From the Dispatch

While DC Delays, States Move Forward on Health Care Reforms

Enzo Pastore — Thu, 28 Jan 2010 13:18:25 -0500

As Congress delays moving forward on the passage of comprehensive health care reform, progressive state leaders from across the country have been demanding passage of reform as critical for families across the nation. But that doesn't mean they are waiting; state leaders are moving forward, laying the groundwork for how national changes should be implemented, and creating the momentum for other meaningful health care reforms in their states.

Public Options and Universal Coverage: In Iowa, SB 2092 would establish the Iowa Choice Exchange -- a form of the public option -- to serve as an information clearinghouse where businesses and consumers could compare health insurance policies. This would be combined with IowaCare Plus, which would subsidize health care for working families fully up to 300 percent of the federal poverty level (FPL) with help up to 400 percent of FPL for buying more restricted health insurance. Sen. Jack Hatch (Des Moines) emphasized the reality that "We cannot do this without a fair and appropriate partnership with the federal government."

Connecticut, building on the enactment of their comprehensive health care reform plan SustiNet in July 2009, will be moving forward to phase it in by 2016. By 2014, it is estimated that 98 percent of Connecticut residents will be insured with a comprehensive benefits package. Sustinet will give every patient a medical home, ratings will not be based on age, gender or health status, and coverage will be guaranteed for chronic or pre-existing conditions. Other new coverage and insurance reforms include:

Vermont's HB 510 would establish “Green Mountain Care,” creating a public health coverage option with sliding scale premiums and cost sharing.
Missouri's Universal Health Assurance Program (HB 1641), which would provide for a publicly financed, statewide insurance program, was introduced on January 13th. If passed, the program would provide timely access to health services for all residents, adequate funding for health care, and lower health care spending through streamlined administration and uniform payments.
California's Universal Health Care Act (S.810) -- approved by the Senate Appropriations Committee this week - would enact a single-payer health care system for the state and create a commission to decide how to pay for the plan and then submit the funding plan to voters through a ballot initiative.
Maine's LD 1620 would eliminate annual and lifetime benefit caps from private insurance policies.

Implementing Federal Reform: Other states are establishing the framework for implementing whatever reforms are enacted by Congress:

A bicameral concurrent resolution in Washington state would create a joint select commission to study the implications of health reform implementation to coordinate policy discussions between the state’s legislative and executive branches to identify dedicated resources, establish clear authority and accountability, a detailed timeline, a critical path analysis, resources and analysis of needs, and a communication strategy.
A similar Joint Select Committee to study Maine’s role in the implementation of federal health care reform received unanimous (13-0) approval by the Joint Committee on Insurance & Financial Services.
The Texas House has established a House Select Committee on Federal Legislation, with a specific emphasis on implementing health care reform efforts. The chair will be Representative John Zerwas and the Vice Chair will be Rep. Garnet Coleman, who also serves as co-chair of the Progressive States Network Board.

Prescription Drug Campaigns: States across the country are also moving to introduce reforms to cut the costs of prescription drugs, many based on models from PSN’s Multi-State Agenda Rx Reforms campaign. Bills have been introduced in Arizona and Iowa while other states likely to introduce reforms include Alaska, Hawaii, New York, North Carolina, Washington, and Wisconsin, with bill introductions possible in a number of other states.

Resources:
Progressive States Network - State Leaders Weigh in on Final Health Care Reform Bill
Progressive States Network - State Public Health Insurance Plans are Models for National Health Reform
Connecticut House Speaker Chris Donovan - Connecticut Healthcare Partnership
Progressive States Network - Rx Reforms to Address Budget Deficits and Ensure Quality of Medications

Rx Reforms to Address Budget Deficits and Ensure Quality of Medications

Adam Thompson — Mon, 23 Nov 2009 13:06:41 -0500

Rx Reforms to Address Budget Deficits and Ensure Quality of Medications

As part of our Shared Multi-State Agenda, the Progressive States Network is working with legislators, advocates and leading experts to promote Rx reforms in 2010 that will reduce health care costs for consumers, businesses, and state and local governments, and will help ensure access to safe and effective medications. Through coordinated, strategic support, PSN and our allies will be working to introduce and advance Rx reforms that will help address state budget deficits and improve access to quality medications in as many states possible; providing model legislation, policy analysis, messaging and more - all of which has been gathered and will be constantly updated on our Prescription Drug Reform Shared Agenda web page.

Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting Rx Reform campaigns through our website or by emailing rxreform@progressivestates.org.

Table of Contents:

- Summary of Rx Reform Policies and Why They Matter

- Messaging on Prescription Drug Reforms

- Building Rx Reform Campaigns

- Additional Models and Key Facts on Prescription Drug Reforms

- PSN Support in Your State

Summary of Rx Reform Policies and Why They Matter

Faced with state budget deficits in 2010 and years to come, reduced spending on prescription drugs can be an important source of savings. In 2007, the U.S. spent $287 billion on pharmaceutical drugs, representing 14% of all health care expenditures and a significant driver of health care costs. Driving this expense is the drug industry, which spends $30 billion on marketing each year, with $6.7 billion spent on physicians in 2007. The industry habitually markets the most expensive drugs over less expensive, yet equally or more effective medications, like generics. In fact, drug manufacturers spend more money marketing drugs than developing new ones, resulting in 70% of Americans saying the industry puts profits before people. As a result of high costs, 1 in 7 Americans reportedly went without prescribed drugs in 2007, up from 1 in 10 in 2003.

The following model policies, divided into two categories - Marketing and Safety and Cost Savings, represent the leading edge of prescription drug reforms to rein in the industry's inappropriate marketing practices and to reduce drug costs, while helping to increase access to life-saving medications.

Bill Summaries:

- Summary of Bill to Lower the Costs of Prescription Drugs

- Summary of Bill to Ensure Safety and Accuracy in Prescribing

Model Legislation:

- Model Legislation to Lower Prescription Drug Costs and Protect Against Unfair Prescription Drug Practices

- Model Legislation for an Act to Ensure Safety and Accuracy in the Prescribing of Prescription Drugs and Medical Devices

Key Provisions include

Gift Ban and Disclosure: Require the industry to disclose information about advertising and marketing spending, and prohibit gifts and payments to health care practitioners from pharmaceutical and medical device manufacturers. Studies show that even small gifts create an unconscious "demand for reciprocity." Disclosure laws have exposed millions of dollars spent on payments to physicians and conflicts of interest. A review of Minnesota data showed that, as payments to psychiatrists increased, so did the writing of prescriptions for drugs made by those companies.
Evidence-Based Prescribing: Establish a Prescriber Education Program, or “academic detailing” initiative, for the dissemination of scientific and clinical data about the effectiveness and costs of pharmaceuticals and medical devices. Studies of existing state programs, like Pennsylvania’s Independent Drug Information Services, which is a partnership between the state and Harvard Medical School, show that every dollar invested in these programs results in $2 in savings. States have several options for funding education programs outside of the general fund, including a fee on manufacturers and federal grants.
Access Reduced Drug Prices: Create a task force to study and report how best to maximize participation in 340B pricing, a provision of the Federal Public Health Act that authorizes discounted drug prices (below Medicaid levels) for certain populations and safety net health care providers, like many rural hospitals, federally qualified health centers and prison populations. States have numerous options to ensure that populations and programs eligible for 340B pricing are receiving the reduced prices, resulting in savings for state budgets and consumers.
Regulate Pharmacy Benefit Managers (PBMs): Regulate PBMs, who act as middlemen between drug manufacturers and public and private health plans, negotiating prices for prescription drugs. The PBM industry is highly corruptible and lax oversight of PBM practices has resulted in ethical lapses and instances of PBMs pocketing discounts they negotiated for health plans, rather than forwarding discounts through to clients. Require transparency, a fiduciary relationship, and annual audits of all PBMs to ensure that the full value of negotiated discounts, rebates, or other financial considerations are passed through.

Messaging on Prescription Drug Reforms

The Public Strongly Supports Rx Reforms: Lawmakers can tap into the public's frustrations with and perceptions of the drug industry to build support for these initiatives.

74% of the American public believes the pharmaceutical industry makes too much profit, according to a November 2009 Associated Press poll.
A June 2008 survey found 68% of Americans support requirements on the drug industry to disclose gifts to physicians; 86% would ban free dinners; 80% support a ban on speaking fees; 71% support “provider education programs” that provide unbiased clinical non-commercial information about drugs to physicians.
9 in 10 Americans support the government using its buying power to negotiate lower prices form drug companies, which many states are already doing, according to a recent Kaiser Family Foundation/Harvard poll,

The Industry Keeps Increasing Prices: The pharmaceutical industry is raising its prices at the fastest rate since 1992. Critics identify this as an attempt to wedge in higher prices before Congress passes health reform that may clamp down on exorbitant drug prices and begins expanding coverage to millions of Americans. Leading up to the creation of the Medicare Part D drug benefit, which notably lacked authority for Medicare to flex the taxpayers' purchasing power and enter into direct negotiations with the industry for lower prices, drug manufacturers raised their prices at the widest margin in 6 years. The industry has so far protected its profits by spending more than almost all other lobbies in Washington, DC.

