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January 31, 2008

California Health-Care Reform to Shift Focus

The demise of California's attempt at comprehensive health-care reform this week means that advocates of overhauling the health-care system will turn their focus back to Washington, several experts said yesterday, as an increasingly tough budget climate raises new questions about whether states can go it alone.

When the plan championed by Gov. Arnold Schwarzenegger (R) and state Assembly Speaker Fabian Nunez (D) went down to defeat in a legislative committee, so did hopes that successful reform in such a populous, influential state would bolster efforts elsewhere to cover more of the nation's 47 million uninsured.

While California is unique in some respects -- it has a diverse electorate, a high number of uninsured and a history of occasional budget crises -- experts said some of the same economic forces at work there threaten to slow or swamp similar proposals in other states. The slumping economy diminishes states' tax revenue at the same time that spending demands increase as more people seek help from programs such as Medicaid, which serves the poor. And, unlike the federal government, state governments have to balance their budgets every year.

"The failure of California's plan pushes the focus about expanding health insurance coverage even more strongly towards Washington," said Paul B. Ginsburg of the Center for Studying Health System Change, a nonpartisan policy-research group. "I've never believed that states would be able to go very far on their own because of their fiscal limitations. A state in an average year could be able to afford something, but once they get into a recession, they get into fiscal trouble."

Karen Davis of the Commonwealth Fund, a nonprofit research institution, said federal leadership is crucial because California and some other states' plans depend, in part, on expanding Medicaid and other public insurance programs to cover uninsured children who currently do not qualify. But the Bush administration has been unwilling to sign off on most such expansions. "The lack of federal support for state innovations has proved to be a major hurdle to reform," Davis said.

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Posted by healthinsurance at January 31, 2008 08:11 AM