NEAL CONAN, host:

This is TALK OF THE NATION. I'm Neal Conan in Washington.

In the wee hours of Monday morning, the House of Representatives approved over $11 billion in cuts to Medicare and Medicaid. If those cuts become law, the bills for what would become uninsured coverage would be delivered to state capitols instead of to Washington, DC. In fact, as the president and Congress continue to pass on health care, state governments are coming up with new ideas to expand coverage or make it more efficient. In Illinois, a new initiative ensures that every child under the age of 18 has access to health care. Florida is now set to begin an experiment that would allow private health-care companies to administrate coverage paid for by Medicaid. And in Massachusetts, Governor Mitt Romney wants to require people who are uninsured to purchase plans at subsidized cost. Health-care experts have their eyes on all of these plans to see if any might be a model for other states, or for the country.

Later on in the program, a federal judge in Pennsylvania rules that intelligent design can not be taught in public schools, and your letters. But, first health-care reform in the states. How is your state coping with the spiraling costs? How are things likely to change there? Our number here in Washington is (800) 989-8255. That's (800) 989-TALK. The e-mail address is totn@npr.org.

And to begin, we're joined by NPR's correspondent on health, Julie Rovner. She's with us here in Studio 3A. Julie, always nice to have you on the program.

JULIE ROVNER reporting:

Nice to be here.

CONAN: How much of the burden is being passed from the feds back to the states?

ROVNER: Well, it depends on how you measure it. Right now the real problem with health care--the governors, to listen to them, will say that the problem is Medicaid, which has, indeed, grown dramatically in recent years. Less because of increases in enrollment and more because of increases in health-care spending. And if you go back and look at increases in health-care spending, writ large, they are going up very, very rapidly. Health-care premiums for individuals with private coverage have gone up to $10,880. That's the average premium for family coverage now. Medicaid and Medicare spending are not quite that large. But what's happening is that as those premiums go up, fewer employers are offering coverage to their workers. Often those workers, if they end up unemployed or if they're very low income, their kids end up on public programs like Medicaid and SCHIP so the states are sort of getting the double whammy. They're getting the whammy of rising health-care costs across the system and the whammy of having fewer people insured privately so they're having to pick up the slack. So it's definitely a problem for the states.

CONAN: So what are they doing to try to meet this new burden? Well, some of them are just tightening their belts, right?

ROVNER: Many of them are just tightening their belts. They're--we're seeing many states that are actually trimming Medicaid. The first thing that states do when Medicaid gets to be too expensive is they cut payments to health-care providers, to doctors and hospitals. The problem with that, of course, is that if you cut them too much, then you can't get doctors and hospitals to serve Medicaid patients. But we've seen over the last four or five years many more states are just full sale cutting people off rolls. We've seen about 100,000 people dropped in the state of Missouri, 300,000 people dropped in the state of Tennessee.

So a lot of people there--they're over there then cutting benefits. If you're not going to take them all the way off, you'll restrict the number of prescription to maybe two or three a month. We've seen that in some states. Or, you know, you make it harder for them to get health care and to come back to what Congress is considering what that bill would do. It would actually help states save money because it would allow states to pass on costs to these low-income beneficiaries. It would save the federal government money, it would save states money, but it would coast the beneficiaries more.

CONAN: So at--in some of these states, Tennessee, for example, that TennCare program, the reason so many people are being dropped is in part because the program was so ambitious in the first place.

ROVNER: It was, indeed. It's funny to see this wave of state reforms right now because we saw a wave of state reforms in the early 1990s, just as Congress was thinking about doing health reform. You had really a half a dozen states talking about ways to insure all of their people, and Tennessee was one of them, and Tennessee, in fact, decided that if they moved everybody on Medicaid into managed care, that managed care--the private firms could save enough money that they could cover all of the uninsured in Tennessee rather than just those who were very, very poor and eligible for Medicaid. And as we've seen, things didn't really work out. The program got too large and too expensive and the managed care companies couldn't save--they couldn't do it that much more cheaply than the state could.

CONAN: And, again, we're going to be talking about new state programs, all of which have tremendous promise and look shiny and bright this morning but it's good to remember that, again, in that earlier period of reform Hawaii tried a form of universal health care that has also not worked out so great.