Rx Industry Markets More Expensive and Often Less Effective Medicines: To reap its record profits, the pharmaceutical industry, as news reports indicate, habitually markets the latest and most expensive drugs over those that are less expensive and often equally or more effective.

The Rx Industry Leverages Relationships With Doctors to Drive Up Rx Costs: Studies show that industry gifts to physicians, in the form of lunches or all-expense paid trips to resort conferences, create an unconscious “demand for reciprocity”. The industry uses traditional advertising, but gets the greatest bang for their buck by developing personal relationships with physicians through gifts and by providing biased information on a drug’s efficacy.

In 2007, the industry spent $6.7 billion on direct-to-physician marketing.
On average, $8,800 in marketing is spent on each physician in the US. The industry sends out 90,000 sales reps, or detailers, and fellow physicians paid by the industry to pitch the newest “celebrity” drugs in doctor’s offices and hospitals, armed with an expensive meal, office supplies with the company logo, and drug samples.
94% of doctors have received industry incentives and studies show that even small gifts create an unconscious "demand for reciprocity."
"Doctors who have close relationships with drug makers tend to prescribe more, newer and pricier drugs" regardless of a drug’s value compared to less expensive medications, as the New York Times reported in 2007.

Protecting the integrity of the patient/doctor relationship from the profit-motive of drug industry marketers will improve health care quality and reduce consumers’ costs: States can intercede by providing physicians with unbiased clinical information on drugs and eliminating the “quid pro quo” created by the exchange of gifts that are the hallmark of the industry’s sales strategy.

Evidence-Based Prescribing Can Improve Medical Care and Save Money: Prescriber education programs, also known as "academic detailing", aim to provide better information to medical providers and consumers about which drugs are the most effective and have the least adverse effects, as well as the costs of these drugs. Unlike drug company detailers, who are in fact salespeople who focus on a particular drug sold be the salesperson’s company, these programs provide objective, clinical information on a range of treatments including non-pharmaceutical options.

Academic detailing saves money by supporting chronic disease management and reducing purchases of unnecessary or more costly pharmaceuticals that have the same – or lesser – degree of efficacy, or medicinal value.
A formal cost-benefit analysis of a 4-state Medicaid study involving 435 doctors showing savings of $2 for every $1 the program cost, based on just Medicaid paid claims data.

State 340B Pricing Reforms Can Cut Drug Prices: 340B pricing, a provision of the Federal Public Health Act, authorizes discounted drug prices (below Medicaid prices) for certain populations and safety net health care providers, like federally qualified health centers, prison populations, hospitals that serve a disproportionately large Medicaid and uninsured population, and clinics for homeless people. The Senate health reform bill would expand discounts to include inpatient drugs and extend eligible participation to critical access and sole community hospitals, cancer hospitals, and other providers.

Under 340B, drug prices are 19% below the average Medicaid best price net or rebates, 39% below the average reimbursement from insurers, and 51% less than average wholesale price (AWP).
Texas saves $10 million per year using 340B pricing for its prison population
Hospitals that are eligible for and are utilizing 340B pricing save state Medicaid programs an average of $300,000 per year
340B pricing can make specialty drugs more accessible for patients, and more affordable for states and providers. Examples include medications for Multiple Sclerosis, Cancer, Antivirals, and Rheumatoid Arthritis.

Regulating Pharmacy Benefit Managers (PBMs) Can Ensure that Consumers Get the Best Deal: To get a drug on a health plan's benefit list or formulary, drug companies make payments to PBMs that are proportionate to how often the drug is prescribed. PBMs boost their profits by pocketing some or all of these payments instead of passing them along as savings to their customers. Consumers benefit by requiring transparency, a fiduciary relationship, and annual audits of all PBMs to insure that the full value of negotiated discounts, rebates, or other financial considerations are passed through. Several states have enacted PBM transparency laws, but Texas, Maine, Maryland, and the District of Columbia have the strongest.

Possible Federal Action Creates Potential for States to Go Further: Federal reform may set the state for states to greatly expand their Rx reform initiatives, most notably those included in this Agenda. While the House reform bill authorizes Medicare to negotiate with the drug industry for reduced prices, a key and necessary reform, the Senate bill simply calls for a study of Medicare Part D drug prices. Importantly, both bills require greater marketing transparency and disclosure of gifts to prescriber, called "sunshine" provisions. The strongest language is in the House bill and both would prohibit states from collecting the same information. However, states would not be prohibited from collecting additional information or prohibiting gifts, which the federal bills fail to do.

Additionally, both bills greatly expand the 340B price discount program by, in part, including inpatient settings and expanding eligibility for the discounts to include children's hospitals, certain cancer and rural hospitals, like critical access hospitals. And, the Senate bill and House bill, which has stronger language, both require greater PBM transparency and reporting, including instances where a PBM switches a covered individual from a less expensive to a higher cost drug. This would help shine a light on PBM practices and ensure that these decisions are clinically-based, rather than an unethical agreement between the PBM and a drug manufacturer. If federal reform passes this year or early next, and includes these provisions, it will be incumbent upon states to act quickly to maximize participation in these programs and regulations and to build on them.

Building Rx Reform Campaigns

PSN is working with its allies, notably the National Legislative Association on Prescription Drug Prices (NLARx), so state leaders can tap resources from those groups to help them in their legislative work. We will be working with those allies to strengthen communication between legislators and organizational allies across the states working on Rx reforms, while providing other technical support as needed during policy campaigns. Key organizations are listed below along with critical resources for waging a campaign.

National organizations working on Rx reforms include: National Legislative Association on Prescription Drug Prices (NLARx), Prescription Policy Choices, National Physicians' Alliance, American Medical Students Association, Community Catalyst, and Pew's Prescription Project.

Key Resources: These and other organizations provide a number of key resources for Rx reform campaigns, including:

Polling: See Pew and Community Catalyst's public opinion survey on American's concerns about drug industry gifts and other ties to physicians and a recent Kaiser Family Foundation/Harvard/NPR survey on the public's opinion of the role of health care interest groups in health reform.
Policy and Legislation - NLARx provides testimony, legal analysis, bill drafting, examples of successful legislation, campaign strategy, and other support, and serves as an industry watchdog with its PhRMA Watch program. NLARx staff regularly travel to states to visit with legislative caucuses to discuss a state's Rx reform opportunities. Prescription Policy Choices has best practices on a medley of Rx reforms and is a recognized leader in supporting prescriber education programs with its Academic Detailing Toolkit. Community Catalyst provides fact sheets, model legislation and policy summaries, and campaign support including legislative strategy and organizing. Pew's Prescription Project provides similar resources and tracking of Rx news and successes.
Fact Sheets: Key policy resources can be found in PPC's Best Practices, NLARx's Model Legislation with policy details and examples of successful campaigns, Pew's State Public Policy with fact sheets, and Community Catalyst's Prescription Access and Quality with fact sheets and other policy details.
Physicians - Physicians are among the most trusted voices in the health care reform debate. The National Physicians Alliance, can help identify local physicians to participate in campaigns, become spokespeople, and testify in support of legislation. NPA is a membership organization representing doctors and is actively engaged in reducing the drug industry's marketing influence in the exam room. In fact, the organization does not accept donations from the pharmaceutical industry. The American Medical Student Association is a similar membership organization representing our nation's future health care practitioners and concerned with the inappropriate influence of drug manufacturers over the prescribing decisions of medical professionals. AMSA can help identify future medical leaders to participate in campaigns as spokespeople and organizers.

Additional Models and Key Facts on Prescription Drug Reforms

The following are a few more examples of policies and facts to support reform campaigns:

Gift Ban and Disclosure - Examples of Policies:

Minnesota, in 1993, became the first state to limit gifts from the drug industry to physicians, banning gifts of more than $50, and to require companies to disclose payments to physicians in excess of $100. A review of Minnesota data showed that, as payments to psychiatrists increased, so did the writing of prescriptions for drugs made by those companies.
In 2008, Massachusetts enacted S2526, limiting industry gifts to medical professionals and requiring public disclosure of gifts valued at more than $50.
In 2009, Vermont enacted the strongest law to date, S48. As NLARx reports, the Vermont law sets a "nationally significant standard" by banning all gifts to physicians, including meals and travel, with few exceptions. For allowable gifts, such as payments for speaking, consulting, or research, the law requires strict reporting and public disclosure. Starting in 2011, Vermont will publish the disclosures through a searchable website.

Academic Detailing and Prescriber Education Programs Approaches:

Sources of Funding: A state's surest way to finance a prescriber education program is to assess a fee on manufacturers. This is a small way to hold the industry accountable for promoting the most expensive drugs regardless of their efficacy. Other sources of revenue include Medicaid match and federal grants. For a limited time, ARRA funds are available as part of the stimulus' promotion of comparative effectiveness research initiatives. The Agency on Health Research and Quality (AHRQ) is accepting applications until December 16, 2009, for funding of up to $1.5 million per project. Annual costs for these programs range from $1 million in Pennsylvania to $50,000 in Vermont.
Examples of Policies: Pennsylvania’s model program, called Independent Drug Information Services, is a partnership between the state and Harvard Medical School. Vermont’s program is run by the University of Vermont Medical School and Maine’s program is a collaboration between the Maine Medical Association and the State. Massachusetts (HB 4900), New Hampshire (HB 1513), and New York are also implementing systems.

