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LAUREN E.

SILVER
State Health Policy Diffusion:
Implications for Universal Health Care Coverage and Federalism in the U.S.
By:
auren Silver
Decem!er "#$ %##&
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LAUREN E. SILVER
1.0 Introduction
In American politics, the notion that states serve as laboratories of innovation often is
emphasie! "hen !ebatin# the !e#ree to "hich a polic$ #oal sho%l! be achieve! thro%#h state
vers%s fe!eral action. &he follo"in# literat%re revie" assesses the evi!ence for "hether states
serve as laboratories of innovation in American health polic$ thro%#h the process of polic$
!iff%sion, an!'"ith a foc%s on the c%rrent health reform !ebate'attempts to infer the res%ltin#
implications for %niversal health covera#e an! fe!eralism in the Unite! States.
2.0 Understanding of the Problem
&he Unite! States provi!es health care covera#e to its citiens via a fra#mente!, patch"or()li(e
s$stem that leaves man$ se#ments of the pop%lation "ith little to no reco%rse for accessin#
me!ical care. In *00+, appro,imatel$ -../ million people in the Unite! States "ere %nins%re!, or
01.- percent. &his n%mber increase! from a total of -1.. million %nins%re! in *002 an! has been
#ro"in# stea!il$ for almost a !eca!e 3U.S. 4ens%s 5%rea%, *0067. &he ma8orit$ of the %nins%re!
belon# to lo")income, "or(in# families "itho%t access to emplo$er)sponsore! ins%rance. As a
res%lt, the$ are less health$ than their ins%re! co%nterparts an! less li(el$ to receive preventive
care an! follo")%p care for chronic con!itions 39aiser 4ommission on :e!icai! an! the
Unins%re!, *0067. ;n top of the health !isparities e,acerbate! b$ %nins%rance, the states, the
fe!eral #overnment, an! cons%mers are #rapplin# "ith risin# health care costs that are cripplin#
state b%!#ets, compo%n!in# the fe!eral !eficit, an! escalatin# the in!ebte!ness of man$
Americans. &he c%rrent fe!eral)state relationship in provi!in# health care in the U.S. has $et to
lea! to an$ "i!esprea! sol%tions to the problem of the %nins%re!.
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LAUREN E. SILVER
&he fe!eral #overnment an! in!ivi!%al states share responsibilit$ for provi!in# p%blicl$)
f%n!e! health covera#e's%ch as thro%#h the :e!icare an! :e!icai! pro#rams'to those
"itho%t access to private covera#e. <iven the ne#ative conse=%ences of %nins%rance, it is in the
interest of both levels of #overnment to ma,imie covera#e. &his ver$ notion %n!erpins the
c%rrent national health care reform !ebate that the American p%blic, 4on#ress, an! the >resi!ent
have been en#a#e! in since the start of the *00+ >resi!ential campai#ns. >rior to the c%rrent
health reform !ebate an! be#innin# as soon as the earl$ 0600?s, n%mero%s attempts at achievin#
nation"i!e %niversal covera#e have faile! in the U.S. 39aiser @amil$ @o%n!ation, *0067.
>resi!ents &heo!ore Roosevelt, @ran(lin Roosevelt, Aarr$ &r%man, B"i#ht Eisenho"er, L$n!on
Cohnson, Richar! Ni,on, an! 5ill 4linton all a!vocate! some form of ma8or national health
reform, man$ of "hom so%#ht %niversal health covera#e. In the absence of a s%ccessf%l fe!eral
health care reform initiative achievin# %niversal covera#e to !ate, in!ivi!%al states have ass%me!
increasin# responsibilit$ for e,pan!in# health covera#e to their %nins%re! resi!ents. :ost
recentl$, :assach%setts an! Vermont enacte! comprehensive health care reform proposals in
*00., each state strivin# for %niversal covera#e of its resi!ents. As of the close of *002, /6 states
ha! enacte! health ins%rance e,pansion an!Dor health ins%rance mar(et reform proposals,
incl%!in# ne" covera#e e,pansions tar#etin# both chil!ren an! a!%ltsE ins%rance mar(et reforms
for improvin# access to private covera#eE an! in!ivi!%al or emplo$er man!ates 3:cBono%#h,
:iller F 5arber, *00+7. Asi!e from :assach%setts an! Vermont, (e$ political actors in thirteen
other states have !evelope! comprehensive reform proposals that remain %n!er consi!eration
3:cBono%#h et al., *00+7.
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3.0 States as Laboratories of Policy Innovation
S%preme 4o%rt C%stice Lo%is 5ran!eis 30+1.)06-07 coine! the metaphor of states as laboratories
in his !issentin# opinion in New State Ice Company v. Liebmann 306/*7. Gritin# in !efense of an
;(lahoma la" that re=%ire! those "ishin# to man%fact%re, sell, or commerciall$ !istrib%te ice to
first obtain a license from the appropriate state a#enc$, C%stice 5ran!eis note!H It is one of the
happ$ inci!ents of the fe!eral s$stem that a sin#le co%ra#eo%s State ma$, if its citiens choose,
serve as a laborator$E an! tr$ novel social an! economic e,periments "itho%t ris( to the rest of
the co%ntr$ 3Leichter, 0662 F &arr, *0007.
Since then, the metaphor has been a!opte! o%tsi!e of the 8%!icial s$stem b$ political
scientists an! other researchers e,aminin# iss%es relate! to fe!eralism an! polic$ma(in#.
