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Governors Discuss Strategies to Provide Health Coverage for Residents

By Reed Cooley, CQ Staff

February 28, 2008 -- At a House Small Business Committee hearing Tuesday, state officials approached the issue of health care overhaul from widely different angles.

The testimony of Govs. Edward G. Rendell, D-Pa., and Tim Pawlenty, R-Minn., discussed distinct strategies that ranged from emphasis on pay-for-performance systems to providing subsidies for eligible small businesses that enroll employees in private plans—both with the goals of reducing costs and expanding coverage to a larger amount of citizens.

"I believe it is becoming increasingly clear that addressing the problem of the uninsured requires a focus on encouraging small businesses to offer health insurance coverage," said Small Business Committee Chairwoman Nydia M. Velázquez, D-N.Y.

Rendell's plan focuses on making health insurance affordable to companies with 50 or fewer employees earning less than the average state wage.

Under the plan, employers, supported by state subsidies, would pay $130 a month toward each premium, while employees would pay on a sliding scale.

Individuals earning up to 150 percent of the federal poverty level (FPL) would pay nothing, while those earning 150 to 200 percent of the FPL would pay $40 per month and those earning 201 to 300 percent would pay $60 per month.

Rendell hopes the plan will drive down costs as well as expand coverage.

"If we cover all Pennsylvanians, it will save the health care delivery system $1.2 billion in Pennsylvania," he said.

The subsidies strategy is part of a broader plan that Rendell calls "Prescription for Pennsylvania," which includes giving more play to non-physician health care providers and cutting down on health facility acquired infections.

Gov. Pawlenty, whose state enjoys some of the lowest health care costs and percentages of uninsured in the country, has proposed a variety of pay-for-performance strategies, including offering incentives to providers for completing procedure according to standards developed by the Mayo Clinic and other health care authorities.

"We can say to small and rural providers: 'here are the outcomes we expect; how you get there is part of the art of medicine,' " he said.

He acknowledged that his and other states have a long way to go in terms of successfully implementing pay-for-performance methods.

"We're not ready yet, nor are the databases ready yet, nor is the delivery system ready yet to pay tribute for health care outcomes . . . in the mean time, as a proxy for outcomes, we want to pay for adherence to world class standards," he said.

A recent report by the Blue Cross and Blue Shield Association found that health care accounted for nearly one-third of total state spending across the country in 2007.

The report also indicated that, although many states tried last year, none passed universal mandate for health coverage, like those passed by Vermont and Massachusetts in 2006.

Pawlenty emphasized mandates are not a necessary step on the path to universal coverage and even said that they "wind up criminalizing poor people."

"Massachusetts, I think, is defining universal coverage at 95 percent, and we're already at 93 percent, and we still have a ways to go with respect to our reforms," he said.

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