ROVNER: No, Hawaii is no longer--for quite a while Hawaii had the lowest rate of the uninsured--of uninsured residents in the US. I think now they're down to fourth or fifth. It has somewhat worked, but, of course, Hawaii is--you know, you don't have people going to other states for health care pretty much in Hawaii the way you have in the continental 48 so that's a little bit different but Hawaii is one of the few that sort of worked. There have been several that just have--like Tennessee--that just haven't worked at all.

CONAN: So as states look toward some of these new changes, we're going to be talking about several of them but maybe with the exception of Massachusetts which we're going to deal with first, they seem to come in broadly two flavors, one of which is to control--and these are terms, by the way, that are not unfamiliar from the debate over Social Security or the debate over pensions, and this is, you know, whether you have defined benefits or defined contributions.

ROVNER: That's right, and in--actually, in the case of health care, the other thing that really sets this--makes both similar and different is that the question is is it the public's--the government's responsibility vs. private responsibility and of course both sides can point to government's inability to deliver services and both sides can point to private sector's inability to deliver services efficiently I guess and so there's a lot of back and forth about whether is this a role for the government, is this a role for the private sector. Then underneath that is who should be at risk for rising costs and that's where we get into this defined benefit, defined contribution. Should it be the entity that's paying for the coverage, i.e., public sector, private sector, or should it be the patients?

CONAN: And in other words, should you get, as some people will in Florida, we're going to be talking about their program, a voucher from Medicare--Medicaid, rather, that you could take then to a private insurance company and say, `I'm gonna spend on these three things that I really want'? Or is it--should it be an example like Illinois, another example, we're going to say, where they're expanding coverage to cover every kid? Now most kids are already covered, with a little bit extra, saying, `We're going to provide this guaranteed coverage for everybody.

ROVNER: And interestingly these mirror what we saw in the last two presidential elections about where the Democrats and the Republicans were on health care, Republicans wanting to harness the power of the private sector to deliver more efficiently and the Democrats wanting to expand public programs that they say are working well and working efficiently.

CONAN: Now these various approaches, and we're seeing variations on them, but do they mirror some of these other approaches that we saw from the '90s?

ROVNER: Absolutely. I mean, Massachusetts, which I don't want to step on that thunder, is particularly interesting because it's an approach that was talked about in the '90s but never tried. So that's the one that nobody's actually done yet although it's not entirely clear whether they're going to do it this time.

CONAN: If you'd like to join the conversation, our number is (800) 989-8255. That's (800) 989-TALK. And our e-mail address is totn@npr.org. And we'll start with Al. Al is calling us from Eden Prairie, Minnesota.

AL (Caller): Good afternoon. Great show. I appreciate it very much.

CONAN: Oh, thank you.

AL: I used to work at a small medical billing company. We processed claims and such for doctors and I figure if you take our business times thousands and thousands across the country, I have a hard time seeing how you can drive without going to universal care--drives the costs out of the system. There are so many people that are taking a little piece here and there. I just--How are we going to get to the point ...(unintelligible) you have a problem, of course, with people, the consumers, you know, driving up the costs using the services. You have a problem with the doctors, of course, getting more money, usually, I mean, inflation and such. But I--I'm really--without going to universal health care, and, you know, kind of dictated coverage, how do you see us being able to at least stem the rise of the costs? I mean, we did it temporarily with managed care, but now that's done so what's next?

CONAN: Julie, I'm so glad you're here to answer.

ROVNER: If I knew that, I probably wouldn't be sitting here. There are certainly--I mean, the caller's right, there's a lot of blame to go around. There's some overuse of services, there's a lot of money that's spent on administering however many thousands of different health plans that there are in the United States and by some estimates it's as much as 25 percent, I think. It's usually--the more common number's about 15 percent that's spent on administration. And there are--there's a lot of people who make their living off of the health-care system. Which would make it hard, even if politically one thought that the government could do a better job, you would be putting a lot of people out of work. That was the discussion in the early '90s about if--even if you had a government mandate, what would happen to all of these insurance companies and all the people who work for them?

CONAN: But Al's broader point, is there--I mean, has managed care choked all of the efficiencies out of the system that are there, at least to a large degree? Has--is there some way to get, you know, more for less? Or are we at the point where the system's beginning to break down?