Access Reduced Drug Prices- Examples of Policies: In addition to our model legislation creating a task force to identify how best to expand 340B in your state, other best practices include:

TX: SB 347, enacted in 2001, creating a program to utilize 340B pricing for the prison population, resulting in annual savings of $10 million.
VT: Public Act 71 of 2005, an appropriations bill, created more opportunities for 340B pricing by expanding the number of Federally Qualified Health Centers in the state and creating a purchasing co-op for the joint purchasing of medications through 340B. This initiative was the result of a task force report authorized by the legislature on how best to expand 340B pricing in the state.
MA: H 2243 would require eligible health care centers to participate in 340B pricing.

Facts on Pharmacy Benefit Manager:

Three PBM companies administer 80% of all private prescription coverage and each pocket annual revenues exceeding $15 billion.
The three largest PBM companies manage the drug benefits for 95% of Americans with prescription drug coverage.
From 1997 to 1999, Medco Managed Care, then a subsidiary of Merck, was paid $3.5 billion in rebates it negotiated from manufacturers, the majority of which were not passed through to health plans and consumers.
Illinois has estimated it could save $10 million annually by directly negotiating prescription drug prices for the state employee health plan instead of using a PBM.
The University of Michigan saved $8.6 million in 2003 by downsizing from 5 to 1 PBMs and better regulating the single remaining manager.
Several states have enacted PBM transparency laws, but Texas, Maine, Maryland, and the District of Columbia have the strongest.

PSN Support in Your States

PSN has already begun working with legislators and advocates to provide support for them as they introduce drug industry reform policies around the country. We'd like to work with many more!

As bills are introduced and sessions begin, PSN will provide ongoing resources and updates on Rx Reform legislation, as well as help coordinate strategy and information sharing with our partners among sponsors and advocates.

The Supreme Court and the States 2008-2009: Trend Defending State Authority Emerges this Term

Nathan Newman — Tue, 14 Jul 2009 11:41:02 -0400

Whether out of circumstance or an emerging trend, where state authority was at issue, this term the U.S. Supreme Court overwhelmingly deferred to state decisionmakers-- a significant reveral from last year. There were major exceptions -- the Ricci decision preempting the affirmative action decision by the City of New Haven being the most prominent -- but the results in favor of state authority overall were relatively broadbased. In the context of President Obama's recent endorsement of less preemption of state laws by federal regulators, we may be seeing a more general reversal of trends that had increasingly undermined state authority. Still, any trend on this Court is provisional since it continued its politicization and divisions, ruling on 79 cases where 23 of which, according to SCOTUSblog, were split 5-4.

Overall Resources:
Scotusblog.com - Statpack
ScotusWiki - Case Index OT08

Table of Contents:

- Upholding State Regulation of the Economy

- Civil Rights and the States

- Criminal Justice Decisions Mixed for Local Authority

- Conclusion

Upholding State Regulation of the Economy

In major decisions, the Supreme Court made dramatic decisions affirming state authority to rein in corporate malfeasance even where federal regulations had been enacted in the same policy area.

Expanding State Regulation of Banks: A blockbuster decision was Cuomo v. The Clearing House Ass’n, L.L.C. which ruled that federal banking regulations did not preempt states from enforcing their own fair-lending laws. The ability of New York's attorney general to bring enforcement actions over banks' residential real-estate lending practices was upheld, a reversal of past court trends that had favored federal regulations at the expense of state regulations.

The decision in many ways come five years too late, since as we wrote back in 2007, Bush administration rules and lower court decisions blocking state fair lending rules allowed the subprime debacle to explode. But as new federal laws are being written to regulate the financial industry, the decision will help reinforce proposals to explicitly make federally chartered institutions subject to state consumer and civil rights laws and allow states to enforce some federal consumer protection laws.

Upholding State Regulations Against Deceptive Marketing Practices: A major goal of the corporate legal right wing has been to gut state tort laws in the name of federal preemption-- and the Supreme Court dealt that a double loss this term in the Wyeth and Altria decisions.

In Wyeth v. Levine, the Court held 6-3 that federal drug labelling rules did not preempt state tort laws holding companies responsible for inadequate warnings over the dangers or procedures for safely using prescription drugs. Justice Thomas, notably, took the broadest position that he would no longer support claims against state laws based on "implied" preemption, instead arguing the burden should be on Congress to make clear its intent to preempt state law.
Similarly, in Altria Group v. Good, the Court held that state laws challenging the marketing of "light" cigarettes were not preempted by either the Federal Cigarette Labeling and Advertising Act or the regulatory actions of the Federal Trade Commission.

In two key labor decisions-- one which was against the interests of unions and one in support of them -- the common denominator was that state governments were given greater discretion over union fees paid by employees:

In Locke v. Karass, the Court ruled that states may enter into collective bargaining agreements that require public employees to pay agency fees that finance litigation by a parent union, as long as such litigation is related to collective bargaining rather than political issues.
In Ysura v. Pocatello Education Association, the Court found states also have the discretion to ban payroll deductions for labor union political activities, even when the state ban applies to the deductions from the paychecks of local government workers.

Protecting Integrity of Jury Decisions: As we highlighted a few weeks ago, the Caperton v Massey decision protected state jury decisions regulating the behavior of businesses from local judges corrupted by corporate campaign contributions. In that case, a $50 million jury award against a West Virginia coal company was overturned by the state's Supreme Court, the deciding vote by a judge whose campaign had received $3 million by the coal company. The U.S. Supreme Court in turn ruled that the judge should have recused himself due to such clear conflict of interest.

Resources
Progressive States Network - States' Victory Against Preemption: FDA Approval Does not Block State Tort Claims Against Drug Makers
Progressive States Network - Judge Ruling in Favor of Big Contributor Ruled Illegal by U.S. Supreme Court
Constitutional Accountability Center - Supreme Court Decides Wyeth: A Victory for Diana Levine and the Constitution
Jurist - National Bank Act does not prevent state enforcement: Supreme Court

Civil Rights and the States

Where it came to the issue of race and civil rights, on the other hand, the conservative majority that controlled most decisions tended to uphold state or federal authority based on which was more hostile to rectifying racial inequality.

Judicial Activism Against Local Decisions in Ricci: It is ironic that the most famous case of the session, Ricci v. DeStefano was also the most dramatic example of the conservative majority on the Court disregarding local government authority. In this case, a local decision that a test for the promotion of firefighters was racially biased -- and thus should not be used -- was deemed illegal reverse discrimination under federal civil rights laws. Even more problematically, the Court majority indicated an inclination to void a much wider range of employer actions seeking integrated workplaces as illegal under the 14th Amendment. "The Supreme Court's interpretation imposes new burdens on employers and makes it more difficult to maintain a discrimination-free workplace," said John Payton, president and director-counsel of the NAACP Legal Defense Fund.

Weakening the Federal Voting Rights Act: Conversely, as we detailed in March, the Court in its 5-4 Bartlett decision narrowed the scope of the Voting Rights Act by ruling that when minority voters make up less than 50 percent of the voting age population, states can ignore provisions of the law meant to keep minority votes from being diluted during redistricting.

And in Northwest Austin Municipal District No. 1 v. Holder, the Court created new exceptions to the Voting Rights Act that allow local government jurisdictions to "bail out" of a provision in the Voting Rights Act that requires federal pre-clearance for changes in election procedures in a number of states. Even more worrisome for civil rights, conservatives on the court indicated a willingness in the future to strike down larger swathes of the federal Voting Rights Act.

Language Access in Schools: In Horne v. Flores, the Court expanded states' ability to escape federal laws requiring them to take “appropriate action” to help English language learners overcome language obstacles. Back in 2000, a a federal district judge found that Arizona's minimal spending on instruction for English language learners violated the federal Equal Educational Opportunity Act. In a decision written by Justice Samuel A. Alito Jr., the Court majority limited lower court decisions requiring more spending to assure equality for non-native speakers in schools.

Rights of Special Needs Students: On the other hand, in its Forest Grove School District v. T.A decision, school districts are now required under the Individuals with Disabilities Education Act to reimburse parents for the hefty costs of sending a child with special needs to private schools for services that were unavailable in public school, even where the child had never even attended public school.

Access to Public Space by Religious Minorities Limited: In Pleasant Grove City v. Summun, the Court ruled that a municipality was not required to allow other religious groups to erect their own religious monuments just because a Ten Commandments monument existed in a park. However, after the Supreme Court decision came down, the municipality made further litigation moot by moving the Ten Commandments monument out of the park.

