States push for the uninsured-good, for now

February 16, 2007

Perspective

With proposals from Govs.' Schwarzenegger and Rendell last month to extend healthcare coverage to every citizen, California and Pennsylvania became the latest states to rush in where the federal government has feared to tread.

Fear alone, of course, doesn't adequately explain why Washington lawmakers have been so reluctant for so long to think boldly about the uninsured. Indeed, although memories of HillaryCare die hard (for Sen. Clinton as well as for almost everyone else), there's another reason why progress on the issue has come to a virtual standstill in Washington: The inevitable political logjam that awaits any proposal outlining a meaningful federal response.

That point was underscored several years ago in the well-regarded essay by Henry J. Aaron of the liberal-leaning Brookings Institution and Stuart M. Butler of the conservative Heritage Foundation. Wrote this political odd couple: "Nearly everyone thinks that something should be done to reduce the number of Americans lacking health insurance. Unfortunately, while numerous plans exist on how to reach that goal, few agree on any one." To end this political impasse, Aaron and Butler argued, states should be strongly encouraged to experiment, as California and other states like Massachusetts, Maine, Pennsylvania, and Vermont are now doing.

For one thing, the prospect of 50 different experiments, if it came to that, is probably unworkable, not least for companies doing business in multiple states with very different employer mandates. Currently, for example, Massachusetts imposes a relatively modest $295 per-employee fee on companies with 11 or more workers that don't offer health insurance of any kind. Gov. Schwarzenegger's plan sets out a somewhat harsher penalty, imposing a 4 percent payroll tax on companies with 10 or more employees that don't offer any coverage.

Workability aside, there's another reason why state experimentation has its limits: When all the smoke has cleared, not all state experiments will prove equally effective at fixing the problem they were intended to fix, as Aaron and Butler themselves recognized: "Our proposal is a process to enable policymakers to discover which is right, either for the whole country or for a region."

In other words, state experimentation is a great testing ground, but it doesn't get Washington lawmakers off the hook. At the end of the day, they'll still have to face up to tough, perhaps politically charged choices, whether those choices result in a broader drive toward individual mandates, employer mandates, a single-payer system, or something else all together. This time around, though, they'll at least be able to claim, with some authority, "My approach has worked in this state and that one and that one, and I think it can work equally well in the Northeast, or the Midwest, or the country as a whole."

Washington lawmakers can pass the buck to the states for now-they just can't do it forever.