ROVNER: Well, interesting, we never really got to managed care with managed care. What we mostly got to was managed discount. We got companies with a few exceptions of some of the really old line managed care companies like Kaiser. Most of these companies were not actually managing the care that people get, and, in fact, that is considered one of the magic bullets. We don't call it managed care anymore now. We call it disease management, that if people with chronic diseases, the very sick people who consume the vast majority of health-care resources are--who have diabetes, who have congestive heart failure, if they're better cared for, better monitored, they'll do better and they'll cost less. And that's the current magic bullet that people are talking about.

CONAN: Al, thanks very much for the call.

Let's try to go to Steve, and Steve is calling from Pacifica, California.

STEVE (Caller): Yes, I'd like to know if any states have proposed funding, an insurance program like they do in Canada where they have a straight 10 percent tax and that covers everybody in the province? And I'll take my answer off the air.

CONAN: Thanks for the call, Steve. The so-called single payer program, as they have in Canada.

ROVNER: Well, Vermont tried it in the early '90s. The big problem with it is there's a federal bar to it. You would have to get a waiver of the so-called ERISA law which governs employee benefits, employer benefits so a state could try it but they couldn't reach those employer benefits because those are governed by the federal government not by the states.

CONAN: So there are legislative barriers for any state to try this?

ROVNER: Yes. Very much so. As I said, in the early '90s when, you know, just parallel to the Clinton debate, there was--there were several states that wanted to try this and none of them could really get anywhere in terms of getting beyond that ERISA barrier.

CONAN: All right, thanks for that, and (800) 989-8255. If you'd like to join us, (800) 989-TALK. And our e-mail address is totn@npr.org. And let's go to John. John's calling us from Philadelphia.

JOHN (Caller): Hi. I have a question about buying in--possibly buying into Medicaid. I--my wife and I are self-employed and we're unable to afford health insurance and I was wondering--we can't qualify for Medicaid because in order to do that you have to have practically nothing. So I was wondering if--what about the concept of being able to buy into it, being able to pay a premium every month to get into the system?

CONAN: Julie?

ROVNER: Well, there are already sort of little ways that one can do that, it's mostly for kids, and, in fact, the Illinois plan does--I don't--it doesn't actually let you buy into Medicaid, but it lets you buy into their SCHIP program. I believe that's how it works. So there are--and there were--there was a bill that passed I think in 2000 about how--letting some people with disabilities who then go to work and make too much buy into Medicaid but generally if you're not a child and you're not disabled, right now you can't.

JOHN: Yeah, I know.

CONAN: Well, good luck, John.

JOHN: Thank you.

CONAN: We're going to be talking more in detail about some of these plans when we come back from a short break, beginning with the Massachusets proposal. I'm Neal Conan. You're listening to TALK OF THE NATION from NPR News.

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CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington. We're talking today about health-care reform in the states. What's happening where you live? Do you want to be able to choose your health-care plan or would you prefer that states guarantee you a group of specific benefits? (800) 989-8255. (800) 989-TALK. Our e-mail address is totn@npr.org.

Little bit later in the program we'll hear from Illinois Governor Rod Blagojevich. Still with us here in Studio 3A is NPR's health policy correspondent Julie Rovner, and joining us now on the line is Alan Levine, the--I'm sorry, got the wrong piece of paper in front of me. Joining me now on the line is Tim Murphy. Tim Murphy is secretary of Health and Human Services for the state of Massachusetts where, under Republican Governor Mitt Romney, the state has adopted a plan that would require the uninsured to purchase health coverage, and, Timothy Murphy, nice of you to join us.

Secretary TIMOTHY MURPHY (Department of Health and Human Services, Massachusetts): Thank you, Neal. Let me just correct you a little bit. We haven't adopted the plan yet. The plan is actually in our conference committee and our Legislatures are--both chambers are hashing that out as we speak.

CONAN: Well, let me ask you a question, then, and thanks for the correction. How do you make somebody buy health insurance?

Sec. MURPHY: Well, under the governor's plan, and actually the idea was picked up by the House of Representatives in our state, you would use the tax system. And what we would essentially do in Massachusetts is that a couple of boxes on our tax form, which would ask you who is your health insurance provider and what is your policy number, and then we would use just the relational database to cross-check that and essentially people always ask--the next question is, well, `How do you enforce that?' more importantly.

CONAN: Yeah.

Sec. MURPHY: And, again, through the tax system, what we would do under the governor's plan, is to suggest to folks who don't have health insurance or don't have the ability to pay for it themselves is that they would lose their personal tax exemption so if you're a single person in Massachusetts, that's a little bit more than $3,300 a year; married couple, that would be a little bit more than $6,600 a year. And you would lose that exemption, and in addition to that if you were to receive a tax refund from the commonwealth, we would withhold that tax refund, up to $10,000, and put that into a medical savings account on your behalf.

