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Some states seek flexibility to push health-care overhaul further

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As far as health-reform boosters go, Oregon Gov. John Kitzhaber is among the most stalwart.

“We want to show that health reform is something real, that it actually works,” he said. “Oregon is a place that can actually make it happen.”

His state has aggressively implemented the health overhaul Congress passed last year, taking more than $100 million in federal funding to do so.

But at the same time, the health-care law puts Kitzhaber (D) in a bind. This year, Oregon passed its own plan, which starts with changing how it pays doctors and eventually ends with allowing public employees to enroll in Medicaid, the federal insurance program for low-income Americans. There’s just one big obstacle: What Oregon wants to do would require the Obama administration to waive integral pillars of its signature legislative accomplishment.

“We would need a number of waivers to implement all of this,” he said. If Oregon doesn’t get them? “That,” Kitzhaber said, “would be a problem.”

Kitzhaber isn’t alone. A handful of states are pursuing health measures that go far beyond the Obama administration’s signature legislative accomplishment, the Affordable Care Act.

They stand in contrast to Republican governors, who have aggressively opposed the law. Twenty-seven states are challenging the law in the courts as unconstitutional, while two, Florida and Louisiana, have just refused to implement much of the law.

For Democratic governors who want to push changes further, navigating the federal law is a much more complex and nuanced task. They want to implement the law, as well as be waived from key parts of it.

“The Affordable Care Act’s main goal was to expand coverage,” Kitzhaber said. “We’re trying to pivot from that and go quite a bit further.”

The health-care law does allow states to pursue ideas outside its purview. It includes State Innovation Waivers for those that want to bypass key components such as the mandated purchase of insurance, so long as they can meet certain benchmarks on cost and coverage. The waivers become available in 2017, three years after most of the law takes effect.

But for states such as Oregon and Vermont, that timeline is problematic. Because most of the law takes effect in 2014, they worry about setting up a system only to dismantle it a few years later, to implement the policies they really want.

In February, President Obama endorsed legislation that would allow the waivers to start in 2014. But it has been languishing in the Senate for months, never seeing a committee hearing.

Meanwhile, states continue to lay the groundwork for health measures that go well beyond the Affordable Care Act, meeting regularly with administration officials to discuss what flexibility might be available.

Vermont has moved swiftly in pursuing universal health care. In May, the state became the first to attempt to implement a single-payer system. The state has begun discussions with the Obama administration about waivers that would be necessary to convert health insurance there into a single-payer health plan, run by a public board.

“We’ve had some very general discussions with the federal government about our single-payer plans, [and] we’ll continue to push for earlier waivers,” said Anya Rader Wallack, chair of the new Vermont Green Mountain Care Board, which held its first meeting last week. She had been a top health policy adviser to Gov. Peter Shumlin (D). “If we can’t have it, we can’t implement our reforms as fast as we’d like to. It’ll make a difference in terms of the degree of simplification in implementation and the savings associated with that.”

Montana has also started exploring single-payer options. Last month, Gov. Brian Schweitzer (D) announced that he would seek permission to open up his Medi­caid program to government employees and other individuals, laying the foundation for a future universal coverage program.

“Most of the Republican governors have either asked or plan to ask for a block grant, which is kind of what I’m talking about here,” he said. “Send me the money and I’ll take responsibility for my Medicaid population. Don’t be my partner anymore.”

Schweitzer has spent three years working on the plan, modeled after one in Saskatchewan, the Canadian province directly north of Montana. But unlike Vermont officials, he’s skeptical that the Obama administration will give him permission to move forward. As evidence of a lack of federal flexibility, Schweitzer points to another waiver request he made, one that would offer a prescription drug benefit to non-Medicaid patients, that the federal government denied.

“Since we’re proposing to save citizens’ money, you’d expect some kind of chorus and music, maybe a presentation with some plaques and flowers,” he said. “That’s what you’d expect. But in my experience, that’s not what you get.”

The Obama administration has spent “countless hours” working with states to implement ideas that diverge from the federal law, White House spokesman Nick Papas said. “Giving states the chance to pursue innovative ideas that strengthen the health-care system is one of our top priorities,” he said.

For some states, though, it’s already too late. Before the health-care law was enacted, Connecticut had explored the possibility of a public option, an insurance plan administered by the state. But after the health-care law came into being, that proposal got pared back to a study of publicly financed insurance. At the time, Gov. Dan Malloy (D) said his top priority was implementing the federal law — the state’s own ideas would have to wait.

Kitzhaber is trying to make sure that doesn’t happen in Oregon. He spent several days in Washington last week trying to clear the way for his state’s proposed changes. He met with Valerie Jarrett, White House senior adviser, and Nancy-Ann DeParle, deputy chief of staff, on the issue last Monday. The next day he met with Donald Berwick, administrator of the Centers for Medicare and Medicaid Services, to discuss a Medicaid waiver Oregon would soon request.

Kitzhaber said Berwick was “very supportive” of his ideas for Medicaid, and his White House meeting went well, too.

“I do think they’re very interested in a state that can demonstrate, on the ground, that health reform is working in the face of all these attacks,” he said.

But whether the White House can give Kitzhaber the flexibility he wants remains an open question.

“We obviously are interested in moving much sooner” than current law allows, he said. “States are going to hit a wall way before 2017.”

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