Dear Governor: Aaron Katz

“Dear Governor: About The State of Reform” is a collection of voices from across the health care spectrum, from four states: WA, OR, ID, and AK.  The book will be published in Sept.  Excerpts will appear here.

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Dear Governor,

The pioneers who drafted the Washington State Constitution were public health experts.  No, really.  As far as we know, none of the 75 delegates to the Constitutional Convention of 1889 was an epidemiologist, but their words – “It is the paramount duty of the state to make ample provision for the education of all children” (Article IX) – show they understood that an educated public is fundamental to a healthy society. Today, we have a large body of research to support their wisdom.

How far we’ve strayed.  Since 2009 we‘ve slashed nearly $5 billion from K-12 and higher education, jeopardizing the health and well-being of a generation of children and threatening to condemn a stellar system of public colleges and universities to a future mediocrity.

This is shameful and avoidable.  The next governor can do two things to reverse the harm and improve the health of all Washingtonians – make the case for additional tax revenues to support a quality educational system and redouble state efforts to reign in health care costs, which have the effect of crowding out education in the state budget.

The case for higher taxes is simple.  U.S. Supreme Court Justice Oliver Wendell Holmes said it best: “Taxes are the price we pay for a civilized society.”  State government needs adequate income to provide a quality education system as well as meet other expectations we have as citizens, yet we’ve been increasingly starving it for the past 20 years through tax limiting initiatives and tax loopholes.  We need a governor who will reverse this course.

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Health care is more complicated.

State health care spending is increasing for two reasons.  First, as employer-sponsored health insurance has eroded – the Great Recession has accelerated an existing long-term trend – Medicaid and other state-funding health insurance programs have filled the gap.  Second, the broader health care system is inherently inefficient and inflationary.  So, for example, during the recession, even as the annual increase in overall national health care spending has dropped below 4%, the lowest in 50 years, prices of health care goods and services have risen much faster.  What the state pays for health care is largely a product of those price increases; that is, state government is largely a “price taker.”

Still, the State of Washington has been one of the most active states in seeking efficiencies in its regulation and purchase of health care services.  It moved most acute care Medicaid beneficiaries into managed care plans in the 1990s, the vast majority of Basic Health clients are served by two highly managed plans, it has an aggressive Medicaid drug purchasing program and has been an innovator at trying to find efficient and effective ways of serving the most difficult patients, those with multiple, chronic diseases.  Certainly, more can be done along all these lines, but it’s safe to say the potential to “save” money in state-purchased health care does not reach into the billions of dollars – a few hundreds of millions, perhaps, but not billions.  And it is billions in savings that are necessary if Washington is to again become a leader in public education and if the economic burden of high health care costs on families and businesses is going to be eased.

The federal Affordable Care Act lays the groundwork for fixing the system, but it didn’t go far enough; it did not include proven mechanisms to control health care spending.  The experiences of many Western industrialized countries provide us with two basic models that will allow us the reign in health care spending.

First is what we might call the “public agency” model – like transportation or law enforcement, state government would pay for health care or health insurance for all its citizens with a budget set and controlled by the Legislature.  Funding would come from some combination of taxes and user fees (that is, premium shares, co-payments, etc.).  This is the model used by Canada and the United Kingdom, among others.

The second approach is the “public utility” model.  Here, rather than financing health care for everyone, the state sets up strong regulations of the health insurance industry so that it competes in ways that promote access, efficiency, and quality.  Think electricity or water, markets in which private enterprise can add value but not at expense of anyone’s basic needs.  Germany and the Netherlands have health care systems based on this “public utility” model.

We need a governor who will set aside economic theories that don’t work in the real world of health care in favor of time-tested policies that do.  These two evidence-based models provide the next governor with the opportunity to lead us toward real health care reform and, therefore, toward rebuilding our education system, the paramount duty of state government and the key to a healthy population.

Sincerely,

Aaron Katz

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Aaron Katz teaches several health policy courses for MPH and MHA students, including in the Community Oriented Public Health Practice and Global Health MPH programs. He received the American Public Health Association’s Award for Excellence in 2006 and the School of Public Health and Community Medicine’s Outstanding Teaching Award in 2004.

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