Congressional Record, Volume 152 Issue 55 (Tuesday, May 9, 2006)

[Congressional Record Volume 152, Number 55 (Tuesday, May 9, 2006)]
[Senate]
[Pages S4213-S4224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

By Mr. VOINOVICH (for himself, Mr. Bingaman, Mr. DeWine, and Mr.
Akaka):
S. 2772. A bill to provide for innovation in health care through
State initiatives that expand coverage and access and improve quality
and efficiency in the health care system; to the Committee on Health,
Education, Labor, and Pensions.
Mr. VOINOVICH. Mr. President, I rise to speak about a bill my
colleague Senator Bingaman and I introduced today, the Health Care
Partnership Act. For too many years, I have listened to my colleagues
on both sides of the aisle talk about the rising cost of health care
and the growing number of uninsured Americans. Yet, we have not been
able to make much progress here at the Federal level to find a
meaningful solution for the dilemma this Nation is facing regarding
access to quality, affordable health care. Next to the economy, it is
the greatest domestic challenge facing our Nation. In fact, the rising
cost of health care is a major part of what is hurting our
competitiveness in the global marketplace.
While surveys have indicated that health insurance premiums have
stabilized--a 9.2 percent increase in 2006 and 2005 and compared with a
12.3 percent in 2004; 14.7 percent in 2003; and 15.2 percent in 2002--
health insurance costs continue to be a significant factor impacting
American competitiveness. In addition, the share of costs that
individuals have paid for employer sponsored insurance has risen
roughly 2 percent each year, from 31.4 percent of health care costs in
2001 to 38.4 percent this year.
In fact, spending on health care in the United States reached $1.9
trillion in 2004--almost 16.5 percent of our GDP--the largest share
ever.
Yet, despite all the increases in health care spending some 46
million Americans--15 percent of the population--had no health
insurance at some point last year. This number has increased steadily.
In 2000, that number was 39.8 million. In 2002 it was 43.6 million.
These statistics are startling and it is time that we do something
about them. The bill Senator Bingaman and I are introducing today aims
to break the log-jam here in Washington and

[[Page S4216]]

allow states the freedom to explore with health care reform options.
This bill would support state-based efforts to reduce the uninsured and
the cost of health care, improve quality, improve access to care, and
expand information technology.
I have been in this situation before. As Governor of Ohio, I had to
work creatively to expand coverage and deal with increasing health care
costs for a growing number of uninsured Ohioans. I am happy to report
that we were able to make some progress toward reducing the number of
uninsured Ohioans during my time as the head of the state by
negotiating with the state unions to move to managed care; by
controlling Medicaid costs to the point where from 1995 to 1998, due to
good stewardship and management, Ohio ended up under-spending on
Medicaid without harming families; and implementing the S-CHIP program
to provide coverage for uninsured children.
Like we did in Ohio, a number of states are already actively pursuing
efforts to reduce the number of their residents who lack adequate
health care coverage. The Health Care Partnership Act will build on
what states like Massachusetts and others are doing, while providing a
mechanism to analyze results and make recommendations for future action
at the Federal level.
Under the Health Partnership Act, Congress would authorize grants to
individual states, groups of states, and Indian tribes and local
governments to carry out any of a broad range of strategies to improve
our Nation's health care delivery. The bill creates a mechanism for
states to apply for grants to a bipartisan ``State Health Innovation
Commission'' housed at the Department of Health and Human Services
(HHS). After reviewing the state proposals, the Commission would submit
to Congress a list of recommended state applications. The Commission
would also recommend the amount of Federal grant money each state
should receive to carry out the actions described in their plan.
Most importantly, at the end of the five-year period, the Commission
would be required to report to Congress whether the states are meeting
the goals of the Act. The Commission would then recommend future action
Congress should take concerning overall reform, including whether or
not to extend the state program.
I believe it is important that we pass this legislation to provide a
platform from which we can have a thoughtful conversation about health
care reform here in Washington. Since I have been in the Senate,
Congress has made some progress toward improving health care, most
notably for our 43 million seniors who now have access to affordable
prescription medication through the Medicare Modernization Act. We have
also increased funding for community health centers and safety net
hospitals that provide health care for the uninsured and under insured;
increased the use of technology in our health care delivery system; and
improved the safety of medical care by passing a medical errors
reporting bill.
Yet, these incremental steps are not enough, and we have been at this
too long here in Washington without comprehensive, meaningful results.
I ask for my colleagues' support for this bipartisan bill that I hope
will move us closer toward a solution to the uninsured.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 2772

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Health Partnership Act''.

SEC. 2. STATE HEALTH REFORM PROJECTS.

(a) Purpose; Establishment of State Health Care Expansion
and Improvement Program.--The purposes of the programs
approved under this section shall include, but not be limited
to--
(1) achieving the goals of increased health coverage and
access;
(2) ensuring that patients receive high-quality,
appropriate health care;
(3) improving the efficiency of health care spending; and
(4) testing alternative reforms, such as building on the
public or private health systems, or creating new systems, to
achieve the objectives of this Act.
(b) Applications by States, Local Governments, and
Tribes.--
(1) Entities that may apply.--
(A) In general.--A State, in consultation with local
governments, Indian tribes, and Indian organizations involved
in the provision of health care, may apply for a State health
care expansion and improvement program for the entire State
(or for regions of the State) under paragraph (2).
(B) Regional groups.--A regional entity consisting of more
than one State may apply for a multi State health care
expansion and improvement program for the entire region
involved under paragraph (2).
(C) Definition.--In this Act, the term ``State'' means the
50 States, the District of Columbia, and the Commonwealth of
Puerto Rico. Such term shall include a regional entity
described in subparagraph (B).
(2) Submission of application.--In accordance with this
section, each State desiring to implement a State health care
expansion and improvement program may submit an application
to the State Health Innovation Commission under subsection
(c) (referred to in this section as the ``Commission'') for
approval.
(3) Local government applications.--
(A) In general.--Where a State declines to submit an
application under this section, a unit of local government of
such State, or a consortium of such units of local
governments, may submit an application directly to the
Commission for programs or projects under this subsection.
Such an application shall be subject to the requirements of
this section.
(B) Other applications.--Subject to such additional
guidelines as the Secretary may prescribe, a unit of local
government, Indian tribe, or Indian health organization may
submit an application under this section, whether or not the
State submits such an application, if such unit of local
government can demonstrate unique demographic needs or a
significant population size that warrants a substate program
under this subsection.
(c) State Health Innovation Commission.--
(1) In general.--Within 90 days after the date of the
enactment of this Act, the Secretary shall establish a State
Health Innovation Commission that shall--
(A) be comprised of--
(i) the Secretary;
(ii) four State governors to be appointed by the National
Governors Association on a bipartisan basis;
(iii) two members of a State legislature to be appointed by
the National Conference of State Legislators on a bipartisan
basis;
(iv) two county officials to be appointed by the National
Association of Counties on a bipartisan basis;
(v) two mayors to be appointed by the United States
Conference of Mayors on a bipartisan basis;
(vi) two individuals to be appointed by the Speaker of the
House of Representatives;
(vii) two individuals to be appointed by the Minority
Leader of the House of Representatives;
(viii) two individuals to be appointed by the Majority
Leader of the Senate;
(ix) two individuals to be appointed by the Minority Leader
of the Senate; and
(x) two individuals who are members of federally-recognized
Indian tribes to be appointed on a bipartisan basis by the
National Congress of American Indians;
(B) upon approval of \2/3\ of the members of the
Commission, provide the States with a variety of reform
options for their applications, such as tax credit
approaches, expansions of public programs such as medicaid
and the State Children's Health Insurance Program, the
creation of purchasing pooling arrangements similar to the
Federal Employees Health Benefits Program, individual market
purchasing options, single risk pool or single payer systems,
health savings accounts, a combination of the options
described in this clause, or other alternatives determined
appropriate by the Commission, including options suggested by
States, Indian tribes, or the public;
(C) establish, in collaboration with a qualified and
independent organization such as the Institute of Medicine,
minimum performance measures and goals with respect to
coverage, quality, and cost of State programs, as described
under subsection (d)(1);
(D) conduct a thorough review of the grant application from
a State and carry on a dialogue with all State applicants
concerning possible modifications and adjustments;
(E) submit the recommendations and legislative proposal
described in subsection (d)(4)(B);
(F) be responsible for monitoring the status and progress
achieved under program or projects granted under this
section;
(G) report to the public concerning progress made by States
with respect to the performance measures and goals
established under this Act, the periodic progress of the
State relative to its State performance measures and goals,
and the State program application procedures, by region and
State jurisdiction;
(H) promote information exchange between States and the
Federal Government; and
(I) be responsible for making recommendations to the
Secretary and the Congress, using equivalency or minimum
standards, for minimizing the negative effect of State
program on national employer groups, provider organizations,
and insurers because of

