In my last post, I discussed the major reforms the Legislature has undertaken in our K-12 system over the past two years. In this post, I want to talk about similar systematic reforms lawmakers have recently enacted around the delivery of health care.

It's no secret that the unsustainable growth rate of costs associated with health care is wreaking havoc across the country upon the budgets of businesses, families and governments at the local, state and federal levels. In Washington, where the state spends $12 billion to cover medical and dental care for approximately 1.2 million individuals - nearly half of whom are children from low-income families - health care inflation costs borne by the state have doubled over the past decade.

At the same time, legislators have invested in solutions that improve patient outcomes and decrease costs throughout the system. These solutions have been at the forefront of states’ efforts to reform their health care systems, and played a major role in the discussion about health care reform at the national level. As a result, our state system is well calibrated to capitalize on the significant benefits available to the states as a result of federal health reform.

In 2007, legislators approved a bill that reduces unnecessary use of emergency rooms, rewards high-quality outcomes, promotes evidence-based disease management to help patients with chronic diseases, increases the use of electronic medical records to improve treatment and reduce errors, and encourages coverage of dependent children to age 25 – with the latter provision foreshadowing coverage of dependent children to age 26 under federal health reform.

That same year we initiated one of the first health insurance exchanges in the nation –the Health Insurance Partnership (HIP) program for small employers – presaging what would become the centerpiece of federal health reform. The HIP program helps small employers get health insurance coverage at a lower employer contribution rate than in the small group market. The program started accepting coverage January 1 of this year.

Thirty to forty cents of each health care dollar spent pays for administration. In 2009, legislators addressed this single largest cost driver in our health care system by creating more uniform standards for administrative procedures. A private-public effort created efficiencies in credentialing professionals, verifying insurance eligibility and coverage, adjudicating and reimbursing claims, and prior authorization. We also passed a bill to enhance efficiency and coordination of care by improving the safe sharing of patient data among providers, including immunization records, prescriptions, laboratory results, allergies, and diagnostic imaging results.

In 2005, the Legislature established a goal to cover all kids in the state by 2010. In 2009, we reaffirmed this commitment and made sure that the 529,000 children from low income families who receive health coverage under the Apple Health for Kids program continue to receive the care they need to be healthy and well. As of 2011, we estimate that over 96 percent of all children in the state now have health coverage. And although the budget reality is grim, thus far we’ve also successfully preserved the Basic Health Plan, which provides an affordable plan for 40,000 working individuals who aren’t eligible for Medicaid and don’t make enough money for private insurance.

Why highlight our commitment to Apple Health for Kids and the Basic Health Plan as examples of reform? Two reasons.

First – even if you set aside the positive impacts to the lives of hundreds of thousands of individuals throughout our state (which include more people receiving vaccinations, and improved student performance at school through fewer days missed due to sickness) – investing in the health of Washingtonians is one of the smartest financial investments we can make as a state.

Unlike investments in education and higher education which help create growth in our economy, investments in health care help avoid a drag in our economy. The $90 per child per month the state spends in the Apple Health for Kids program and the $200 per person per month we spend in the Basic Health Plan help to avoid massive costs that the state would assume in emergency room visits and hospital stays – which cost $1190 and $41,700 each, respectively – if hundreds of thousands of Washingtonians who currently receive health care coverage were no longer able to do so. They would still get sick, and they would still get treated eventually – but in the manner most costly to their health and to the system that is paid for by all of us.

Second, these two programs will allow the state to leverage considerable federal dollars to support the health needs of Washingtonians. The Apple Health for Kids program has already qualified the state for tens of millions in additional federal Children’s Health Insurance Program dollars. And the Basic Health Plan – which served as a model for a component of federal health reform allowing states to implement their own type of “public option” – started receiving 50 percent federal matching funds in January of this year and will receive even more federal dollars in 2014 to support and expand the program as federal health reform phases in.

Considering our state’s status as a federal donor state – in which we receive 88 cents in federal funding for every dollar we send to D.C., ranking us the 38th highest recipient of federal dollars in the union – any program that helps us secure more federal dollars to support our key priorities is highly justified.

As is the case with education, reform in our health care system is an iterative process, not a heroic one. There is no single bold stroke we can make to reform the system completely and finally – which also means there is no final word to any reform effort.

Is there more work to be done to control costs in our health care system while ensuring that the health needs of Washingtonians are met? Absolutely there is – and that work should build on the considerable progress that’s already been made to address this growing problem.

Up next: our corrections system.