Governors try experimentation to lower Medicaid costs

CHARLESTON, S.C. -- Two years ago, the nation's governors were wrestling with exploding health-care costs, soaring populations and agonizing choices over how to keep their Medicaid programs afloat.

Now, as governors met Sunday for their annual summer meeting, health care seems less hopeless. Their choices are vastly different as many states embark on unprecedented experiments to revamp the health-care program for the poor and health care overall.

Massachusetts has captured the spotlight with a universal health insurance plan that demands everyone in the state get insurance, and gives them help to get it. In different shapes and sizes, other states have begun experiments, from West Virginia to Idaho, Florida to Maine.

"There's an imperative for change out there," said Michael O. Leavitt, the secretary for health and human services, who Sunday asked governors to join President Bush in demanding nationwide standards on medical quality and information-sharing. "The system is moving."

For most governors, what's happened so far are just baby steps -- but they are steps toward change.

* Massachusetts created universal health insurance by requiring everyone to carry insurance, with a combination of subsidies and penalties to make coverage more affordable and encourage people to buy it.

* Florida tried to rein in costs, starting in two large counties, by shifting many Medicaid recipients into private managed care. Medicaid recipients choose a managed care group to coordinate their care and the state pays a premium to the group. Companies will get more money for sicker patients.

* West Virginia aims to encourage Medicaid families to make healthier decisions and save money by reducing benefits if they refuse to sign contracts promising to show up for doctors' appointments and use the emergency room only for emergencies.

Most programs are not yet in place or too new to assess whether the change is for better or worse, or even if they work. Democrat Gov. John Baldacci's overhaul in Maine -- which brings state and businesses together to get more people on insurance -- is one of the oldest, though so far has failed to enroll the numbers of uninsured that it aimed for.

There is a partisan divide, too, as Republicans push many of the more ambitious plans so far -- though the changes in Massachusetts and Vermont only passed with Democratic help in their legislatures. Many Democratic governors are coming up with their own proposals.

Health-care experts are watching carefully and monitoring the results.

"The question is, does this work?" said Judith Solomon, a senior fellow at the Center on Budget and Policy Priorities, a liberal think tank. She's looking closely at programs that aim to encourage healthier -- and more cost-efficient -- decisions.

"A lot of states are really seeking different approaches to change behavior," she said. "But the short of it is it's not that easy."

While on one hand governors work on often technical details of insurance markets and quality control, they are also targeting the nation's culture of eating and exercise.

"The only thing that really does have a real shelf life is having a health care population that doesn't cost so damn much," said Republican Gov. Mike Huckabee of Arkansas. "Sick people aren't going to get cheaper. You can trim a few pennies, but we need to trim dollars."

That means getting people to live healthier, said Huckabee, who has made that goal the focus of his past year as NGA chairman. Once more than 100 pounds overweight, he now runs or cross-trains six days a week, and has focused on ways that government can encourage its citizens to reduce obesity and chronic disease.

The different elements come together as governors seek to rein in rising Medicaid costs, which has ballooned to about $275 billion. The states pick up, on average, about 43 percent of the overall costs.

Some ideas are nuts and bolts, though even details are massive when tackling the entire medical industry. Leavitt said Bush would soon issue an executive order to demand doctors and hospitals that work with government to adopt standards on quality, information and performance. He asked governors to do the same.

Others are even more massive, such as the proposal from Tommy Thompson, who preceded Leavitt as the administration's health and human services secretary and served 16 years as Wisconsin governor.

He called for a massive change in Medicaid where states would only be responsible for acute, short-term care and the federal government would take on all the costs of long-term care -- a huge bill that's rising with the aging of American society.

And states need to get that change rolling, aggressively pursuing new models that, if successful, can be adapted to other states. Thompson -- the architect of a welfare reform plan in Wisconsin that was a model for the national welfare reform plan under President Clinton -- spoke the governors' language.

"It can be done. It can start in one state," Thompson told the governors. "Congress is not going to do it. You're going to have to do it."