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The Insurance Lottery

When states subsidize health insurance, the hardest part is deciding whom to help and who goes without.


Name

Penelope Lemov

Penelope Lemov is a GOVERNING correspondent. She was GOVERNING's health columnist and was senior editor for several award-winning features.

Here's some good news. Hospital emergency room visits are down in Massachusetts. Accident victims still arrive in their usual numbers, as they always will. But the hacking coughs and sprained ankles -- maladies that are better handled in primary care -- are no longer showing up in as great a number.

The decreased traffic in the E.R. is thanks to the state's two-year-old landmark health insurance law. Changing patient behavior in this manner is a key part of how the Massachusetts plan is supposed to bring near-universal health care to state residents. As uncompensated care drops -- and many of the primary care visits to emergency rooms were by people who could not afford to pay -- the savings can be shifted into a program that includes subsidies for the cost of insurance for those who earn less than 150 percent of the poverty level.

The apparent success of the Massachusetts reform has caused some unexpected consequences. Now that those who used to go to the E.R. for routine care have insurance, it's getting harder to make appointments with physicians for office visits. In some parts of the state, the docs are booked up -- overwhelmed by the number of people who now can claim their attention. When the law first passed, the state figured it would sign up 57,000 uninsured residents. Instead, 76,200 enrolled -- kicking up costs for the state but also providing coverage for those most in need.

The experience in Massachusetts comes to mind as I follow what's been happening in Oregon. That state, once a leader in the universal-coverage movement, has had its ups and downs with the cause. Oregon was able to drop its uninsured rates -- from 17 percent in 1989 to 11 percent in 1997 -- when it came up with a controversial way to stretch its health dollars. It put limits on what services Medicaid would cover, using a priority list that ranked procedures involved in saving life or limb at the top. The list generated savings that could be used to cover more people. It was a rational idea, but critics tagged the plan as a form of "rationing" and thus brought it a lot of negative national publicity.

That isn't what doomed the program, however. The financing did. The idea was that the priority list would be flexible. If the state hit an economic bump, it would cut back further on the list of services but still keep people on the rolls. Unfortunately, the economic dislocations in Oregon in the early 2000s were so severe that the idea was dumped, along with a lot of people who were on Medicaid because of it. The rate of uninsured soon bounced back up. It is currently 16 percent.

Oregon hasn't given up. The state is expanding its Oregon Health Plan, a program that subsidizes the cost of insurance for those who can't afford to buy it. But money is still tight. The state can only afford to underwrite care for 24,000 people -- and 17,000 of those slots are already filled. That raises the question of how to choose the 7,000 people who will get insurance. The neediest of the needy? The sickest of the sick? Or, more simply, the first in line?

None of those criteria fit Oregonian sensibilities. Instead, the state came up with something completely different: "random selection," a methodology that everyone else refers to as a lottery. The state asked low-income adults who lack private insurance and do not qualify for Medicaid or Medicare to sign up to be considered for the program. More than 91,000 have. A first batch of 3,000, based on a computer selection, received an official application that was then reviewed for eligibility. The "winners" were notified and now another batch of names is being randomly selected for review.

What Oregon is doing is of real interest in other states. A handful of state legislatures are looking into universal health care plans -- or at least plans that edge them closer to universal coverage. And in most cases, these plans call for some of that coverage to be subsidized by the state. California's ill-fated plan did, and so do plans being considered in Connecticut and elsewhere.

Few states are flush with money right now. It's doubtful that any will pass a health care plan that is truly "universal." Whatever plans they do consider are likely to require making hard choices about whom to cover and whom to leave out. It will be interesting to see the kinds of solutions they come up with. And whether lotteries make the list.


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