4onse=%entl$, a n%mber of !ifferent interpretations of the metaphor persist to!a$, ran#in# from
literal to loose translations. 5$ "a$ of e,ample, health polic$ researchers a!vocatin# a literal
interpretation insist that states act as laboratories onl$ "hen the$ a!opt, implement, an! eval%ate
policies accor!in# to the scientific metho! as emplo$e! b$ nat%ral scientists'failin# to mimic
the controlle! con!itions of a scientific laborator$ precl%!es the le#itimate %se of the metaphor
3;liver F >a%l)Shaheen, 0662E Leichter, 06627.
;thers insist that s%ch ortho!o,$ is %n"arrante! an! s%##est that for the metaphor to
be anal$ticall$ an! !i!acticall$ %sef%l it nee! onl$ compl$ "ith a more cas%al an! analo#ical,
rather than literal, stan!ar! 3Leichter, 06627. A more cas%al interpretation of the metaphor
proposes that as states e,periment "ith innovative policies an! pro#rams, other states as "ell as
the fe!eral #overnment ma$ learn from their e,periences an! choose "hether to follo" a similar
path 3Leichter, 06627. &he loose interpretation of the metaphor can help facilitate an
%n!erstan!in# of state polic$ma(in# processes'as the$ occ%r in the real "orl! "here the
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reso%rces, time, an! consens%s for ri#oro%s eval%ation often are lac(in# 3Leichter, 06627. &h%s,
the revie" of polic$ !iff%sion that follo"s is base! on this more cas%al interpretation.
4.0 Policy Innovation and iffusion! "once#ts and $heory
&he states as laboratories metaphor implies that states not onl$ learn from one another?s polic$
e,periments, b%t that states also appl$ "hat the$?ve learne! "hen consi!erin# "hether to a!opt
the policies an! pro#rams of other states. &his process is referre! to as polic$ !iff%sion'it is
not merel$ an increase in %sa#e or inci!ence of a polic$I, b%t rather the res%lt of a !$namic
!ecision)ma(in# process 39arch, *0027. Gal(er 306.67 an! <ra$ 3062/7, the pioneers of polic$
!iff%sion research, so%#ht to %n!erstan! "h$ some states are =%ic(er than others to a!opt
innovative policies an! ho" these innovations sprea! amon# the states. 5oth !efine an
innovation as a polic$ or la" that is ne" to the state a!optin# it, re#ar!less of ho" man$ other
states have a!opte! it or ho" lon# a#o the$ a!opte! it 3Gal(er, 06.6E <ra$, 062/7. Anal$in# the
10 states? a!option of ++ !ifferent pro#rams in 0/ !ifferent polic$ areas incl%!in# health, Gal(er
306.67 fo%n! that certain !emo#raphic an! political factors are correlate! "ith ho" =%ic(l$ a
state a!opts a polic$ innovation relative to other states. Lar#er, "ealthier, an! more in!%strialie!
states ten! to lea! the pac( "hile smaller, less !evelope! states brin# %p the rear 3Gal(er, 06.67.
Gal(er 306.67 theorie! that the !rivin# forces behin! "h$ states event%all$ mimic earl$
a!opters are em%lation an! competition, "hich compel state !ecision)ma(ers JtoK constantl$
Jloo(K to each other for #%i!es to action in man$ areas of polic$.
<ra$ 3062/7 anal$e! the a!option of 0* !ifferent la"s in the areas of e!%cation, "elfare,
an! civil ri#hts an! fo%n! that an interaction effect'a!opters infl%encin# non)a!opters'
acco%nte! for the !iff%sion of innovations in half of the la"s e,amine!. Li(e Gal(er, <ra$
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LAUREN E. SILVER
concl%!e! that this interaction effect operates thro%#h state officials em%latin# the polic$
!ecisions of other state #overnments.
S%bse=%ent polic$ !iff%sion research has corroborate! Gal(er an! <ra$?s fin!in#s, b%t it
also has e,pan!e! on their concl%sions to f%rther o%r %n!erstan!in# of ho" innovations !iff%se
across states. @irst, as Gal(er an! <ra$ theorie!, em%lation an! competition pla$ a pivotal role
in polic$ !iff%sion 39arch, *0027. A!!itional so%rces of polic$ !iff%sion incl%!e #eo#raphic
pro,imit$ an! imitation 39arch, *0027. <eo#raphic pro,imit$ lea!s to polic$ !iff%sion "hen
states a!opt policies enacte! b$ nei#hborin# states 39arch, *0027. Nei#hborin# states ma$ be
more li(el$ to mimic one another beca%se the$ share similar !emo#raphic an! c%lt%ral
characteristics, the$ are e,pose! to the same me!ia mar(ets, or the$ simpl$ comm%nicate more
"ith each other 39arch, *0027. Biff%sion ma$ occ%r !%e to an imitative process !riven simpl$
b$ share! attrib%tes of states 39arch, *0027. In this case, state officials a!opt the polic$ enacte!
b$ another state beca%se the$ perceive m%t%al polic$)relevant characteristics, s%ch as
i!eolo#ical, political, or socioeconomic similarities 39arch, *0027. &h%s, polic$ !iff%sion
research to !ate has isolate! fo%r primar$ so%rces that acco%nt for the sprea! of innovationsH
imitation, em%lation, competition, an! #eo#raphic pro,imit$.
>olic$ !iff%sion also ma$ occ%r "hen the national #overnment ta(es c%es an! learns from
states re#ar!in# "hat "or(s'an! "hat !oesn?t'in a specific polic$ area 3Geissert F Scheller,
*00+7. &h%s, polic$ !iff%sion occ%rs both horiontall$ bet"een states an! verticall$ bet"een
states an! the fe!eral #overnment.