[[Page S4217]]

differing State requirements under the programs.
(2) Period of appointment; representation requirements;
vacancies.--Members shall be appointed for a term of 5 years.
In appointing such members under paragraph (1)(A), the
designated appointing individuals shall ensure the
representation of urban and rural areas and an appropriate
geographic distribution of such members. Any vacancy in the
Commission shall not affect its powers, but shall be filled
in the same manner as the original appointment.
(3) Chairperson, meetings.--
(A) Chairperson.--The Commission shall select a Chairperson
from among its members.
(B) Quorum.--A majority of the members of the Commission
shall constitute a quorum, but a lesser number of members may
hold hearings.
(C) Meetings.--Not later than 30 days after the date on
which all members of the Commission have been appointed, the
Commission shall hold its first meeting. The Commission shall
meet at the call of the Chairperson.
(4) Powers of the commission.--
(A) Negotiations with states.--The Commission may conduct
detailed discussions and negotiations with States submitting
applications under this section, either individually or in
groups, to facilitate a final set of recommendations for
purposes of subsection (d)(4)(B). Such negotiations shall
include consultations with Indian tribes, and be conducted in
a public forum.
(B) Hearings.--The Commission may hold such hearings, sit
and act at such times and places, take such testimony, and
receive such evidence as the Commission considers advisable
to carry out the purposes of this subsection.
(C) Meetings.--In addition to other meetings the Commission
may hold, the Commission shall hold an annual meeting with
the participating States under this section for the purpose
of having States report progress toward the purposes in
subsection (a)(1) and for an exchange of information.
(D) Information.--The Commission may secure directly from
any Federal department or agency such information as the
Commission considers necessary to carry out the provisions of
this subsection. Upon request of the Chairperson of the
Commission, the head of such department or agency shall
furnish such information to the Commission if the head of the
department or agency involved determines it appropriate.
(E) Postal services.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(5) Personnel matters.--
(A) Compensation.--Each member of the Commission who is not
an officer or employee of the Federal Government or of a
State or local government shall be compensated at a rate
equal to the daily equivalent of the annual rate of basic pay
prescribed for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, for each day
(including travel time) during which such member is engaged
in the performance of the duties of the Commission. All
members of the Commission who are officers or employees of
the United States shall serve without compensation in
addition to that received for their services as officers or
employees of the United States.
(B) Travel expenses.--The members of the Commission shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Commission.
(C) Staff.--The Chairperson of the Commission may, without
regard to the civil service laws and regulations, appoint and
terminate an executive director and such other additional
personnel as may be necessary to enable the Commission to
perform its duties. The employment of an executive director
shall be subject to confirmation by the Commission.
(D) Detail of government employees.--Any Federal Government
employee may be detailed to the Commission without
reimbursement, and such detail shall be without interruption
or loss of civil service status or privilege.
(E) Temporary and intermittent services.--The Chairperson
of the Commission may procure temporary and intermittent
services under section 3109(b) of title 5, United States
Code, at rates for individuals which do not exceed the daily
equivalent of the annual rate of basic pay prescribed for
level V of the Executive Schedule under section 5316 of such
title.
(6) Funding.--For the purpose of carrying out this
subsection, there are authorized to be appropriated
$3,000,000 for fiscal year 2006 and each fiscal year
thereafter.
(d) Requirements for Programs.--
(1) State plan.--A State that seeks to receive a grant
under subsection (f) to operate a program under this section
shall prepare and submit to the Commission, as part of the
application under subsection (b), a State health care plan
that shall have as its goal improvements in coverage, quality
and costs. To achieve such goal, the State plan shall comply
with the following:
(A) Coverage.--With respect to coverage, the State plan
shall--
(i) provide and describe the manner in which the State will
ensure that an increased number of individuals residing
within the State will have expanded access to health care
coverage with a specific 5-year target for reduction in the
number of uninsured individuals through either private or
public program expansion, or both, in accordance with the
options established by the Commission;
(ii) describe the number and percentage of current
uninsured individuals who will achieve coverage under the
State health program;
(iii) describe the minimum benefits package that will be
provided to all classes of beneficiaries under the State
health program;
(iv) identify Federal, State, or local and private programs
that currently provide health care services in the State and
describe how such programs could be coordinated with the
State health program, to the extent practicable; and
(v) provide for improvements in the availability of
appropriate health care services that will increase access to
care in urban, rural, and frontier areas of the State with
medically underserved populations or where there is an
inadequate supply of health care providers.
(B) Quality.--With respect to quality, the State plan
shall--
(i) provide a plan to improve health care quality in the
State, including increasing effectiveness, efficiency,
timeliness, patient focused, equity while reducing health
disparities, and medical errors; and
(ii) contain appropriate results-based quality indicators
established by the Commission that will be addressed by the
State as well as State-specific quality indicators.
(C) Costs.--With respect to costs, the State plan shall--
(i) provide that the State will develop and implement
systems to improve the efficiency of health care, including a
specific 5-year target for reducing administrative costs
(including paperwork burdens);
(ii) describe the public and private sector financing to be
provided for the State health program;
(iii) estimate the amount of Federal, State, and local
expenditures, as well as, the costs to business and
individuals under the State health program;
(iv) describe how the State plan will ensure the financial
solvency of the State health program; and
(v) provide that the State will prepare and submit to the
Secretary and the Commission such reports as the Secretary or
Commission may require to carry out program evaluations.
(D) Health information technology.--With respect to health
information technology, the State plan shall provide
methodology for the appropriate use of health information
technology to improve infrastructure, such as improving the
availability of evidence-based medical and outcomes data to
providers and patients, as well as other health information
(such as electronic health records, electronic billing, and
electronic prescribing).
(2) Technical assistance.--The Secretary shall, if
requested, provide technical assistance to States to assist
such States in developing applications and plans under this
section, including technical assistance by private sector
entities if determined appropriate by the Commission.
(3) Initial review.--With respect to a State application
for a grant under subsection (b), the Secretary and the
Commission shall complete an initial review of such State
application within 60 days of the receipt of such
application, analyze the scope of the proposal, and determine
whether additional information is needed from the State. The
Commission shall advise the State within such period of the
need to submit additional information.
(4) Final determination.--
(A) In general.--Not later than 90 days after completion of
the initial review under paragraph (3), the Commission shall
determine whether to submit a State proposal to Congress for
approval.
(B) Voting.--
(i) In general.--The determination to submit a State
proposal to Congress under subparagraph (A) shall be approved
by \2/3\ of the members of the Commission who are eligible to
participate in such determination subject to clause (ii).
(ii) Eligibility.--A member of the Commission shall not
participate in a determination under subparagraph (A) if--

(I) in the case of a member who is a Governor, such
determination relates to the State of which the member is the
Governor; or
(II) in the case of member not described in subclause (I),
such determination relates to the geographic area of a State
of which such member serves as a State or local official.

(C) Submission.--Not later than 90 days prior to October 1
of each fiscal year, the Commission shall submit to Congress
a list, in the form of a legislative proposal, of the State
applications that the Commission recommends for approval
under this section.
(D) Approval.--With respect to a fiscal year, a State
proposal that has been recommended under subparagraph (B)
shall be deemed to be approved, and subject to the
availability of appropriations, Federal funds shall be
provided to such program, unless a joint resolution has been
enacted disapproving such proposal as provided for in

