Introduction for 2022-2023 Symposium: States as Health Policy Laboratories

In many respects, the United States provides some of the best health care in the world. The U.S. healthcare system is a leader in innovative biomedical research and provides patients with cutting-edge medicine administered by world-renowned hospitals and specialists.^[1] But our healthcare system also faces significant challenges, including wide disparities in access to care and patient outcomes.^[2] Under our federal system of government, the federal government and the states have overlapping responsibility for addressing these challenges.^[3] And while the federal government’s role in healthcare has grown over the years, states retain broad authority over key healthcare matters.^[4] This symposium explores states’ role as health policy laboratories by examining specific failures in the U.S. healthcare system that adversely impact the health of socioeconomically disadvantaged populations and states’ role in contributing to and redressing these conditions.

Longstanding conventional wisdom holds that a federal system protective of state sovereignty promotes states functioning as “laboratories of democracy.” As Justice Louis D. Brandeis famously explained, “[i]t is one of the happy incidents of the federal system . . . that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”^[5] This traditional account contends that various features of federalism support states serving as the primary locus of policy experimentation. In particular, free movement of people and commerce promotes political-economic competition among states, with each state seeking to improve its performance in order to attract and retain citizens and businesses.^[6] In addition, proponents of state sovereignty argue that because states can build on other states’ policy successes while learning from their failures, overtime states achieve better policy solutions than can the federal government. In addition, states may better understand the needs and values of their citizens and can tailor policies to local conditions and preferences.^[7] This may be particularly important in the healthcare context given geographic variation in populations’ health needs, local medical practices, the competitiveness of provider and insurance markets, and available medical technology, among other factors.^[8]

Many commentators, however, argue that this traditional defense of state autonomy does not reflect how federalism operates in practice, characterizing the state laboratories view as “little more than a campfire story”^[9] or a “mythology.”^[10] In many respects, states are poorly equipped for the policy innovator role assigned to them under the laboratories of democracy theory. Competition among states can lead to a so-called “race to the bottom,” as states may fear that wealthier taxpayers and businesses will flee if asked to pay higher taxes in support of benefit programs or if heavily regulated.^[11] Policy experimentation also requires resources—money, labor, and expertise—that may be in short-supply among states given their smaller budgets and shorter legislative sessions.^[12] Developing new policies also can be costly and politically risky should they fail.^[13] State politicians and leaders therefore may decide that it is safer to wait and copy other states’ successes rather than be a first-mover, leaving few if any states willing to sponsor initial policy experiments.^[14] These concerns can justify federal intervention on health policy matters, such as federal schemes that provide states with funding in exchange for their compliance with minimum federal standards, a model followed by Congress when enacting the Medicaid program.

Recent scholarship also has challenged the assumption that a large role for the federal government will restrict states’ autonomy and stifle policy innovation and experimentation. Federal participation can actually empower state experimentation in circumstances where states would default to nonaction in the absence of federal involvement.^[15] Specifically, when states participate in experiments facilitated and coordinated by the federal government, states can benefit from the financing, guidance, and research and evaluation offered by the federal government.^[16] Moreover, collaborative federalism structures often afford states opportunities for innovation and experimentation, either by leaving certain policy decisions to the states or granting waivers of applicable federal standards to states wishing to pursue alternative approaches. Federal reliance on state administration of national initiatives also can open the door to state input on federal policy decisions^[17] and give states bargaining leverage viz-a-viz federal officials.^[18] On the other hand, federal involvement can interfere with state policy innovation when federal authorities disagree with a state’s approach, something that may be occurring more frequently given increasing partisanship.^[19]

Finally, some commentators have questioned whether states are the primary, or even a necessary, source of policy innovation and experimentation. Although it is often assumed that the federal government implements uniform policies across the nation, in practice the federal government can experiment with different policy approaches.^[20] In addition, more recent criticism of the laboratories of democracy account contends that it overlooks a key source of policy innovation─outside third party organizations such as interest groups, activists, and think tanks that both perform many of the tasks necessary for policy innovation and motivate government actors to implement new policies.^[21]

Perhaps not surprisingly, recent scholarship on federalism has concluded that in practice it is “messy and complex.”^[22] Yet few would question whether states have played, and will continue to play, an important role in the development and implementation of health policy. For this reason, the tenth annual Health Law Symposium sponsored by the Health Law and Policy Institute at the University of Houston Law Center explores States and Health Policy Laboratories. This symposium issue of the Houston Journal of Health Law & Policy presents the insights of four scholars with expertise at the intersection of federalism and health law and policy. Read together and apart, the symposium articles enhance our understanding of how federalism works in practice, including the strengths and weaknesses of relying on states to develop policy solutions to some of our most pressing healthcare issues.

