Critics have said the health care bill amounts to a one-size-fits-all program imposed by Washington on the rest of the country. After 2014, the health care system will indeed look far more uniform across the nation than it does now. But the new law leaves a lot of room for variation and experimentation by individual states. That's fitting, given that some states have been far ahead of Washington in expanding coverage and cracking down on dubious insurance-industry practices. Massachusetts, for instance, moved to cover nearly all its citizens in 2006; its system is in many ways a model for much of what is anticipated for the rest of the country. But other states like Texas, where an estimated 28% of the population is uninsured will have a lot of catching up to do.
Governors have been lukewarm to the Obama health care bill, in large part because it calls for adding 16 million people to the Medicaid rolls, which are jointly administered by the states and the feds. At least in the initial years, Washington will pick up the tab for those newly eligible. But governors say expanding Medicaid will add billions to their health care costs at a time when their states are already facing record deficits.
The most important challenge for the states will be setting up health insurance exchanges marketplaces where small businesses and individuals will be able to shop around, choosing from a selection of insurance policies, much as federal government employees (including members of Congress) do now. "Right now there are a lot of people out there buying health insurance on their own or small businesses buying health insurance on their own. They don't work for a big company. They're not part of a big pool. So they have no leverage. They've got no bargaining power with insurance companies," Obama said in a speech shortly after he signed the bill. "What we're going to do is create exchanges all across the country where uninsured people small businesses they're going to be able to purchase affordable, quality insurance."
But to work right, each exchange will need to have enough enrollees and enough insurance-plan offerings to assure vigorous competition. That's no small challenge, given the near monopoly power insurers have in many states. For instance, Republican Vermont Governor Jim Douglas notes that while there were 75 major insurers competing for business in his state a decade ago, there are now only three. The rest were driven away, he says, when Vermont instituted many of the same reforms that are envisioned under the federal law.
While some states will be able to operate these exchanges on their own, others are likely to join with their neighbors in regional operations. "The borders don't separate where the care might be given, and I have five borders," says West Virginia Governor Joe Manchin, a Democrat. "We're going to work in conjunction with our fellow states, with our fellow governors, to make the best delivery system and the best economy that we can."
And some states may well return to an idea that generated a lot of controversy during the yearlong battle over health reform: a government-run public option for the uninsured, similar to Medicare. Oregon is already studying the feasibility of including a public option as part of its state exchange. Says Manchin: "All of us are going to have to look at that ... What we've got to do is make [insurance companies] compete and a public option is probably the only way."
Indeed, many of the battles that took place in Washington during the 14 months of debate on the legislation are likely to be reprised in state capitols across the country over the next few years. At latest count, conservative legislators in 39 states have introduced bills or plan to that would exempt their citizens from the new law's requirement, effective in 2014, to have health insurance or else face a fine. Though it is not a good bet that such measures will hold up in court, they have already been enacted by the Virginia and Idaho legislatures, will be on the November ballot in Arizona and have passed one chamber in Georgia, Missouri, Oklahoma and Tennessee.
Next 5. What Comes Next