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State Innovations

Across the nation, states face the common challenges of expanding health coverage, improving the quality of care, and controlling costs. Yet, as a recent Health Affairs article by Sherry Glied, Ph.D., and Douglas Gould made clear, there is widespread variation among states in terms of numbers of uninsured, economic conditions, and health care markets. Unlike federal policymakers, state policymakers can tailor their health policies to suit the particular needs of their populations, creating solutions that are as diverse as the 50 states themselves.

Over the next five years, many states will develop and implement major health system improvements, offering a nation-wide laboratory of experimentation. State and federal policymakers and other stakeholders can tap into this wealth of experience, exchange data and policy strategies, and develop models that can be replicated across the nation.

New Commonwealth Fund State Innovations Program
To focus attention on state health policies, the Fund's board of directors recently approved the establishment of a State Innovations program, directed by senior program officer Jennifer Edwards. It is hoped that the program will help states look to each other for ideas and that innovations in some states will inspire others to follow, as well as spur federal action.

In particular, the program aims to:

  • Increase the understanding of health system performance among state health care and policy leaders;
  • Identify and assess public and private sector policies with the potential to improve state health system performance; and
  • Stimulate new efforts to improve state health system performance and spread promising approaches.


The first step has been the launch of a quarterly digest of innovative state actions to improve health system performance: States in Action: A Quarterly Look at Innovations in Health Policy. The program's grants will support work assessing the status of state policies and programs to improve health system performance. It will offer technical assistance, share findings through state profiles, case studies, and evaluations, and encourage state leaders in their efforts to achieve high performance health systems.

The State Innovations program is a critical component of a new Commonwealth Fund Commission on a High Performance Health System. Each year, the Commission will issue a scorecard on targets for improving access, quality, and efficiency and look to state performance on selected indicators as a way of identifying promising practices worthy of further study or dissemination. The Commission also will sponsor site visits around the country to examine promising innovations firsthand.

Like the Commission, the State Innovations program will focus on policy areas that are long-standing Fund priorities: coverage, efficiency, quality, and access for all populations.

Despite the difficult fiscal times at the federal and state level, both large and small targeted efforts are underway in states to expand health coverage. Many states are trying to retain and expand employer participation in health insurance coverage—recognizing that it is hard to "go it alone" without financial contributions from employers and employees. Others are taking advantage of federal matching funds under Medicaid or the State Children's Health Insurance Plan or developing policies to cover vulnerable populations. And some have generated new revenues from assessments on tobacco, health care providers, or insurers.

Perhaps the most interesting experiment currently underway at the state level is Maine's Dirigo Health Program. It created a new insurance product offered by Anthem that includes a plan with a $1,250 deductible, with a sliding scale for those below 300 percent of the federal poverty level. Employers may participate by paying a fee covering 60 percent of the individual worker's premium. Individuals pay sliding scale premiums ranging from no contribution to $124 a month. The first enrollees joined in January 2005, and 6,370 people were covered by May 1.

Another strategy that encourages small businesses to provide health insurance to employees is the Healthy New York program. Instituted in January 2001 as part of legislation that also created Family Health Plus for low-income adults, it had 92,368 enrollees as of May 1. The state of New York provides stop-loss coverage, picking up 90 percent of the cost of claims between $5,000 and $75,000. By providing reinsurance and a slimmed-down HMO benefit package, the average monthly premium is $194, compared with $270 for HMO coverage in the small-group market and $496 in the individual market.

State and local governments are often the largest buyer of health care services in their markets and, as such, can use market clout to purchase care efficiently. Many states are engaged in single and multi-state initiatives to purchase prescription drugs more cheaply, including a new effort supported by Oregon Health and Science University's Center for Clinical Effectiveness Research that helps states select less expensive but therapeutically equivalent drugs for their formularies.

Buying based on effectiveness is also part of a new strategy being used in Minnesota by both public and private purchasers. The recently implemented Smart-Buy Alliance, whose members buy health care for about 70 percent of state residents, is working to improve quality and lower costs by reducing inappropriate and unnecessary care, encouraging evidence-based medicine and use of highest-performing providers, and reducing providers' administrative costs through common reporting requirements. It could reduce spending by an estimated 30 percent.

Certain states are using their Medicaid managed care programs to improve the quality of care for low-income beneficiaries. Some are addressing the quality of clinical care delivered through managed care organizations; Rhode Island, for example, sets performance targets and rewards achievement of goals. Others work with plans and provider organizations to improve processes of care, which can lead to changes such as shorter wait times for appointments or less time spent waiting to be seen by a physician.

In 10 states, Medicaid agencies are increasing the number of young children receiving developmental screening and being referred for appropriate care. In North Carolina, 68 percent of children are now screened, a marked increase from 5 percent just two years earlier.

Improving Access, Reducing Disparities
Work by Nerenz has demonstrated the feasibility of reporting quality of care by race and ethnicity. While knowing where we stand on quality is an important first step, states are undertaking important initiatives to reduce disparities, including improving the availability of language translation services.

Many other examples of state innovations are featured in the Tools & Innovations section of our Web site. We hope that these efforts, and the State Innovations program itself, will give legs to good ideas—encouraging the spread of innovative strategies that are flexible enough to travel around the country and be adapted to local conditions.





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June 2005