[[Page S4218]]

subsection (e). Nothing in the preceding sentence shall be
construed to include the approval of State proposals that
involve waivers or modifications in applicable Federal law.
(5) Program or project period.--A State program or project
may be approved for a period of 5 years and may be extended
for subsequent 5-year periods upon approval by the Commission
and the Secretary, based upon achievement of targets, except
that a shorter period may be requested by a State and granted
by the Secretary.
(e) Expedited Congressional Consideration.--
(1) Introduction and Committee Consideration.--
(A) Introduction.--The legislative proposal submitted
pursuant to subsection (d)(4)(B) shall be in the form of a
joint resolution (in this subsection referred to as the
``resolution''). Such resolution shall be introduced in the
House of Representatives by the Speaker, and in the Senate,
by the Majority Leader, immediately upon receipt of the
language and shall be referred to the appropriate committee
of Congress. If the resolution is not introduced in
accordance with the preceding sentence, the resolution may be
introduced in either House of Congress by any member thereof.
(B) Committee consideration.--A resolution introduced in
the House of Representatives shall be referred to the
Committee on Ways and Means of the House of Representatives.
A resolution introduced in the Senate shall be referred to
the Committee on Finance of the Senate. Not later than 15
calendar days after the introduction of the resolution, the
committee of Congress to which the resolution was referred
shall report the resolution or a committee amendment thereto.
If the committee has not reported such resolution (or an
identical resolution) at the end of 15 calendar days after
its introduction or at the end of the first day after there
has been reported to the House involved a resolution,
whichever is earlier, such committee shall be deemed to be
discharged from further consideration of such reform bill and
such reform bill shall be placed on the appropriate calendar
of the House involved.
(2) Expedited Procedure.--
(A) Consideration.--Not later than 5 days after the date on
which a committee has been discharged from consideration of a
resolution, the Speaker of the House of Representatives, or
the Speaker's designee, or the Majority Leader of the Senate,
or the Leader's designee, shall move to proceed to the
consideration of the committee amendment to the resolution,
and if there is no such amendment, to the resolution. It
shall also be in order for any member of the House of
Representatives or the Senate, respectively, to move to
proceed to the consideration of the resolution at any time
after the conclusion of such 5-day period. All points of
order against the resolution (and against consideration of
the resolution) are waived. A motion to proceed to the
consideration of the resolution is highly privileged in the
House of Representatives and is privileged in the Senate and
is not debatable. The motion is not subject to amendment, to
a motion to postpone consideration of the resolution, or to a
motion to proceed to the consideration of other business. A
motion to reconsider the vote by which the motion to proceed
is agreed to or not agreed to shall not be in order. If the
motion to proceed is agreed to, the House of Representatives
or the Senate, as the case may be, shall immediately proceed
to consideration of the resolution without intervening
motion, order, or other business, and the resolution shall
remain the unfinished business of the House of
Representatives or the Senate, as the case may be, until
disposed of.
(B) Consideration by other house.--If, before the passage
by one House of the resolution that was introduced in such
House, such House receives from the other House a resolution
as passed by such other House--
(i) the resolution of the other House shall not be referred
to a committee and may only be considered for final passage
in the House that receives it under clause (iii);
(ii) the procedure in the House in receipt of the
resolution of the other House, with respect to the resolution
that was introduced in the House in receipt of the resolution
of the other House, shall be the same as if no resolution had
been received from the other House; and
(iii) notwithstanding clause (ii), the vote on final
passage shall be on the reform bill of the other House.
Upon disposition of a resolution that is received by one
House from the other House, it shall no longer be in order to
consider the resolution bill that was introduced in the
receiving House.
(C) Consideration in conference.--Immediately upon a final
passage of the resolution that results in a disagreement
between the two Houses of Congress with respect to the
resolution, conferees shall be appointed and a conference
convened. Not later than 10 days after the date on which
conferees are appointed, the conferees shall file a report
with the House of Representatives and the Senate resolving
the differences between the Houses on the resolution.
Notwithstanding any other rule of the House of
Representatives or the Senate, it shall be in order to
immediately consider a report of a committee of conference on
the resolution filed in accordance with this subclause.
Debate in the House of Representatives and the Senate on the
conference report shall be limited to 10 hours, equally
divided and controlled by the Speaker of the House of
Representatives and the Minority Leader of the House of
Representatives or their designees and the Majority and
Minority Leaders of the Senate or their designees. A vote on
final passage of the conference report shall occur
immediately at the conclusion or yielding back of all time
for debate on the conference report.
(3) Rules of the senate and house of representatives.--This
subsection is enacted by Congress--
(A) as an exercise of the rulemaking power of the Senate
and House of Representatives, respectively, and is deemed to
be part of the rules of each House, respectively, but
applicable only with respect to the procedure to be followed
in that House in the case of a resolution, and it supersedes
other rules only to the extent that it is inconsistent with
such rules; and
(B) with full recognition of the constitutional right of
either House to change the rules (so far as they relate to
the procedure of that House) at any time, in the same manner,
and to the same extent as in the case of any other rule of
that House.
(4) Limitation.--The amount of Federal funds provided with
respect to any State proposal that is deemed approved under
subsection (d)(3) shall not exceed the cost provided for such
proposals within the concurrent resolution on the budget as
enacted by Congress for the fiscal year involved.
(f) Funding.--
(1) In general.--The Secretary shall provide a grant to a
State that has an application approved under subsection (b)
to enable such State to carry out an innovative State health
program in the State.
(2) Amount of grant.--The amount of a grant provided to a
State under paragraph (1) shall be determined based upon the
recommendations of the Commission, subject to the amount
appropriated under subsection (k).
(3) Performance-based funding allocation and
prioritization.--In awarding grants under paragraph (1), the
Secretary shall--
(A) fund a diversity of approaches as provided for by the
Commission in subsection (c)(1)(B);
(B) give priority to those State programs that the
Commission determines have the greatest opportunity to
succeed in providing expanded health insurance coverage and
in providing children, youth, and other vulnerable
populations with improved access to health care items and
services; and
(C) link allocations to the State to the meeting of the
goals and performance measures relating to health care
coverage, quality, and health care costs established under
this Act through the State project application process.
(4) Maintenance of effort.--A State, in utilizing the
proceeds of a grant received under paragraph (1), shall
maintain the expenditures of the State for health care
coverage purposes for the support of direct health care
delivery at a level equal to not less than the level of such
expenditures maintained by the State for the fiscal year
preceding the fiscal year for which the grant is received.
(5) Report.--At the end of the 5-year period beginning on
the date on which the Secretary awards the first grant under
paragraph (1), the State Health Innovation Advisory
Commission established under subsection (c) shall prepare and
submit to the appropriate committees of Congress, a report on
the progress made by States receiving grants under paragraph
(1) in meeting the goals of expanded coverage, improved
quality, and cost containment through performance measures
established during the 5-year period of the grant. Such
report shall contain the recommendation of the Commission
concerning any future action that Congress should take
concerning health care reform, including whether or not to
extend the program established under this subsection.
(g) Monitoring and Evaluation.--
(1) Annual reports and participation by states.--Each State
that has received a program approval shall--
(A) submit to the Commission an annual report based on the
period representing the respective State's fiscal year,
detailing compliance with the requirements established by the
Commission and the Secretary in the approval and in this
section; and
(B) participate in the annual meeting under subsection
(c)(4)(B).
(2) Evaluations by commission.--The Commission, in
consultation with a qualified and independent organization
such as the Institute of Medicine, shall prepare and submit
to the Committee on Finance and the Committee on Health,
Education, Labor, and Pensions of the Senate and the
Committee on Energy and Commerce, the Committee on Education
and the Workforce, and the Committee on Ways and Means of the
House of Representatives annual reports that shall contain--
(A) a description of the effects of the reforms undertaken
in States receiving approvals under this section;
(B) a description of the recommendations of the Commission
and actions taken based on these recommendations;
(C) an evaluation of the effectiveness of such reforms in--
(i) expanding health care coverage for State residents;
(ii) improving the quality of health care provided in the
States; and
(iii) reducing or containing health care costs in the
States;

[[Page S4219]]

