Wisconsin Gov. Scott Walker won’t take a firm line against pursuing health reform grants. 6 states to watch on health reform

Health reform repeal efforts will generate a lot of noise in the opening weeks of the 112th Congress – but the real action on health reform is going to ramp up outside the Beltway in state capitals.

“Unless states move forward as fast and as hard as they can this year, they will be lost in 2014 when the bulk of health reform hits,” says Stan Dorn, a senior health policy researcher at the Urban Institute. “The pressure is just enormous on state policy makers.”


In Washington, House Republican attempts to repeal the reform law are likely to die in the Senate – or, failing that – at President Obama’s veto. Meanwhile, state legislatures, whether they are dominated by Democrats or Republicans, must brace for a frenetic and fast-paced year of building the infrastructure needed for reform.

Thirty-three states have created some entity to implement the new federal health law and over a dozen require a report on the law by the early part of 2011, according to the National Conference of State Legislatures.

All 50 states will take some action on the health reform law in the coming year. Here are six to watch closely in early 2011:

Wisconsin – The Badger State has aggressively lead the way on health exchanges, developing an online prototype that Wisconsinites can already take for a spin. In late December, Wisconsin applied for an “early innovator” grant, which would mean increased federal funding and serve as a model for others.

But Wisconsin’s assembly, senate, and governorship all flipped from Democratic to Republican control in November. Republican Governor Scott Walker, who takes office today, won’t take a firm line against pursuing health reform grants—but he has also promised to “back off” of a lot of the state has done so far, moving the work in a different direction.

“I don’t want to put anything in place that forces us into mandates of what kind of coverage needs to be provided,” Walker told POLITICO. “The concept of an exchange itself is not something I’m against…a system where there’s a defined component to what has to be in the exchange. That to me is where the problem is.”

Walker will, however, remain open to pursuing Health and Human Services grants and working with Secretary Kathleen Sebelius. “I’d like to think we can be an innovator as well, but from a much different point of view from what Governor Doyle was doing,” Walker says, noting that he does not plan to withdraw the state’s early innovator application.

Within days of his election, Walker began aggressively opposing Wisconsin’s work on health reform. In a November 12 letter to the state’s Department of Administration, he requested they “temporarily freeze any new implementation of the federal health reform law” until after he took office. The same day, Walker announced he would allow Republican attorney general J.B. Van Hollen to join an anti-health reform lawsuit. Walker’s Democratic predecessor had barred Holland from doing so.

Vermont – Newly sworn-in Democratic Governor Peter Shumlin ran on an aggressive, single-payer platform. Now, all eyes watch Vermont to see whether it’s possible to turn the single payer promise into policy—and whether it can be implemented in tandem with the reform law.

“There’s a lot we can do under the existing law, but also some clear limitations,” says Anya Rader Wallack, health policy advisor to the governor. “We will try and do the maximum we can under the existing law…and I think seek federal permission for flexibility.”

The single-payer plan will move forward quickly: by February, Harvard professor William Hsiao will deliver three design options to provide state-wide coverage. The report will likely catalyze legislative action.

“We’ve been pushing this rock up a hill for a long time” says Rader Wallack on the slow progress on health reform. “It’s time to see if we can move to a whole new plane. We can only get so far within the current system and need to do something dramatically different to keep fighting this fight.”

Alaska – With Minnesota Gov. Tim Pawlenty no longer in office, Alaska’s Gov. Sean Parnell arguably snatches the title for most aggressive, anti-health-reform governor. He has regularly rejected grant opportunities pursued by the vast majority of states; Alaska was one of two states not to pursue an exchange planning grant, one of five that turned down an opportunity for increased rate review funding.

“My sense is the individual state agencies are tracking the requirements of the law and implementing those requirements,” says Deborah Erickson, executive director of the Alaska Health Care Commission, a state agency created by Gov. Sarah Palin. “Beyond that, there are so many, essentially new programs that I don’t think Governor Parnell will be pursuing.”

Alaska could emerge as a key state to watch to understand how HHS will deal with an adamantly opposed state.

With so much uncertainty surrounding federal reform’s fate in Alaska, Erickson’s group will steer clear of making implementation recommendations. When they issue a report on health reform in Alaska on January 15 it will only go as far as to summarize what has been done and what deadlines loom in the future.

California – Under Republican Gov. Arnold Schwarzenegger, the Golden State established itself as a health reform leader by passing the first legislation in the country to authorize a health exchange under the federal law. A failed California Health Exchange, which opened in 1993 and shuttered five years ago, left the state “with a pool of people who were will poised to move forward very quickly,” says Dorn of the Urban Institute. “Now you have an incoming Democratic governor [Jerry Brown] who is a ‘small is beautiful’ Democrat. What he’s going to do on health reform, how he uses that pool of expertise, will be interesting to watch.”

Insurers have grumbled over the state’s “selective contracting” approach. The exchange will decide which plans can sell on its market, as opposed to a more laissez faire model where all insurers meeting basic benefits qualify. But as the first state out the gate, many others will look to it as a model.

Schwarzenegger moved the exchange forward up through the final days of his administration. He appointed two advisors to the California Health Exchange Board of Directors on December 31: current California Health and Human Secretary Kim Belshe and Susan Kennedy, the governor’s chief of staff.

Connecticut – If there’s a hope for reviving the public option, it’s strongest in Connecticut. Since 2009, the governor’s office has been at work on an ambitious plan to transform its public plans, like Medicaid and state employee benefits, into a publicly-financed plan that could be sold on the health exchange come 2014.

The new plan, dubbed Sustinet, will deliver a progress report to the state legislature on January 7.

“I think that if it’s successful, it’s an interesting model,” says Rader Wallack of Vermont. “It could potentially provide competition from the public sector within a private business model.”

Massachusetts – Four years after the health reform law passed, Massachusetts boasted record coverage: 98.1 percent among adults and 99.8 percent for children, according to statistics released in December. But less-heartening numbers loom in the background: the state’s health care costs continue to rapidly outpace general economic growth.

Cost-control was a key campaign issue and the governor’s race and is positioned to become a legislative priority in the coming Massachusetts session. “It’s quite doable but takes some political courage,” says Rader Wallack who, previously co-chaired Massachusetts’ Cost Containment Committee. “What they really need is for the legislature to move on this and enact something that gets the ball rolling.”

Governor Deval Patrick has purposed payment reforms similar to the Accountable Care Organizations championed in the federal health reform law. “The idea, in oversimplified terms is to move from paying for the amount of care to paying for wellness,” Patrick told local radio station WBUR in an October 2010 interview. “There are models for this where we’ve seen costs managed down.” Rader Wallack cautions against moving too quickly into an ACO-model and argues in favor of a gradual approach.

“The idea you flip a switch and everyone be in ACO isn’t necessarily feasible,” she says. “Having them move in that direction, at a reasonable pace with incentives to take the next steps, calibrating that all correctly is a complicated endeavor.”

The Massachusetts Committee on the Status of Payment Reform Legislation has its first meeting of the year on January 5.