Blagojevich pioneers health care for children

Governors Write Their Own Prescriptions for Healthcare Crisis

By Ronald Brownstein ( Los Angeles Times )
November 21, 2005 in print edition A-10

Last week, one day apart, two governors took dramatic steps that could crystallize a healthcare debate developing in the states – even as Washington mostly averts its eyes from the problems of declining access and rising costs.

On Tuesday, Democratic Gov. Rod Blagojevich signed legislation making Illinois the first state to guarantee all children access to health insurance.

The next day, Republican Gov. Mark Sanford of South Carolina asked the federal government for permission to shift responsibility for providing health coverage for the state’s poorest citizens primarily to private insurance companies.

These divergent initiatives signal an escalating competition to develop models for coping with the slow-motion crisis in healthcare.

Several Democratic-leaning states are rallying around plans to ensure universal coverage for children as a first step toward expanding access for adults.

Bill Richardson, the Democratic governor of New Mexico, says that in his next budget he’ll propose to ensure universal coverage in his state for all children 5 or younger. Anthony Wright, executive director of the liberal group Health Access California, says activists are planning a state ballot initiative next November that would fund universal coverage for children through a cigarette tax increase of $1.50 a pack.

Blagojevich says he is hoping his action will encourage more states to fund universal coverage for children; nationwide, about one in nine children are uninsured. “If we can do it in Illinois, other states can do it,” he says. “The idea that we are going to wait around for Washington or the Bush administration to do this is not a good use of time.”

Conversely, the hot idea in Republican states is giving private health insurance companies the principal authority for operating Medicaid, the joint state-federal healthcare program for the poor. Sanford was actually the second GOP governor to propose such a shift; Florida’s Jeb Bush has already won approval from Washington for a test he’ll begin next year, assuming the Legislature gives its final blessing in December.

Last week, approving a proposal from Rep. Mike Rogers (R-Mich.), House Republicans nudged other states to follow; the House authorized a five-year, 10-state test of Health Opportunity Accounts, which would allow low-income families to buy healthcare directly from doctors or insurers as an alternative to Medicaid.

Compared with the GOP initiatives, Blagojevich’s plan builds more on the existing public systems. Since his election in 2002, Blagojevich has steadily expanded access to the Children’s Health Insurance Program – a state-federal partnership, known as CHIPs, that provides insurance to the children of working-poor families. (Children in the poorest families receive coverage through Medicaid.) Those expansions, with an improving economy, have reduced the number of uninsured children in Illinois by about half, to about 250,000 this year.

The law Blagojevich signed last week covers those remaining children by allowing all uninsured families to purchase subsidized insurance for their children through the state’s CHIPs. Insurance would cost $40 per child per month for middle-income families, about one-fifth as much as private insurance; the state’s cost would rise to $100 million annually within five years. Eventually, Blagojevich wants to add adults.

While Blagojevich would increase the state’s role in guaranteeing care, Bush and Sanford want to shift authority to the private sector. Medicaid now guarantees all eligible low-income families access to a specific set of services, such as doctor visits or X-rays. Both Bush and Sanford would instead provide a fixed sum for Medicaid recipients to purchase private health insurance.

Some guarantees would remain (for instance, children covered under Medicaid would receive the same services they do now), but the insurance companies would be granted unprecedented freedom to determine the scope of the services recipients obtain.

In essence, both Bush and Sanford would move Medicaid away from a program that ensures recipients defined benefits in healthcare toward one that guarantees them only a defined contribution from the state to their care. In that way, these initiatives advance a broader Republican goal – and crystallize the difference between this proposal and Democratic initiatives such as Blagojevich’s.

The public and private economic safety net constructed from the New Deal through the Great Society relied mostly on defined benefits – a set monthly pension or Social Security check, or a menu of services covered by Medicare. Most private employers have already departed from that vision by replacing pensions with a defined contribution to 401(k) retirement plans.

In the name of increasing choice, expanding ownership and saving taxpayer dollars, many Republicans also want to shift from a defined-benefit to a defined-contribution approach in the key public safety net programs: Social Security (by reducing guaranteed benefits and increasing reliance on individual investment accounts), Medicaid (through ideas such as the Florida and South Carolina proposals) and Medicare (where Congress has authorized the test of a voucher-like system similar to those Medicaid plans).

Democrats believe all of these ideas transfer too much financial risk to individuals. Instead, they want to bolster public programs that share risk collectively to provide individuals with guaranteed benefits – like Social Security or the CHIPs plan Blagojevich is using to cover all Illinois kids.

Democrats this year won an early round of this debate when they blocked President Bush’s plan to restructure Social Security. But the competing healthcare proposals from Illinois and South Carolina show that this argument is far from settled. Long after both governors are gone, it’s likely that America will still be wrestling over whether its social safety net should look more like the vision Blagojevich or Sanford offered last week.

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Ronald Brownstein’s column appears every Monday. See current and past Brownstein columns on The Times’ website at latimes.com/brownstein.