Alan Weil Executive Director National Academy for State Health Policy December 2006

1. Alan WeilExecutive DirectorNational Academy for State Health PolicyDecember 2006 Hello. My name is Alan Weil and I am the executive director of the National Academy for State Health Policy, an independent, non-profit organization dedicated to improving state health policy and practice. Today I am going to discuss the many roles of states in setting and administering health policy.Hello. My name is Alan Weil and I am the executive director of the National Academy for State Health Policy, an independent, non-profit organization dedicated to improving state health policy and practice. Today I am going to discuss the many roles of states in setting and administering health policy.

2. All levels of government are involved in health policy. Each state is organized differently, but common departments and divisions include a department of health, human services or social services, as well as a division of insurance and in some cases a state medical school.States relate to the federal government—primarily the department of health and human services which has many important divisions including the Centers for Medicare and Medicaid Services, the Food and Drug Administration, and the Health Resources and Services Administration.States also relate to local departments of health which can reside in counties, groups of counties, or cities.All levels of government are involved in health policy. Each state is organized differently, but common departments and divisions include a department of health, human services or social services, as well as a division of insurance and in some cases a state medical school.

3. Spending on Health Accounts for a Sizable Share of State Spending; Half from Federal Funds Health care is a central function for state governments. As this chart shows, of the $1.1 trillion states spend in total, 30 percent is on health care. And of that 30 percent, half comes from the federal government. Therefore, intergovernmental relationships are a key feature of state health policy Health care is a central function for state governments. As this chart shows, of the $1.1 trillion states spend in total, 30 percent is on health care. And of that 30 percent, half comes from the federal government. Therefore, intergovernmental relationships are a key feature of state health policy

5. States Play Multiple Roles in Health Policy States play many roles in health policy. While they are not entirely distinct, I will discuss the roles in three categories: Regulator, Purchaser, and Provider.States play many roles in health policy. While they are not entirely distinct, I will discuss the roles in three categories: Regulator, Purchaser, and Provider.

6. States Have Major Role as Health Care Regulators A core role of states is to regulate the health care system. States regulate health care providers, such as doctors and nurses, by requiring these professionals to register and meet certain standards in order to practice. States regulate health facilities, including hospitals and nursing homes to assure that they meet certain quality standards. And states regulate health insurance companies and health maintenance organizations. Insurance regulation includes what products they can offer, how they are priced, how they are marketed, and provisions to assure their financial solvency.A core role of states is to regulate the health care system. States regulate health care providers, such as doctors and nurses, by requiring these professionals to register and meet certain standards in order to practice. States regulate health facilities, including hospitals and nursing homes to assure that they meet certain quality standards. And states regulate health insurance companies and health maintenance organizations. Insurance regulation includes what products they can offer, how they are priced, how they are marketed, and provisions to assure their financial solvency.

9. States Purchase Health Care for Certain Populations Medicaid beneficiaries A second core role of states is purchasing health care services for certain populations. States pay for services for Medicaid and State Children’s Health Insurance Program, or SCHIP, enrollees, and they provide health insurance to active state employees and retirees.A second core role of states is purchasing health care services for certain populations. States pay for services for Medicaid and State Children’s Health Insurance Program, or SCHIP, enrollees, and they provide health insurance to active state employees and retirees.

10. Medicaid Dominates State Health Spending Medicaid is by far the largest program from a state budget perspective. As this chart shows, about three-quarters of all state spending on health care is associated with Medicaid and SCHIP. Spending on state employees represents another 8 percent, while all other activities make up a much smaller share.Medicaid is by far the largest program from a state budget perspective. As this chart shows, about three-quarters of all state spending on health care is associated with Medicaid and SCHIP. Spending on state employees represents another 8 percent, while all other activities make up a much smaller share.