%.0 &ealth Policy iffusion
1.0 Aoriontal Biff%sionH &he Sprea! of Aealth >olic$ Innovation across States
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Diffusion by imitation. 5arrillea%, an! 5race 3*0027 e,amine! factors relate! to "hether state
#overnments in the 0660?s p%rs%e! state) or mar(et)base! health care reform strate#ies aime! at
re!%cin# %nins%rance amon# their citiens. State)base! approaches appoint the state as the
ins%rer for e,pan!e! covera#e "hile mar(et)base! approaches rel$ on !evelopin# incentives to
enco%ra#e in!ivi!%als an! b%sinesses to p%rchase ins%rance 35arrillea%, F 5race, *0027. &he
a%thors assesse! the infl%ence of polic$)relevant political an! economic covariates on "hich
polic$ t$pe states p%rs%e!, incl%!in# liberal)part$ stren#th, the percenta#e of %nins%re!
emplo$e! citiens, an! per capita personal income. States sharin# similar val%es for these
characteristics "ere more li(el$ to a!opt the same t$pe of polic$H states "ith a liberal le#islat%re
an! poorer states "ere si#nificantl$ more li(el$ to a!opt state)base! reforms "hile states "ith a
smaller percenta#e of the "or(in# %nins%re! "ere more li(el$ to a!opt mar(et)base! policies
35arrillea%, F 5race, *0027. &hese fin!in#s s%##est that, to a certain e,tent, !iff%sion of state)
vs. mar(et)base! health reform policies are !riven b$ imitation.
An a!!itional e,ample of !iff%sion via imitation emer#es amon# states that passe!
comprehensive health care reform b$ the mi!)0660?s. @rie!man 3066-7 conten!s that most
reform states e,hibit certain social, !emo#raphic, an! health care s$stem characteristics,
incl%!in# a histor$ of ins%rance covera#e e,cee!in# the national avera#e, #enero%s :e!icai!
f%n!in# an! benefits, an! a #enerall$ pro#ressive histor$ of social pro#rams.
4arter an! La>lant 306627 e,plore! the states? a!option of ei#ht !ifferent health polic$
meas%res in the areas of small b%siness ins%rance reforms, hi#h)ris( ins%rance pools, pree,istin#
con!ition le#islation, certificate of nee! le#islation, creation of health commissions, #%arantee!
rene"al le#islation, portabilit$ of health covera#e, an! #%arantee! iss%e. &he a%thors
investi#ate! the impact of certain pop%lation, political, an! re#ional characteristics on ho"
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LAUREN E. SILVER
innovative'or =%ic( to a!opt'a state "as "ith respect to each of the ei#ht polic$ areas. States
"ith a histor$ of polic$ liberalism "ere si#nificantl$ more li(el$ to have hi#her innovation
scores than their less liberal co%nterparts an!, in partic%lar, "ere si#nificantl$ more li(el$ to
a!opt hi#h)ris( ins%rance pool an! #%arantee! iss%e policies, both of "hich are health reforms
that see( to e,pan! covera#e an! access 34arter F La>lant, 06627.
@inall$, imitation appears to have infl%ence! states? selection of policies %n!er the State
4hil!ren?s Aealth Ins%rance >ro#ram 3S4AI>7. >olitical an! !emo#raphic similarities affect
!iff%sion, "ith more i!eolo#icall$ similar states an! states "ith similar income levels more li(el$
to a!opt one another?s policies, s%##estin# that S4AI> polic$ !iff%ses across states !%e to their
imitatin# the strate#ies of their more similar co%nterparts 3Vol!en, *00.E 9arch *0027.
Diffusion by geographic proximity. &here is evi!ence of re#ional infl%ences on "hether states
a!opt certain health care reform policies, ho"ever, the evi!ence remains mi,e!, at best. 4arter
an! La>lant 306627 fo%n! that amon# ei#ht possible health reform policies, northeastern states
are si#nificantl$ more li(el$ to innovate "ith #%arantee! rene"al reforms "hile so%thern states
ta(e the lea! in a!optin# certificate)of)nee! reform. In contrast, 5arrillea%, an! 5race 3*0027
fo%n! that states? a!options of mar(et) or state)base! reform policies !o not si#nificantl$
infl%ence "hether their nei#hbors a!opte! the same strate#$, s%##estin# that #eo#raphic
pro,imit$ !oes not facilitate !iff%sion via em%lation or competition.
Diffusion by emulation. Recent research reveals that states are more li(el$ to em%late s%ccessf%l
rather than failin# health care reform initiatives aime! at e,pan!in# ins%rance covera#e amon#
chil!ren. Vol!en 3*00.7 e,amine! polic$ chan#es in the State 4hil!ren?s Aealth Ins%rance
>ro#ram 3S4AI>7 to assess "hether more s%ccessf%l policies !iff%se more rapi!l$ or more
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completel$ across the states. &he S4AI> emer#e! from the 0662 5alance! 5%!#et Act, provi!in#
states "ith fe!eral #rants to ins%re chil!ren from families "ith incomes above :e!icai!
threshol!s b%t belo" *00L of the fe!eral povert$ level 3Vol!en, *00.7. <iven the fle,ibilit$
#rante! b$ the fe!eral #overnment to states in the initial !esi#n of their S4AI> pro#rams, the
states la%nche! a !iverse ran#e of pro#rams an! s%bse=%entl$ ma!e -+ amen!ments that
s%bstantivel$ chan#e! a lar#e n%mber of the initial policies 3Vol!en, *00.7. Vol!en 3*00.7
emphasies that overloo(in# the !iff%sion of s%ccessf%l vers%s %ns%ccessf%l policies is a serio%s
omission, beca%se m%ch of the ar#%ment that states serve as polic$ laboratories is base! on the
premise that polic$ma(ers learn from others? s%ccesses an! fail%res, replacin# their o"n failin#
policies "ith the s%ccesses fo%n! else"here. Ae %n!erscores that the interestin# feat%re of
S4AI>, from a fe!eralism point of vie", is the variet$ of amen!ments an! "hether the$ represent
learnin# abo%t effective policies in other states.
