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State Strategies to Expand Health Insurance Coverage: Trends and Lessons for Policymakers

Executive Summary

Our employer-based health insurance system is crumbling—with the result that there are more uninsured people with less access to needed health services. In 2005, the number of uninsured climbed to 47 million, the result of a steady increase since 2000. Even more disturbing are the present trends that show the number of uninsured could reach 56 million by 2013.

Many state policy leaders, frustrated by the lack of federal action on the problem of the uninsured, have taken matters into their own hands, and the result is a trend toward health care reform at the state level. The latest round of state reforms, most of them enacted or proposed in 2006, presents a variety of approaches to covering the uninsured, including new mechanisms to subsidize coverage for low-income families, new variations on employer and personal responsibility for insurance coverage, and new strategies to facilitate the purchase of health insurance for small businesses and for individuals without access to employer-sponsored insurance.

Several state efforts are characterized as comprehensive because they attempt to reach near-universal coverage, accomplishing the task through broad system reforms that include quality initiatives, cost-containment efforts, and strategies to reduce the underlying cost of health care through chronic care management. Other states are moving ahead with incremental approaches such as providing universal coverage for children or public–private partnerships to insure low-income workers.

The boldest reform proposals, demonstrating the capacity for breaking ground in a bipartisan manner, have come from the Northeast. The comprehensive reforms in Massachusetts, Vermont, and Maine go further toward helping low-income families purchase health insurance than in any other states. One of the key elements shared by all three reforms is that they subsidize coverage for families with annual incomes up to approximately $53,000 (300% of the federal poverty level [FPL] for a family of four). Each of these states uses Medicaid to partly fund its subsidized product, demonstrating the importance of Medicaid as a financing source. However, they each couple the products with other reforms that reflect distinct local priorities.

Meanwhile, a growing number of other states are pursuing less-than-comprehensive but still significant approaches. For example, some states are moving toward coverage of all their children. Illinois has passed the Covering All Kids Health Insurance Act, making insurance coverage available to all uninsured children. As of January 2007, All Kids will be available to any child uninsured for 12 months or more, with the cost to the family determined on a sliding-scale basis. Pennsylvania has announced the development of the Cover All Kids program, Tennessee has passed the Cover Kids Act, and other states—notably Oregon, Wisconsin, Washington, and New Mexico—are considering proposals in a similar vein.

In aiming to address children and adults alike, several states have developed partnerships with private employers and insurers to cover low-income workers. These collaborations have taken a variety of different approaches, reflecting the different regulatory and market environments of each state as well as the specific compromises that state policy leaders have been able to craft. The majority of state efforts to expand coverage rely on private insurers to deliver services, including those that use Medicaid funds.

This is not the first time that state policy leaders have taken the lead in attempting to improve insurance coverage in their states. The recent reforms build on at least a decade of state experiments, most of them of limited impact, that ranged from comprehensive attempts to numerous incremental approaches.

These newest reforms are more promising than their predecessors. Although they vary in a number of ways, they all are based on some common, hard-won lessons:

  • Comprehensive state reforms take time because they build off prior efforts and
    in-place financing mechanisms.
  • Reforms attempt to stem the erosion of employer-sponsored insurance.
  • Successful efforts to enact reforms often expect shared financial responsibility. Some are beginning to recognize the need for mandatory participation.
  • Expansions in coverage often rely on private insurers to deliver care.
  • Voluntary purchasing pools, as a stand-alone strategy, are not likely to be sufficient to expand coverage.
  • Medicaid benefits are being redesigned through new reforms, but to date these efforts have not included expansions in coverage.
  • Many state reforms address cost and quality in addition to health insurance coverage.

The past year's state-level efforts to implement health insurance reforms have fueled optimism that states can lead the way in addressing the problem of the uninsured. Certainly, states' efforts can test coverage strategies both politically and practically, which can inform and provide lessons to other state and national leaders. However, the variation among states is far too great for state-by-state reform to result in a national solution for the country's 47 million uninsured.

Nevertheless, because it appears unlikely that comprehensive national health reform will be considered in the near term—as other issues may continue to dominate the national agenda—health policy experts have promoted the concept of federally supported state experimentation as a promising way to make progress.

During the 109th Congress, several members of Congress offered legislation that would provide grant funds to states to pilot new health reforms. The introduction of these bills clearly bolsters the trend toward developing solutions to the problem of the uninsured at the state level rather than in Washington, D.C. Time will tell whether the new Congress is indeed ready to enact laws that provide the federal resources necessary to encourage state innovation, whether the current bipartisan agreements at the state level are able to encourage even broader federal action, or whether the status quo will remain.

Publication Details



A. Burton, I. Friedenzohn, and E. Martinez-Vidal, State Strategies to Expand Health Insurance Coverage: Trends and Lessons for Policymakers, The Commonwealth Fund, February 2007