs would eliminate most of the duplication of Medicare and Medicaid services for the dual eligible population. Such an approach would require a 10-15 year transition similar to the Part D drug plan, in which states would make direct payments to the federal government. Essentially, this would add a temporary "Part E" to Medicare, with the federal government funding and administering the major health program for individuals older than 65 after the transition period.

Because of the shift of long-term care spending to the federal government, states would anticipate a reduced long-term financial burden. As a result they are likely to become extremely aggressive in implementing health care reform plans that provide universal coverage and combine such plans with more aggressive cost control strategies that include quality measures, price transparency and the implementation of electronic health care records.

In the past, states have been laboratories for experimentation in addressing national issues such as Social Security, clean air and welfare reform; today, states are equally well-positioned to develop strategies for confronting the challenges of providing universal health care. Such experimentation will provide the evidence necessary to break the federal log jam, and it is important to create the fiscal conditions that will enable states to succeed.

While most states with existing uninsured populations of less than 15 percent are expected to implement plans, additional federal grant funds would alleviate pressure in those states with significantly higher rates of uninsured residents, enabling them to experiment as well.

Ideally, states would offer multiple approaches in balancing the roles of government and the private sector, which seems to be a major philosophical obstacle to achieving a national consensus. While the testing period may last as long as 5-8 years, it would reduce the possibility of unintended consequences from federal legislation. Similar to welfare reform, such a time period would allow academics and other researchers to evaluate the various models, which would provide valuable information for the enactment of a federal universal health care initiative.

If the two levels of government are able to develop a coordinated strategy, it would be possible to have a cost-effective universal health care system in place by 2020. It also would eliminate the confusion and duplication of the current Medicaid/Medicare system and increase accountability and cost effectiveness.

Low-income individuals younger than 65 would seek assistance from states, while those older than 65 would rely on federal programs for coverage. This is consistent with the federal-state division of responsibilities of all programs. For example, the federal government administers Social Security, a program for those over age 65, and the states provide other integrated services, such as welfare and other social services to the non-elderly, low-income population.

Bringing the pendulum of national leadership to rest squarely between state and federal government would create an understandable and accountable national system that builds on our current separation of roles and responsibilities and responds to the needs of every American.

Raymond C. Scheppach, Ph.D., is the executive director of the National Governors Association. The views expressed here are those of the author and do not necessarily represent those of the National Governors Association.

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