Resources:
Alliance for Justice - Alliance for Justice Supreme Court Review: Analysis of the 2008-2009 Term
Civilrights.org - Civil Rights in the Supreme Court: Wrapping up the 2008-2009 Term
Think Progress - The Supreme Court Term In Review, Part III: Anti-Discrimination
Progressive States Network - Supreme Court Limits Redistricting Provision of Voting Rights Act

Criminal Justice Decisions Mixed for Local Authority

As is usual, the criminal justice docket was a mixed bag, weakening individual rights for defendants in some cases, while giving law enforcement a more free hand in others.

Cases Strengthening Police Powers: In one of its highest profile criminal justice cases of the term, the Court overruled a longstanding precedent to make it easier for police to obtain a waiver of counsel from suspects in Montejo v. Louisiana. The Court held that the right to counsel could be waived “so long as relinquishment of the right is voluntary, knowing and intelligent,” which could be established by the state’s rote recitation of the defendant’s Miranda rights, and the defendant’s un-counseled and voluntary waiver of those rights. Other cases strengthened police and prosecutor powers included:

In Herring the Court weakened protections against illegal searches and seizures by holding that it was not necessary to exclude evidence that had been obtained pursuant to a warrant based on erroneous evidence that was negligently supplied by a police clerk. The opinion suggests a broader trend toward allowing the use of evidence obtained through police negligence.
In its Osborne decision, the court rejected a claim that those convicted of crimes had a due process right to DNA testing to prove their innocence. Although Alaska is one of the few states that has no DNA testing law, the court reasoned that since 46 states already have such a law, it should not ''short-circuit'' the legislative process by mandating it for all jurisdictions.
In Van de Kamp v. Goldstein, the Court strengthened the immunity from prosecution that prosecutors enjoy.
Arizona v. Johnson expanded the stop and frisk powers of police.
Oregon v. Ice strengthened judicial power to impose consecutive sentences based on facts that were not found by the jury, but only by the judge.

Cases Favoring Defendants Against Police and Prosecutors: On the other hand, defendants won a number of victories against state police powers. These included:

In Melendez-Diaz, the Court ruled that a state forensic analyst's laboratory report prepared for use in a criminal prosecution is "testimonial" evidence, meaning that defendant has the right under the Confrontation Clause to require forensics staff to testify and be cross-examined at all trials.
Arizona v. Gant restricted the power of the police to search a vehicle seized in the course of an arrest.
And in Safford Unified School District #1 v. Redding, the Court held that school authorities violated the Fourth Amendment right by applying a strip search to a 13-year old girl who was suspected of having ibuprofen.

Resources:
Think Progress - The Supreme Court Term In Review, Part II: Criminal Justice

Conclusion

Future terms will show how durable this term's trend of the Court deferring to state authority will be, but the fact that conservative Justices Thomas and Scalia each joined one or more of the decisions giving states greater authority to regulate corporations means there may be a longer-lasting judicial coalition emerging to defend state authority adding an extra set of regulatory eyes on corporate malfeasance. No doubt, the spectacular federal regulatory breakdown around the financial crisis has dimmed the corporate argument that a single federal regulatory scheme is sufficient to protect consumers. On the other hand, the Ricci decision shows the conservative majority's ongoing commitment to using federal power to overturn local affirmative action actions is unabated even as those same conservative Justices seem determined to weaken federal commitments to racial equality.

States' Victory Against Preemption - FDA Approval Does not Block State Tort Claims Against Drug Makers

Nathan Newman — Thu, 05 Mar 2009 12:11:25 -0500

In a much anticipated decision, Wyeth v. Levine, the Supreme Court in a 6-3 decision upheld states' right to hold the drug industry accountable for not adequately warning consumers and prescribers of a drug's impact. The pharmaceutical industry had argued that Federal Drug Administration approval of a drug's warning label pre-empts state claims of injury based on the failure by a company to warn of additional dangers not covered by the FDA-approved label. The court rejected this argument. As the Constitutional Accountability Center wrote in analyzing the decision:

In a key part of its ruling, the Court applied the “presumption against preemption” that the Court has used to preserve the traditional authority of the states to protect their citizens, describing it as one of the two “cornerstones of our preemption jurisprudence.”

The Bush Administration had sided with big business interests by including language preempting state laws in regulatory preambles -- or, the introduction to regulations outlining the reasoning behind the rules. These preambles, however, are not formulated through a public comment process. However, the Court rejected such regulatory endruns around laws that had no intent to preempt state law.

As Public Citizen notes, the FDA is "overworked and underfunded, and it depends almost entirely on drug companies for information about the safety and effectiveness of drugs," so initial approval of a drug label should not be taken as a permanent bar on those potentially injured by the drug from having legal protections. Once a drug is widely marketed, new problems often appear, so state law should hold those companies responsible for failure to warn about those new dangers as they appear.

The broader principle here is that federal law should provide a "floor, not a ceiling" on consumer rights. As Justice Thomas wrote (in a break from his conservative colleagues), state laws should not be struck down because courts somehow divine an "implied preemption" based on the supposed "intent or purpose" of federal law. State laws should only be rejected when there is a clear conflict with the text of federal law.

Resources

Supreme Court - Wyeth v. Levine
Constitutional Accountability Center - Supreme Court Decides Wyeth: A Victory for Diana Levine and the Constitution
Public Citizen - Supreme Court Correct to Uphold Right of Injured Patients To Sue Drug Companies
Progressive States Network - Federal Preemption Must Be Explicit

Focus on Prescription Drug Reform

Adam Thompson — Mon, 24 Mar 2008 10:25:00 -0400

$287 billion -- that is how much the U.S. spent on pharmaceuticals in 2007, representing a significant driver of health care costs. While spending on hospital and physician care surpass spending on prescriptions, drugs still account for 14% of all health care expenditures. Combine this with polls that show 70% of Americans believe the drug industry puts profits ahead of people, and it's no wonder that in 2008, at least 540 bills and resolutions are being considered by states across the country to reduce prescription drug prices, ensure the quality of medications covered by public and private health plans, and reduce the undue influence of pharmaceutical industry marketing - which itself tops out at $30 billion each year.

Reducing prescription drug costs is an essential element of long-term and sustainable health care reform. Fortunately, states have many options to reduce costs, from bulk purchasing to expanding use of generic medications to reducing the cost-driving influence of pharmaceutical marketing. This Stateside Dispatch presents many of the leading policy options available to states to reduce prescription drug costs and expand access to safe and affordable prescriptions.

This Dispatch draws on the expertise and tireless advocacy of three leading prescription drug reform organizations:

The National Legislative Association on Prescription Drug Prices (NLARx), a member organization of state legislators led by Maine State Rep. Sharon Treat. NLARx provides model legislation, testimony, networking of legislators across states, technical assistance, analysis, and strategy for state legislators to move important prescription reforms.

Prescription Policy Choices (PPC) provides research, analysis and technical assistance focusing on developing policies that reduce drug prices and increase access to medications. PPC is currently working with Maine, New Hampshire and Vermont to create a multi-state academic detailing collaborative. PPC is run by Ann Woloson, a former chief of staff to the Maine Senate Majority Leader and a consumer health advocate.

The Prescription Project (RxP) is led by Community Catalyst and seeks to "eliminate conflicts of interest created by industry marketing" and works with academic and professional medical entities, advocacy groups, and state and federal lawmakers. RxP provides fact sheets, strategy, research, analysis and technical assistance, among other services. Marcia Hams, Assistant Director of RxP, directs the Project's state initiatives.

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Increasing Access to Affordable Prescriptions and Reducing Drug Costs

States are expanding access to affordable medications for low income and vulnerable populations while at the same time reducing costs for Medicaid, state employee, and other public programs. Options discussed below include maximizing states' purchasing power, offering lower negotiated prices to people who may not be covered by Medicaid, ensuring generic medications are used when available, and eliminating conflicts of interest between drug makers and the people who manage prescription benefit programs.

Favoring Drugs that are Less Expensive But Equally, or More, Effective - As NLARx reports, generic drugs cost $45 less on average than brand name drugs. Over the next 4 years, $38 billion worth of sales of brand name drugs are going to lose their patents, meaning generics will flood the market. This is therefore a good time to promote the use of generics over brand name celebrity drugs with policies including:

Preferred Drug Lists: These policies help states reduce drug costs by prioritizing certain drugs, those proven to be safe, highly effective and typically cheaper medications, over more expensive yet no more effective brand name drugs. As Prescription Policy Choices (PPC) reports, at least 40 states have some sort of PDL policy which regulates physician prescribing practice. To ensure quality and safety, PDLs should be based on clinical data indicating the most effective drugs with the least side effects, rather than simply the cheapest drug. Maine's PDL has kept Medicaid drug cost increases to below 3% annually. During the same period, the federal government saw increases of 13%.
Generics: With more brand name drugs losing their patents and generic versions becoming available, states are increasingly requiring that generics be prescribed when available, saving millions of dollars for Medicaid and other state programs. Most rules typically allow this requirement to be overruled by the treating physician. According to PPC, Massachusetts saved more than $150 million annually by emphasizing generics over brand name drugs and Texas saved $223 million by making it easier for doctors to prescribe generics. PDLs are a good way to expand the use of generics.