(D) recommendations regarding the advisability of
increasing Federal financial assistance for State ongoing or
future health program initiatives, including the amount and
source of such assistance; and
(E) as required by the Commission or the Secretary under
subsection (f)(5), a periodic, independent evaluation of the
program.
(h) Noncompliance.--
(1) Corrective action plans.--If a State is not in
compliance with a requirements of this section, the Secretary
shall develop a corrective action plan for such State.
(2) Termination.--For good cause and in consultation with
the Commission, the Secretary may revoke any program granted
under this section. Such decisions shall be subject to a
petition for reconsideration and appeal pursuant to
regulations established by the Secretary.
(i) Relationship to Federal Programs.--
(1) In general.--Nothing in this Act, or in section 1115 of
the Social Security Act (42 U.S.C. 1315) shall be construed
as authorizing the Secretary, the Commission, a State, or any
other person or entity to alter or affect in any way the
provisions of title XIX of such Act (42 U.S.C. 1396 et seq.)
or the regulations implementing such title.
(2) Maintenance of effort.--No payment may be made under
this section if the State adopts criteria for benefits,
income, and resource standards and methodologies for purposes
of determining an individual's eligibility for medical
assistance under the State plan under title XIX that are more
restrictive than those applied as of the date of enactment of
this Act.
(j) Miscellaneous Provisions.--
(1) Application of certain requirements.--
(A) Restriction on application of preexisting condition
exclusions.--
(i) In general.--Subject to subparagraph (B), a State shall
not permit the imposition of any preexisting condition
exclusion for covered benefits under a program or project
under this section.
(ii) Group health plans and group health insurance
coverage.--If the State program or project provides for
benefits through payment for, or a contract with, a group
health plan or group health insurance coverage, the program
or project may permit the imposition of a preexisting
condition exclusion but only insofar and to the extent that
such exclusion is permitted under the applicable provisions
of part 7 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 and title XXVII of the Public
Health Service Act.
(B) Compliance with other requirements.--Coverage offered
under the program or project shall comply with the
requirements of subpart 2 of part A of title XXVII of the
Public Health Service Act insofar as such requirements apply
with respect to a health insurance issuer that offers group
health insurance coverage.
(2) Prevention of duplicative payments.--
(A) Other health plans.--No payment shall be made to a
State under this section for expenditures for health
assistance provided for an individual to the extent that a
private insurer (as defined by the Secretary by regulation
and including a group health plan (as defined in section
607(1) of the Employee Retirement Income Security Act of
1974), a service benefit plan, and a health maintenance
organization) would have been obligated to provide such
assistance but for a provision of its insurance contract
which has the effect of limiting or excluding such obligation
because the individual is eligible for or is provided health
assistance under the plan.
(B) Other federal governmental programs.--Except as
provided in any other provision of law, no payment shall be
made to a State under this section for expenditures for
health assistance provided for an individual to the extent
that payment has been made or can reasonably be expected to
be made promptly (as determined in accordance with
regulations) under any other federally operated or financed
health care insurance program, other than an insurance
program operated or financed by the Indian Health Service, as
identified by the Secretary. For purposes of this paragraph,
rules similar to the rules for overpayments under section
1903(d)(2) of the Social Security Act shall apply.
(3) Application of certain general provisions.--The
following sections of the Social Security Act shall apply to
States under this section in the same manner as they apply to
a State under such title XIX:
(A) Title xix provisions.--
(i) Section 1902(a)(4)(C) (relating to conflict of interest
standards).
(ii) Paragraphs (2), (16), and (17) of section 1903(i)
(relating to limitations on payment).
(iii) Section 1903(w) (relating to limitations on provider
taxes and donations).
(iv) Section 1920A (relating to presumptive eligibility for
children).
(B) Title xi provisions.--
(i) Section 1116 (relating to administrative and judicial
review), but only insofar as consistent with this title.
(ii) Section 1124 (relating to disclosure of ownership and
related information).
(iii) Section 1126 (relating to disclosure of information
about certain convicted individuals).
(iv) Section 1128A (relating to civil monetary penalties).
(v) Section 1128B(d) (relating to criminal penalties for
certain additional charges).
(vi) Section 1132 (relating to periods within which claims
must be filed).
(4) Relation to other laws.--
(A) HIPAA.--Health benefits coverage provided under a State
program or project under this section shall be treated as
creditable coverage for purposes of part 7 of subtitle B of
title I of the Employee Retirement Income Security Act of
1974, title XXVII of the Public Health Service Act, and
subtitle K of the Internal Revenue Code of 1986.
(B) ERISA.--Nothing in this section shall be construed as
affecting or modifying section 514 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1144) with respect to
a group health plan (as defined in section 2791(a)(1) of the
Public Health Service Act (42 U.S.C. 300gg-91(a)(1))).
(k) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section, such sums as
may be necessary in each fiscal year. Amounts appropriated
for a fiscal year under this subsection and not expended may
be used in subsequent fiscal years to carry out this section.

Mr. BINGAMAN. I am pleased to announce today the introduction of
bipartisan legislation with Senator Voinovich entitled the ``Health
Partnership Act of 2006'' with additional bipartisan support from
Senators DeWine and Akaka. The ``Health Partnership Act'' is intended
to move beyond the political gridlock in Washington, D.C., and set us
on a path toward finding solutions to affordable, quality health care
for all Americans by creating partnerships between the federal
government, state and local governments, private payers, and health
care providers to implement different and promising approaches to
health care.
Federal funding and support would be committed to states to reduce
the number of uninsured, reduce costs, and improve the quality of
health care for all Americans. Should a state decline to apply or if a
unique need exists, local governments also would be authorized to apply
for a federal grant for such purposes.
States, local governments, and tribes and tribal governments would be
able to submit applications to the federal government for funding to
implement a state health care expansion and improvement program to a
bipartisan ``State Health Innovation Commission.'' Based on funding
available through the federal budget process, the Commission would
approve a variety of reform options and innovative approaches.
This federalist approach to health reform would encourage a broad
array of reform options that would be closely monitored to see what is
working and what is not. As Supreme Court Justice Louis D. Brandeis
wrote in 1932, ``It is one of the happy incidents of the federal system
that a single courageous State may, if its citizens choose, serve as a
laboratory; and try novel social and economic experiments without risk
to the rest of the country.''
Our bipartisan legislation, the ``Health Partnership Act,''
encourages this type of state-based innovation and will help the nation
better address both the policy and the politics of health care reform.
We do not have consensus at the federal level on anyone approach and so
encouraging states to adopt a variety of approaches will help us all
better understand what may or may not work. And, it is well past the
time when we need action to be taking place to address the growing and
related problems of the uninsured and increasing health care costs.
In fact, spending on health care in our country has now reached $2
trillion annually, and yet, the number of uninsured has increased to 46
million people, which is six million more than in 2000. The
consequences are staggering, as uninsured citizens get about half the
medical care they need compared to those with health insurance and,
according to the Institute of Medicine, about 18,000 unnecessary deaths
occur each year in the United States because of lack of health
Insurance.
While gridlock absent a solution continues to permeate Washington,
DC, a number of states and local governments are moving ahead with
health reform. The premise on which this bill is based is that the
federal government should provide support for such efforts rather than
constantly undermining them.
The ``Health Partnership Act'' would provide such support, as it
authorizes grants to states, groups of states, local governments, and
Indian tribes and organizations to carry out any of a broad range of
strategies to reach the goals

[[Page S4220]]