&o that en!, Vol!en 3*00.7 con!%cte! a !$a!)$ear event histor$ anal$sis an! semi)
str%ct%re! intervie"s "ith S4AI> a!ministrators in 01 states to !etermine "hether states
mimic(e! s%ccessf%l policies, "hich "ere operationalie! as those policies that re!%ce!
%nins%rance rates amon# poor chil!ren. &he anal$sis, in!ee!, reveals evi!ence of polic$
!iff%sion sp%rre! b$ em%lation'pairs of states in "hich one "as s%ccessf%l e,hibite! a *0L
#reater o!!s of the other state a!optin# the s%ccessf%l polic$ compare! to pairs of states in "hich
neither "ere s%ccessf%l 3Vol!en, *00.7. &his fin!in# s%pports the notion that states em%late other
states "ith s%ccessf%l policies re#ar!in# coverin# %nins%re! chil!ren.
@rie!man 3066-7 also points o%t that most states that "ere flirtin# "ith comprehensive
health care reform b$ the mi! 0660?s either share! a bor!er "ith 4ana!a or "ith a state
bor!erin# 4ana!a, s%ch as Vermont an! :ontana, both of "hich "ere consi!erin# sin#le)pa$er
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s$stems at the time. Altho%#h not sho"n empiricall$, this s%##ests that em%lation ma$ have
pla$e! a role in these states? !ecisions to p%rs%e comprehensive reform.
@inall$, follo"in# the passa#e of the :assach%setts an! Vermont comprehensive health
care reform initiatives in *00., state officials in at least 0/ other states propose! comprehensive
reform la"s, "ith most proposals borro"in# from the :assach%setts an! Vermont plans
3:cBono%#h et al., *00+7. &his !emonstrates the "i!esprea! effect that em%lation can e,ert on
the !iff%sion of state health polic$ innovations.
1.* Vertical Biff%sionH &he Impact of State >olic$ Innovation on @e!eral Initiatives
Vertical polic$ !iff%sion, as !escribe! above, refers to the process "hereb$ the national
#overnment ta(es c%es an! learns from states re#ar!in# "hat "or(s an! "hat !oes not "or( in a
specific polic$ area 3Geissert F Scheller, *00+7. &he fe!eral #overnment has ta(en c%es from
certain areas of state health polic$ activit$ an!, in t%rn, either propose! or enacte! meas%res
aime! at reme!$in# the tar#ete! iss%es on a national scale.
&"o e,amples ill%strate the fe!eral #overnment attemptin# to e,pan! health ins%rance
covera#e in response to similar state effortsH first, "hen the 4linton a!ministration attempte! to
pass comprehensive health care reform in the earl$ 0660?s in response to a sle" of state health
access reform initiatives at aro%n! the same time, an! secon!, "hen 4on#ress passe! the State
4hil!ren?s Aealth Ins%rance >ro#ram as part of the 5alance! 5%!#et Act in response to nearl$
half the states e,pan!in# covera#e to %nins%re! chil!ren in the $ears prece!in# the act 35ro"n F
Sparer, *000E :cBono%#h et al., *00+7.
State activities in more isolate! areas of health polic$ li(e"ise have inspire! fe!eral
action. >assa#e of the Aealth Ins%rance an! >ortabilit$ an! Acco%ntabilit$ Act 3AI>AA7 in 066.
stemme!, in lar#e part, from state attempts at reformin# the small)#ro%p an! in!ivi!%al health
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ins%rance mar(ets !%rin# the earl$) to mi!)0660?s, an! state proposals in the late 0660?s for
improvin# access to affor!able prescription !r%#s for :e!icare enrollees hastene! the passa#e of
the :e!icare >rescription Br%#, Improvement, an! :o!erniation Act in *00/ 3:cBono%#h et
al., *00+7.
Geissert an! Scheller 3*00+7 point o%t that altho%#h state action can motivate fe!eral
action, it !oes not necessaril$ follo" that the national #overnment "ill !evelop polic$ base! on
"hat can be #leane! from states? e,periences. In fo%r of si, cases of state health polic$ activit$,
the fe!eral #overnment ma$ have been motivate! b$ state efforts, b%t it faile! to !ra" on state
e,periences for informin# its o"n co%rse of action 3Geissert F Scheller, *00+7.
;verall, the prece!in# e,amples ill%strate that health polic$ !iff%sion, in!ee!, occ%rs
both horiontall$ an! verticall$. Ao"ever, the more pressin# =%estion that remains is "hether
s%ch !iff%sion means that states event%all$ co%l! ta(e the lea! in achievin# the near)%niversal
covera#e that m%ltiple attempts at the national level have been %nable to accomplish.
