Access to Health Care

States have taken the lead in expanding access to health insurance and containing the growth of health care costs. They have had a difficult time, however, overcoming federal legislation preempting state authority to regulate self-insured employer health plans. States that have tried to move toward coverage of all their citizens have had to work within the constraints of the federal law. One strategy used by Massachusetts and Oregon has been to create "play or pay" systems that rely on the state's power to tax. Employers who provide health insurance to employees generally receive a credit for the amount they spend on coverage; those who do not must pay a tax to help finance state-brokered insurance. These laws are expected to face legal challenges, however, and the outcome is uncertain. Some state initiatives have been more narrowly focused, creating programs to help specific groups, such as low-income children and adults. These programs have successfully extended coverage to some residents, but state budget problems have meant that only a fraction of the uninsured population is being served. State efforts to help the medically uninsurable and small business employees gain access to coverage through the private health insurance market have also achieved modest results. In addition, some states have implemented payment reforms to control medical inflation and reduce administrative costs. Maryland, for example, has lowered cost growth through its hospital rate-regulation system.

GAO found that: (1) states have moved decisively to devise plans to expand access to health insurance and control increases in health costs, but have been hindered by the restrictions of the Employee Retirement Income Security Act of 1974 (ERISA), which prevents states from exercising full control over all employer-provided insurance; (2) working within ERISA constraints to achieve universal health coverage, some states have created "play or pay" systems, which hinge on the state's power to tax, but implementation of these systems has been delayed because the outcome of laws for implementing these systems is uncertain; (3) other state programs have targeted specific uninsured groups, such as low-income children and adults, but have had limited success because of budgetary constraints; (4) Hawaii has the lowest uninsured rate of all states, largely due to a previously enacted law which exempts Hawaii from the ERISA preemption provision; (5) many states continue to develop proposals to achieve universal access to health care; (6) most states have also adopted measures to help people with high-cost health conditions and small business owners and employees obtain affordable health insurance, but these measures have had only a modest effect; and (7) although most states have focused on expanding access to coverage, some have concentrated on controlling increasing costs through changes in methods for reimbursing providers.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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