What Texas Can Teach California About Health Care Reform

Policy wonks love to compare and contrast states. And who can blame them?

The U.S. system allows for 50 different policy laboratories. Each promises a template for national reforms, or sets up potential mix-and-match scenarios for would-be reformers.

For years, health care analysts have lumped California and Massachusetts together — two progressive states that chased the dream of universal coverage. Of late, Massachusetts and Texas are being held up against each other, as their former and current governors chase the GOP presidential nomination.

But a more apt comparison may be another combination: California and Texas.

The nation’s most-populous states face similar health care challenges. Both feature diverse service areas, high rates of uninsurance and large undocumented immigrant communities.

Yet the pair adopted staggeringly different approaches to reforming their health care systems across the past decade. While California has strived for the Massachusetts model — broadening access to care by bolstering its safety net and boosting regulation — some say that Texas’ stripped-down approach should be a realistic, if unappealing template for the cash-strapped Golden State.

California’s Drive To Reform

One reason that Massachusetts and California have been favorably compared is because both states “have had the political interest and will” to work through their health care challenges, Anthony Wright of Health Access California told California Healthline.

Wright listed a range of local and state efforts — from Healthy San Francisco to Healthy Kids –that illustrate California’s continued, diverse commitment to improve its safety net. “You can argue the pros and cons of these various approaches, but there was an agreement — through multiple legislatures and governors of different parties — that there was an issue that needed to be addressed” in California, Wright added.

Meanwhile, the state has quickly moved to take advantage of Affordable Care Act tools and subsidies, which build on forward-thinking efforts in progress. Writing in The New Republic, Jonathan Cohn spotlighted California’s rapid creation of a health insurance exchange and its long experience with innovative models, like Kaiser Permanente’s approach to integrated medical care.

Yet Cohn notes that California’s health policy is beset by perils, too — namely, its funding crisis may force some hard trade-offs in coming years. Reimbursement rates for Medi-Cal — California’s Medicaid program — are squarely in the crosshairs of continuing efforts to close a multibillion budget gap, which could leave millions of residents with “insurance that, although better than nothing, offers inferior access to care,” Cohn writes.

Texas’ Move To Withdraw

In contrast, Texas legislators have fought the ACA rollout, hinted at pulling out of Medicaid, and scaled back spending on safety-net and other health programs. After 11 years in office, Gov. Rick Perry’s (R) most significant health reform is reworking the Texas malpractice system, which has anecdotally helped physicians but not ended access issues; Texas still has the fewest physicians per capita in the nation.

Perry’s health care record merited a scathing look in the Los Angeles Times last week. According to reporter Noam Levey, the state’s health care system has “withered” under Perry’s watch.

Levey cites a range of access issues that are worrying experts. For example:

  • In 2007, nearly one in three children in Texas did not receive a yearly physical or teeth cleaning;
  • Across the past 10 years, infant mortality declined nationally but rose in Texas;
  • Nearly 20% of Texas seniors are readmitted within 30 days of discharge, one of the highest rates in the country; and
  • According to the Commonwealth Fund, the state has the second-least affordable health insurance in the nation when compared with average incomes, despite its booming economy.

At the same time, Texas’ health policies have attracted fans. Writing on Forbes.com, Avik Roy credits Perry for slowing the growth in insurance premium costs and keeping Medicaid spending to 5.1% of the state budget, roughly one-third of the national average.

Does the Uninsurance Rate Really Matter?

To some, Texas’ health access concerns are a clear sign of systemic dysfunction. Others say that Texas has long faced these challenges and that recent efforts to scale back health spending have not had a dangerous impact.

For example, analysts frequently invoke Texas’ uninsurance rate — which was 24.6% in 2010, according to Census Bureau data released this week, and remains the nation’s highest — as a clear indictment of Perry’s health record. Yet one major marker of health actually has improved under Perry, although at a slower rate than the rest of the nation. In 2001, the Texas age-adjusted mortality rate was 887.5 per 100,000 people; by 2007, that rate had fallen to 810.1.

This helps illustrate that California’s costly drive to expand health coverage may be unnecessary, John Graham, director of health care studies at the Pacific Research Institute, told California Healthline. “The relationship between being uninsured and poor access to health care is very weak.  A low rate of uninsured is a terrible proxy for a good health system,” Graham said.