Strengthening Negotiating Power with Drug Makers - Pooling the bargaining power of drug purchasers, like state Medicaid and state employee health plans, increases their individual leverage to negotiate cheaper prices from the industry. States are increasingly combining public purchasers and the last few years have seen an increase of states banding together to combine their purchasing power, generating millions in savings.

Multi-State Purchasing Pools: To achieve greater economies of scale and reduce costs, several states have teamed up to negotiate lower prices from drug companies. As NLARx reports, Iowa, Maine and Vermont created the Sovereign States Drug Consortium and Oregon and Washington created the Northwest Prescription Drug Consortium. In 2006, it was estimated that the purchasing pool would save Maine $5 million in state and federal Medicaid costs. As PPC reports, Oregon could save $17 million annually if it combined the drug purchasing of all its state programs. There are at least five multi-state bulk purchasing pools.
Pharmacy Benefit Managers (PBMs): PBMs, or middlemen, negotiate rebates and manage drug benefit programs on behalf of public and private health plans and many businesses. However, the PBM industry is highly corruptible. To get their drugs on a health plan's benefit list, or formulary, drug companies make payments to PBMs that are directly tied to how often the drug is prescribed. As PPC reports, PBMs boost their profits by pocketing some or all of these payments instead of passing them along to their customers. Three PBM companies administer 80% of all private prescription coverage and pocket annual revenues exceeding $15 billion. Model legislation compiled by PPC and NLARx, and mirroring Maine's first-in-the-nation law, requires greater transparency of negotiations, disclosure of conflicts of interest, and create an ethical fiduciary duty to serve the interests of the health plans which hire them. Maine's and DC's PBM laws have been upheld by the federal courts, and the US Supreme Court refused to review the Maine decision.
Pricing Reforms: Worries about price gouging and artificial price inflation on celebrity and other drugs are driving states to implement a number of policies designed to shed light on the pricing practices of pharmaceutical companies. Wisconsin and Colorado law prevent unfair and discriminatory pricing of prescription drugs, particularly during emergency situations. Maine law requires disclosure of manufacturer prices and "best price" and West Virginia created the Pharmaceutical Cost Management Council in 2004 (HB 4084) to continually examine the cost of prescriptions and develop ways to reduce prices in the state. Model legislation compiled by NLARx, includes the Excessive Drug Pricing Act and the Drug Retail Price Disclosure Bill.

Increasing Access to Low Income and Vulnerable Populations - States are increasingly thinking more creatively about how to enable populations that are ineligible for Medicaid to purchase drugs at the same reduced prices that Medicaid bargaining wins.

Discount Programs: Maine Rx negotiates with drug companies to bring more affordable drugs to residents living below 350% of the poverty line. The program, as NLARx reports, achieves average savings of 25-50% on generic and brand name drugs. The program uses the leverage of the state's Medicaid program to negotiate lower prices for residents not eligible for Medicaid, who get an Rx card for the purchase of medications. According to NCSL, at least 42 states have some sort of program to help lower income residents afford medications. These typically take the form of direct subsidies to help residents pay for their prescriptions through discount programs that achieve lower prices through negotiations and bulk purchasing.
340B: An obscure name, but "340B" represents a tremendous source of lower prices for drugs. Federal law allows certain "safety-net" programs to purchase prescriptions at significant discounts, often below what Medicaid pays for drugs. Eligible entities include community health centers, hospitals that serve a disproportionately large Medicaid population, and programs that serve populations with costly medical needs, like AIDS clinics. States have options to ensure that populations and programs eligible for 340B pricing are receiving the reduced prices. Legislation in Massachusetts (H 2243) would require eligible health care centers to participate in 340B pricing and Vermont's comprehensive prescription reform act of 2007 requires the state to inform residents of the availability at 340B pricing.

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Reining in Abusive Marketing Practices to Cut Costs

They are ubiquitous to board rooms and doctors' offices: those pens emblazoned with the latest celebrity drug - like Celebrex or Xanax - representing the industry's profits from a purple pill. But these innocent looking pens are only the tip of the iceberg when it comes to pharmaceutical industry marketing.

The drug industry spends nearly $30 billion each year on marketing. As the Prescription Project (RxP) reports, $7 billion is targeted directly at physicians. Through TV advertisements, catered lunches, "educational" conferences at swanky resorts, and other gifts, drug manufacturers and their 90,000 sales reps exert tremendous influence over which drugs physicians prescribe. In fact, as the RxP reports, "94% of doctors have received such incentives" and studies show that even small gifts create an unconscious "demand for reciprocity."

As the New York Times reported last year, the drug industry habitually markets the latest and most expensive drugs over medicines that are cheaper and often equally or more effective. This drives up costs for state Medicaid programs, families, businesses and private insurance. Fortunately, as the RxP and NLARx show, states have many options to reduce the undue influence of pharmaceutical marketing.

Ban Gifts Outright: Minnesota, in 1993, became the first state to limit gifts from the drug industry to physicians. It bans gifts of more than $50. This year, Massachusetts' Senate President Therese Murray has proposed an outright ban on gifts as part of a broad cost and quality health care reform bill (S.2526). The effort is being supported by the newly created MA Prescription Reform Coalition.
Require Disclosure of Financial Relationships: An important step, often pursued in conjunction with banning gifts, is requiring drug and medical device companies to publicly disclose any financial relationship they have with physicians. Minnesota's 1993 law requires companies to disclose payments to physicians in excess of $100. Payments are often in exchange for pitching a drug to other physicians. Several states in addition to Minnesota have enacted disclosure - or "sunshine laws" - including Vermont, Maine, West Virginia and the District of Columbia. As RxP reports, these disclosure laws have exposed millions of dollars spent on payments to physicians and conflicts of interest, such as physicians with ties to a drug company sitting on a drug formulary panel which determines which drugs will be covered by a health plan. A review of Minnesota data showed that, as payments to psychiatrists increased, so did the writing of prescriptions for drugs made by those companies.
- Model Legislation: RxP and NLARx have collaborated on model legislation that encompasses both a gift ban and disclosure requirements called The Drug and Medical Device Marketing Restrictions and Disclosure Act.
Ban "Data-Mining" - Protecting Prescription Privacy: A particularly manipulative marketing practice by the drug industry is collecting physicians' prescribing history and using the data to tailor marketing and sales to individual physicians. Behind the leadership of Rep. Cindy Rosenwald, New Hampshire became the first state in 2006 to ban this practice, called "data-mining", by enacting HB 1346. Maine and Vermont soon passed similar bans on data-mining. As expected, PhRMA is holding up these laws in court. However, states continue to press forward. As we wrote recently, the Washington State Senate passed SB 6241 to ban the use of prescribing history for marketing use. Although the measure failed in the House, the effort is part of a growing trend among states and the District of Columbia to protect prescription privacy and reduce PhRMA's undue influence on the prescribing habits of physicians. RxP provides an excellent "myths and rebuttals" fact sheet on data-mining and a legal analysis on the "Constitutional Battle Over State Regulation of Data Mining."

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Ensuring Drug Quality and Safety

Reducing the inappropriate influence of pharmaceutical marketing over physicians' prescribing decisions is only part of the solution. States are advancing initiatives to help physicians stay on top of the latest scientific information about drug quality and effectiveness. In fact, these efforts stand to directly counter the biased information presented to physicians by drug makers and their sales representatives. And, they promise to reduce costs for public programs, private insurance, businesses and families.

The Costs of Industry "Detailing": As RxP reports, the drug industry spends an average $8,800 directly marketing to each of the 817,000 physicians in the US. Sales reps and fellow physicians paid by the industry give the sales pitch directly to physicians in their offices, over expensive dinners or at industry-sponsored conferences. This is known as "detailing". As the New York Times reported last year, "doctors who have close relationships with drug makers tend to prescribe more, newer and pricier drugs" regardless of the drug's efficacy over less expensive brand name or generic medications. The problem is pervasive and can be profound. As RxP reports, the pain-killer Vioxx, which led to 139,000 people suffering heart attacks, was heavily marketed to the tune of $209 million by the industry, driving up utilization even though it was not clinically proven more effective than older, less expensive drugs and before the medical community had a full understanding for the drug's side effects.

Academic Detailing - Countering Industry Detailing: To counter drug industry "detailing", or direct-to-physician marketing and sales, states are increasingly creating programs that send highly-educated medical professionals to doctors' offices with scientific and unbiased information about which drugs are right for a given situation. This is known as "academic detailing." As we reported previously, Pennsylvania and Vermont have successful academic detailing program to ensure doctors are getting more than just the industry's pitch. Mississippi also established a program for physicians participating in Medicaid. Pennsylvania's program, Independent Drug Information Services, which is a partnership between the state and Harvard Medical School, is a model. As RxP reports, academic detailing programs help save lives and reduce costs. One study found that every dollar spent on academic detailing results in two dollars saved.

Prescription Policy Choices is bringing together legislators and health care advocates to create a multi-state academic detailing collaborative between Maine, New Hampshire and Vermont. In addition to Vermont's existing program, Maine recently enacted Public Law, Chapter 327, sponsored by Rep. Sharon Treat, creating an academic detailing program, and HB 1513 in New Hampshire, sponsored by Rep. Cindy Rosenwald, has passed the House and is waiting action in the Senate.