Professor Robert I. Field’s article, The Devil in the Details, State Medicaid Administrative Rules as Enrollment Policy, examines how states’ administrative requirements for gaining and maintaining Medicaid can create barriers to enrollment that unfairly deny insurance coverage to many low-income Americans. For example, requirements such as face-to-face interviews, lengthy application forms, and complex financial documentation rules can prove burdensome for many applicants. Consistent with the positive view of states as health policy laboratories, Field shows that some states have successfully implemented changes that mitigate the impact of administrative requirements on Medicaid enrollment. Yet the story Field tells also provides support for those concerned about a race to the bottom, as some states have used restrictive administrative requirements to shrink their Medicaid enrollment numbers. Other states have left onerous burdens in place due perhaps to inertia, an outcome consistent with the view that states often lack the time, expertise, and motivation to address pressing policy concerns. The article also provides support for those who believe federal involvement can both protect vulnerable populations from state neglect or hostility and spur policy action at the state level. As Field explains, Congress through the Affordable Care Act directed states to simplify certain administrative requirements. More recently, in response to the COVID pandemic, Congress imposed a moratorium on Medicaid disenrollment and offered states an increase in their federal matching rate for Medicaid funding if they dispensed with certain administrative requirements. The federal government’s pending termination of these COVID initiatives has created an opportunity for states to re-examine their administrative requirements for enrollment and re-enrollment, with Field making several thoughtful recommendations on steps states could take.

Professor Medha D. Makhlouf’s article, Charity Care for All: State Efforts to Ensure Equitable Access to Financial Assistance for Noncitizen Patients, focuses on another barrier to access to health care─non-profit hospitals’ denial of charity care to certain low-income patients based on their immigration status. Her article explores steps states, as well as hospitals, can take to prohibit discrimination in charity care programs. Like Field’s article, however, Makhlouf’s article highlights some of the limits of looking to states as health policy laboratories, including concerns that states have weak incentives to address the needs of its most vulnerable citizens. As Makhlouf explains, states have shown little interest in adopting policies that help its noncitizen residents obtain access to needed medical care. Yet Makhlouf’s article also fits within a more positive view of states as health policy laboratories, one that sees a state’s experimentation as offering valuable lessons to other states. Specifically, the article evaluates efforts in New Mexico, Colorado, Maryland, and Illinois to prohibit discrimination against noncitizens in charity care. Yet Makhlouf also provides support for recent scholarship flagging outside third party organizations as a source for policy innovation, as she envisions state legislative action on this issue happening in response to advocacy efforts by groups representing noncitizens. But Makhlouf also calls for hospitals to reform their practices even in the absence of states amending their charity care laws, an acknowledgement that private actors rather than the state or federal government can be a source of “policy” change.

Professors Sidney D. Watson and John V. Jacobi move beyond access to health care and draw our attention to efforts to improve the functioning of the healthcare system for communities facing socioeconomic disadvantage. In her article Lessons from Michigan and North Carolina: Leading the Way in Addressing and Redressing Racial and Ethnic Disparities in Medicaid Managed Care, Professor Watson discusses state Medicaid efforts to collect enrollees’ data on race and ethnicity to support the design and implementation of interventions to reduce disparities by Medicaid managed care programs. Her article provides support for the positive view of states as health policy laboratories by highlighting the lessons of one state’s experimentation in this domain. Specifically, the article analyzes successful efforts in Michigan to track quality data stratified by race and ethnicity and whether interventions to reduce disparities have been successful, and identifies lessons from Michigan that may help other states find similar success. However, the article also illustrates the importance of effective federal involvement and leadership by explaining how the lack of clear federal guidance on this issue has contributed to many states’ failure to collect adequate information on race and ethnicity data for their Medicaid beneficiaries. Finally, the article provides support for the importance of outside third-party organizations as sources of innovation. Specifically, it describes how Michigan’s early efforts were part of a demonstration project led by the Centers for Health Care Strategies and funded in part by the Commonwealth Fund. It also notes how several private organizations are helping to highlight specific state efforts and create a research database documenting states’ efforts to collect and use patient data stratified by race to design and implement interventions targeting disparities.

Finally, Professor Jacobi’s article, Community Health Workers and the Dilemma of Integrated Care, discusses how integration of community health workers (CHWs) into the health care system can undermine their independent role as community advocates and bridge-builders and lead to the medicalization of poverty. Rather than rely on state-level interventions to address these concerns, Professor Jacobi proposes a community-based solution, reminding us that states do not have a monopoly on policy innovation. Specifically, Jacobi endorses the Pathways HUB model where local agencies serve as intermediaries (the “HUB”) between public and private payers and non-healthcare organizations employing CHWs. The HUB would direct patient referrals (and payment) from health systems and payers to local organizations whose CHWs can assist patients with their non-medical, health-related needs (e.g., substandard housing). With the Pathways HUB model currently operating in several communities, we see in Jacobi’s article an example of local health policy laboratories in practice. Moreover, because a HUB typically is operated by a private entity rather than a government agency, the Pathways HUB model shows that the locus for developing and testing policy solutions often occurs among private actors functioning outside the political process.

Read together, the pieces in this symposium reinforce the view that in practice federalism is complicated and muddles. At times the authors provide support for more traditional assumptions about the merits of states as health policy laboratories. Yet they also offer insights and observations consistent with newer federalism scholarship challenging these traditional assumptions. And while these articles do not provide a definitive answer as to the desirability of states serving as health policy laboratories, they make important contributions to this debate by highlighting some of the strengths and weaknesses of relying on states to address some of our most pressing healthcare challenges.