CONAN: So that sounds persuasive.

Sec. MURPHY: Well, I think that it's a--you know, I think when you raise the level of the importance of this issue and say that you're going to do it through a tax code, we think that the compliance issue becomes a lot more robust.

CONAN: Now some people worry about a backlash. Healthy people in their 20s, for example, are often not so interested in paying for health-care coverage.

Sec. MURPHY: That is exactly right. In Massachusetts today we have a little bit more than 500,000 individuals that are uninsured and what's interesting through all the work that we've done over the past couple of years to come up with this proposal is you start to get an understanding of who is uninsured and how much money they make and we have about 40 percent of the individuals who are uninsured in Massachusetts who actually earn more than the 300 percent of the federal poverty level. That's a single person making more than $29,000 a year. And what we inevitably find is that a number of those folks tend to be younger, single and they tend to skew male. I think what we're suggesting here though is is that while in the main, as you know, that that's a very healthy group, you do still run the risk of having a health expenditure and while the person of that group who might use that amount of money is just one person over a large group of individuals, that in the end is what insurance is about. It's about guarding against bad financial outcomes and having the ability to pay for your health care. And it's about a system of larger risk.

CONAN: So fewer of those people will develop long-term cancer problems but a fair number will be in car accidents, that sort of thing.

Sec. MURPHY: That's correct.

CONAN: All right. Another group--some people are concerned that in fact employers who provide most of the health-care coverage now in Massachusetts will no longer have an incentive to do so. Say, `Hey, the state's got a program. We can drop it.'

Sec. MURPHY: Yeah, fair point, and, you know, obviously, one that we're very concerned about, that whole idea of kind of private-market crowd-out, either into government programs or for folks that aren't qualified for government programs just having employers say, `You can't be in--we're not going to provide insurance anymore.' In the governor's plan, we went to great lengths to guard against that. We recognize that in our state the employers are still the backbone of providing insurance. So, you know, how do we do that? Well, what we did in Massachusetts in our legislation is that we basically made it unattractive for businesses who are looking to, if you will, not offer insurance to those individuals who might qualify for a new government subsidy and to say, `If you're not going to offer them insurance, you can't offer anybody else in your company insurance.' And...

CONAN: Including the CEO and the president.

Sec. MURPHY: Exactly.

CONAN: OK.

Sec. MURPHY: Exactly. So in a tight labor market, we feel that to be unattractive where benefits are an important part of attracting quality employees.

CONAN: And I assume that there's some--you know, if they try some dodge, if they say, `And you get an annual bonus of, you know, $50,000 a year,' that you would picket that out as a health coverage bonus, something?

Sec. MURPHY: Yes. Well, I--what the governor always says is that, you know, we might not get every trick right the first time...

CONAN: Aha.

Sec. MURPHY: ...but we'll have to be monomaniacal to make sure that we're not seeing anybody, if you will, do, quote-unquote, "pseudo-dumping" into, you know, making up subsidiaries for lower-wage employers vs. higher-wage employees. We would look to kind of crack down on those type of practices.

CONAN: So do you expect that under this policy, at least residents of the state of--taxpayers of the state of Massachusetts will all be covered?

Sec. MURPHY: That is the goal. The goal is to say if--so long, the whole conversation has been about, you know, pay or play and forcing employers. And at the end of the day, what you end up missing are all those individuals that aren't part of the employer system or who are working part-time for employers. And so what we came up with was to say, `Well, what we should do is really focus on the individual. And what you see--and this is through the econometric modeling that we did and then other independent groups have done--that when you start to talk about it from an individual responsibility perspective, all of a sudden the take-up rate, we expect, would be very, very high. I mean, you'll never get to a hundred percent, but you'll get pretty close.

CONAN: Timothy Murphy, appreciate your time today. Thanks very much.

Sec. MURPHY: Thanks, Neal.

CONAN: Tim Murphy is secretary of Health and Human Services for the state of Massachusetts, and he joined us by phone from Boston.

And now let's go to Florida, where Governor Jeb Bush is poised to sign a law that would make the state health care system operate more like a private HMO, at least in places. Alan Levine is the secretary of the Florida Agency for Health Care Administration and chief architect of the governor's plan.