Evidence-Based Prescribing: The Drug Effectiveness Review Project is a public and private collaboration that compares and reports on the effectiveness and safety of drugs designed to treat similar conditions. This program is used by at least 13 state preferred drug lists.

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Fighting the PhRMA Lobby

A primary reason states have led on Rx reforms while the federal government has been largely stagnant, is that the Pharmaceutical Research and Manufacturers of America (PhRMA), the lobbying arm of pharmaceutical research and biotechnology companies, deploys literally troops of lobbyists in the halls of the US capital to kill proposals that rein in their obscene profits. Public Citizen reports that in 2002 PhRMA deployed 7 lobbyists for each US Senator and in 2003 spent $141 million and dispatched over 1,000 lobbyists to push the Medicare Drug Benefit that prevented the massive bargaining power of Medicare to negotiate lower prices from the industry. Recognizing the threat to their profits by state lawmakers, PhRMA is increasing its presence and influence in the halls of state houses across the country. In 2003 and 2004, according to the Center for Public Integrity, PhRMA spent $44 million in state lobbying to prevent sensible Rx reforms. As states up the ante and propose bans on data mining, gifts to doctors and require greater disclosure of conflicts of interest, this presence will only grow. Fortunately, there are political strategies and regulatory steps states can take to reduce the influence of PhRMA lobbyists and their cash.

Campaign Finance and Ethics Reform: Arizona, Maine and Connecticut all now allow for public financing of state legislative campaigns. This helps to take the money out of politics and reduce the influence lobbyists and campaign contributors have over state policy. It is arguably no accident that Maine, which has the longest history with clean elections, has repeatedly enacted path-breaking policies to restrain the drug industry, since its elected leaders are not reliant on industry donations for their elections.
Promoting Ethical Standards at Medical Schools and Professional Medical Societies: As RxP reports, states can take action to help medical schools and teaching hospitals play a central role in establishing ethical standards for relationships between medicine and industry. Recently, the Oregon Academy of Family Physicians, the largest medical society in the state, announced that it will no longer accept industry support for its organizational or educational programming. Unfortunately, almost two-thirds of medical schools lack institutional standards to prevent conflicts of interest. The RxP works directly with medical center leaders to address these issues and reports that in several states policy change has been stimulated by state legislators who have taken an interest in this area and started asking medical centers to account for their current policies.
Coalitions, Physicians as Spokespeople: Just as the industry recruits physicians to pitch new drugs to their peers, physicians are strong spokespeople promoting legislation to reduce and counter PhRMA influence in exam rooms. Washington State Rep. Jamie Pedersen, who sponsored a ban on data-mining by pharmaceutical marketers (HB 2664), attributes the failure of the bill to come to a vote in the House after passing the Senate to the "intense lobbying... by the industry creating enough doubt and confusion." The good news is that despite PhRMA's effort, the bill passed the Senate and stands a good chance of being brought back for lawmakers' consideration next session. Along with Rep. Pedersen's leadership, much of the success of the legislation is due to the new Coalition for Prescribing Integrity, which includes the Washington State Medical Association, the Healthy Washington Coalition, AARP, the State Labor Council, the National Physician's Alliance and others.

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Conclusion

There is nominal good news about prescription drug costs. In 2007, sales grew 3.8%, the lowest annual increase since 1961, but still at a faster pace than inflation. Still, total sales were a staggering $286.5 billion -- reason alone to ramp up the pressure on big-PhRMA and advance solutions to increase access to quality drugs and restrict the industry's abusive and cost-driving marketing practices.

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Health-Care-for-All On the Installment Plan

PSN — Mon, 03 Mar 2008 11:04:00 -0500

Incremental steps to improve the health care system can lay the foundation for comprehensive reform that provides health care for all. Comprehensive reforms enacted in Massachusetts, Vermont, Maine and San Francisco were, in large part, the result of pragmatic incremental steps those states had already taken. For example, a Families USA report discusses the many reforms Massachusetts put in place over the years that led to its comprehensive 2006 reform. Not every state is as far along in moving comprehensive health care reform, but each state does have numerous options for increasing access to coverage, reducing the growth of health care costs, and improving the quality of care.

Achieving incremental successes can also build public support for broader reform. For example, as a first step to universal access to coverage, states like Illinois, Pennsylvania, and Wisconsin have built health care programs to cover all kids, a strategy feared by the Right. The Wall Street Journal referred to all-kids' programs as universal health care on the "installment plan" and has counseled Republicans in Congress and the Bush Administration to oppose broad expansion of SCHIP, believing it is a first step towards health-care-for-all -- a good thing in our minds and a backhanded compliment to such strategies.

With the help of a new web-guide for state health care reform, created by Families USA and Community Catalyst, this Stateside Dispatch presents a menu of incremental and pragmatic steps states can take now to address health care access, costs and quality. One of the most obvious steps being taken by states is to continue to expand coverage through well-established programs like Medicaid and SCHIP, especially for children, as a first step toward broader coverage. States are also working to shore-up existing employer coverage through both employer mandates and public-private partnerships to help fund that coverage. Funds for these measures are coming from everything from federal matching funds to taxes on unhealthy products like tobacco to closing corporate tax loopholes. And, in order to assure affordability of coverage, states are enacting reforms to protect individual and group access to health care coverage and to limit profiteering by insurance companies. More broadly, a range of measures are being used to contain care costs throughout the health care system so that saved money can then be used to expand coverage. While these measures are most effective when enacted together as part of a truly comprehensive reform, enacting any of them helps lay the groundwork for future broader changes in the health care system.

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Expanding Access to Coverage through Medicaid and SCHIP

Bringing Medicaid and SCHIP to more people is one of the best and most cost-effective ways to broaden access to health care coverage. Medicaid and SCHIP bring in valuable federal dollars and frequently do not require new administrative structures. In fact, as states contend with slowing economies, maintaining or broadening investments in social services can help prop up an ailing economy.

As presented by the Community Catalyst and Families USA web-guide, states have a number of options for expanding access to Medicaid and/or SCHIP, including:

Raising eligibility levels above the federal poverty line or "disregarding" some amount of income so that more people become eligible under existing income eligibility guidelines. For example, providing health care most children is relatively inexpensive. It also has broad public support; a 2007 New York Times/CBS poll found that 84% of voters support expanding SCHIP to cover all uninsured kids. Once publicly based programs are covering most children in families, it is a much smaller leap conceptually to more comprehensive programs covering adults as well.
Providing Medicaid coverage for all children or children with disabilities up to 300% of the poverty line with sliding scale premiums for families, and cover adults and seniors with disabilities to 100% of the poverty line or even higher incomes by disregarding income.
Premium assistance offered to Medicaid-eligible employees, whereby Medicaid pays the employee's share of job-based coverage. This helps employers provide group coverage because most states require a certain percentage of employees to participate in the employer-provided plan in order for the business to qualify for group coverage.
Using Medicaid "Ticket to Work" programs to provide coverage on a sliding scale to people who are working but have severe disabilities.
Implementing "medically needy" programs which help people who are impoverished by health care costs and events to pay for their costs.
Securing a federal "waiver" to existing federal Medicaid and SCHIP laws. These allow states to develop programs or expand access to coverage to populations not immediately covered by existing rules, such as adults without children. Waivers, however, require "budget neutrality." This means the federal government mustn't be required to provide any additional funds and can be achieved through cost containment measures like implementing managed care programs.

Despite the cost-effectiveness of expanding Medicaid and SCHIP to low and moderate income families, many on the Right argue that such expansions drive people away from private insurance and into public programs, weakening the private market in the process. As Community Catalyst, Families USA, and the Center on Budget and Policy Priorities point out, these are "false" concerns and distract from the fact that expanding Medicaid and SCHIP is far more "cost-effective than proposals like health tax credits and deductions," which primarily benefit people who already have coverage. Additionally, while Medicaid is a government-created program, almost two-thirds of Medicaid members receive their benefits through a privately-run managed care program. And state investments in Medicaid and SCHIP have made progress but have not been able to completely stem the tide of rising uninsured rates as employer-based health care has declined.

Recent Highlights:

Wisconsin has begun enrolling children and parents in the broad expansion and reorganization of the state's Medicaid and SCHIP programs called BadgerCare Plus. In 2007, lawmakers approved the expansion which covers children at no cost to 200% of poverty and provides sliding scale premiums to 300% ranging from $10 to $91 per child. Higher income families can purchase the coverage for children at full-cost. In addition, parents are eligible for the program up to 200% of poverty. The program is estimated to cost $50 million over the next year and a half, but the federal government will pay more than 60% of the costs. The authorizing legislation also gives the administration the authority to seek a federal waiver to expand the program to cover low-income workers who do not have children.
New York passed a budget in 2007 that authorized expansion of the state's SCHIP program, Child Health Plus, from 250% of the poverty line to 400% of poverty, roughly $82,000 for a family of four and the highest level in the country. Although the Bush Administration has refused the state's waiver request to put the expansion in place, Governor Eliot Spitzer is asking lawmakers to approve $37 million to finance the expansion.

