State legislatures were busy this past year proposing, debating, and in many cases passing health care reforms. According to Laura Tobler, program director of the Health Program at the National Conference of State Legislatures, states are leading the way in health reform. She adds that the 2007 legislative session saw a rise in interest—across party lines and across the country—in both incremental and system-wide health reforms.

"While the media has focused on universal or near universal coverage, more laws passed to implement incremental reform covering some of the uninsured," she says. "In addition, state laws to improve quality and prevent disease as well as to encourage a focus on wellness and reduce health disparities are very much a part of the movement in the states."

Below we highlight four states where the recent legislative sessions resulted in the passage of major health care bills related to expanding coverage, reducing health disparities, creating new purchasing mechanisms, promoting health, and/or improving quality: Colorado, Washington, Kansas, and Texas.

In June, Texas Governor Rick Perry (R) signed a multifaceted health reform bill (SB 10) intended to expand coverage to up to 200,000 low-income residents and to promote patient responsibility.

The bill creates the "Texas Health Opportunity Pool Trust Fund." If a federal waiver is granted, the trust fund would combine federal Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL) supplemental payments, plus other federal and state contributions, to be used to reduce the number of uninsured residents through a variety of mechanisms, as well as reimburse hospitals for providing uncompensated care and enhance the public health infrastructure. Funds could be used to provide premium subsidies to purchase private insurance (e.g., through regional or local small business initiatives), offer medical homes to the uninsured, contribute to health savings accounts, and create efficiencies such as use of electronic medical records systems.

Another key feature is a pilot program, similar to programs in West Virginia and Kentucky, that gives Medicaid recipients in one region of the state incentives to lead healthy lifestyles. Recipients who volunteer for the program would receive expanded benefits if they participate in smoking cessation or weight loss programs. They would also receive credits in "individual health rewards accounts" that could be used to purchase additional services.

A federal waiver also would allow Texas to modify the Medicaid benefit package for children with special health care needs, and potentially other recipient groups. A commission has broad discretion to customize the benefit package as long as it "preserves recipients' access to necessary services and is consistent with federal requirements."

Other provisions include the following:

• implementing a "physician-centered nursing facility model" demonstration project to determine the cost-effectiveness of enhanced Medicaid reimbursement to a nursing facility in which physicians specializing in geriatrics provide continuous, on-site oversight;
• developing outcome-based performance measures and incentives for HMO contracts, and exploring opportunities for pay-for-performance mechanisms;
• requiring individuals eligible for public coverage to enroll in employer-sponsored insurance, if available to them and determined to be cost-effective to the state, with the state paying part or all of the enrollee's share of the premium;
• allowing small businesses to form group health cooperatives for the purpose of obtaining health coverage, and providing tax incentives to insurance companies that participate; and
• developing a pilot project whereby primary care physicians serving Medicaid beneficiaries receive incentives to use electronic health records.

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