And he joins us now by phone from Snowmass, Colorado, where I assume you're vacation. We appreciate you taking the time to speak with us today.

Mr. ALAN LEVINE (Secretary, Florida Agency for Health Care Administration): Well, it's a pleasure to be with you. We try to make as much room in Florida as we can.

CONAN: But skiing is not a pleasure you cannot readily offer.

Mr. LEVINE: Right. Hey, I want to correct one thing. The governor signed the law last week. It was the waiver that the federal government approved. And we want to comment President Bush and Secretary Leavitt. I think they recognized that if we're going to change the system, we have to do it at the state level and allow the states to be innovative with their own populations.

Florida's got a very unique population, 2.2 million people on our Medicaid system. I believe it's the fourth-largest in the nation. And what's been troubling for us is we've looked--from the day Governor Bush took office, the program has grown $9 billion in the last six years. It's grown since 2001 32 percent per person and--while the population growth in Medicaid's only been about 18 percent. So clearly the utilization side of the system has contributed to the growth, and we think that, you know, the bottom line is if you're going to spend more money, that's fine, but we want to see better outcomes.

CONAN: And how would this program change things. As I understand it, the people who receive Medicaid would get instead vouchers.

Mr. LEVINE: Well, they wouldn't get vouchers, per se. What they would have is the choice of different plans. You know, different Medicaid plans have already stepped up and said they want to compete in the marketplace. And we're not just talking about HMOs. We're talking about hospital-based provider service networks. For example, the Shands HealthCare system is putting a program together up in Jacksonville. We have a minority physician network that's forming specifically targeted towards minority population. And that's the kind of innovation we want to see in the marketplace because the population of Medicaid is so--there's such variation in that population with so many different conditions.

But that--the bottom line is if you're going to change the system, you have to change the incentives in the system. The current system we have right now does not have one single incentive for prevention, for early identification of chronic conditions. It's straightforward a fee-for-service system where the only time someone gets paid is once somebody is sick or if they're in the emergency department. And as I heard one of your callers earlier--as you've reduced reimbursement rates to hospitals and doctors, you see fewer people willing to take the population, and that leads to more people going to the emergency department.

And we've seen network--we've seen models where, you know, well-child checkups are as low as 17 percent, but then once these managed care models are put into place, you see well-child checkup compliance going up to 85, 90 percent. And that's what we're trying to get at is early identification of these chronic conditions so they can be better managed.

CONAN: So how would this work? I mean, would people be--one of the complaints, for example, you're hearing even now about the new Medicare prescription drug benefit is how confusing it all is, and you're going to be asking people, some of whom I guess suffer from dementia, to be making choices about health programs.

Mr. LEVINE: Well, actually that's a very good point, and one of the things we've invested very heavily in is the choice counseling component of Medicaid reform. We're going to be putting out a request for proposals for people to come in and provide the choice counseling functions. That's a very important component of this, where once someone is determined eligible for Medicaid, they would have a counselor sit down with them and explain to them what their options are. If it's somebody that has HIV or AIDS, there may be a plan--in fact, we're confident a plan is forming specifically for the HIV/AIDS population, and that may be the plan they want to choose. And so the critical component is to lay out for the consumer: What's the consumer satisfaction with each of these plans, what's the percentage of children, for example, who are getting their vaccinations, their well-child checkups, their dental exams? And let the consumer see which plans are performing well.

And that kind of transparency is what's going to ultimately change health care. You know, we can keep talking around the provider-centric model where all we debate every year is how much providers get paid. Instead, we'd rather have--turn on the lights and have a transparent system where you know these networks are going to compete based on their outcomes. And if they do a good job, they're going to succeed financially, and that's going to be the model going forward.

CONAN: But underlying it, would recipients be guaranteed certain services?

Mr. LEVINE: Absolutely. The system--what we're moving towards is a system where a plan can vary the amount, duration and scope of the benefits based on the needs of the population. However, the starting point for all benefits is the services that are currently being used. When a plan proposes to alter their benefit package, the state, our agency, will be the final determiner as to whether or not they'll be able to alter those benefits. And the state maintains firm control over the benefit package, and the reason that's important--for example, if you have a chronically ill child, the current Medicaid state plan doesn't pay for things like respite services for family members, which discourages family members from taking care of their family member that's sick, because they don't get paid for it. Under a state--under our reform proposal, for example, if you're a plan that takes care of chronically ill children, you can offer respite services and you can even pay family members to stay home and take care of these children.