Others hold up Texas as a lesson for California to avoid — that the Golden State’s tradition of idealism would never mesh with the Lone Star State’s credo, where sometimes it feels like every man for himself.

“The question seems to be how little can we fund and still have a system,” Dr. Jane Rider, a past president of the Texas Pediatric Society told the Los Angeles Times. “It seems like we’re leading the way into a downward spiral.”

California Healthline will continue to watch how Texas’ health policies influence national discussion and California’s own approach to health coverage. Meanwhile, here’s what else is making news around the nation.

In the States

  • Last week, HHS denied a medical-loss ratio waiver to Delaware, the second state to be denied an MLR waiver since the federal health reform law was enacted. Delaware officials had requested permission to phase in the new MLR standards over the next three years. Under the MLR rule, private insurers are required to spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs. Insurers that do not comply will have to issue rebates to consumers (Baker, “Healthwatch,” The Hill, 9/12). In a letter to Delaware officials, Steve Larsen, deputy administrator and director of the Center for Consumer Information and Insurance Oversight at CMS, said the evidence presented in the waiver request “does not establish a reasonable likelihood” that the new limits would destabilize Delaware’s individual insurance market (Norman, CQ HealthBeat, 9/12).

On the Campaign Trail

  • Last week, former Massachusetts Gov. Mitt Romney (R) said if his bid to clinch the presidency in 2012 is successful, his first order of business will be to issue an executive order that would slow implementation of the federal health reform law. The executive order would direct the HHS secretary “and all relevant federal officials to return the maximum possible authority to the states to innovate and design health care solutions that work best for them.” Romney, who outlined his plans during a speech to unveil his economic blueprint, added that he would take further steps to “repeal and replace” the law. According to the blueprint, the federal law is a burden to businesses and is contributing to economic uncertainty (Baker, “Healthwatch,” The Hill, 9/6).

On the Hill

  • A bill (S 3958) that would have allowed states to apply in 2014 — three years earlier than originally slated — for a waiver from the individual mandate has lost support and is no longer on the congressional agenda. Sens. Scott Brown (R-Mass.) and Ron Wyden (D-Ore.) introduced the bill in November 2010. Republicans said the bill lost support because it would not have allowed them to overhaul Medicaid, which they say is necessary to control health costs. Meanwhile, Democrats withdrew their support to avoid another damaging health care battle, according to Henry Aaron of the Brookings Institution (DoBias, Politico, 9/7).
  • While Republicans quickly moved on efforts to repeal the federal health reform law after the November 2010 election, those efforts have slowed over the last several months. After the House in January approved a Republican-sponsored bill (HR 2) to repeal the law, Congress has passed only a few minor changes to the reform law: reducing insurance subsidy funds and eliminating a program to allow employers to let some individuals choose their own insurance plans (McCarthy, National Journal, 9/8).

Rolling Out Reform

Effect on Employers

  • Federal health and tax officials are urging small business owners to submit their applications for tax credits under the federal health reform law. Eligible businesses have fewer than 25 full-time workers whose annual incomes average less than $50,000. The credits will cover 35% of insurance premium costs for eligible applicants. Most companies would have to pay at least 50% of premium costs. Not-for-profit entities are eligible for up to 25% off of their premium costs. The application deadline for claiming a tax credit on 2010 tax returns is Sept. 15 for certain small companies, while individual proprietors, partners and S-corporation shareholders that file Form 1040 have until Oct. 17 to complete their returns (Adams, CQ HealthBeat, 9/8).

In Public Opinion

  • Just 9% of U.S. adults believe that the federal government is doing a good job on balancing its priorities in overhauling the nation’s health care system, while 57% say the government has not been effective in setting any priorities, according to a new Deloitte Center for Health Solutions survey. The survey — of 4,000 adults in April — also found that just 44% of respondents believe the federal health reform law will bring improvements within the next five years and slightly more than 30% have doubts that the improvements will ever happen. Center for Health Solutions Executive Director Paul Keckley noted that although the “majority of consumers feel health care reform efforts are not succeeding,” the survey found that many agree with the law’s goals lowering health care costs, improving the quality of care and increasing access to insurance benefits (Fox, National Journal, 9/12).

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