Health Care Reform: Implications of Geographic Boundaries for Proposed Alliances

Pursuant to a congressional request, GAO discussed proposed health care reform legislation, focusing on the potential effects of health alliance boundaries. GAO noted that: (1) each legislative proposal gives states the responsibility for establishing alliance boundaries; (2) all of the bills prohibit states from subdividing metropolitan statistical areas (MSA) and permit health plans to operate across state lines or alliance boundaries; (3) the bills vary on the required size of a minimum population base, how many alliances can operate in one area, and whether alliances can cross state lines; (4) changes in MSA definitions could affect alliance boundaries; (5) two states have established entities similar to health alliances and one state's alliance boundaries generally conform to the proposed legislative requirements; (6) the establishment of alliance boundaries will affect the provision of care, particularly where MSA cross state lines; (7) the segregation of high-risk groups and rural areas will depend on the number of alliances in each state and whether states require plans to provide care throughout a service area; and (8) each bill will require some people to pay more for insurance than they do now, and these payments will indirectly subsidize those who will pay less under the alliances.