The focus of the health reform debate has shifted about a mile down Pennsylvania Avenue, from Capitol Hill to Blair House, where members of Congress and President Obama met Thursday to determine whether bipartisan cooperation on reform legislation is possible.
The political dynamics do not bode well. The White House insists Mr. Obama is "adamant about passing comprehensive reform similar to the bills passed by the House and the Senate."
Democrats in Congress believe the only way to achieve real reform is with an interlocking chain of mandates on individuals and businesses, taxpayer subsidies and new federal programs, regulations and taxes.
Republicans disagree with the size, substance and direction of the legislation that has passed the House and Senate. They would not agree to plug a few of their ideas into bills they believe are seriously flawed.
So what will happen after the standoff at the summit? The focus is likely to shift yet again to the states where they can find examples of state-level health policy experiments that have proven successful in expanding access to coverage and getting costs under control.
States provide a better foundation for viable reform because they are more flexible and can better balance needs with resources.
Consider the Healthy Indiana Plan. Spearheaded by Gov. Mitch Daniels, this program offers coverage to low-income Hoosiers who are uninsured but aren't eligible for traditional Medicaid.
Participants partner with the state in funding an individual health spending account that can be used for medical expenses up to $1,100. Expenses above that are covered by a state program.
Since patients are in charge of spending for routine care, they have a built-in incentive to spend wisely and to take care of themselves. And they also are covered if they need expensive medical care such as hospitalization or surgery.
Healthy Indiana has been enormously successful. So far, it has extended coverage to 50,000 people who were previously uninsured, and it has controlled costs without limiting choice.
Another promising state-level reform experiment is Community Care of North Carolina. This program is an example of a new medical care delivery model known as a patient-centered medical home.
Each patient is connected with a personal physician to coordinate medical care. This connection makes it more likely that medical problems will be detected early and that patients will comply with prescribed treatments.
In 2004, Community Care of North Carolina was responsible for almost $245 million in cost savings, primarily due to reduced emergency room visits and inpatient utilization.
Idaho has devised a novel solution to the problem of insuring people with pre-existing conditions by creating a high-risk reinsurance pool. If a private insurer deems a patient to have chronic health problems or other more costly medical conditions, the insurer can offload some of the financial risk to the pool.
The program is funded by taxes and premiums paid by insurance carriers. More than 1,400 Idaho residents with pre-existing conditions who might otherwise have gone without insurance now have coverage as a result of the program.
Not all state experiments are successful, of course. Three years after Massachusetts enacted its sweeping health-reform legislation, rising health costs continue to bedevil the state and threaten to derail reform efforts.
Indeed, Massachusetts still has the highest health-insurance costs in the nation — the average family policy costs $13,788 annually!
When state lawmakers make mistakes, though, they can learn from their errors and more quickly reverse bad policies.
For example, Kentucky has seen the error of its ways, reversing excessive regulations that drove companies out of the state and sent health insurance prices soaring.
Federal lawmakers can't be nearly as nimble. The 2,500-page Senate health reform bill would alter 17% of the U.S. economy. There is no way that 435 legislators could possibly know how to completely restructure one-sixth of our economy in one bill and get it right.
The federal government's main job should be to get the incentives straight so private-sector solutions and state initiatives can emerge to make health care and coverage more affordable and accessible. The right answer is to take a step-by-step approach to reform and engage the states as active partners in the process.