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Introduction

1. Main Findings
2. Red States vs. Blue States
3. Ask the Experts
4. Methodology

Main Findings

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Overall Rank	State	Total Score	Effective	Annual	Difference	Annual	Adjusted
1	Alaska	5.69%	$3,066	-46.85%	$4,237	6
2	Delaware	6.02%	$3,246	-43.74%	$3,830	1
3	Montana	6.92%	$3,728	-35.37%	$3,561	3
4	Wyoming	7.45%	$4,015	-30.40%	$4,312	2
5	Nevada	7.72%	$4,161	-27.86%	$4,028	7

 

Red States vs. Blue States

 

Ask the Experts < >

• Mark James DeHaven Dean W. Colvard Distinguished Professor at University of North Carolina at Charlotte
• Linda Bane Frizzell Assistant Professor in the School of Public Health at University of Minnesota
• Leonard J. Nelson Professor Emeritus at Samford University
• Leonard H. Friedman Professor in the Department of Health Policy and Management and Director of the MHA Programs in the Milken Institute School of Public Health at The George Washington University
• Jessica Greene Professor at Baruch College - CUNY
• Jae Kennedy Professor and Chair of the Health Policy and Administration Department at Washington State University
• Charles Stoecker Assistant Professor in the Department of Global Health Management and Policy at the School of Public Health and Tropical Medicine at Tulane University
• Amy M. Lischko Associate Professor of Public Health and Community Medicine at Tufts University

