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Are the States Ready To Undertake Health Care Reform?

As the U.S. Senate prepares for floor action on health care reform, there's a sudden profusion of schemes that seek a compromise on the key "public option" question by giving states a lot of leeway.  Tom Carper is floating a state "opt-in" approach.  Others are talking about a state "opt-out" system.  The Finance Committee has already adopted Maria Cantwell's proposal to let states use federal subsidy funds to cover a majority of the uninsured as they see fit.   And the original Baucus markup vehicle included Ron Wyden's proposal to let states do all sorts of "experimentation" with federal funds. 

The political value of these approaches is pretty obvious: by giving states flexibility on the key questions surrounding the public option debate, health reform proponents hope to give shaky Democrats and maybe a Republican or two an avenue to get out of the way of health reform while accomodating home-state pressure from health insurers and/or providers. 

This makes abundant sense in Washington.  But the question must be asked: are the states ready to get into the driver's seat on the basic design of health care systems, public and private, within their borders?

I raise the question not because of any particular doubts about the competence of states on health care policy. But it's important to understand that these state-based approaches to national health reform will transfer much of the yelling and screaming and lobbying we've seen, along with the complex issues that have to be resolved, right into the center of state politics, just in time for the 2010 elections. 

Most of the fears about health reform that state officials have expressed up until now have, understandably enough, focused on the fiscal impact of Medicaid mandates.  But governors and legislators, not to mention candidates for state offices, may soon be grappling with the entire range of controversial health care issues.   They better get ready, and their representatives in Washington better start talking to them.  

Click here to read Suzy Khimm on how these proposals come out of the Cass Sunstein-Richard Thaler school of "nudge" policy design--which may work for individuals, but could be a flop for state governments.