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February 04, 2008

California's reform fails; can a federal solution work?

The demise of California's attempt at comprehensive health-care reform last week means that advocates of overhauling the health-care system will turn their focus back to Washington, several experts said, as an increasingly tough budget climate raises new questions about whether states can go it alone.

When the plan championed by Gov. Arnold Schwarzenegger, a Republican, and state Assembly Speaker Fabian Núñez, a Democrat, went down to defeat in a legislative committee, so did hopes that successful reform in such a populous, influential state would bolster efforts elsewhere to cover more of the nation's 47 million uninsured.

While California is unique in some respects -- it has a diverse electorate, a high number of uninsured and a history of occasional budget crises -- experts said some of the same economic forces at work there threaten to slow or swamp similar proposals in other states. The slumping economy diminishes states' tax revenue at the same time that spending demands increase as more people seek help from programs such as Medicaid, which serves the poor. And, unlike the federal government, state governments have to balance their budgets.

"The failure of California's plan pushes the focus about expanding coverage even more strongly towards Washington," said Paul B. Ginsburg of the Center for Studying Health System Change, a nonpartisan policy-research group. "I've never believed that states would be able to go very far on their own because of their fiscal limitations. A state in an average year could be able to afford something, but once they get into a recession, they get into fiscal trouble."

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Posted by healthinsurance at February 4, 2008 07:14 PM