IF YOU had to sum up the problems of American health care in two words, they would be “cost” and “coverage”. The country spends 16% of its GDP on health, around twice the average of other rich economies. Yet a sixth of the population lacks medical coverage. Most Americans receive health insurance through their employer. The government picks up the bill for the poor and elderly. But an estimated 47m people fall through the cracks—a number that is rising as premiums soar.
That so many people should be without medical coverage in the world's richest country is a disgrace. It blights the lives of the uninsured, who suffer by being unable to get access to affordable treatment at an early stage. And it casts a shadow of fear well beyond, to America's middle classes who worry about losing not just their jobs but also their health-care benefits. It is also grossly inefficient. Hospitals are forced, by law, to help anyone who arrives in the emergency room. Since those without insurance coverage usually cannot pay for that care, the bill is passed on to everyone else, driving up premiums. Higher premiums, in turn, swell the ranks of the uninsured.
Breaking that spiral would be a big step towards fixing American health care. And it is one that politicians at last seem ready to take. Not in Washington, DC, where reform is still stalled by an ideological stalemate between conservatives, who want more consumer choice, and those on the left, who think more government intervention is the answer. Instead, state governors are taking the lead (see article). This week Arnold Schwarzenegger laid out a plan for universal coverage in California, where 6.5m people, or almost 20% of the population, lack medical insurance. Massachusetts passed a similar plan last year, led by Mitt Romney, then governor and now a Republican presidential candidate. From Wisconsin to West Virginia, governors want to cut the ranks of the uninsured. Some are pushing reforms that might actually work.
The most promising idea is compulsion. Massachusetts was the first state in America to propose that every resident must have health insurance, or face a fine. Mr Schwarzenegger has proposed something similar. The logic is simple. Forcing people to buy health insurance eliminates free-riders, broadens the insurance risk pool and helps contain costs. No longer can the young and healthy gamble against needing a doctor, safe in the knowledge that they can free-load off those paying insurance if they find themselves in hospital.
Compelling people to buy insurance coverage will work only if several other conditions are met. Insurance markets need an overhaul so that it becomes easier for individuals to buy basic “bare-bones” coverage and harder for insurers to deny access to older workers or the chronically sick. Poorer people will need subsidies to pay their premiums. Above all, costs must be controlled; otherwise those subsidies will become prohibitively expensive and the government's programmes for the old and the poor will bust the federal budget.
In the ambulance together
States cannot meet these conditions alone, not least because the federal government foots far more of the health-care bill: Mr Schwarzenegger's numbers rely on $5 billion a year of new federal money. Expanding health coverage must be a joint effort, just as welfare reform in the early 1990s was pioneered by the states but largely paid for by the federal government. George Bush and the new Democratic Congress ought to loosen restrictions on how federal health-care money is spent and offer more cash to the boldest reformers. Federal reforms, in turn, should be focused on cost control, the area where the various state plans are weakest. Medicare and Medicaid ought to be leading the charge for cheaper treatments.
The federalist momentum may yet fizzle. Massachusetts is a small state, and Mr Schwarzenegger's ideas are far from being law. But after years of stalemate, a couple of ambitious governors have given America's health-care debate a jolt. They deserve help from Washington, DC.
This article appeared in the Leaders section of the print edition under the headline "Sensible medicine from the states"