11. Medicaid Basics Medicaid is administered by the states with federal oversight and shared federal/state financing (57% federal) If you are interested in learning more about Medicaid, there are additional tutorials available that focus specifically on that program. Medicaid provides services to more than 55 million Americans. The majority of beneficiaries are children and adults in low-income families, but the majority of spending is associated with meeting the varied needs of people with significant disabilities and frail elders. While the framework for the program is established in federal law, states have a high degree of flexibility in setting key Medicaid policies, including who is eligible for the program, what services they will receive, and how providers will be paid.If you are interested in learning more about Medicaid, there are additional tutorials available that focus specifically on that program. Medicaid provides services to more than 55 million Americans. The majority of beneficiaries are children and adults in low-income families, but the majority of spending is associated with meeting the varied needs of people with significant disabilities and frail elders. While the framework for the program is established in federal law, states have a high degree of flexibility in setting key Medicaid policies, including who is eligible for the program, what services they will receive, and how providers will be paid.

12. One example of state variability is the income thresholds for working parents to be eligible for the program. This map shows that many states only cover parents if their income is below 40% of the federal poverty level—meaning they earn less than $8000 for a family of four—while a handful of states have extended eligibility to parents with incomes that exceed the poverty level, which is $20,000 for a family of four.One example of state variability is the income thresholds for working parents to be eligible for the program. This map shows that many states only cover parents if their income is below 40% of the federal poverty level—meaning they earn less than $8000 for a family of four—while a handful of states have extended eligibility to parents with incomes that exceed the poverty level, which is $20,000 for a family of four.

13. While Medicaid budgets receive a great deal of attention due to their size and rates of growth, states face challenges similar to those of the private sector when it comes to the health costs of their retirees. As one example, this chart shows that expenditures by the State of California on retirees has grown from less than $300 million to in excess of $1 trillion over the last decade.While Medicaid budgets receive a great deal of attention due to their size and rates of growth, states face challenges similar to those of the private sector when it comes to the health costs of their retirees. As one example, this chart shows that expenditures by the State of California on retirees has grown from less than $300 million to in excess of $1 trillion over the last decade.

14. Incremental expansion efforts at state-level:

15. States as Health Care Providers The third key role for states is that of a health care provider. States provide services directly through facilities or institutions that serve people with developmental disabilities and serious mental illnesses, and some states operate nursing homes and veteran’s homes. States run prisons and must meet the health care needs of their prisoners, and states operate medical schools and teaching hospitals. Finally, states provide services designed to improve the health of the public and to meet the needs of specific, targeted populations.The third key role for states is that of a health care provider. States provide services directly through facilities or institutions that serve people with developmental disabilities and serious mental illnesses, and some states operate nursing homes and veteran’s homes. States run prisons and must meet the health care needs of their prisoners, and states operate medical schools and teaching hospitals. Finally, states provide services designed to improve the health of the public and to meet the needs of specific, targeted populations.

16. Prison Health Expenditures Are Mounting as Number of Inmates Rise and Age Over 2.1 million prisoners in U.S. In 2005, - about 1 prison inmate for every 205 residents State activities as providers are highly variable. Yet some activities are common to all states, including operating prisons. This chart shows that one out of every eight dollars spent on prisons is associated with meeting the health care needs of prisoners. State activities as providers are highly variable. Yet some activities are common to all states, including operating prisons. This chart shows that one out of every eight dollars spent on prisons is associated with meeting the health care needs of prisoners.

17. State Medical Schools: The California System State medical schools train the future health care workforce while they also provide health care services through teaching hospitals which generally serve a largely indigent population. This slide provides some information on the California system which is very large and plays a critical role in the state’s health care system.State medical schools train the future health care workforce while they also provide health care services through teaching hospitals which generally serve a largely indigent population. This slide provides some information on the California system which is very large and plays a critical role in the state’s health care system.

18. States Provide Important Public Health Services to the General Population State public health functions play a central role in supporting the health of each state’s residents. Core public health functions are listed here, and include disease surveillance, designed to detect possible outbreaks, vital statistics, such as birth and death records, and the operation of pathology labs to determine the causes of death and disease.State public health functions play a central role in supporting the health of each state’s residents. Core public health functions are listed here, and include disease surveillance, designed to detect possible outbreaks, vital statistics, such as birth and death records, and the operation of pathology labs to determine the causes of death and disease.