And frankly, we're not alone in this. If you go read the pediatric journals from the last summer of 2004, the studies were very clear that managed-care models worked better for chronically ill populations, particularly children, than does the fee-for-service system. I mean, we've looked very hard at all of the different independent models and the studies that are out there that determine really what's the best model for Florida, and this is one we've chosen. So...

CONAN: Let's get--see if we can get a listener on the line with a question. Again, our number, if you'd like to join us, is (800) 989-8255. This is Wendy. Wendy's calling us from Bay City in Oregon.

WENDY (Caller): Yes. My question or comment is, with requiring people to have insurance, isn't the government just invading one more step into people's private lives? And then telling corporations that they can or cannot supply insurance to certain people or requiring it to be a blanket coverage--aren't we just asking for yet more control over government?

CONAN: Julie Rovner, I'm going to put that to you, since that was a question, I guess, about the Massachusetts program, which is, of course, not being implemented in Florida, where Mr. Levine is from.

ROVNER: No, that's true, there are other complaint--I mean, the caller's absolutely right. This has been in the--just as when President Clinton was putting together his plan, a number of Republicans at the national level came forward with this individual mandate proposal. The late Senator John Chafee and, actually, the current chairman of the Ways and Means Committee, Bill Thomas, each introduced a bill. And I think they ultimately backed off because there were a lot of concerns about, you know, how Republicans were going to react to this idea of the government mandating that people have insurance. Now as both of them said at the time, and sometimes will say now, we mandate that people have insurance in order to have a driver's license. So, you know, if you're--it's--that driving is a privilege and you have to have insurance, and it--again, it's back to the shared risks, like the gentleman from Massachusetts was talking about. But, indeed, nobody has ever quite gotten brave enough to try to get over that hurdle.

WENDY: Mm-hmm.

CONAN: Does that cause you concern, Wendy?

WENDY: I think so, and you make a point with requiring a driver's insurance. But at the same time, if I have my own private insurance, why should I be required to supply that information to anybody, I think, is the question, is that hurdle that needs to be jumped for that to be a successful and not invasive program.

CONAN: Interesting question, Wendy. Thanks very much. Appreciate it.

WENDY: Thank you.

CONAN: We're talking today about health-care coverage and the states. You're listening to TALK OF THE NATION from NPR News.

And as we--Mr. Levine, as we look ahead to what's going on in Florida, this is, as I understand it, being addressed first as a pilot program in some parts of the state.

Mr. LEVINE: That's correct. We're starting it in Duval County, which is Jacksonville, and down in Broward County. Combined, it's about a 200,000 population, which is, you know, substantial. In fact, today we announced that we've contracted with the University of Florida to conduct an independent evaluation of reform, and, you know, as we see success, we expect that the Legislature will want to see this program expanded very rapidly.

CONAN: Alan Levine, thanks very much for being with us.

Mr. LEVINE: Pleasure to be with you. Thank you.

CONAN: Alan Levine, secretary of the Florida Agency for Health Care Administration, and he joined us by phone from his vacation in Colorado, for which we are very thankful.

Let's see if we can get another caller on the line, and this would be Carl, Carl calling us from Milford, Michigan.

CARL (Caller): Hi, Neal. Good show. I appreciate your guests.

CONAN: Thanks.

CARL: Yes. Well, this really has to do with a comment, more or less, but recently the Medicaid situation--not Medicare, but Medicaid--we have some--a relative that was able to get into a particular nursing home, whereas someone else who saved up all their life and is a friend of mine and had a home to sell and things of that nature was not able to get in. And it turns out that they're somewhat--although we all want to retire well and we don't know how much we're going to have to spend on our health care as we get older vs. taking vacations and doing things we want to do in retirement, there's a disincentive that's been cast upon us by the government to save money, assuming that some of our retirement savings will go to nursing home care and those kinds of things, because you have to spend down your assets so much that people are right next to somebody who might have saved up hundreds of thousands of dollars, if not millions, and someone else who's on Medicare--or, I'm sorry, Medicaid--what's the incentive to save up, you know, extra money? I mean, why not just calculate what you might need and make sure that it's spent down so that the state can take care of you? And if a person has that ...(unintelligible).

CONAN: Make sure that you don't miscalculate by a year or two, but anyway...