'.0 (ederalism and the Path to)ard Universal &ealth "overage
In man$ polic$ arenas, American fe!eralism has been characterie! as a marble ca(e, "ith
#overnmental polic$ma(in# share! bet"een the fe!eral #overnment, the states, an! localities
3Vol!en, *001E Anton, 06627. &his characteriation stan!s in sharp contrast to la$er ca(e
fe!eralism, in "hich partic%lar levels of #overnment ass%me f%ll responsibilit$ for specific
polic$ f%nctions 3Vol!en, *0017. Aealth care provision in the U.S., %n!o%bte!l$, ill%strates
marble ca(e fe!eralism, "ith the fe!eral #overnment provi!in# covera#e for certain
pop%lations 3e.#., the el!erl$ an! the !isable! via :e!icare7 an! the states ta(in# the lea! in
coverin# other pop%lations 3e.#., lo")income a!%lts an! chil!ren via :e!icai! an! S4AI>7.
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<iven the pro#ress in state health care reform efforts as "ell as the evi!ence on the e,tent to
"hich health polic$ !iff%sion occ%rs, "here is American fe!eralism hea!e! in the =%est for
%niversal health covera#eM Is the fe!eral #overnment or are the states in a better position to ta(e
the lea!, an! "hat are the res%ltin# implications for achievin# %niversal health covera#eM &hese
=%estions are a!!resse! belo" not in the conte,t of philosophical or i!eolo#ical ar#%ments, b%t
rather on the basis of "hether the states or the fe!eral #overnment sho" the most propensit$ to
ta(e the lea! in a re#%lator$ capacit$ "ith re#ar! to implementin# comprehensive health care
reform.
..0 State)Le! Aealth 4are Reform
&hose "ho vie" the cas%al interpretation of the states)as)laboratories metaphor to be partic%larl$
apt in !escribin# ho" states f%nction as so%rces of polic$ innovation vie" state action not as an
en! in itself, b%t more as a mechanism for !eterminin# effective polic$, "hich other states or the
nation can choose to a!opt'or re8ect 3Geil, *00+7. S%ch an interpretation %n!erpins "hat some
scholars refer to as the fe!eralist strate#$ for health care reformH &he overarchin# premise of
the fe!eralist strate#$ is that once a s%fficient n%mber of states !evelop s$stems of %niversal
covera#e, other states "ill be compelle! to follo" an! conse=%entl$, the fe!eral #overnment "ill
be pers%a!e! to facilitate the transition to %niversal covera#e in ever$ state 3B%ba$, *00-7.
&h%s, implicit in an effective fe!eralist strate#$ is the notion that state polic$ innovations !o, in
fact, !iff%se across states. &he fe!eralist strate#$ emphasies a lea!in# role for statesE the fe!eral
#overnment sho%l! facilitate health reform onl$ insofar as it provi!es incentives for states to
e,periment in the search for an! a!option of s%ccessf%l policies 3B%ba$, *00-7. @%rthermore, the
viabilit$ of the fe!eralist strate#$ !epen!s on states possessin# the capacit$ an! reso%rces to
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#rapple "ith comple, polic$ iss%es as "ell as havin# the fiscal an! political con!itions that "ill
help sp%r movement to"ar! %niversal covera#e 3B%ba$, *00-7.
&o that en!, scholars pose a n%mber of ar#%ments re#ar!in# "h$ states are in a position
to ta(e the lea! in comprehensive health care reform. @irst, the polic$ e,pertise an! capacit$ of
state le#islat%res as "ell as the polic$ sophistication of state officials, in #eneral, has #ro"n
s%bstantiall$ over the past fe" !eca!es, "hich has enable! states to innovate in the absence of
fe!eral #%i!ance 3B%ba$, *00-7. Secon!, a top)!o"n, one)sie)fits)all approach !ictate! b$ the
fe!eral #overnment is %nli(el$ to accommo!ate the consi!erable !emo#raphic, socioeconomic,
an! c%rrent health ins%rance covera#e variation bet"een states 3Leichter, 0662E 4antor, Lon# F
:ar=%is, 066+E Aaron F 5%tler, *00+E Anton, 06627. 4onse=%entl$, the fe!eral #overnment
sho%l! simpl$ provi!e states "ith the reso%rces to e,periment "ith reforms that are tailore! to
their %ni=%e sit%ations 3Aaron F 5%tler, *00+7. &hir!, b$ enco%ra#in# states to ta(e the lea!,
political !ea!loc(s li(el$ to occ%r at the national level ma$ be better avoi!e! at the state)level
3Aaron F 5%tler, *00+7. &his is not to sa$ that state politics are si#nificantl$ less contentio%s
than national politics, b%t comprehensive health reform meas%res ma$ stan! more of a chance if
their vario%s merits an! !ra"bac(s are !ebate! "ithin the conte,t of a sin#le state, "hich ma$ be
more homo#eno%s on polic$)relevant factors 3i.e., c%lt%re, income, i!eolo#$7 than at the national
level 3Aaron F 5%tler, *00+7. @o%rth, state e,perimentation "ith !ifferent health reform plans
"ill help %ncover #litches to be avoi!e! "hen the fe!eral #overnment %ltimatel$ !eci!es to step
in "ith a national plan 3Aaron F 5%tler, *00+7. As Aaron an! 5%tler 3*00-7 conten!, b$ act%all$
testin# competin# approaches to reach common #oals, rather than en!lessl$ !ebatin# them, the
U.S. is far more li(el$ to fin! the sol%tion to the perple,in# an! seemin#l$ intractable problem of
%nins%rance.
0*
LAUREN E. SILVER
..* National Aealth 4are Reform
4omprehensive health care reform !riven b$ a more centralie! approach'"ith the fe!eral
#overnment ta(in# the rei#ns'co%l! span a contin%%m from a sin#le)pa$er strate#$ to the
fe!eral #overnment man!atin# specific reforms to be a!ministere! b$ the states 3B%ba$, *00-7.
