Health care reform is, once again, high on the domestic political agenda.  Across the political spectrum, each presidential candidate has outlined a plan for policies intended to expand health insurance coverage to the nation’s estimated 46 million uninsured. And, in the face of continued increases in the uninsured and inaction at the federal level, many states have begun to consider mechanism for expanding health insurance coverage for their own residents. 

Presidential hopefuls and state policymakers vary in the approaches that they are considering, but many include some expansion of existing public programs (Medicaid/SCHIP), subsidies for making insurance more affordable, and/or the development of purchasing cooperatives to make private insurance plans more accessible and affordable to individuals and small employers. While a number of proposals exist, the Commonwealth of Massachusetts has enacted the broadest health care reforms of any state to date, with implementation already in progress.

In addition to identifying the most effective approaches to designing and financing expansions of health insurance coverage, policymakers have a strong interest in developing mechanisms for containing the rate of growth in health care spending.  Without such mechanisms, policymakers are concerned that they will be unable to sustain over the long run any reforms that they implement.  Also, the political environment in some states dictates that coverage expansions not be legislated without cost containment strategies implemented simultaneously.

While federal reform would inevitably lead to some degree of redistribution of financing across the states, acting alone, states vary considerably in their ability to finance coverage expansions for their own residents.  Per capita income and per capita state product range broadly across the states, providing them with widely varying tax bases for financing reforms.  In addition, federal dollars paid to states under Medicaid’s disproportionate share hospital (DSH) program vary a great deal.  DSH dollars are a key source of federal dollars that can be re-directed for use in buying insurance policies for a state’s low-income population under a reform proposal; however, those dollars have been distributed across states with little regard to their relative needs. 

Plus, current uninsured rates as well as state spending on the uninsured populations in each state are highly variable, making the new financing necessary for reaching universal health insurance for state residents very different as well.  Those states with the highest shares of their population uninsured are generally the least well situated to finance their own coverage expansions, particularly if those reforms are structured outside of programs that provide significant federal matching funds for new state spending (i.e., Medicaid or SCHIP).

The Urban Institute staff has provided extensive technical assistance and analytic support to policymakers and others as they consider options for addressing the problems associated with the uninsured and the high costs of medical care in both federal and state-specific contexts.  Examples include: