States of Health

Rather than wait for change from the feds, states are taking on health care issues themselves. The result, say experts, could be a "compliance nightmare."

While President Bush devoted a portion of his
State of the Union address to the issue of health care, many
Beltway observers expect federal gridlock for the next 20
months. “It’s difficult to have dramatic change when the
White House and Congress are controlled by different parties,”
says Edgar “Jed” Morrison Jr., a partner at Jackson Walker
LLP in San Antonio.

But major changes are already brewing at the state
level. According to Ted Nussbaum, director of health-care
consulting at Watson Wyatt Worldwide, health-care legislation
is pending in about 30 states. Those states, Nussbaum
says, are motivated by the fact that they spend billions of dollars
a year to cover the medical expenses of the uninsured.

In January, California governor Arnold Schwarzenegger
proposed extending health-insurance coverage to the state’s
6.5 million uninsured residents. To accomplish this, he would,
among other steps, require individuals to carry health insurance,
expand access to Medi-Cal (California’s Medicaid program),
and enhance tax breaks for employers and individuals
purchasing insurance. Massachusetts, Minnesota, and Oregon
have ambitious efforts under way, while many others have or
are exploring a range of options (see map at the end of this article).

This could result in what Nussbaum calls “a compliance
nightmare,” as different states mandate different funding
thresholds or tax penalties for failing to offer health insurance.
Add in the confusion over whether certain state demands will
be struck down as Employee Retirement Income Security Act
violations and battles over whether stronger state laws can
take precedence over federal laws (an issue affecting the Mental
Health Parity Act of 2007) and health care could be a wildly
moving target, gridlock or no.

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