Mark James DeHaven Dean W. Colvard Distinguished Professor at University of North Carolina at Charlotte What are the most popular parts of the ACA? What components would be most politically difficult to repeal? Of course, what most people like and the provision that makes the most sense is providing care for people with preexisting conditions. The very idea of insurance (creating a broad pool and sharing costs among the healthy and those who are not as healthy) is to share costs across large numbers of people, under the assumption that only some of the individuals will need to use the insurance at any given time, but all may need to have help managing large and unexpected events - in this case health emergencies. The former practice of excluding entire lists of any possible condition that might remotely be related to an acute condition or development of a chronic condition, has rightly been eliminated - it was immoral. A return to these exclusions is not insurance, it is creating an entire class of uninsured and high-risk individuals who are subject to exorbitant and unchecked out-of-pocket expenses due to the extremely unrealistic and unsustainable costs of the U.S. health care system. This provision would be the most politically difficult to repeal. Are Health Savings Accounts an effective strategy for helping families finance health care costs? Americans are notoriously negligent when it comes to savings - any types of savings. I am not sure if we can depend on Americans to start saving for a possible medical emergency - most people still continue to smoke, for example, and engage in other high-risk behaviors under the assumption that they will not get sick. People just do not believe it will happen to them. I think it is a really nice idea in theory, but not very practical. Another major issue here is the working poor who do not have discretionary funds for savings accounts. I have worked in communities for the past 25 years, directing community medicine programs in marginalized and underserved communities, where there is high unemployment (much of it due to debilitating health conditions and few economic opportunities) and low income, where many people work two and three jobs, raise families, and then develop a debilitating medical condition, cannot work, and then lose their house, their savings, and all that they have worked for. These folks often cannot afford to save in a way that could possibly offset the enormous expenses required to seek emergency episodic or even routine care in the very expensive U.S. system. And, finally, what savings accounts avoid entirely is the question about affordability - medical care in the U.S. is vastly out of proportion with the rest of the advanced world (double that in U.K, Canada, France, Germany). And, the percent of GDP devoted to health care is vastly out of proportion also - 17% is not sustainable. We have a system that is like Neiman Marcus - works great for people with resources, private health insurance, good incomes - it is absolutely exquisite, but compared to the rest of the world it is vastly overpriced. Something needs to be done to bring down costs. Do you believe it is possible to drive down the cost of health care through more market based reforms? Absolutely not. I have run community medicine programs in three large American cities during the past 25 years, both before and during Obamacare. The change has been dramatic the past few years. Before Obamacare there was no incentive for the market to reform itself - we have to be serious, look at what was occurring before Obamacare; the banking industry cannot regulate itself and the health care marketplace cannot regulate itself either. Most people do not realize that 80% of chronic disease is preventable, yet 95% of health care expenditures in the U.S. are for disease treatment and only 5% for prevention, and the CDC estimates that between 70 - 75% of health care expenditures are for preventable conditions. Under Obamacare, I have seen accountability introduced into hospitals in terms of reducing readmission rates and discussing community-based prevention and health promotion for the first time ever. Health care systems have been forced to consider how to prevent disease and think in terms of the health of the entire community, entire populations rather than just one individual patient at a time. The federal government can force health care systems to think bigger than just the individual patient and the individual patient-provider relationship. Shifting to market-driven reforms is a return to what we know does not work, the conditions that stimulated the need for the ACA in the first place. The market may work for the affluent - highly educated with good general health. However, there is no market incentive to work in poor communities under that type of system, where people have real and complex needs that do not exist in affluent communities. How do you see the role of employers in providing coverage changing over the coming years? I am not an economist, but I watched employer-based coverage decline over most of the past decades from over 70% to less than 55%, and also shift costs - to the point where the employee share of many employee-based systems was too expensive, and many with access to employer-based insurance could not afford the premiums. Thus, many large employers have discovered that they need to focus on maintaining the health and wellness of their employees, in order to avoid the need for expensive care in the first place. Small employers are at a distinct disadvantage and it all boils down to the fact that health care is just too expensive. The ACA slowed health care expenditures as a percent of GDP for the first time in my lifetime. I think the ideal system is for employers, communities, and health care systems to work together to improve health (not health care), by addressing the social determinants of health in our communities. Fully 70% of premature mortality is due to where and how a person lives; only 30% is due to genes and access to health care. Health is pretty easy to understand actually - a warm house with windows, good education, economic opportunity, a caring family and neighborhood creates health. The opposite - homelessness, inadequate education, and lack of opportunity - creates disease. We have known this for 150 years. It is the social conditions we live in that create disease. We need to shift the priority from health care and to creating health - living healthy lives. That is the only fair system and only the federal government can provide the incentives for all Americans to work together - including employers, to produce health equity. Otherwise, continued adjustments or reductions in the ACA will miss the mark - unless they address community-based health promotion and the runaway costs that existed before the ACA. Linda Bane Frizzell Assistant Professor in the School of Public Health at University of Minnesota What are the most popular parts of the ACA? No denial of coverage for preexisting conditions. What components would be most politically difficult to repeal? The Indian Health Care Improvement Act (IHCIA) amendments enacted in Section 10221 ACA, must be preserved to ensure that the Indian health delivery system remains viable. The IHCIA is separate and distinct from the ACA and was the result of 11 years of