CARL: Right.

CONAN: ...the broader point, Julie Rovner, is he's right. I mean, there seem to be contradictory messages.

ROVNER: There are. These are rife throughout the health-care system. And again, the bill that the Senate is considering now will address that, although in the opposite way it would make it more difficult for people who have assets to get onto Medicaid by spending down. In fact, their consumer advocates are worried that it's punitive in that it makes you go back--for instance, take an example--a grandmother who helps a granddaughter get through college, and then two years later the grandmother has a stroke, needs long-term care in a nursing home. Now the grandmother has given that money to the granddaughter long since. It's not like she can get it back from the college, but she doesn't have any money to pay for the nursing home care. But under these new rules, if this bill is to pass, she would be penalized for having had that money and given it to the granddaughter. So this is a disincentive both ways, and long-term care is just a huge, difficult issue that nobody wants to address because the dollar signs that go with it are so enormous. But as, you know, the baby boomers are turning 60, it will not be long before we're going to have to address that.

CONAN: Carl, thanks for the question.

CARL: Thank you.

CONAN: When we come back from a short break, we're going to be talking with Illinois Governor Rod Blagojevich, and in his state they've initiated a program to cover every child under the age of 18, another approach that states are taking as the federal government sits on the sidelines, largely, of the health-care debate. (800) 989-8255 if you'd like to join us. E-mail us: totn@npr.org. It's TALK OF THE NATION from NPR News.

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CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.

And here are the headlines from some of the other stories we're following here today at NPR News. In Iraq Sunni Arabs charged that last week's parliamentary elections were fraudulent, especially in Baghdad province. They say if irregularities are not corrected, new balloting must be held in Iraq's largest electoral district. And subways and buses in New York City shut down this morning as transit workers walked off the job, stranding millions of daily riders. Mayor Michael Bloomberg calls the strike devastating for some businesses. It's the first citywide transit strike since 1980. Details on those stories and, of course, much more later today on "All Things Considered" from NPR News.

Tomorrow on TALK OF THE NATION, as China deals with rapid economic growth, it must also deal with toxic spills, air pollution and environmental degradation. That's protecting the environment in China, tomorrow on TALK OF THE NATION.

And right now we're going to continue our conversation on health care and covering the uninsured with a special emphasis on programs being initiated by the states. Our guest is Julie Rovner, who's NPR's health policy correspondent. And joining us now is the Democratic governor of Illinois, Rod Blagojevich. Last month he signed into law a program called ALLKids, which guarantees health coverage for every child in the state under the age of 18. And Governor Blagojevich joins us by phone today from Chicago.

And nice to have you on TALK OF THE NATION, Governor.

Governor ROD BLAGOJEVICH (Democrat, Illinois): Well, thanks for having me, Neal.

CONAN: How many kids will get health care that didn't have it before?

Gov. BLAGOJEVICH: Well, currently in Illinois, there are 253,000 kids who don't have health care, don't have health insurance. And of that, 70 percent of them come from families that earn between $40,000 and $80,000 a year. So most of the kids that are falling through the cracks in Illinois--and this is true nationally as well--are kids whose parents work. And that's one of the great ironies here: In America, land of opportunity, you're supposed to be able to be rewarded for your work, not penalized, and you've got a vast number of people in the middle class who do what you're supposed to do: Get up every day, go to work and pay their taxes. They follow the rules. But through no fault of their own, they're either making too much money to be available for public assistance, but not nearly enough to afford high health-care premiums for their children. And we found a way to be able to close that gap, and now in Illinois every single child will have access to comprehensive health care; comprehensive meaning the same kind of health care that the governor's children get.

CONAN: And you found a way. What is the way? How much is it going to cost?

Gov. BLAGOJEVICH: Well, the way is principally threefold. Number one, over the previous three years, in our budgets, we've fought very hard to achieve more investments in health care through the KidCare program and now through our ALLKids program. The second way--and this is the principal way to pay for the program--75 percent of the program will be paid for by the participating families paying premiums, but the premiums they would pay would be affordable. You know, they'll be premiums based on a sliding scale of what a family's income is. So, for example, a family of four earning $40,000 a year would pay $40 a month in premiums and a $10 co-pay. If you're earning $60,000 to $80,000 a year, your premium would go up to $70 a month and a $15 co-pay. So it's an affordable program, but it's not free, and 75 percent of the program is paid for by the participating families making contributions.

