As Medicine Advances, the Condition of State Health Care Systems Is Deteriorating

As Medicine Advances, the Condition of State Health Care Systems Is Deteriorating

Medicine in the United States is riding a surge of innovation and creativity, but the ability of the nation's health care system to deliver those improvements fairly and consistently is not only inadequate--it is deteriorating. Americans, in short, now live with first-class medicine and a third-rate delivery system that, increasingly, puts people dependent on public programs at risk.

That is the central conclusion of a year-long initiative to diagnose government-funded health care in the 50 states. The report, released today, shows that while some states are making improvements in certain health care areas, others are facing severe financial problems that are increasing the number of uninsured, limiting access to mental health care, and threatening public health. 

The report, entitled “A Case of Neglect: Why Health Care Is Getting Worse Even Though Medicine Is Getting Better,” is published in the February 2004 issue of Governing magazine. It is one in a series produced by the Government Performance Project (GPP), a six-year-old effort supported by The Pew Charitable Trusts, through a grant to the University of Richmond, to evaluate a wide range of state government management and policy functions. 

Based on hundreds of interviews and analyses, the GPP report focuses on six critical health care areas: public health, mental health, long-term care, children's care, prescription drugs, and insurance coverage. The report highlights those states that are models for health care improvements and those states that are in trouble. The report cites 29 notable “success stories,” and 27 “trouble spots.” Some states, including California, Florida, Massachusetts, Michigan, New York and Texas, appear in both categories since the report examines a broad range of health care problems. 

In each of six areas investigated by the project, the results were the same: States cannot afford to pay for the escalating costs of modern medicine and the growing numbers of men, women and children who depend on the public safety net for their care. At a time when state budgets are under enormous pressure, that has led to declining access to care, even for those most obviously in need. 

The ironies of the gap between the advances in medicine and the growing inability to deliver care are palpable. State and local public health systems all but eradicated such traditional scourges as measles and tuberculosis, only to see them return when inoculations and funding fell off. Psychotropic drugs made it possible for many mentally ill Americans to leave state institutions for community-based settings but lack of services in the communities leaves tens of thousands on the streets--or in jail. New medications and operative procedures keep people alive much longer; three times as many Americans live past 65 than did a century ago. But older people are often sicker, and publicly funded long-term care for them is squeezing out the dollars necessary to provide doctor visits for children. 

“Clearly there is a health care crisis in America, but it is not a medical crisis. It is a fiscal crisis,” according to Peter Harkness, editor and publisher of Governing

These highlights emerged from the six areas studied: 

  • Public Health -- Programs to control outbreaks of contagious diseases and fight chronic medical problems, such as heart disease and lung disease, are seriously underfunded. At the same time, states are cutting back on critical services including those that provide immunizations and anti-tobacco programs. Meanwhile, the new emphasis on fighting bioterrorism is starving traditional functions even more. 
  • Mental Health -- Deinstitutionalization and the introduction of psychotropic drugs should have been breakthroughs in bringing mental health care into the 21st century. But a fragmented and disorganized system and the high price of medications have left those dependent on the public sector ill served. 
  • Long-Term Care -- States spend well over $20 billion annually on Medicaid-supported nursing homes for the elderly and disabled. Community-based care accounts for an additional $8 billion. With those numbers growing at a rapid clip, long-term care is breaking Medicaid's back. Many states are trying to cut down on institutional care, but it's neither easy nor a cure-all. 
  • Children's Care -- This has been one of the brightest spots in recent years, with more and more young people receiving care. But confronted with budget pressures, many states are now retreating from recent advances, despite the fact that preventive care for young people is unquestionably an efficient means for saving money in the long term. 
  • Prescription Drugs -- Many states have seen their bills for prescription drugs rise between 10 and 20 percent a year in recent years. Now almost every state is embarking on programs to slow that growth. Meanwhile, powerful lobbies stand in their way, and the long-term results of cost-control measures are uncertain. 
  • Insurance Coverage -- Nearly 44 million Americans lack health insurance, and many of the states' efforts to help cut that number have been marginally successful at best. Meanwhile, much of the cost of care for the uninsured falls on the states' backs anyhow. At the root of the fiscal crisis is Medicaid, the state-federal program that finances health care for some 47 million people. In 2002, state and federal Medicaid expenditures came to $258 billion, and accounted for about 17 percent of all hospital care, 17 percent of prescription drug spending and nearly half of all nursing home care. The state share of that is more than $110 billion, and represents 20 percent of state spending--the second-largest budget item in most states after education. And the numbers are growing quickly, due primarily to the increasing costs of prescription drugs and long-term care.

Meanwhile, the number of Americans who are not covered by any form of health care insurance, including Medicaid, continues to grow, and the states wind up paying a large portion of the tab for their medical care through a patchwork of largely flawed methods. 