Tribal Consultation (by 567 Federally recognized Tribes), first introduced to Congress on Oct. 6, 1999. Repealing the IHCIA amendments and the other Tribal related provisions enacted as part of the ACA would have devastating impacts on both the health of American Indian and Alaska Natives (AI/ANs) and the Indian health system that serves them. Including compromising the Tribal government to government relationship with the Federal government, which has a Constitutional duty to provide health services to AI/ANs. Are Health Savings Accounts an effective strategy for helping families finance health care costs? Somewhat, does require people to understand and have the ability to navigate the administrative functions for their health services. Those that understand and participate seem to be satisfied that there is a personal savings. Do you believe it is possible to drive down the cost of health care through more market based reforms? No. One needs to use a public health lens and look at why the cost of health services has increased so dramatically. Compare the difference of cost per encounter in the 1980s to now, including the insurance premiums. Basically, we have a health insurance industry that benefits from a "requirement" of every individual to buy health insurance, resulting in a monopoly business structure. Thus, since the 1980, the cost of health insurance has been left to have unlimited profits. The seven digit salaries of CEOs and other management, have robbed the actual provision of direct health services. Cutting salaries for physicians and other providers, increasing the amount of charting and documentation for services provided, basically gutting the direct services infrastructure. How do you see the role of employers in providing coverage changing over the coming years? As a business owner, I have had to require my employees to share the cost of health insurance. For the last 20 years, I had paid the entire premium. That is not possible now. The cost is too high to remain in business, unless employees cost share. Leonard J. Nelson Professor Emeritus at Samford University What are the most popular parts of the ACA? What components would be most politically difficult to repeal? The most popular parts of the ACA and the most difficult to repeal are the insurance reforms applicable in the individual and small group markets: e.g., guaranteed issuance and renewal, no restrictions on coverage of preexisting conditions, no annual and lifetime caps, essential health benefits, and adjusted community rating (the ban on medical underwriting). The premium and cost sharing subsidies available to those purchasing individual coverage also popular. Premium subsidies are available on a sliding scale to those with incomes less than 400% of FPL, but the subsidies available to those above 250% of FPL are not significant. Cost-sharing subsidies are available to those with incomes below 250% of FPL and reduce out-of-pocket maximums and increase the actuarial value of the plan (the latter are available on a sliding scale). The requirement that employer sponsored health insurance plans that cover dependents also provide coverage to children up to the age of 26 is also very popular. And in the 32 states and the District of Columbia that have expanded Medicaid to cover everyone up to 138% of FPL, this coverage expansion will be difficult to repeal. Are Health Savings Accounts an effective strategy for helping families finance health care costs? Health savings Accounts (HSAs) are attractive to higher income families because of the tax subsidy. Deposits in the HSA are triply advantaged: no tax paid on the money going on, no tax on earnings, and no tax on the money going out if it is used for the payment of qualified medical expenses. In order to be eligible for the favorable tax treatment, the HSA must be combined with High Deductible Health Plan with certain minimum deductibles and maximum out-of-pocket expenses. The funds invested in an HAS are portable and may be carried forward (they don't have to be spent in the year deposited). And the funds may be invested. Some financial counselors are recommending HSAs as an additional retirement savings vehicle because money withdrawn for qualified medical expenses is never taxable unlike money withdrawn from an IRA. Moreover, while money withdrawn from an HSA for non-medical expenses is subject to taxation and imposition of a 20 % penalty prior to age 65, the penalty disappears when the withdrawals are made after age 65. On the other hand, lower income consumers may not benefit much from setting up an HSA and may prefer coverage that will provide access to direct primary care with lower out-of-pocket costs rather than an additional tax shelter. Do you believe it is possible to drive down the cost of health care through more market based reforms? We don't know whether market-based reforms will reduce the costs of coverage. The marketplace exchanges set up under the ACA were supposed to reduce costs through competition among insurers, but in many states there are only one or two insurers offering policies on the exchanges. And in many states premiums have significantly increased since 2014, when the exchanges were first established. This is undoubtedly due to problems with adverse selection (i.e., not enough healthy people signing up for insurance). Republicans are proposing that insurers be permitted to sell insurance across state lines, but it is not clear that this reform will have much of an impact on reducing the costs of health care coverage. On the other hand, the evidence seems clear that more competition among hospitals could reduce costs, particularly in markets with several hospitals. But at this time there is a trend toward more market concentration among hospitals, i.e., a lot of mergers and acquisitions that could result in less competition and increased costs for consumers. How do you see the role of employers in providing coverage changing over the coming years? Many employers are shifting to a defined contribution model for health insurance coverage as happened earlier with defined benefit pensions. This means that employees will be provided with a set amount from the employer to spend on health insurance, which the employee can then top off to purchase more generous coverage. Some employers are setting up private exchanges to facilitate choice of plans by their employees along with the defined contribution. Leonard H. Friedman Professor in the Department of Health Policy and Management and Director of the MHA Programs in the Milken Institute School of Public Health at The George Washington University What are the most popular parts of the ACA? What components would be most politically difficult to repeal? If you were to ask the general public, they would probably say that the most popular parts were persons age 26 and under being able to stay on their parent’s health insurance plan and additionally, the requirements that plans cover pre-existing conditions. A much larger benefit to the ACA is that some 22 million persons now have access to health insurance who did not before passage of the Act. Repeal of the ACA without a comparable replacement plan would effectively tell those 22 million persons that they no longer have health insurance. The pain that would be experienced as a result of this decision would cut across