Bespite the ar#%ments pose! b$ those "ho believe state)le! reform offers the most pla%sible path
to"ar! %niversal covera#e, the #eneral consens%s lar#el$ cre!its the fe!eral #overnment "ith
havin# more capacit$ to ta(e the lea! in health care reform'not as a sin#le)pa$er, ho"ever, b%t
as a catal$st for reform 35ro"n F Sparer, *0007.
>roponents of this vie" emphasie the m%ltit%!e of barriers that 10 in!ivi!%al states face
in achievin# %niversal covera#e if left to their o"n !evices. @irst, contrar$ to those "ho foresee
#reater s%ccess "ith a state)le! effort, those favorin# fe!eral action cite the variation in state
polic$ as a primar$ reason for a more centralie! approach 3Sparer, 0661E 4antor et al., 066+7. In
a s%rve$ of *2,000 families in ten states, 4antor et al. 3066+7 fo%n! that there is consi!erable
variation amon# states in health ins%rance covera#e, health stat%s, an! access to care. :oreover,
states "ith lo" rates of the former also e,hibite! lo" rates of the latter t"o problems. As a res%lt,
the challen#es face! b$ !ifferent states in improvin# their health s$stem performance var$
"i!el$. &he a%thors concl%!e that a reform strate#$ rel$in# on incremental state)b$)state action
is li(el$ to leave the nation "ith si#nificant lin#erin# #aps in the health care of man$ Americans
34antor et al., 066+7. Secon!, some emphasie that "itho%t e,plicit fe!eral #%i!ance an! specific
reform man!ates, states "ill contin%e to !abble in incremental reforms 3Sparer, 0661E Ga!!an F
Caenic(e, *00.7. In their e,amination of incremental reforms ma!e in ei#ht !ifferent health
polic$ areas, incl%!in# :e!icare, :e!icai!, an! S4AI>, Ga!!an an! Caenic(e 3*00.7, concl%!e
that incrementalism has not constit%te! a coherent strate#$ for achievin# %niversal covera#eI
0/
LAUREN E. SILVER
Rather, incremental reforms merel$ b%il! on the stat%s =%o an! enco%ra#e tin(erin# "ith a
fla"e! s$stem rather than improvin# it 3Ga!!an F Caenic(e, *00.7. &hir!, states face a lon# list
of obstacles that'even if state lea!ers are %nite! aro%n! achievin# %niversal covera#e'pose
s%bstantial barriers to implementin# s%ccessf%l health reform polic$. &hese obstacles incl%!e
fin!in# ne" so%rces for financin# reform an! fear on the part of state officials that
comprehensive reform "ill !rive b%sinesses a"a$ "hile attractin# the %nins%re! from other
states 3Sparer, 06617. @o%rth, the Emplo$ee Retirement Income Sec%rit$ Act 3ERISA7, enacte!
b$ 4on#ress in 062-, is a po"erf%l barrier to nearl$ ever$ state reform initiative 3Sparer,
06617. ERISA is a series of fe!eral la"s that obviate state la"s re#ar!in# emplo$ee benefits. In
partic%lar, ERISA prohibits states from re#%latin# or ta,in# self)ins%re! b%sinessesE
conse=%entl$, states cannot man!ate that emplo$ers provi!e health covera#e to their emplo$ees
3Sparer, 0661E B%ba$, *00-7. It sho%l! be note!, ho"ever, emplo$er pa$)or)pla$ initiatives so far
have been permitte!, as is one of the primar$ provisions containe! in the *00. :assach%setts
comprehensive health reform le#islation 3B%ba$, *00-7.
*.0 (ederalism in U.S. &ealth Policy! $he +nd of the evolution ,evolution-
As it stan!s to!a$, the health care s$stem in the U.S. lar#el$ is !ecentralie! "ith the fe!eral
#overnment, state #overnments, an! the private sector sharin# responsibilit$ for provi!in# health
ins%rance for certain se#ments of the pop%lation. In!ee!, the fe!eral #overnment has !ele#ate! a
s%bstantial amo%nt of !iscretion to the states in coverin# those "ith p%blic ins%rance thro%#h the
fle,ibilit$ it #rants them in !esi#nin# their :e!icai! an! S4AI> pro#rams. :oreover, states
re#%late a lar#e share of the private health ins%rance sector as "ell 3Sparer, 066+7. &h%s, man$
"o%l! sa$ that fe!eralism is alive an! "ell in U.S. health polic$.
0-
LAUREN E. SILVER
&he most recent attempt at national health care reform, "hich occ%rre! in the earl$
0660?s %n!er the 4linton a!ministration, presa#e! possible chan#es to the nat%re of fe!eralism in
U.S. health polic$. In response to the 4linton plan, man$ states voice! their concern that national
polic$ on health care reform sho%l! foc%s on en!s rather than means, a co%rse that "o%l! better
tap the innovation in the fe!eral str%ct%re 35o"man F >a#ano, 066-7. &he states, in partic%lar,
!o%bte! "hether the plan #rante! them eno%#h fle,ibilit$ in restr%ct%rin# their state"i!e health
s$stem "hile still conformin# to the parameters of the fe!eral le#islation 35o"man F >a#ano,
066-7. &he 4linton >lan %ltimatel$ faile!, lea!in# man$ to pa$ partic%lar attention to the states in
the hopes that, !%rin# this so)calle! !evol%tion revol%tion, the$ mi#ht ta(e the lea! in
e,pan!in# covera#e an! rei#nin# in health care costs 3Sparer, 066+7. 5$ the late 0660?s, tho%#h,
state initiatives be#an to fall short of their initial promise, an! scholars be#an to =%estion "hether
states ha! the capacit$ to brin# abo%t the health care reforms that "ere nee!e! across the co%ntr$
3Spit, 066+E Sparer, 066+7.