of reducing the number of uninsured, reducing costs, and improving the
quality of care.
As usual, state and local governments are not waiting around for
federal action. This is exactly what was happening in the early 1990s
as states such as New Mexico, Massachusetts, Pennsylvania, Florida,
Rhode Island, Hawaii, Maryland, Tennessee, Vermont, and Washington led
the way to expanding coverage to children through the enactment of a
variety of health reforms. Some of these programs worked better than
others and the federal government responded in 1997 with passage of the
``State Children's Health Insurance Program'' or SCHIP. This
legislation received broad bipartisan support and was built upon the
experience of the state expansions. SCHIP continues to be a state-based
model that covers millions of children and continues to have broad-
based bipartisan support across this nation.
So, why not use that successful model and build upon it? In fact,
state and local governments are already taking up that challenge and
the federal government should, through the enactment of the ``Health
Partnership Act,'' do what it can to be helpful with those efforts. For
example--
On November 15, 2005, Illinois Governor Rod Blagojevich signed into
law the ``Covering All Kids Health Insurance Act'' which, beginning in
July 2006, will attempt to make insurance coverage available to all
uninsured children.
In Massachusetts, Governor Mitt Romney recently signed into law
legislation that requires all Bay State residents to have health
insurance. Virtually everyone interested in solutions to our nation's
health care problems are looking at the Massachusetts ``experiment'' as
a possible solution.
Other states, including New Mexico, Maine, West Virginia, Oklahoma,
and New York have enacted other health reforms that have had mixed
success.
All of these efforts are very important to add to our knowledge base,
which can then lead to the formation of a possible national solution to
our uninsured and affordability crisis. We can learn from each and
every one of these efforts, whether successful or failed.
Commonwealth Fund President Karen Davis said it well by noting that
state-based reforms, such as that passed in Massachusetts, are very
good news. As she notes, ``First, any substantive effort to expand
access to coverage is worthwhile, given the growing number of uninsured
in this country and the large body of evidence showing the dangerous
health implications of lacking coverage.''
She adds, ``But something more important is at work here, While we
urgently need a national solution so that all Americans have insurance,
it doesn't appear that we'll be getting one at the federal level any
time soon. So what Massachusetts has done potentially holds lessons for
every state.'' I would add that it holds lessons for the federal
government as well and not just for the mechanics of implementing
health reform policy but also to the politics of health reform.
As she concludes, ``One particularly cogent lesson is the manner in
which the measure was crafted--via a civil process that successfully
brought together numerous players from across the political business,
health care delivery, and policy sectors.''
Mr. President, Senator Voinovich and I have worked together for many
months now on this legislation via a process much like that described
by Karen Davis. The legislation stems from past legislative efforts by
senators such as Bob Graham, Mark Hatfield, and Paul Wellstone, but
also from work across ideological lines by Henry Aaron of the Brookings
Institute and Stuart Butler of the Heritage Foundation.
The legislation also received much advice and support from Dr. Tim
Garson who, as Dean of the University of Virginia, brought a much
needed provider perspective which is reflected in support for the
legislation from the American Medical Association, the American Academy
of Pediatrics, the American College of Physicians, the American College
of Cardiology, American Gastroenterological Association, the Visiting
Nurses Association, the National Association of Community Health
Centers, and from state-based health providers such as the New Mexico
Medical Society and Ohio Association of Community Health Centers.
And the legislation also received much comment and support from
consumer-based groups advocating for national health reform, including
that by Dr. Ken Frisof and UHCAN, which is the Universal Health Care
Action Network, Bill Vaughan at Consumers Union, and from numerous
health care advocates in New Mexico, including Community Action New
Mexico, Health Action New Mexico, Health Care for All Campaign of New
Mexico, New Mexico Center on Law and Poverty, New Mexico Health Choices
Initiative, New Mexico POZ Coalition, New Mexico Public Health
Association, New Mexico Religious Coalition for Reproductive Choice,
New Mexico Progressive Alliance for Community Empowerment, and the
Health Security for New Mexicans Campaign, which includes 115
organizations based in the State.
Support from all stakeholders in our nation's health care system has
been sought and I would like to thank the many organizations from New
Mexico for their support and input to this legislation. There is great
urgency in New Mexico because our State, like all of those along the
U.S.-Mexico border, faces a severe health care crisis. In fact, New
Mexico ranks second only to Texas in the percentage of its citizens who
are uninsured. New Mexico is also the only state in the country with
less than half of its population having private health insurance
coverage.
A rather shocking statistic, which also continues to worsen, is that
one out of every three Hispanic citizens are uninsured. In fact, less
than 43 percent of the Hispanic population now has employer-based
coverage nationwide, which is in sharp comparison to the 68 percent of
non-Hispanic whites who have employer-based coverage.
The State has also enacted its own health reform plan called the
State Coverage Initiative, or SCI in July 2005. SCI is a public/private
partnership that is intended to expand employer-sponsored insurance and
was developed in part with grant funding from the Robert Wood Johnson
Foundation. As of May 1, there were just over 4,500 people covered by
this initiative and there are efforts to expand this effort to cover
over 20,000 individuals. With federal support for my State, the hope
would be to further expand coverage to as many New Mexicans as
possible.
It is also important to note that the legislation encourages reforms
at both the state and local levels of government. Senator Voinovich, as
former Mayor of Cleveland, suggested language that would capture
community-based efforts as well. Illinois, Georgia, Michigan, and
Oregon have all initiated efforts at the local level for reform,
including what is known as the ``three-share'' programs in Illinois and
Michigan. These initiatives have employers, employees, and the
community each pick up about one-third of the cost of the program.
Jeaneane Smith, deputy administrator in the Office of Oregon Health
Policy and Research was quoted in a recent Academy Health publication
saying, ``In recent years it has become apparent that there is a need
to consider both state- and community-level approaches to improved
access. We want to learn how best to support communities as they play
an integral part in addressing the gaps in coverage.''
Our hope is to spawn as much creative innovation as possible.
Brookings Institute Senior Health Fellow Henry Aaron and Heritage
Foundation Vice President Stuart Butler wrote a Health Affairs article
in March 2004 that lays out the foundation for this legislative effort.
They argue that while we remain unable to reconcile how best to expand
coverage at the federal level, we can agree to support states in their
efforts to try widely differing solutions to health coverage, cost
containment, and quality improvement. As they write, ``This approach
offers both a way to improve knowledge about how to reform health care
and a practical way to initiate a process of reform. Such a pluralist
approach respects the real, abiding differences in politics,
preferences, traditions, and institutions across the nation. It also
implies a willingness to accept differences over an extended period in
order to make progress. And it recognizes that permitting wide
diversity can foster consensus by revealing the strengths and exposing
the weaknesses of rival approaches.''
The most important message that I hope this bill carries is that we
must stop having the perfect be the enemy of the good. This proposal is
certainly not perfect but we hope it makes a very

[[Page S4221]]

important contribution to addressing our nation's health care crisis.
In addition to Dr. Garson, Mr. Aaron, Mr. Butler, and Dr. Frisof, I
would like to express my appreciation to Dan Hawkins at the National
Association of Community Health Centers, Bill Vaughan at Consumers
Union, and both Jack Meyer and Stan Dorn at ESRI for their counsel and
guidance on health reform and this legislation.
I would also like to commend the American College of Physicians, or
ACP, for their outstanding leadership on the issue of the uninsured and
for their willingness to support a variety of efforts to expand health
coverage. ACP has been a longstanding advocate for expanding health
coverage and has authored landmark reports on the important role that
health insurance has in reducing people's morbidity and mortality. In
fact, to cite the conclusion of one of those studies, ``Lack of
insurance contributes to the endangerment of the health of each
uninsured American as well as the collective health of the nation.''
And finally, I would also thank the many people at the Robert Wood
Johnson Foundation on their forethought and knowledge on all the issues
confronting the uninsured. Their efforts to maintain the focus and
dialogue on addressing the uninsured has kept the issue alive for many
years.
I hope we can break the gridlock and urge my colleagues to support
this important legislation.
I would ask for unanimous consent for a Fact Sheet and copy of the
Health Affairs article entitled ``How Federalism Could Spur Bipartisan
Action on the Uninsured'' be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

The Health Partnership Act

Introduced by Senators Voinovich and Bingaman in May 2006--
``A bill to provide for innovation in health care through
state initiatives that expand coverage and access and improve
quality and efficiency in the health care system.''
The Health Partnership Act, cosponsored by U.S. Senators
Voinovich (R-OH) and Bingaman (D-NM), is a first step to move
beyond the political deadlock that has prevented the United
States from finding paths to affordable, quality health care
for all. For decades, national solutions have proven
impossible to attain because of sharp differences on how to
pay for and organize health care services. The Health
Partnership Act breaks through the impasse. It creates
partnerships among the federal government, state governments,
private payers and health care providers to implement
different approaches to achieve sustainable reform that
provides affordable, quality health care for all. It
demonstrates federal leadership on health care through
establishing a mechanism by which federal dollars are
committed to states to reduce the number of uninsured and to
improve the quality of health care for all.
A creative new bipartisan initiative to move beyond
political deadlock and a potential first step towards
affordable quality health care for all.

the federal level

Federal dollars will fund five-year State Health Care
Expansion and Improvement Grants. The amount of federal
funding for new grants will be determined annually in the
budgetary process.
The bill establishes a bipartisan State Health Innovation
Commission composed of national, state and local leaders that
will:
Issue requests for proposals.
Establish, in collaboration with an organization such as
the Institute of Medicine, minimum performance standards and
5-year goals.
Provide states with a ``toolkit'' of reform options, such
as single-payer systems, public program expansions, pay-or-
play mechanisms, tax credit incentives, health savings
accounts, etc.
Ensure the maintenance of Medicaid--prohibiting restrictive
rule changes that would limit eligibility or benefits.
Recommend to Congress which grants to support, giving
preference to states maximizing the reduction in numbers of
the uninsured.
Monitor the progress of programs and promote information
exchange on what works.
Recommend ways to minimize negative effects on national
employer groups, providers and insurers related to differing
state requirements.

state level

Each state applying for a grant will develop a health care
plan to increase coverage, improve quality and reduce costs,
with specific targets for reduction in the number of
uninsured and the costs of administration.
States will receive renewable grants for five-year
expansion and improvement programs.
States will receive from the federal level technical
assistance, if requested, for developing proposals.
Each state plan would address:
Coverage by describing the process and setting a 5-year
target for reducing the number of uninsured individuals in
the state.
Quality by providing a plan to increase health care
effectiveness, efficiency, timeliness, and equity while
reducing health disparities and medical errors.
Costs by developing and implementing systems to improve the
efficiency of health care, including a 5-year target to
reduce administrative costs and paperwork burdens.
Information technology by designing the appropriate use of
health information technology to improve infrastructure, to
expand the availability of evidence-based medical and to
provide outcomes data to providers and patients.

