The ACP Advocate Blog
by Bob Doherty
Thursday, January 14, 2010
Why do red states gain the most under health reform?
With news that a tentative deal may have been reached on the contentious issue of a tax on high cost health plans, the negotiations on the health reform bill may be on the verge of overcoming one of the biggest obstacles to reconciling the House and Senate bills. It looks increasingly likely that the House and Senate may strike a deal to allow a revised bill to be sent, as early as tomorrow, to the Congressional Budget Office, for a revised estimate of its impact on the federal budget. This would set the stage for possible passage of the legislation by the end of this month or early February.
Without assuming anything, it isn't too soon to begin talking about who gains and who loses under the likely compromise legislation. Writing in the Health Affairs blog, Claudia Schur and Marc Berk estimate that "the states most likely to 'win' as a result of health care reform are Arkansas, Idaho, Kentucky, North Carolina, Oklahoma, Tennessee, and Utah. All of these states have a relatively high number of uninsured and all are in the bottom half of states in terms of cost under both financing mechanisms." They used a simple metric - "benefits were measured in terms of the state's current proportion of uninsured residents, and costs were assessed by ranking the states to see which would be hardest hit by each of two financing mechanisms, a tax on high earners and a tax on high health insurance premiums" - to determine which states would get more benefit than their contribution to the cost.
"Among the states most likely to 'lose'" they write, "are Delaware, Nebraska, and New Hampshire as well as the District of Columbia. Each of these states has a relatively lower-than-average proportion of uninsured residents, and each would fall in the "High Cost" category under either of the financing options." Other states would do better or worse depending on which financing mechanism - tax on high income residents or tax on high cost insurance plans - is used. Many other states fall somewhere in between.
What do the "winning" states have in common? They have more uninsured persons, fewer unionized workers, lower average insurance premiums (meaning fewer "Cadillac" plans to be taxed), and fewer high income persons (meaning fewer people who fall in the income brackets that may have to pay higher taxes). "The overall pattern therefore shows a curious alignment" they write since, "states with the most to gain under health care reform are overwhelmingly represented by Republicans, while those states likely to do worse are much more likely to have Democratic senators."
This dissonance between a state's partisan voting pattern and how much they will gain is dramatic: "When we examine the seven states most likely to be winners under reform, we see a combined split in their Senate delegations of twelve Republicans versus two Democrats. The three states most likely to lose under health care reform are collectively represented by four Democrats and two Republicans. When we add in the group that would be losers under the income-tax option, the split becomes even stronger, with these states being represented by eighteen Democrats and four Republicans."
If politics was all about bringing home the goods, then one might expect that the states that will gain the most from health reform would be the most in favor of it. But the "red" states that will gain economically from health reform are also the ones whose electorate tends to be most distrustful of government. Because these voters don't particularly like government, they have been willing to tolerate high number of uninsured persons. Now, though they will gain the most if the federal government ends up picking up the tab to cover more people - even though their own Senators (and most of their residents) were against it. Meanwhile, many of the Democratic "blue" states will see more of their tax dollars go to paying for health care coverage in the states that didn't want it in the first place.
The best hope the Democrats have is that once health reform is signed into law, red state voters will eventually discover that they have gained the most from the programs, and may even give the Democrats some of the credit.
Today's question: What do you take away from the dissonance between how much a state will gain from health reform and how little support it has in the state?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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