The last part is we found a way to save taxpayers nearly $60 million in the first year and up to $105 million in the fifth year by having what is known as a primary care case manager and implementing a program called disease management in our Medicaid programs here in Illinois, and we can save taxpayers a lot of money. That money will then be used to pay for the ALLKids insurance and provide health care to all the children.

CONAN: Mm-hmm. Now as you look at this policy, doesn't it sort of require the state to generate an entire administrative apparatus to control all of this?

Gov. BLAGOJEVICH: Well, the challenge for us, now that we've passed the law, is to enroll children, and so there's a very aggressive effort on behalf of my administration to get the word out to families that we have found a way where they can have affordable health care for their children. And so there's an infrastructure that already exists because of what is known as the KidCare program, which is the Illinois version of child health care that every state has. In 1997, the United States Congress passed the State Children's Health Insurance Plan, and under that program every state has a version of our KidCare program. So we have an infrastructure already in place.

What we did with the ALLKids program is basically we simply took the infrastructure in the current program and we extended it to every child. And, again, 75 percent of it is paid for by the families that are working to participate, paying health insurance premiums, but they would pay premiums they can afford rather than premiums that are unattainable for them to be able to afford and, therefore, provide health care for their kids.

CONAN: I wanted to ask you also a philosophical question. I mean, you've expanded defined benefits to a whole class of people. Do you see this as the first step in saying that eventually we want to move to have similar programs of defined benefits for, well, people over the age of 18, maybe everybody?

Gov. BLAGOJEVICH: Well, I believe health care is a fundamental right. I believe in the Declaration of Independence, when our Founding Fathers promised a country that was built on the inalienable right to pursue happiness, that part of that means that your children should be able to visit a doctor if they need to visit a doctor, and that that's a right that everyone has. It also applies to grown-ups, too. But we've got to be practical. We're not in a position where we can provide health care to everyone all at once. In fact, unfortunately, our country's going in the wrong direction. More and more people are without health care today than before.

In Illinois, I think we're frankly swimming against the current of what's been the national trend, certainly the trend of the Bush administration, and we felt that we found a commonsense way to be able to provide health care to all the children that's affordable, that has families participate so it's not a free program. It's not all government. It's a combination of government and families and a personal responsibility component. You know, you're a stakeholder. You've got to be able to pay something into this program to provide health care for your kids. But it's a plan that rewards and recognizes the work that people do who go to work and are doing what you're supposed to do, but ought to be able to make sure their child can go to the doctor when he or she needs to go to the doctor.

And so beginning with kids here in Illinois, if I have a voice in this beyond this year and next year, yes, I'd like to see us expand this to others as well. Obviously, it's a function of being able to find the resources to make that happen. But when you're a governor of a state like Illinois and you're dealing with a $54 billion budget, that's a lot of money. And when you're the governor, you have a real voice in where all that money goes, and I just believe when you compare providing health care to children to some of the other things that we spend money on in state government, it's a very easy priority to be for child health care.

CONAN: Governor Blagojevich, thank you so much for taking the time to speak with us today. Appreciate it.

Gov. BLAGOJEVICH: Appreciate you talking to me. Happy holidays.

CONAN: And you, too.

Rod Blagojevich, governor of Illinois, joined us by phone from Chicago.

Julie Rovner, as we look at these policies--and, again, defined benefits in Illinois, at least for kids, defined contributions in Florida; all shiny and new. They all look wonderful. Their flaws may become more evident as we move on.

ROVNER: Indeed. I mean, I think one thing that's important to distinguish about the Florida program is that we've had managed care in Medicaid for a long time, and the secretary was correct when he said there's a lot of evidence that people actually do well, particularly people with chronic illness in Medicaid do well in managed care--managed-care plans that actually manage care. The difference in the Florida plan is that it--they're going to let the managed-care plans determine what benefits are offered, and that is not the case now. Right now there's a federal benefit package. There are minimum benefits. The states have a lot of leeway about things they want to offer that are optional or how much, but generally there's a floor below which you can't fall. The--Florida has now gotten permission from the federal government to potentially go below that floor.

CONAN: Julie Rovner, NPR's health policy correspondent, joined us here in Studio 3A, and a subject to which I'm sure we will return again in future programs.

Thanks, Julie.

ROVNER: You're welcome.

CONAN: When we come back, intelligent design in Pennsylvania.

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