states in the lead: lessons on the process of making change

Given the inaction of the federal government on health care
access issues, states have begun to address these challenges
creatively with sensitivity to local ideas and conditions.
Dozens of states are considering new proposals. Five have
already acted.
Maine, June 2003--the Dirigo Health Plan.
California, October 2003--phased-in Employer Mandate
(repealed by ballot initiative, November 2004).
Illinois, September 2005--Health Care for All Children.
Maryland, January 2006--Fair Share Health Care (employer
mandate for the largest employers).
Massachusetts, April 2006--Massachusetts Health Reform
Package--with both an individual and an employer mandate.
The recently passed Massachusetts law deserves special
attention because it is the first one enacted cooperatively
with a divided government--a strongly Democratic state
legislature and a Republican governor.
The detailed policy particulars in each of these state
measures are controversial, with strong supporters and strong
detractors. But they teach us a lot about the process of
reforming health care in America.
State political leadership at the highest level is
necessary.
Active consumer advocacy plays an important role.
Some stakeholder leadership must be willing to put the
larger public interest above their own narrow economic self-
interest.
The proposals have implementation phased in over several
years.
It is easier for these proposals to expand access than to
restrain the growth of costs--the latter being critical to
make them sustainable over the long term.
Massachusetts, in particular, demonstrated how modest
federal financial incentives (in this case the threatened
loss of less than \1/10\ of federal Medicaid funding) can
provide the critical stimulus for leaders to come together to
create comprehensive reform.

political advantages of the health partnership act

The Health Partnership Act provides positive multi-year
financial incentives to states to address these issues,
making it more likely for them to take the first steps and
less likely to backslide when money concerns arise.
Congress need not pick just one path to health care for
all. Members may be willing to let other states try models
that they would oppose in their home states.
Allowing states to design their own plans, based on simple
federal standards, has the potential to break through the
current political deadlock. Breakthroughs in some states
could be replicated elsewhere.
Advocacy is needed concurrently at the state and federal
levels, with each reinforcing the other.
Federal support has the potential to counteract likely
opposition by special interests in state efforts.

policy advantages of the health partnership act

The process of implementing a variety of partnerships
recognizes that one national plan may not address the
differences among states and encourages states to address
creatively their own needs.
Lessons learned in testing diverse state plans would
benefit other states and national reform.
____

How Federalism Could Spur Bipartisan Action on the Uninsured

(By Henry J. Aaron and Stuart M. Butler)

Nearly everyone thinks that something should be done to
reduce the number of Americans lacking health insurance.
Unfortunately, while numerous plans exist on how to reach
that goal, few agree on any one. In deed, as authors we
disagree on how best to extend and assure health insurance
coverage. Nonetheless, we believe that using the pluralism
and creative power of federalism is the best way to break the
political logjam and to discover the best way to expand
coverage.
Accordingly, we believe that states should be strongly
encouraged to try any of a wide range of approaches to
increasing health insurance coverage and rewarded for their
success. This approach offers both a way to improve knowledge
about how to reform health care and a practical way to
initiate a process of reform. Such a pluralist approach
respects the real, abiding differences in politics,
preferences, traditions, and institutions across

[[Page S4222]]

the nation. It also implies a willingness to accept
differences over an extended period in order to make
progress. And it recognizes that permitting wide diversity
can foster consensus by revealing the strengths and exposing
the weaknesses of rival approaches.
Despite our abiding disagreements on which substantive
approach to extending coverage is best, we believe that
people of goodwill must be prepared to countenance the
testing of ideas they oppose if progress is to be made.
Moreover, we believe that there is no hope for legislation
to begin to transform the largest U.S. industry--health
care--unless such legislation enjoys strong support from
both major political parties.

Using Federalism To Spur Action

Proposals to reduce the number of uninsured Americans
abound. Some favor expanding government programs, such as
Medicaid. Others favor refundable tax credits to help
families buy private health insurance. Still others favor
regulatory approaches, such as changes in insurance rules.
But working together in health care to achieve a goal shared
by virtually everyone has proved to be impossible. One reason
for this is that the capacity to reach substantive compromise
in Washington has seriously eroded. Among the causes is the
widespread view that reforming the complex health care system
requires very carefully designed and internally consistent
actions. Some say that it is like building a new airplane:
Unless all the key parts are there and fit together
perfectly, the airplane will not fly. Thus, many proponents
of particular approaches fear that abandoning key components
of their proposals to achieve a compromise will prevent a
fair test of their favored approach and lead to failure.
Another obstacle is that many lawmakers believe that
approaches that might conceivably work in one part of the
country, given the cultural, philosophical, or health
industry conditions prevailing there, will not work in their
state or district because of different local conditions. This
view leads many in Congress to resist proposals that might
work in some areas because they believe that those proposals
could make things worse for their constituents.
These and other factors have stalled efforts to extend
health insurance and achieve other reforms for decades. The
enactment of Medicare and Medicaid stands as one notable--and
instructive--exception to that pattern. Medicare sprang from
comprehensive social insurance initiatives of congressional
Democrats, Medicaid from limited needs based approaches of
congressional Republicans. The passage of each program was
possible only because the two initiatives were linked in the
form of a trade-off, not so much by blending some elements of
each approach but by moving forward with two programs in
parallel: Medicare for the elderly and disabled, and Medicaid
for the poor of all ages. That experience illustrates a
principle of politics: that progress often requires combining
elements of competing proposals into a hybrid legislative
initiative, in which internally consistent approaches operate
in parallel.
In our view, federalism offers a promising approach to the
challenge of building support to tackle the problem of
uninsurance. While proponents of nationwide measures to
introduce health insurance tax credits, or to extend Medicare
or the State Children's Health Insurance Program (SCHIP) to
other groups, should of course continue to make their case
for national policies, we emphasize an initiative designed to
support states in launching a variety of localized
initiatives. Under this process, the federal government
would reward states that agreed to test comprehensive and
internally consistent strategies that succeeded in
extending coverage within their borders. In contrast to
block grants, federal-state covenants would operate within
congressionally specified policy constraints designed to
achieve national goals for extending health insurance.
These covenants would include plans ranging from heavy
government regulation to almost none, as long as the plans
were consistent with the broad goals and included
specified protections. States could also select items from
a federally designed ``policy toolbox'' to include in
their proposals. Allowable state plans would include forms
of single-payer plans, employer mandates, mandatory
individual purchase of privately offered insurance, tax
credits, and creative new approaches. States would be free
not to undertake such experiments and continue with the
current array of programs, but sizable financial
incentives would be offered to those that chose to
experiment and financial rewards given to those that
achieve agreed-upon goals.
The model we propose builds upon proposals we have outlined
elsewhere. It is also compatible with some other federalism
approaches, such as the plan advanced by the Institute of
Medicine. We favor a wide diversity of federal-state
initiatives for three reasons. First, fostering a bold
program in a state will produce much information that will
aid the policy discovery process. Successes will encourage
others to follow, while unanticipated problems will force
redesign or abandonment and will be geographically contained.
Second, encouraging bold state action will quickly and
directly extend coverage to many of the uninsured. Instead of
facing continued national inaction or the potential for
disruption of state initiatives by future federal action,
states would have the incentive and freedom to act
decisively. Third, we see no evidence of an emerging
consensus on how to deal with these problems at the national
level. But our proposal is based on the observation that
advocates of rival plans trust their preferred approaches
enough to believe that a real-life version would persuade
opponents and create a consensus. Not all can be right, of
course, but all advocates of health insurance reform, like
residents of Lake Wobegon, seem to believe that their plans
are above average. Thus, they should be open to the idea of
testing diverse proposals. Our proposal is a process to
enable policymakers to discover which is right, either for
the whole country or for a region.

