States go it alone in health care reform

California and New York are both trying to cut their states' health care costs, and their stories provide a cautionary tale in the national debate.

In California, Governor Arnold Schwarzenegger tried to push through a grand compromise on reform, but it was finally killed by both parties in the legislature.

The Governator then signed a series of cuts to Medi-Cal, the state's version of Medicaid, leading to reimbursements so low most doctors and hospitals no longer accept such patients. The media is now starting to hammer him.

New York, by contrast, is trying a two-prong attack based on what it can control, the state Medicaid contract and the time of the state's lawyers.

Gov. Eliot Spitzer claims he can save $1 billion on Medicaid, mainly through contracts for preventive care. He also wants to raise taxes on health plans to pay for preventive care.

Meanwhile Attorney General Andrew Cuomo is investigating health insurers, arguing that the "reasonable and customary" charges on which reimbursement is based may be rigged on behalf of insurers.

These two states aren't alone in trying macro and mini approaches to reform.  Illinois and Pennsylvania tried, and failed, to enact large-scale health reform. Maryland is among the states which have successfully sued providers.

Massachusetts, which passed a mega-reform a few years ago, is now seeing the end of its savings, with premiums due to rise 5% this year.

No government program delivers any more than a brief respite from health care inflation. This is the stark reality, all around the world.

It's a reality the U.S. government will have to confront once this year's elections are over. Based on the history in the states the result will not be pretty.