As in the earl$ 0660?s, the c%rrent national health care reform !ebate an! the t"o ma8or
le#islative provisions that are %n!er consi!eration'the Ao%se an! Senate versions of
comprehensive health reform'ma$ foresha!o" that si#nificant chan#es, once a#ain, are afoot.
As can be seen in &able 0, if the Senate an! Ao%se bills s%rvive conference committee
ne#otiations an! receive presi!ential approval, then the lan!scape of the U.S. health care s$stem
'an! state an! fe!eral roles'stan! to be altere! remar(abl$.
@irst an! foremost, both bills call for a #overnment)r%n health ins%rance plan to compete
"ith plans offere! b$ private health ins%rers'the Senate version, ho"ever, "o%l! allo" states to
opt o%t b$ passin# a state la" 3Stanton, No%rish F 9elso, *0067. A!!itionall$, both bills "o%l! 07
re=%ire in!ivi!%als to p%rchase ins%rance or face a fine, *7 re=%ire states to e,pan! their
01
LAUREN E. SILVER
:e!icai! pro#rams accor!in# to fe!eral r%les an! set %p ins%rance e,chan#es "here those
"itho%t emplo$er)sponsore! ins%rance co%l! access affor!able care, an! /7 impose a ta, on
those earnin# incomes above a certain threshol! 3Stanton et al., *0067.
'a!le ": Provisions of Current Health Care (eform Proposals
House Bill Senate Bill
)com!ination of Health * Finance Committee
provisions+
,e- ta.es Surcharge on taxpayers who earn more than
$500,000 a year, or $1 million a year for families.
A tax on high-cost insurance plans and would
raise Medicare payroll taxes for the wealthiest
Americans. Also leies a 5 percent tax on
electie cosmetic surgery.
/andates !e"uires indiiduals to purchase insurance or
pay a penalty of #.5 percent of income.
$mployers must pay %5& of family premiums or
pay a penalty 'ased on payroll. Small
'usinesses with less than $500,000 on payroll
are exempt and payrolls up to $(50,000 would
hae a reduced contri'ution.
)ndiiduals must purchase insurance or pay a
fine starting at $*5 in #01+ and rising to $(50 'y
#01%.
0.changes ,he 'ill would set up new insurance
mar-etplaces . called exchanges . where
people without access to afforda'le coerage
through an employer could purchase
comprehensie plans. Su'sidies would 'e
aaila'le to households earning up to +00
percent of the poerty leel /$00,#00 for a family
of four1.
Sets up new insurance mar-etplaces called
exchanges where people without access to
afforda'le coerage through an employer could
purchase comprehensie plans. ,ax credits
would 'e aaila'le on a sliding scale for
indiiduals and families who earn up to +00
percent of the federal poerty leel /$00,#00 for
a family of four1.
/edicaid
e.pansions
Medicaid would 'e expanded to proide free
health care to all Americans with incomes 'elow
150 percent of the federal poerty leel /$22,0(0
for a family of four1.
Medicaid would 'e expanded to coer eeryone
earning under 122 percent of the federal poerty
leel /$#*,2#( for a family of four1.
1overnment2run
insurance
A new pu'lic plan aaila'le through the
insurance exchanges would 'e set up and run 'y
the secretary of 3ealth and 3uman Serices.
4rogressie 5emocrats wanted reim'ursement
rates to 'e tied to Medicare, 'ut the 3ouse 'ill
would let the 33S secretary negotiate rates with
proiders.
6reates a pu'lic insurance option, 'ut allows
states that don7t want to participate to opt out.
,he federal goernment would negotiate
payment rates with medical proiders.
If the opt)o%t option prevails, some believe it "o%l! be a prel%!e to 10 state le#islative
battles over ho" to e,pan! :e!icai!, ho" to set %p the e,chan#es an! ho" to enforce ne"
ins%rance re#%lations, as "ell as "hether to #ive state resi!ents access to a p%blic plan
3:ont#omer$ F Slevin, *0067. &his path "o%l! seem to preserve the c%rrent nat%re of
fe!eralism in the U.S. health care s$stem. ;thers believe that man$ of the provisions, especiall$
0.
Source8 The Washington Post, retrieed 5ecem'er *, #00* from http899www.washingtonpost.com9wp-sr9special9nation9health9compare-health-
plans-#00*9
LAUREN E. SILVER
the :e!icai! e,pansions, "ill become %nf%n!e! man!ates, leavin# state b%!#ets in even more
!isarra$ than the$ are to!a$E or that states "ith little a!ministrative an! anal$tical capacit$ "ill
be force! to implement reforms that are be$on! their scope of e,pertise an! level of reso%rces
34a#le, *0067. &h%s, "hat appears even more evi!ent is that the propose! le#islation stan!s to
shift a s%bstantial amo%nt of responsibilit$ an! control for health care in the U.S. to the fe!eral
#overnment.
So, "hat are the prospects for U.S. fe!eralism in health polic$ in this time of intense
!ebateM It seems reasonable to ass%me that marble ca(e fe!eralism in U.S. health polic$ is here
to sta$'!espite the a%thorit$ #rante! to the fe!eral #overnment in the pen!in# pieces of
le#islation, the states "ill contin%e to pla$ an active an! participator$ role, even if it is one of
captive participation.