political parties but would disproportionately affect poor and low income working families. Are Health Savings Accounts an effective strategy for helping families finance health care costs? Health Savings Accounts (HSA’s) are a reasonable alternative for those whose household income is enough to provide them with the flexibility to put money aside to cover planned as well as unexpected health costs. The issue is that unlike health plans who negotiate lower charges with providers for covered expenses, there is no such buying power for persons who purchase care out of their own pocket. Persons buying health services through an HAS effectively pay the “rack rate” and are helping to subsidize those with employer sponsored health insurance or other commercial insurance product. Do you believe it is possible to drive down the cost of health care through more market based reforms? Market based reforms assume that “invisible hand” of the larger market will help drive down costs through competitive pressure and consumer choice based on cost and quality. This assumption is probably correct if you are talking about the vast majority, or goods or services that we purchase. Health care is fundamentally different. With the exception of elective procedures that allow the consumer the time to shop for the best provider at the lowest price, most medical care occurs when something wrong is happening and in this case, rational decision making gives way to whatever the physician says that needs to be done regardless of cost. This is particularly true when confronted with an acute illness that requires important decisions be made at one of the most stressful times of one’s life. Finally, market based solutions assume a rough equality of information between and among the parties to the exchange. In healthcare, the physician or other clinicians will always have more information than the consumer even with the availability of medical information on the internet. How do you see the role of employers in providing coverage changing over the coming years? Employers will continue to play a critical role in providing health coverage. The pressure from insurance companies will be to increase the cost of premiums as a result of higher charges by healthcare providers and an increasing number of older persons needing healthcare combined with the cost of caring for those with chronic illnesses that are related to lifestyle choices (e.g., diabetes, obesity, emphysema, etc.). In order to keep healthcare premiums affordable, employers will likely reduce the number of health plans to employees and pass a larger fraction of the costs for insurance onto the employee. Jessica Greene Professor at Baruch College - CUNY What are the most popular parts of the ACA? What components would be most politically difficult to repeal? What people with ACA marketplace and expanded Medicaid coverage really value is having affordable health insurance. What is tricky though, is for insurance to be affordable, people who are both healthy and less healthy need to buy insurance. Opponents of the ACA want to end the mandate requiring health insurance coverage, which will likely result in healthier people dropping coverage, and the costs spiraling for those less healthy people who continue to buy insurance. This will effectively end what people value most - having access to affordable coverage. Are Health Savings Accounts an effective strategy for helping families finance health care costs? Health Savings Accounts (HSAs), which are tax advantaged accounts for paying out of pocket health care costs, are typically coupled with high deductible health plans. What we know from research about enrollees in high deductible health plans is that they cut back on health care - both care that is very valuable and care that is less valuable. HSAs and high deductible health plans unfortunately do not help people make informed health care choices, as proponents thought they would. They are not a magic bullet for improving use of health care, and for people with lower incomes, they can be particularly challenging. How do you see the role of employers in providing coverage changing over the coming years? So much is unknown right now about the future of health insurance coverage, I think it would only be a guess at this point. Jae Kennedy Professor and Chair of the Health Policy and Administration Department at Washington State University What are the most popular parts of the ACA? What components would be most politically difficult to repeal? Probably the most popular component of the ACA is its regulation of private health insurance, particularly the prohibition of pre-existing condition exclusions, annual and lifetime caps, and maximum out-of-pocket costs. These changes opened the insurance market to people with disabilities and chronic conditions for the first time, and eliminated the fear that coverage could be arbitrarily withdrawn during a period of costly illness. American voters will be furious if repeal means a return to the bad old days of private health insurance. Are Health Savings Accounts an effective strategy for helping families finance health care costs? No, they are simply a strategy for shifting costs back to the consumer, and tend to favor the healthy, wealthy and young. Ironically, the biggest complaint by consumers who purchase health insurance coverage from the state Health Insurance Exchanges is the cost of their co-payments and deductibles. If there was a widespread shift to HSA coverage, these out-of-pocket costs would likely skyrocket. Do you believe it is possible to drive down the cost of health care through more market based reforms? It depends what kind of market reforms we are talking about. Allowing purchase of individual health insurance products across state lines, for example, would do little to reduce costs, and may well lead to a loss of consumer protections. Allowing the federal government to openly negotiate prescription drug prices for millions of Medicare beneficiaries like it does for veterans, on the other hand, could significantly reduce program and patient costs. How do you see the role of employers in providing coverage changing over the coming years? Our country’s reliance on employers to provide health insurance is really based on two historical accidents – Blue Cross was created to keep hospitals afloat during the Great Depression, and the special treatment of employee insurance benefits as a pre-tax business expense was a way to contain wage inflation during the post-WW2 economic boom. Anyone who has looked at their paycheck notices that their compensation is a combination of wages and benefits, and the dollar value of those benefits is growing a lot faster than their wages. Their employers sure know this. I think a lot of them would like to get out of the insurance business, and compete on the basis of wages. We just need a robust public alternative for current and future American workers. Charles Stoecker Assistant Professor in the Department of Global Health Management and Policy at the School of Public Health and Tropical Medicine at Tulane University Do you believe it is possible to drive down the cost of health care through more market based reforms? The health care market is rife with externalities and information asymmetries. Markets can’t function well on their own without regulatory