Worrisome Trends:

Texas officials have rolled out draft plans for a Medicaid-based expansion offering stripped-down medical coverage to adults with incomes up to 200% of poverty. The plan would divert $246 million in Medicaid safety net funds that currently go to hospitals to cover uncompensated care costs. Members would receive coverage for two prescriptions each month and an annual total of five primary care visits and five days in the hospital. Research, however, repeatedly shows that consumers with high deductible and/or limited benefit health plans, i.e. the under-insured, act like they are uninsured and avoid getting necessary care because of costs.
Indiana began enrolling low income individuals with incomes up to 200% of poverty in a limited benefit plan that requires participants to contribute to a Health Savings Account (HSA). This is a variation on a high deductible health plan. As we have written, despite sliding scale contributions to the HSA and early enrollment exceeding expectations, HSAs are likely to lead to under-insurance, particularly for low-income residents.

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Employer Responsibility and Public/Private Partnerships

Despite a steady decline in employer-based coverage, employers still cover more than 158 million Americans, more than twice the number of Americans who receive Medicaid or Medicare. Because of the financial contributions employers make to health care, ensuring strong employer participation in health care is a key priority for reform. This is increasingly done in two ways: (1) requiring employers to provide a certain level of coverage or make a payment to the state to help fund expansion programs, known as an employer mandate and (2) developing public/private partnerships that bring more affordable and often subsidized insurance options to market for small businesses and their employees and individuals.

Employer Mandates: Massachusetts, Vermont, and San Francisco each passed comprehensive health care reform measures in 2006 and are early leaders in requiring all employers to provide some degree of health coverage for their employees or pay additional fees to the government. The main goal is to ensure that "low road" employers are not dumping their health care costs solely on the public, thereby both costing taxpayers additional money and unfairly giving those employers a competitive advantage against responsible employers providing coverage.

San Francisco's comprehensive health care law has the strongest employer mandates, requiring employers with 20 or more employees to provide health care or pay the city $1.17 to $1.76 per hour depending firm size. Employers have tried to challenged the law in court, but recent court decisions allowing the city to continue with the mandate during the appeal process bode well for the program and employer mandates elsewhere. In fact, the Lieutenant Governor of Rhode Island, Elizabeth Roberts, has proposed a reform package that requires employers to provide coverage or pay $1,000 annually for every uninsured employee.

Public/Private Partnerships: Many states have developed programs that contract with private carriers and offer coverage to individuals and small businesses and their employees who are not eligible for Medicaid and can't afford private insurance. These typically offer insurance-like coverage administered by public and private entities coupled with sliding scale subsidies or premiums up to 300% of the poverty line.

Contracting with Insurers: Vermont's Catamount Health Plan and Maine's DirigoChoice insurance program similarly contract with private carriers to offer a comprehensive benefits package with sliding scale premiums or subsidies to 300% of poverty. In case private carriers do not step up to the plate and bid to offer the health plan, each state is authorized to offer the coverage through a public entity or state-run non-profit. Both programs are available to individuals and small business employees. Maine's program is available to small businesses as long as employers cover 60% of the employee's premium. It is also available to employees eligible for Medicaid and provides a wrap-around benefit to ensure those employees receive the full range of Medicaid services. New Mexico's State Coverage Insurance is a similar but more limited program. It offers coverage to individuals and small business employees with incomes up to 200% of the poverty line. Importantly, the program limits total out of pocket costs to 5% of a family's income.
New Regulatory Agencies, Insurance Connectors: Massachusetts' Commonwealth Connector negotiates and contracts with private insurers to bring more affordable insurance options to market for individuals and small businesses. The law combined the small group and individual markets, resulting in a 15% decrease in individual premiums. The state created Commonwealth Care, a program offering subsidized coverage to adults with incomes up to 300% of poverty and who are not eligible for Medicaid, and Commonwealth Choice, a similar program that offers non-subsidized health plans to individuals, documented immigrants, families and small businesses. Both Commonwealth programs are administered by the Connector.

Reinsurance: New York's Healthy New York program employs reinsurance to offer low-income individuals and employees more affordable insurance. Reinsurance is a form of insurance for insurance companies. To enable insurers to offer lower rates, reinsurance subsidizes carriers by paying for costly medical claims. To keep rates below market prices, Healthy New York covers 90% of medical claims between $5,000 and $75,000. The program is available to individuals and employees with incomes below 250% of poverty and to small businesses with a high percentage of low-wage employees. Through 2006, the program covered 130,000 New Yorkers. As the Community Catalyst and Familes USA webguide explains, the program has had success in getting small employers to participate. Benefits, co-pays and co-insurance are comparable to private insurance and all HMO's in the state are required to carry the program.

Another example of a public/private partnership comes from Howard County, Maryland. Health officials have proposed Healthy Howard, a plan to provide the county's 20,000 uninsured residents with comprehensive health care services. The proposal hinges on state lawmakers exempting the program from state health insurance requirements, notably the requirement that insurers have adequate reserves to cover a high volume of costly medical claims. County officials assert that the program is not insurance, rather, as draft legislation says, it is a "public-private partnership" providing and financing health care services for residents without health insurance.

For more on these and other approaches, a 2004 Commonwealth Fund report, Stretching State Health Care Dollars: Building on Employer-Based Coverage, discusses state efforts to build on and support existing employer-based coverage.

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Funding Health Care Expansions

As states face another economic downturn and growing budget deficits, expanding access to coverage may seem like an impossible goal. However, there are steps states can take to generate revenue and "stretch" health care dollars to ensure access to health care.

Following the budget stress states felt earlier this decade, the Commonwealth Fund issued a series of reports titled, Stretching State Health Care Dollars During Difficult Economic Times. The included four reports focus on shoring up employer-based coverage, improving prescription drug purchasing through pooling and evidence-based systems, improving chronic care management, and innovative uses of uncompensated care funds.

Sources of funding include:

Employer Pay-or-Play Mandates: As already noted, ensuring strong employer participation in financing health care is a key priority for health care reform considering that employers cover more than 158 million Americans. Employer mandates help ensure employers provide coverage, but for those that don't, the penalties for non-compliance can help fund health care expansions. Notably, San Francisco's law requires employers with 20 or more employees to provide health care or pay the city $1.17 to $1.76 per hour depending firm size.
Tobbaco Settlement Dollars: The 1998 multi-state tobacco settlement is projected to total $246 billion over the first 25 years of the settlement. Unfortunately, only three states have used their settlement dollars to fund tobacco cessation and prevention programs at or above minimum levels prescribed by the Centers for Disease Control and Prevention - Maine, Delaware and Colorado. These funds, which should be used for health care instead of non-health care related expenditures, are a good source for programs expanding access to coverage.
Cigarette and Sin Taxes: Despite their regressivity, raising cigarette, alcohol and other so-called sin taxes can provide valuable revenue to fund health care expansion programs. Additionally, raising tobacco taxes has shown to help reduce rates of smoking, which is a key public health goal. Even lawmakers in South Carolina are considering a proposal to increase the country's smallest cigarette tax and ban smoking in public places, which in many cases has been shown to strengthen local economic growth.
Ending Corporate Loopholes: Instead of cutting social services or foregoing expansions during difficult economic times, states can raise revenue by requiring corporations to pay their fair share. Options include: requiring combined reporting of profits from all subsidiaries, refusing to automatically grant special interest tax breaks handed out by the Feds by "decoupling" state and federal tax codes, enacting oil windfall taxes, and requiring tax disclosure to expose corporations that are abusing the tax code.
Maximizing Federal Matching Dollars: As Familes USA and Community Catalyst points out, it is in a state's best interest to maximize federal matching dollars, particularly during economic downturns. For every dollar a state puts up for Medicaid programs, the federal government matches it with at least $1 and in many cases more, depending on a state's per capita income. States can generate additional state funds to draw down more federal match through provider taxes. The recent stalled California reform measure included a 4% tax on providers that would have generated an estimated $2.3 billion, in large part through additional federal match. Agreement was reached with the hospital industry by promising increased Medicaid provider rates. Other options for maximizing the federal match are summarized by the Kaiser Commission on Medicaid and the Uninsured.
Capturing Savings: A bold feature of Maine's comprehensive Dirigo Health Reform initiative is a unique funding measure called the Savings Offset Payment. The Payment is a fee paid by insurance companies that is proportional to health care savings that are achieved by the Dirigo Health's cost containment provisions. The strength of this model is that it builds health care expansions on top of cost containment, which is necessary for sustainable reform.

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Insurance Reforms to Ensure Fairness and Access to Coverage

Highlighting the need for tighter regulation of the insurance industry, California regulators have had their hands full investigating and imposing fines on many of the state's for-profit and non-profit insurance companies. Recent headlines documenting abusive and anti-consumer business practices include HealthNet providing bonuses to employees who cancel health plans after members submit costly claims and Blue Cross of California recruiting physicians in canceling health insurance coverage. To the North, news that a Washington State-based non-profit insurer has transfered $49 million in premium revenue over the past three years to a faltering for-profit subsidiary in Arizona has fueled debate for stronger insurance oversight and rate regulation.