“It's not that the states are oblivious to the problems they confront in health care,” says Katherine Barrett, co-author of the report, “but there's simply not enough money available and solutions are elusive.” Adds her co-author, Richard Greene, “Everybody knows that state governments confront a whole variety of challenges in times of fiscal distress. But while the downside in most fields is a decreased quality of life for citizens, when it comes to health care, life itself is at risk.” 

Governing is a policy and management magazine aimed at high-level state and local government officials.

The Pew Charitable Trusts ( serves the public interest by providing information, policy solutions and support for civic life. Based in Philadelphia, with an office in Washington, D.C., the Trusts make investments to help organizations and citizens develop practical solutions to difficult problems. In 2003, with approximately $4.1 billion in dedicated assets, the Trusts committed more than $143 million to 151 nonprofit organizations. 



Below is a sampling of some individual state highlights in Governing's special issue about health care in the states. They are listed in alphabetical order and provide some sense of the many ways in which states distinguish themselves in this increasingly important field--both positively and negatively. Press releases providing specific information about each of the 50 states will be featured on Governing's Web site at on January 29. 


Success Stories: 

Arizona – Many states have found it nearly impossible to stem out-of-control costs for long-term care for the elderly and disabled, while providing services for these same people in the home and community. Arizona, however, is making notable progress with a statewide managed care system that operates in conjunction with strong quality controls. 

Arkansas – Although this southern state often finds itself in the nether reaches of many state comparisons--including poverty rates, pay levels and college attendance--it fared extremely well in Governing's analysis of health care systems. Strong management over the last decade made the state a standout in long-term care, where it has been a pioneer in a new program that gives health care support directly to citizens, cutting out middlemen. It was also singled out for cutting-edge work in public health and prescription drugs. 

Florida – All 50 states are trying some combination of efforts to control the costs of prescription drugs, and many have run into rancorous debate and even lawsuits. Florida could be a “poster state” in this area. Among the initiatives the state has undertaken: a preferred drug list; data management; use of counterfeit-proof prescription pads; restricting some beneficiaries to just one pharmacy; and dealing with manufacturers to deliver value-added programs for the state. 

Maine – The only way states can know for sure that innovative health care management efforts work well is by watching other states that have been pioneers. On that basis, Maine is the state to watch this year. A new prescription drug program, implemented in mid-January, uses the buying power the state gets from its Medicaid population to extend discounts to low-income, non-Medicaid residents. In July, its new Dirigo program will combine a variety of approaches to provide the widest-reaching health care insurance coverage in the country. 

Rhode Island – National experts agree that money spent on preventive care for children and prenatal care for women pays off handsomely in the long run. They also agree that Rhode Island leads the way on this front. Strong commitment, coupled with attention to the actual results of its programs over the past decade, has helped the state narrow the gap between high- and low-income families' infant mortality rates; establish the best record in the country for providing women with prenatal care and dramatically increase the number of children screened for potential health problems, such as lead poisoning. 

Vermont – Out the six topic areas covered in the report, the Green Mountain State is cited for standout management in five. For example, though the state has one of the strongest laws in the country requiring insurance companies to cover mental illness at the same levels as physical problems, evaluations show that employers didn't cease covering employees, access to mental health services improved and health plan spending increased only slightly. Among the state's other accomplishments: virtually all of its children are covered by some form of health insurance, and it has joined with Michigan in a purchasing pool to bring down prescription drug costs. 


Trouble Spots: 

Colorado – Like many other states, Colorado's budget is extremely tight. Part of the state's solution has been to cut back on public health dollars--including stripping away state funding from its immunization programs. This is particularly noteworthy in a state that already has the lowest immunization rate in the country for children, according to the National Immunization Survey for the Centers for Disease Control and Prevention. 

Oregon – One of the boldest health care reform efforts in the country is now in deep trouble. About a decade ago, Oregon prioritized potential benefits for its Medicaid population. Treatment for a heart attack was high on the list; back pain was lower down. By using the list to adjust benefits based on cash available, the number of people covered could grow. However, the federal government has been reluctant to allow the state to make some of the cutbacks on benefits it has wanted, which derailed the cost-control part of the plan and has recently forced the state to reduce the number of people covered. Right now, the state is waiting for approval to drop some 30 lines of benefit including incontinence and earaches. If the feds refuse, this reform will be severely compromised. 

Tennessee – The Volunteer State took on the national challenge to cut the numbers of uninsured residents with its TennCare system. But despite success in reducing the number of uninsured, the program has been plagued with management failures, many of them attributable to an unstable and problem-plagued network of managed care companies. As a result of this and other problems, the state's health care costs have been skyrocketing and a recent study concluded that the program will “not be financially viable” in the future. 

Texas – Starting in 1997, the new State Children's Health Insurance Program helped states get appropriate health care for more young people. Texas was late to the game, beginning its efforts in 2000. But now--even though the state still has the highest rate of uninsured children in the country--it is retreating once again. Texas has been putting up barriers to enrollment in its health programs, which has led to a one-year decline of 100,000 children covered.