19. States Also Run Other Health Services… Often Financed with Federal Funds Services under state purview include: There are a large number of other programs that states operate—often relying heavily upon federal funds. Some of the better known programs include Title V, the Maternal and Child Health program, and the breast and cervical cancer screening and treatment program. Some of the programs listed here are small in dollar terms, but they often meet needs that would otherwise go unmet because there are no alternative sources of funding for these services.There are a large number of other programs that states operate—often relying heavily upon federal funds. Some of the better known programs include Title V, the Maternal and Child Health program, and the breast and cervical cancer screening and treatment program. Some of the programs listed here are small in dollar terms, but they often meet needs that would otherwise go unmet because there are no alternative sources of funding for these services.

20. Public Health Preparedness Funding Has Grown Much attention has been focused recently on emergency preparedness. Indeed, this attention has coincided with a tremendous increase in federal grants in this area just in the past few years.Much attention has been focused recently on emergency preparedness. Indeed, this attention has coincided with a tremendous increase in federal grants in this area just in the past few years.

21. The Relationship Between Federal and State Governments is Constantly Changing In the American federal system, the relative roles of the states and the federal government are constantly changing. For example, it is periodically suggested that state-level regulation of doctors and nurses should be consolidated into regions or even taken over by the federal government given the highly mobile American population.Insurance regulation has traditionally been a matter left entirely to the states, but in 1996 Congress enacted HIPAA, the Health Insurance Portability and Accountability Act, which for the first time established federal standards for health insurance. Recent Congressional debate has included topics such as establishing Association Health Plans, which would be regulated by the federal government, and various efforts that would undermine the ability of states to regulate the benefits offered by and the rating practices used by health insurers.Meanwhile, in early 2006 President Bush signed into law the Deficit Reduction Act which gave states substantial new flexibility in how they operate their Medicaid programs.In the American federal system, the relative roles of the states and the federal government are constantly changing. For example, it is periodically suggested that state-level regulation of doctors and nurses should be consolidated into regions or even taken over by the federal government given the highly mobile American population.

22. Conclusions… In sum, states play many different roles when it comes to health policy. States are regulators, purchasers, and providers.While the number of people without health insurance has grown in recent years, some states have made efforts to reverse this trend, although progress has been limited.The political pendulum swings back and forth between state and national leadership on health issues. Today, the federal government shows few signs of taking major steps to cover the uninsured, so states are taking the lead. The federal government has shown interest in intervening in and in some instances preempting how states regulate health insurance, while it also is willing to give states more leeway in how they run programs like Medicaid. But the balance between state and federal action is subject to change, and those changes will have a significant effect on what states can do, and what they will do.In sum, states play many different roles when it comes to health policy. States are regulators, purchasers, and providers.While the number of people without health insurance has grown in recent years, some states have made efforts to reverse this trend, although progress has been limited.The political pendulum swings back and forth between state and national leadership on health issues. Today, the federal government shows few signs of taking major steps to cover the uninsured, so states are taking the lead. The federal government has shown interest in intervening in and in some instances preempting how states regulate health insurance, while it also is willing to give states more leeway in how they run programs like Medicaid. But the balance between state and federal action is subject to change, and those changes will have a significant effect on what states can do, and what they will do.

23. Additional Resources Kaiser Family Foundation (KFF) Statehealthfacts.org National Academy for State Health Policy (NASHP), “Making Medicaid Work for the 21st Century” NASHP, “Patient Safety and Medical Errors: A Road Map for State Action” KFF, “National ADAP Monitoring Report” Kaiser Commission on Medicaid and the Uninsured, “State Fiscal Conditions and Medicaid” National Governors Association, “State-Funded Home and Community-based Service Programs”

24. Return to kaiserEDU.org tutorial page