States are working to ensure consumers in the individual and small group markets are treated fairly and that more of our premium dollars actually go to health care. In fact, as Families USA explains, Massachusetts' 2006 health care reform law was "built on Massachusetts' expanded public programs and its highly regulated insurance market." State reforms to better regulate the insurance industry include:

Rate Review and Oversight - requiring insurers to gain prior approval for premium increases. On Friday, the Washington State House and Senate passed SB 5261, which will restore the insurance commissioner's oversight of the individual health insurance market and requires individual health plans to maintain a 77% medical loss ratio.
Medical Loss Ratio - requiring insurers to spend a certain amount of premium revenue on direct medical care. As Families USA discusses, these laws ensure that more of our premiums are used on medical care and less on profits, bonuses, and inefficient administration. New Jersey has a medical loss ratio of 75% for the individual and small group markets. If less than 75-cents of every premium dollar is spent on direct medical care, an insurer must issue the difference in refunds to their members. Minnesota has a tiered loss ratio, setting different levels for the large group, small group, and individual markets.
Guaranteed Issue - preventing insurers from refusing coverage to individuals because of their health status, age, gender, or other factors. This helps ensure the availability of coverage and is espcially important in the individual market, where many states allow insurers to cherry-pick their customers and refuse coverage to certain residents.
Community Rating - creating more consistency in health insurance rates across insured populations. These laws limit how much an insurer can adjust a health insurance policy based on a person's age, gender, health status, history, and other factors. Pure community rating sets the same rate for an entire insured population, regardless of demographic factors. Modified community rating, the more common form, sets a rating band within which insurers can vary rates based on certain factors. Last year, Colorado strengthened the community rating standards in the small group market through HB 1355, which removes health status as a factor in setting premium rates.
Coverage for Young Adults - requiring insurance companies to allow children to stay on their parent's health insurance well into their 20's. Eleven states have authorized coverage up to age 25, but New Jersey has extended dependent coverage to age 30. This is a simple and relatively low-cost way to expand access to coverage. Of the 45 million uninsured in the US, 31% are between 19 and 29 years of age.
Pre-Tax Employee Premium Payments - requiring employers to set up "section 125 plans," which allow employees to pay their share of employer-based health insurance premiums pre-tax. This federal tax subsidy can help employees afford coverage, even if employers do not pay towards employee premiums.
Standardized Benefit Plans - requiring insurers in a particular market, often the individual market, to always include a certain level of benefits in their insurance options. This prevents insurers from selling inadequate insurance and allows consumers to better compare the value of different health plans. And, as Community Catalyst points out, states can also establish maximum premiums and out-of-pocket costs to protect consumers from medical debt and bankruptcy.
Health Insurance Connector - pooling consumers and negotiating on their behalf with insurance companies for more affordable insurance rates. Following Massachusetts' lead, several states are considering establishing insurance connectors which typically negotiate or contract with insurers to offer insurance plans that meet set standards for coverage and costs. As Community Catalyst describes, connectors create a common marketplace for consumers to compare options and work best with other insurance reforms like guaranteed issue, community rating and standardized benefit plans.
Merging Insurance Markets - creating one large pool by combining the individual and small group markets can make more affordable options available to small businesses and to individuals, in particular. Massachusetts has merged these markets and early projections estimate the move will reduce individual insurance premiums by 15% and cause only a slight up-tick in small group premiums. This works best if the two markets have similar consumer protections, as Community Catalyst points out.

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Reducing Costs and Improving Quality of Care

The federal agency that directs Medicare and Medicaid has projected US health care spending to double in ten years to more than $4 trillion. One of every $5 dollars in your pocket will go to health care costs. All too often, it takes a crisis to put foresight into action, as with the current mortgage and foreclosure crisis. Fortunately, state lawmakers are taking on the elephant-in-the-exam-room and working to curb the growth of health care costs and unnecessary spending.

As part of a growing trend among states, Rhode Island's Lieutenant Governor Elizabeth Roberts has proposed a comprehensive health care reform package that targets cost containment to help provide a framework and more funds for a health-care-for-all system. The plan includes many of the measures described here:

Managing Chronic Disease: A staggering 78% of all health care costs are for people with chronic conditions, like diabetes, heart disease, lung disease, and depression. Improving the management of chronic diseases to prevent emergencies and stabilize and prevent symptoms is a key policy goal towards reducing the growth of health care costs. Most states have some sort of Medicaid managed care program, either administered by a private firm or contracted directly with primary care physicians. Elsewhere, Vermont's Blueprint for Health is working to move the health care system to one that helps people stay healthy, rather than merely treating isolated medical events. Pennsylvania is also making notable inroads. A state commission recently outlined a chronic care model that would establish local collaboratives of providers through which care and problem-solving would be coordinated and best practices would be shared. The model focuses on engaging patients in making better health decisions, creating a quality-oriented provider culture, information systems, and payment incentives for providers.
Eliminating Health Disparities: There is great inequity in US health care across racial, ethnic, economic, gender, and geographic factors. As the Opportunity Agenda shows, compared to whites, people of color are more likely to receive sub-par care, experience worse outcomes, lack health insurance, and are less likely to receive routine or necessary care. The Families USA and Community Catalyst webguide presents a number of best practices for reducing disparities and creating equity in US health care, including targeting expansion programs and enrollment in underserved communities, requiring cultural competence in provider settings, reimbursing for language services, and supporting providers who serve low-income and underserved populations.
Certificate of Need: Certificate of Need (CON) is a state regulatory process designed to contain health care costs by preventing spending on unnecessary heatlh care infrastructure and services. Under CON, hospitals and other medical facilities are required to get state approval before building a new facility or offering a new medical service. Approval, in large part, hinges on a clear demonstration of need for the new facility or service. Maine's Dirigo Health Reform strengthened the state's Certificate of Need process by including in the approval process hospitals as well as large outpatient doctor collaboratives. Additionally, the state established a budget, called the Capital Investment Fund (CIF), to guide the CON approval process. The CIF limits the amount of expenditures approved by CON. CON applications are also reviewed by the state's Maine Quality Forum to assess a proposed project's effect on the quality of care.
Pay for Performance: A sure way to improve quality of care is to change how health care is paid for. Paying providers in a way that rewards quality care and care that keeps people healthy, instead of paying for each service rendered or office visit can reduce costs and keep people healthier. More than half of US states have pay for performance systems in their Medicaid programs and a Medicare pilot project is achieving cost reductions and quality improvements in participating hospitals. A December report from the Robert Wood Johnson Foundation, Paying for Quality: Understanding and Assessing Physician Pay-for-Performance Initiatives, examines public and private health care initiatives offering financial incentives as a reward for providing quality care. Additionally, as Families USA and Community Catalyst point out, pay for performance is also a mechanism to eliminating health disparities and hospital errors.
Ending Reimbursement for Avoidable Hospital Errors: Washington is the latest state to announce an agreement by health care providers not to charge for avoidable hospital errors. The Pennsylvania Medicaid program recently launched a program to identify and stop reimbursements for care related to avoidable hospital errors. The effort is similar to a Medicare rule that it will no longer pay for preventable conditions acquired at hospitals.
Reducing Hospital-Based Infections: Other approaches to reducing errors include public reporting, or medical error "sunshine" laws, and reducing infections acquired at medical facilities. The Governor of Pennsylvania reports that in 2006 there were 19,154 infections, resulting in 2,500 deaths and more than $3.5 billion in hospital charges. In response, lawmakers enacted SB 968 which will require hospitals to test their highest-risk patients and patients admitted from nursing homes for infections that are resistant to antibiotics. The law will also increase reimbursements to hospitals that meet benchmarks in preventing infections and require reporting to the CDC.
Reducing Prescription Drug Costs: States have many options before them to reduce prescription drug costs. The National Legislative Association on Prescription Drug Prices (NLARX), an organization every state legislative body should join, offers an encyclopedic array of model legislation, talking points, and other valuable resources designed for legislators. Legislative best practices include reining in harmful drug industry marketing that inflates health care costs, establishing drug purchasing pools, and promoting use of generic medications.
Electronic Medical Records: A statewide electronic medical records system in Maine could save the state $50 million each year by eliminating duplicate and unnecessary tests, procedures, prescriptions and hospital admissions. The program was created by private and public stakeholders and medical professionals and will start with a pilot project before expanding statewide. Similarly, Vemont' s chronic care management system, Blueprint for Health, is creating a new web-based and free Chronic Care Information System. The system will ensure clinicians have comprehensive patient information and clinical guidance to support diagnosis and treatment decisions. Delaware has already built a statewide system providing immediate access to patient records and New York City has launched a system that is expanding across the city. The New York City program offers training and maintenance assistance to doctors with a large number of Medicaid patients.

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Conclusion

The goal is quality, affordable health care for all. If it can't be done all at once, pragmatic incremental steps help lay the foundation for comprehensive reform and strengthen the public's resolve for broader initiatives.

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