States take the lead in health care access initiatives

 Faced with growing numbers of uninsured, rising Medicaid costs, and no likelihood of timely federal leadership, states have -- again -- taken the lead in expanding health coverage. Following 2005 implementation of Maine's "Dirigo" voluntary health purchasing pool, in 2006 Maryland, Massachusetts and Vermont passed laws to expand access to health coverage. Policy makers in California are drafting universal coverage bills and similar initiatives are under discussion in several other states, such as Colorado and Wisconsin.

As the level of government constitutionally responsible for the "health, safety, and welfare" of their residents, state governments have long provided health care and health coverage to vulnerable (e.g., poor, disabled and elderly) populations, preceding, for example, federal programs like Medicaid and Medicare. Recognizing that the uninsured are not only the low income unemployed but also low and moderate income working people, for almost three decades, many states have tried to assist low wage workers to obtain coverage through both public and private sector sources. In the late 1980s and early 90s, several states (including Massachusetts, Minnesota, Oregon and Washington) enacted programs to make insurance available to most state residents, but these laws were never fully implemented and most were eventually repealed. Because 2/3 of Americans receive health coverage through the workplace, state programs typically include a role for employers as financers and/or providers of coverage in order to retain employer dollars currently spent on health care and not disrupt existing employee benefit programs and expectations. But ERISA's preemption clause complicates state policy development -- for example, shortly after ERISA was passed, courts held that it preempted Hawaii's law requiring employers to offer and pay for health coverage (eventually restored by a 1983 ERISA amendment).

Last July, a federal court struck down Maryland's law requiring large employers (i.e., Wal-Mart) to spend at least 8% of payroll on health coverage or pay the difference to the state's Medicaid program. Whether the much smaller employer taxes in Massachusetts or Vermont will face and survive preemption challenges remains to be seen.

Proposals recently outlined by California Governor Schwarzenegger and the heads of the state's Senate and Assembly contain elements of the Massachusetts and the Maryland laws, including assessments on employers to partially fund a public coverage program while allowing employers to offer health coverage if they choose. Because it seems undeniable that states can tax employers for such public purposes, the issue will be whether a state law allows multi-state employer-sponsored health plans the type of choice Supreme Court decisions indicate are the primary objective of ERISA's preemption clause. And this outcome will likely depend on the precise language of a final legislative compromise -- if the myriad and contentious stakeholders can craft one.