HEALTH REFORM: Key to Avoiding Permanent Fiscal Crises in the States

California is among the states currently experiencing mind-bending budgetary shortfalls. Eventually returning to a period of wealth wisely will depend on fixing health care systems that were strained to a breaking point even before the crisis began. Here are some highlights from an event on Monday that The New America Foundation's Next Social Contract Program and its California Program co-hosted at the Commonwealth Club in San Francisco: "California, the Crisis, and the Next Social Contract: Staying Healthy, Wealthy, and Wise in Challenging Times." (We'll link to the webcast when it's available in a few days.)

Reinventing Government guru David Osborne kicked off the event with a presentation that laid out starkly how, unless brought under control, spiraling health spending will keep the states in permanent fiscal crises. Throughout the rest of the morning, the issue of health care costs kept rearing its head in panels on topics from economic development to education. As it turns out, making progress on any policy issue of importance to state governments will first require getting these costs under control.

It was only fitting, therefore, that the day culminated with a panel on the prospects for national health care reform that could bring desperately needed relief to states and their citizens. Secretary of the California Health and Human Services Agency Kim Belshé said that as a marathon runner, she had come to see healthcare reform as the most challenging endurance sport in politics. But she also believes that there has to be opportunity somewhere in this crisis. Her most trenchant insight, perhaps, was that the health reform effort under Gov. Schwarzenegger in California in 2007 was ultimately not about systems change but about expanding the existing costly system. The current fiscal crisis has helped put changing the health care delivery system on the national agenda, and a consensus is developing even among healthcare stakeholders that such change is necessary.

Jacob Hacker, professor of Political Science at the University of California at Berkeley, highlighted the human costs of delay on healthcare reform within the context of the Great Risk Shift from the broad shoulders of governments and corporations onto the narrow shoulders of working families. He explained that in many ways the social contract has been revised slowly during the past several decades to edit out many of government's basic obligations to its citizens. It is not just the uninsured that the country is leaving behind. Dr. Hacker noted that almost half of medical bankruptcies in the past year have been filed by families that had some form of health insurance. He ended by invoking the words of Franklin Delano Roosevelt in 1938 that, "There is still today a frontier that remains unconquered, an America unclaimed. This is the great, the nationwide frontier of insecurity, of human want and fear. This is the frontier the America we have set ourselves to reclaim."  Seventy years later, those words continue to ring true.

Crystal Hayling, president and CEO of the Blue Shield of California Foundation, reminded us that we have reason to be hopeful. She shared her own inspiration born of witnessing the inauguration of President Barack Obama, a day that—perhaps not unlike the eventual passage of national healthcare reform—many thought would never come.  She also shared how her foundation is pursuing a strategy of simultaneously helping those most in need because of the gaps in our current system and supporting organizations such as The New America Foundation who are pushing to put new and better policies in place.  

Len Nichols, director of New America's Health Policy Program, wrapped up the event by sagely handicapping the prospects for national reform now as compared to the early 1990s.  Many differences augur well for this round, perhaps most notably the strong bipartisan interest in health policy in the Senate.  He also underscored how the different elements are interlinked through a "virtuous cycle of reform." Coverage expansion is the key to bringing stakeholders on for delivery system reform. Delivery system reform will control costs. Cost control will make coverage expansion sustainable. Yet he cautioned that many powerful forces still benefit from the status quo and will fight tooth and nail against comprehensive reform.  Healthcare reform, he concluded, is impossible... but necessary.