@or those "ho are leer$ of centraliation, tho%#h, the prospects loo( #rim. Even if states
are #iven the choice to opt)o%t of a p%blic ins%rance plan, it has been establishe! that national
activit$ infl%ences state polic$ma(in# 39arch, *00.7. Asi!e from overtl$ coercin# state
polic$ma(in# via s%ch mechanisms as man!ates, the national #overnment can s"a$ state)level
!ecision)ma(ers thro%#h more s%btle approaches, "hich often are referre! to as catal$tic
controls, or pra$ers 39arch, *00.7. 9arch 3*00.7 notes that >resi!ents, members of 4on#ress,
an! national 8%!#es mi#ht rel$ on this s%btle strate#$ "hen the$ "ant to steer state polic$ma(in#
in a partic%lar !irection "hile sim%ltaneo%sl$ preservin# state la"ma(ers? a%tonom$I &o
steer polic$ma(in# in a partic%lar !irection, national)level officials ma$ raise the obstacles that
prevent innovation, "hich lo"ers the chance that states "ill enact a polic$ innovation 39arch
*00.7. 5$ "a$ of e,ample, 9arch 3*00.7 !emonstrates that the national #overnment %se! this
s%btle form of infl%ence !%rin# the health care reform !ebate of the earl$ 0660?s to prevent the
02
LAUREN E. SILVER
"i!esprea! a!option of me!ical savin#s acco%nts 3:SAs7 b$ creatin# artificial barriers to state
implementation in the 066. AI>AA le#islation. &he opt)o%t option presents somethin# alon# the
lines of a reverse catal$tic control'it !oes not prevent states from actin# b%t, rather, it
!isco%ra#es inaction. &h%s, b$ re=%irin# that state officials en!%re the hassles of passin#
le#islation to opt o%t, the fe!eral #overnment "o%l! be compellin# all states to participate in the
p%blic plan, th%s e,ertin# a centraliin# effect on health care provision.
All in all, the evi!ence sho"s that state health polic$ innovation, !iff%sion, an! learnin#
occ%r across states an!, to a lesser e,tent, bet"een states an! the fe!eral #overnment. &h%s,
"hile the metaphor of states as laboratories of innovation'at least in health care polic$'passes
the test, it mi#ht be a necessar$, b%t is not a s%fficient con!ition for stavin# off fe!eral
encroachment into "hat has been a polic$ area share! b$ both levels of #overnment. If ens%rin#
health covera#e'vie"e! b$ man$ as a basic h%man ri#ht' remains o%t of reach for the states,
then past an! present attempts at national health care reform in!icate that re!%ce! state a%tonom$
ma$ be a fair price to pa$ for realiin# a lon#)so%#ht polic$ #oal, especiall$ if all else has faile!
to !ate.
..0 irections for (uture ,esearch
:%ltiple facets of polic$ !iff%sion an! fe!eralism, partic%larl$ "ith re#ar! to health polic$,
remain areas ripe for f%t%re research. @irst, "hat is the interpla$ bet"een em%lation, competition,
imitation, an! #eo#raphic pro,imit$ in acco%ntin# for the !iff%sion of state polic$ innovationM
Un!er "hat circ%mstances, "hether state) or polic$)relate!, !oes each of these infl%ence
!iff%sionM 5$ "a$ of e,ample, 9arch 3*0027 s%##ests that one line of in=%ir$ mi#ht investi#ate
"hether economic an! "elfare policies are more li(el$ to !iff%se via competition an! "hether
0+
LAUREN E. SILVER
moralit$ policies, s%ch as abortion an! #a$ ri#hts, are more li(el$ to !iff%se via imitation.
A!!itionall$, ho" !oes polic$ !iff%sion alter the scope an! content of polic$ itself'ho" !o the
policies of earl$ a!opters !iffer from those a!opte! b$ la##ar!sM 34lar(, 06+17. :ore
specificall$, ho" !o the scope an! content of policies chan#e as the$ !iff%se across statesE !o
policies become more or less e,pansive an! ho" !oes the content of a polic$ a!opte! earl$
compare to the same t$pe of polic$ a!opte! at a later timeM Li(e"ise, "hat are the con!itions
%n!er "hich the fe!eral #overnment is most li(el$ to refer to states? polic$ e,periences "hen
!esi#nin# national policiesM
Gith re#ar! to fe!eralism, "hat are the attrib%tes of policies that comman! increasin#
fe!eral attention compare! to policies that remain lar#el$ the territor$ of in!ivi!%al statesM In
other "or!s, is the possibilit$ of increase! centraliation of health care provision a slipper$ slope
lea!in# to fe!eral intervention in other areas, or is there simpl$ somethin# f%n!amentall$ %ni=%e
abo%t health careM Similarl$, ho" has marble ca(e vers%s la$er ca(e fe!eralism fare! in other
polic$ areas "ith respect to achievin# specific polic$ #oalsM Are there an$ ma8or t$pes of polic$
that have $et to be !escribe! as characteriin# marble ca(e fe!eralism, an! ho" !o these policies
!iffer from those "here the states an! the fe!eral #overnment share responsibilit$M
@inall$, m%ch of polic$ !iff%sion research s%ffers from metho!olo#ical shortcomin#sE
ne" an! more ri#oro%s empirical metho!s m%st be !evelope! in or!er to more f%ll$ isolate
patterns an! ca%sal mechanisms of polic$ !iff%sion. :ore specificall$, metho!s nee! to be better
able to tease o%t "hether a !iff%sion process is ta(in# place in "hich state officials loo( to one
another or "hether e,ternal infl%ences, s%ch as national a!vocac$ or#aniations, are the ma8or
!rivers of contin%e! polic$ a!option b$ states.
06
LAUREN E. SILVER
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