Core Elements

We propose that Congress provide financial assistance and a
legal framework to trigger a diverse set of federal-state
initiatives. To help break the impasse in Congress over most
national approaches, we propose steps designed to enable
``first choice'' political ideas to be tried in limited
areas, with the support of states and through the
enactment of a federal ``policy toolbox'' of legislated
approaches that would be available to states but not
imposed on them. Our view is that elected officials would
be prepared to authorize some approaches now bottled up in
Congress if they knew that the approach would not be
imposed on their states. Our proposed strategy would
contain six key elements.
Goals and protections. First, Congress would set certain
goals and general protections. Goals would be established for
extending coverage, and perhaps improving the coverage of
some of those with inadequate coverage today. One such goal
could be a percentage reduction in the number of uninsured
people in a state. The more precise the goals, the more
contentious they are likely to be. But clear and measurable
goals under the proposed covenants are necessary if the
system of financial rewards described below is to work
effectively.
What is ``insurance''? For a coverage goal to mean
anything, it would have to define what constitutes
``insurance.'' Specifying adequate coverage in health care is
no easier than quantifying an adequate high school education,
and when money follows success, drafting such definitions
becomes even more difficult.
In defining what is meant by adequate insurance, agreement
on two characteristics is vital: the services to be covered
and the maximum residual costs (deductibles and copayments)
that the insured must bear. States could be more generous
than these standards. Instead of speciying precisely what
states must do in each of these dimensions, we suggest that
Congress establish a required actuarial minimum--such as the
cost of providing the benefit package of the Federal
Employees Health Benefits Program (FEHBP) for the state's
population--as the standard, with states retaining
considerable latitude on which services to include and how
much cost sharing to require. Whether to set this actuarial
standard high or low will be controversial and will determine
the overall cost to the federal government of eliciting state
participation.
Both high and low benefit standards suffer from well-known
problems. High standards would raise program costs and weaken
individuals' incentives to be prudent purchasers of health
care. Low standards expose patients to sizable financial risk
and raise questions about whether to restrict patients' right
to buy supplemental coverage. Thus, federal legislation would
not specify the content of insurance plans beyond some such
actuarial amount. States would then be free to design plans
as they wish, although certain types of plans might be
presumptively acceptable (see below), and others could be
negotiated as part of a covenant. The exact mix of benefits
could vary within reason, but no further limits would be
imposed. One goal of this approach, after all, is to
encourage experimentation to generate information on whether
particular configurations of benefits work better than
others. It might turn out, for example, that states would
adopt quite different plans with similar actuarial values.
One group might opt for high deductible plans covering a wide
range of services with no cost sharing above the
deductible and generous relief from the deductible for the
poor, while others might adopt a system with low
deductibles and modest cost sharing but covering a much
narrower range of benefits. Discovering how individuals'
and providers' attitudes and behavior differ under such
plans and how health outcomes vary would provide valuable
information for private health insurance planners and
government officials.
Protections for individuals. In addition to the
definitional question, the question also arises, What
limitations and protections should be applied to state
experiments? If a simple net reduction in uninsurance
guaranteed a financial reward to a state, for example, the
state would have the incentive to drop coverage of costly
high-risk adults and extend coverage to less costly
(healthier and younger) workers. Some such concerns could be
addressed in negotiating covenants, but some broad
protections and policy ``corridors'' would be established
under our proposal and would be necessary to achieve
political support.
One of the most politically sensitive would be a primum non
nocere limitation. That is, states could not introduce a plan
that reduced coverage for currently insured populations, most
notably the Medicaid population, beyond some minimum amount.
We believe that no reform proposal is likely to

[[Page S4223]]

be achievable without that restriction. Most Medicaid outlays
in many states are not strictly mandated by federal law, in
the sense that some beneficiaries and some services for all
beneficiaries are optional. States provide optional coverage
because federal law permits it, and the federal match makes
its provision attractive to states. If incentives were
introduced to cover the non-Medicaid population, states might
find it financially and politically attractive to increase
the total number of insured people by curtailing Medicaid
eligibility and benefits and using the money saved, together
with federal support, to cover a larger number of people who
are uninsured but less poor.
Designing and enforcing rules to prohibit or limit such
``insurance swapping'' would be extremely challenging but
politically--and, one could argue, morally--essential. On the
other hand, we believe that states should have some
opportunity to propose different ways of delivering the
Medicaid commitment to the currently insured population, as
long as the degree and quality of coverage were not
diminished. That form of Medicaid protection could stimulate
creativity and improvement in coverage for the poorest
citizens while avoiding any threat to their existing
coverage. To be sure, there are disagreements, including
between us, on the degree of freedom states should have in
deciding how to deliver the Medicaid commitment. Positions
range from only minor tweaking to sweeping changes in the
delivery system, such as allowing states to use Medicaid
money to subsidize individual enrollment in an equivalent
private plan. The degree of flexibility states should have,
while maintaining eligibility and level of coverage, is a
difficult political issue for Congress to decide.
Acceptable state proposals would also have to limit cost
sharing and features analogous to pension nondiscrimination
rules. We believe that requirements, consistent with the
general goals and protections we propose, are needed to
ensure that lower-income households do not face
unaffordable coverage. Without such limits, states could
reduce the number of uninsured people and secure attendant
federal financial support, for example, by instituting an
individual mandate with a high premium that would
effectively make insurance universal among the financially
secure and do little for the poor. States would need to
propose a fair, plausible way of meeting the requirement,
such as by mandating some form of community rating or
through a cross-subsidy to more vulnerable populations.
The federal government should establish broad guidelines,
but no more. A key principle of our proposal is that state
officials are more likely than federal officials to design
successful solutions to those problems that members of the
policy or congressional staff community have failed to solve.
Congress can and should set the parameters, but it should
avoid micromanagement.
``Policy toolbox'' of federal policies and programs. A
feature of the congressional impasse noted earlier is that
many plausible health initiatives that might merit testing,
and have support in some states, are blocked by other
lawmakers who oppose the introduction of the approach in
their own state or across the country. Thus, we propose that
Congress enact presumptively legitimate approaches to the
expansion of health insurance coverage as a ``policy
toolbox'' that would be available to states a la carte to
apply within their borders. Lawmakers could safely vote to
permit an initiative, confident that it would not be imposed
on their states. In this way, potentially useful policies and
programs could be ``unlocked'' from Congress and become
available for states to use in their own initiatives.
A policy toolbox likely would include expansions of
existing policies, such as raising income limits under
Medicaid or lowering the age of Medicare eligibility. It
could include arrangements to subsidize individual buy-ins to
the FEHBP, refundable tax credits or their equivalent
(perhaps with some steps to modify the federal income tax
exclusion for employee-sponsored health insurance costs),
mandating employer or individual coverage, or creating a
single state insurance plan though which everyone may buy
subsidized coverage.
Other possible examples might include the following: (1)
Remove regulatory and tax obstacles to churches, unions, and
other organizations providing group health insurance plans.
This could open up new forms of group coverage offered though
organizations with an established membership and common
values. (2) Allow Medicaid and SCHIP to cover additional
populations, with greatly enhanced federal matching payments,
and perhaps to operate in very different ways--with
appropriate safeguards to protect those who are covered under
current law. Both federal welfare legislation and SCHIP, for
example, included safeguards to preserve existing Medicaid
coverage. (3) Extend limited federal Employee Retirement
Income Security Act (ERISA) protection to large corporate
health plans willing to enroll nonemployees, and extend the
tax exclusion to those enrollees. This could lead in a state
to expanded access to comprehensive coverage. (4) Provide
a voucher to individuals designed to mimic a comprehensive
refundable tax credit for health insurance. This could
allow the practical issues of a major tax credit approach
to be examined. (5) Enact legislation to make forms of
FEHBP-style coverage available to broader populations
within states. This would enable states and federal
government to explore the issues associated with extending
the program to nonfederal employees and retirees. (6)
Enable states to establish association plans and other
innovative health organizations.
We emphasize that any menu of tools would be optional for
states. None would be required. Members of Congress would be
more likely to agree to the inclusion of elements they would
deplore in their own states if they knew that no state,
including their own, would be forced to adopt them than they
would be in a nationally uniform system. Some lawmakers, for
instance, oppose association plans be cause they believe that
such plans would disrupt successful state insurance
arrangements. Under the menu approach, association plans
would be introduced only in states wishing to use them as
part of their overall strategy.
State proposals, federal approval. Under our proposed
strategy, states interested in a bold, creative initiative
would design a proposal consistent with the goals and
restrictions established by Congress. Typically this proposal
would include some elements from the federal policy toolbox
in conjunction with state initiatives.
Needless to say, a critical congressional decision would
concern mechanisms for approving state plans and monitoring
state performance. States would no doubt seek to take
advantage of every financial opportunity to game the system
and to stretch agreements to the limit, as the almost zany
history of the Medicaid upper payment level (UPL) controversy
makes painfully clear. Yet monitoring state behavior,
determining state violations, and enforcing penalties on
states is enormously difficult. Moreover, the entity could
(and we think should) have the power to negotiate parts of a
proposal, not merely approve or reject it, so that
refinements could be made consistent with Congress's
objectives.
But what entity should this be? It might seem natural to
designate an executive agency that reports to the president,
such as the Department of Health and Human Services (HHS). We
suspect, however, that many members of Congress would refuse
to cede so much selection authority to another branch of
government and that roughly half would fear partisan
decisions by an administration of the ``other'' party.
Congress would likely insist on adding suffocating selection
criteria and other restrictions to executive department
decisions, jeopardizing the very creativity we intend. Thus,
we favor instead an existing or newly created body that has
independence but ultimately answers to Congress. A new
bipartisan body might perform this function with members
selected by Congress and the administration or with members
also representing the states, with technical advice from the
U.S. Government Accountability Office (GAO). This body would
evaluate and negotiate draft state proposals according to the
general requirements specified by Congress and then present a
recommended ``slate'' of proposals to Congress for an up-
or-down vote without amendment. Once the state proposals
had been selected, HHS would be responsible for
implementing the program.
Bipartisan willingness to authorize state programs and to
appropriate sufficient funds to elicit state participation
also requires that members of Congress believe that
approaches they find congenial will receive a fair trial and
agree that approaches they reject will also receive a fair
trial. Unfortunately, current federal legislation makes two
key approaches difficult to implement in individual states or
even groups of states: a single-payer plan and an individual
mandate combined with refundable tax credits. A federalist
approach should include mechanisms that would enable states
to give such proposals as fair and complete a test as
possible, both because that would provide valuable
information and because the political support of their
advocates is important in Congress.
Crafting a single-payer experiment. ERISA, which exempts
self-insured plans from state regulation, is the primary
technical obstacle to testing single-payer plans. The
political sensitivity to modifications in ERISA is difficult
to exaggerate. Any attempt to carve out an exception from
ERISA for state programs to extend cover age would probably
doom federal legislation. But states could create ``wrap
around'' plans to cover all who are not currently insured, or
even to cover all who are not insured under plans exempted by
ERISA from state regulation. While such an arrangement would
not be a single-payer plan, it could achieve universal
coverage, which is one defining characteristic of single-
payer plans, and arguably be sufficient for a valid test.
After all, the U.S. health care system is characterized by
different subsystems for certain populations and has a form
of single-payer coverage for military veterans. But of course
the real test is whether advocates of single-payer plans
regard such a limited arrangement as a fair trial.
An individual tax credit approach. The obstacles to a state
level individual mandate with a refundable credit are also
serious and complicated. We presume that an individual
mandate would require some contribution from people with
incomes above defined levels. Such a mandate raises both
political and practical questions. Testing federal tax reform
in selected geographic areas also raises constitutional and
practical issues, although advocates of the approach maintain
that other site-specific programs involving federal tax
changes, such as enterprise zones,

