States in a Reformed Health System: Lessons from Nursing Home Policy

Prologue: Even in a society that strongly favors limiting the powers of central government, there is general agreement that Washington must establish the basic framework of a reformed health care system if universal coverage is to be achieved. But what role should states play in a reconfigured health care system? This is a critical question as the Clinton administration fashions its health care policy. Given Bill Clintons long tenure as the governor of Arkansas, he seems inclined to grant states greater flexibility and perhaps more responsibility in the future. One reflection of this inclination is the administration s decision to approve Oregon's controversial proposal to guarantee medical services for its poor population by rationing care. Great variations separate how individual states craft and administer their health care programs, what demands they place on providers, and the generosity they extend to patients. Variation between New York and Alabama is to be expected. But what about the great variation that separates large industrial states with broader tax bases and more liberal commitments to social welfare? Specifically, what about, as author Michael Sparer characterizes it, the “wildly inconsistent” nursing home policies of California and New York? This variation is not limited to eligibility and benefit policy, but exists in reimbursement policy and quality of care oversight as well. How much variation is too much, and what measure of uniformity should the federal government exact in these matters? Sparer became interested in the often neglected issues surrounding federalism when he practiced law for seven years in New York City's legal department. Much of his legal work centered on intergovernmental litigation. Sparer completed a doctorate in political science at Brandeis University last year. Currently he is an assistant professor of health policy at Columbia University's School of Public Health. Abstract: Most serious health system reform proposals include a prominent role for states, despite documented variation in costs, delivery systems, and health status among states. As policymakers search for an approach that will reform the health system and minimize inappropriate interstate variation, the experience of nursing home policies and politics in two states—New York and California—can offer useful lessons about underlying reasons for variation and how to ensure equitability amidst state differences. These two states are examined as case studies because they have the nation's two largest Medicaid programs yet have approached their long-term care systems very differently. The differences in their nursing home policy approaches suggest that state-based health system reform be pursued with caution, lacking further study of state variations.