intervention when either of those conditions exist. An information asymmetry is when two people are exchanging a service but one side knows more than the other. When you go to your doctor, you trust he or she will make the right treatment recommendations because he or she went to medical school. But some doctors are motivated partly by the free trip to the conference in Bermuda offered by the pharmaceutical company. That might lead them to recommend a more costly course of treatment than necessary. Externalities are when your decisions affect me. Externalities are very common in health care because we share costs through our insurance companies. The idea is that when I’m healthy I’ll pay in and cover your costs when you’re sick and vice versa. But suppose we develop a taste for some really unhealthy food or drinks that increase obesity. Those will raise everyone’s costs. Philadelphia and Berkeley have taken an interesting step to levy a tax on soda. Government taxes and regulations to curtail certain behaviors are vital to changing the cost curve. How do you see the role of employers in providing coverage changing over the coming years? The US is a bit unique in that we link health insurance with employment. It has a few positives, you get a nice risk pool that cuts across health status - in a single firm you can have senior workers that need relatively expensive care and new hires that require very little who subsidize the more expensive folks. This comes with a couple of costs. First, firms have to deal with a product that’s not their core area. If you’re really good at making bicycles, it’s really nonsensical you’d have to compete with bicycle manufacturers from other countries by also knowing a lot about health insurance. Second, linking insurance to employment misses a huge swath of the population. If you’re between jobs or disabled, it’s hard to get access to the kind of coverage enjoyed by those of us that are employed. Third, you might have a great idea to start a new business or want to go back to school to change professions, but you might be hesitant because you’d lose your health insurance at your current employer. All of those issues are a drag on the US economy and make it harder for US firms to compete with firms abroad. Moving to a system that doesn’t tie health insurance to employment would have a lot of benefits. Amy M. Lischko Associate Professor of Public Health and Community Medicine at Tufts University What are the most popular parts of the ACA? What components would be most politically difficult to repeal? The most popular parts of the reform include the Medicaid expansion for very low income people, the subsidies for private coverage for moderate income people, free preventive care (especially routine care like contraceptives), dependent coverage where kids can stay on parents’ plans until 26, and guaranteed issue and no underwriting for people with health conditions. I think the most politically difficult would be the guaranteed issue with no underwriting for people with pre-existing conditions. No one wants sick people to go without needed coverage. And, it is easy for news outlets to find sad cases of people with health conditions unable to get coverage. I think we will see this feature remain, but instead of an individual mandate to encourage a healthy risk pool, we might see penalties for people who do not maintain continuous coverage and/or high-risk pools where people with high health care needs can purchase insurance. My sense is that Medicaid will be turned into a block grant of some sort, where states will be able to craft coverage and benefits that best meet their state population needs under a budget cap of some sort. Congress will weigh in on this and governors will not all be happy as it would mean a decrease in federal funding. If the cap is based on current coverage, then states will not be immediately affected by a decrease in funding and the expansion population can remain covered. However, states will need to figure out how to be more efficient with the program and or how to secure additional state funds via taxes, employers, etc. Dependent coverage will likely remain as it is not a budget issue and is widely popular. Exactly which types of preventive care will be covered moving forward is a question—it will likely be pared down, as republicans do not like insurance mandates. The subsidies will be re-crafted along with the products people can buy with their subsidies. Are Health Savings Accounts an effective strategy for helping families finance health care costs? I think the jury is still out on this question. The literature is mixed and it is a partisan feature so very hard to disentangle. I think HSAs can play a greater role and I would like to see more consumer engagement and education around health care costs in general. I do not believe that simply providing people with an HSA will help much. The market for health care needs to change. I think people are willing to shop around for some types of care, but when they try to do so they find it very difficult. We really need to provide better information, and educate people about when and how to shop for care. We need greater transparency of both provider costs and quality and tools to easily locate that information. There is no doubt that insurance masks the true cost of care and this leads to significant waste. However, I don’t think HSAs are the silver bullet that will solve all of our health care cost problems. We need both supply and demand approaches. Do you believe it is possible to drive down the cost of health care through more market based reforms? Difficult to answer as I do not believe we have fully tested market-based reforms. We have a hybrid approach here in the United States and both systems (government and private) work better together than if we wholly went to one approach or the other. We underpay providers for Medicaid (and Medicare) and shift these costs to privately insured. If we had a fully governmental system, we would have to pay providers more and we would lose much of the innovation that occurs in the private market. If we moved towards a fully market-based approach, there would be vulnerable populations for which this sort of system would not work as well. Under the new administration and Congress, it seems more likely that we will move closer towards market-based approaches. I think we also will see more innovation at the state level. Because historically health care has mostly been administered at the state level, markets are very different across the states. I do not believe that one size fits all and I think this administration would do well to set some parameters for reform, providing financing, and let states innovate. How do you see the role of employers in providing coverage changing over the coming years? I hope that 10 years from now, employers are no longer in the business of health care. Health care should be portable, tax deductible, and selected by individuals and families. Employers could play a role by providing some financing towards that purchase but they should not be in the business of selecting which health plans their employees have access to. I think we moved closer to this in some ways vis a vis the ACA Exchanges - but we have further to go.

Methodology

 

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