[[Page S4224]]

have passed muster. In addition, for a limited experiment it
might be possible to design subsidy programs that would mimic
tax relief.
Administering a refundable tax credit would pose formidable
difficulties for some states, particularly those that do not
have a personal income tax. In all states, the logistics of
providing a credit with reasonable accuracy on a timely basis
would be challenging. So, too, would deciding how to address
such administrative problems as households that live in one
state yet work in another. Advocates for tax credits say they
have solutions to these and similar challenges, just as
supporters of single-payer approaches or employer mandates
claim to have answers to challenges facing those approaches.
For instance, some maintain that the employment-based tax
withholding system could serve as a vehicle for refundable
credits or equivalent subsidies and would make individual
enrollment practical. Whether or not they are right is of
course disputed by their critics. The beauty of a ``put up
or shut up'' federalism initiative is that it offers a
chance for advocates to offer such solutions in practice
instead of in theory.
Using ``managed federalism'' to build support? Deciding how
many states could qualify for experiments is an open
political and technical question. One approach would be to
limit it to a few states. This would limit costs but has
little else to be said for it. Accordingly, we would favor
opening the program to all states wishing to accept a federal
offer. Nevertheless, we recognize that some lawmakers would
be reluctant to vote for a process of federal-state
innovation unless they were sure that certain ``generic'' or
``standard'' approaches were included--especially if the
number of states in the program were to be limited. In
particular, we believe that our proposal can win
congressional support only if liberals and conservatives
alike are fully convinced that the approaches each holds dear
will receive a fair and full trial in practice.
While we believe that any state initiative that meets
approval should be welcomed, political considerations thus
might require that no state's proposal would be approved
unless a sufficient range of acceptable variants was
proposed. For example, strong advocates of market-based or
single-payer approaches might find the federalism option
acceptable only if each was confident that favored approaches
would be tested.
Adequate data collection. To determine whether a state was
actually making progress toward a goal, accurate and timely
data would be needed. These data would include surveys of
insurance coverage, with sufficient detail to provide state-
level estimates. Such surveys would be essential to show
whether the states were making progress in extending health
insurance coverage. They are vital to the success of the
whole approach because payments to states (apart from modest
planning assistance) should be based on actual progress in
extending coverage, not on compliance with procedural
milestones.
Congress should also assure that states report on use of
health services, costs, health status, and any other
information deemed necessary to judge the relative success of
various approaches to extending coverage. Only a national
effort could ensure that data are comparable across states.
States' cooperation with data collection would be one element
of the determination of whether a state was in compliance
with its covenant and was therefore eligible for full
incentive payments. The experience with state waivers under
welfare before enactment of the 1996 welfare reform clearly
illustrates the power and importance of such data collection.
The cumulative effect of the reports showing the
effectiveness of welfare-to-work requirements in reducing
rolls, increasing earnings, and raising recipients'
satisfaction transformed the political environment and made
welfare reform inescapable.
Rewarding progress. Congress would design a formula under
which states would be rewarded for their progress in meeting
the agreed federal-state goals of extending insurance
coverage. As experience with countless grant programs
attests, haggling over such formulas can become politics at
its grubbiest, with elected officials voting solely on the
basis of what a particular formula does for their districts.
Even without political parochialism, designing a formula that
rewards progress fairly is no easy task. For one thing,
states will be starting from quite different places. The
proportion of states' uninsured populations under age sixty-
five during 1997-1999 ranged from 27.7 percent in New Mexico
and 26.8 percent in Texas to 9.6 percent in Rhode Island and
10.5 percent in Minnesota and Hawaii. Designing an incentive
formula to reward progress amid such diverse conditions is
both an analytical and a political challenge. Moreover, the
per capita cost of health care varies across the nation,
which further complicates the assessment of progress. The
cost of extending coverage depends on the geographic
location, income, and health status of the uninsured
population. Having financial access may be hollow in
communities where services are physically unavailable or
highly limited. Extending coverage may require supply-side
measures to supplement financial access.
We believe that the only way to design such a formula is to
remove the detailed design decisions from congressional
micromanagement. We suggest that Congress be asked to adopt
the domestic equivalent of ``fast-track'' trade negotiation
rules or base-closing legislation. Under this arrangement,
Congress would designate a body appointed in equal numbers by
the two parties, to design an incentive formula that Congress
would agree to vote up or down, without amendments. Such a
formula would have to recognize the different positions from
which various states would start. Any acceptable formula
would have to reward both absolute and relative reductions in
the proportions of uninsured people. Whether financial
incentives would be offered for other dimensions of
performance and how performance would be measured constitute
additional important challenges.
Sources of funding. Bleak budget prospects could cause one
to give up on this or any other attempt to extend health
insurance coverage broadly. But as recent history amply
illustrates, the political and budgetary weather can change
dramatically and with little notice. What funding approach
would be desirable if funds were available? Under our
proposal, the federal funding would be intended for several
broad purposes: (1) A large portion of the money would be
used to help states actually fund approaches to be tested.
(2) Some funding (perhaps with assistance from private
foundations) would provide national support and technical
assistance to states. A model to consider for such support is
the Health Resources and Services Administration (HRSA) State
Planning Grants program, which both funds state planning
activities and provides federal support and technical
assistance. (3) Some funds would cover the cost of
independent performance monitoring. (4) Some funds would be
set aside to reward states for meeting the goals in their
agreed-upon plan. Congress might consider an automatic
``performance bonus'' system similar to the mechanism used
in welfare reform. Congress could also consider
withholding the periodic release of part of a state's
grant pending a periodic assessment by the independent
monitor of the degree to which the state is accomplishing
the objectives specified in its covenant. Only those
states willing to offer proposals designed to achieve the
national goals would be eligible for a share of the
funding or for the menu of federal policy tools. A state
could decline to offer a proposal and remain under current
programs.
Federalism enables the states to undertake innovative
approaches to challenges facing the United States. Federal
legislation often grants states broad discretion in designing
even those programs for which the federal government bears
much or most of the cost. In health care as well as education
or welfare, states have been the primary innovators. But the
federal government limits, shapes, and facilitates such
innovation through regulation, taxation, and grants. Such a
partnership is bound to be marked by conflict and tension as
state and federal interests diverge.
A creative federalism approach of the kind we propose would
change the dynamics of discovering better ways to expand
insurance coverage, just as a version of this approach
triggered a radical change in the way states addressed
welfare dependency. By actually testing competing approaches
to reach common goals, rather than endlessly debating them,
the United States is far more likely to find the solution to
the perplexing and seemingly intractable problem of
uninsurance.

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