Should someone in Idaho or Nevada have significantly different health care coverage from someone in Massachusetts?
That, essentially, is one of the biggest questions Congress will be wrestling with as it tries to meld House and Senate bills into a single law to revamp the nation’s health care system.
The issue has not received as much publicity as controversies like abortion coverage or the insurance excise tax, but it could prove just as divisive: what role should the states play in overseeing the overhaul of the health insurance market?
The House and Senate take starkly different approaches to the question. And some policy analysts say the version that lawmakers ultimately choose could determine whether residents in some states end up with significantly better or worse coverage than people in other states.
The House bill envisions a new federal agency to oversee a national marketplace in which people could buy insurance. House leaders said this week that they would fight to keep that provision in the final legislation. But the Senate bill calls for the industry overhaul to take place on the state level, with marketplaces, or exchanges, set up in each of the 50 states.
“It cuts to the core of how we do health care,” said Peter T. Harbage, a policy analyst who is a former California state health official and has served as a Democratic adviser on health issues.
Lawmakers will need to decide whether they want a federally regulated insurance system, administered like the existing private Medicare plans, or a system in which states continue taking the lead on overseeing insurers and enforcing the rules.
Under the current system, states oversee a patchwork of laws that govern the health insurance sold to individuals and small businesses. (The federal government already plays a role overseeing the insurance provided by bigger employers, which often operate in multiple states, through the federal Employee Retirement Income Security Act, or Erisa.)
Policy analysts say consumers have benefited from the close supervision of some states, like Massachusetts, which a few years ago revamped its market so insurers were obliged to cover everyone and offer consumers a comprehensive set of benefits. California, too, is well known for its aggressive regulation of insurers on consumers’ behalf.
But many other states give insurers much more leeway in deciding whom and what they must cover, how much they can charge and even, in some cases, when they must pay claims.
Idaho, for example, is among the few states that does not routinely review many denials of insurance claims. Nevada, which also takes a laissez-faire approach, does not require insurers in its state to cover maternity care.
For that matter, Gov. Jim Gibbons of Nevada announced last week that his state would sue the federal government to prevent the health care legislation from becoming law.
Under the Senate legislation, the same state officials who now oversee the insurance market with varying degrees of intensity would be largely responsible for putting into effect and enforcing the new law — rules intended to give individuals and small businesses access to better, more affordable coverage. Besides running the insurance exchanges, the states would determine which health plans can be offered and how much in premiums the insurers can charge from year to year.
The House bill, on the other hand, would essentially put the federal government in charge of the new insurance system. It would create a new agency, the Health Choices Administration, to vet the health plans available and review any premium increases.
There are, to be sure, some fundamental similarities between the House and Senate bills. Both would set certain ground rules, like insisting that insurers cover everyone, regardless of medical status. Both would also set minimum standards for coverage and place limits on how much the price of policies could vary from individual to individual.
So, even if a plan purchased in Reno might look a lot different under the Senate bill from one bought in Boston, under either the House or Senate version the policies would probably be much more alike than they are today, said Alan Weil, the executive director of the National Academy for State Health Policy.
But if states are put in charge of enforcing the new rules, Mr. Weil predicts some states will do their best to ignore them. “It doesn’t matter if it’s in the statute,” he said. “It isn’t going to happen.”
The state-federal divide between the House and Senate could be a difficult gap to bridge. One possible compromise would be to have a federal exchange set up alongside the state exchanges.
Senator Ben Nelson, Democrat of Nebraska, is a former governor, state insurance commissioner and insurance executive who strongly favors the state approach. His support is considered critical to the passage of any health care bill.
But many House Democrats, who met in caucus Tuesday night to discuss health care, say they plan to insist on a national exchange and putting the federal government in charge.
House members who argue that the overhaul will not succeed if left up to the states include the majority whip, James E. Clyburn, Democrat of South Carolina.
“You cannot allow them to have a states-rights approach,” he said in an interview Tuesday. Mr. Clyburn said that states should be allowed to opt out of a national system only if they can demonstrate that what they are offering is essentially the same.
Some outside advocates for a health care overhaul are also pushing for a final bill that more closely resembles the House legislation. On Tuesday, Health Care for America Now, a liberal advocacy group, held a news conference about the need for active involvement by the federal government.
“The role of the federal government is to put in place a national marketplace,” said one of the speakers, Representative John Garamendi, Democrat of California and a former state insurance commissioner. He says that some states simply do not have the money or inclination to enforce the new laws.
Insurers argue that a federal layer of regulation is unnecessary, given the states’ current expertise.
State regulators, too, argue that their role is essential. “If Congress wants this to work, they have to have this state oversight,” said Sandy Praeger, the Kansas insurance commissioner and a past president of the National Association of Insurance Commissioners.
The commissioners recently wrote to lawmakers to argue against the creation of a federal agency. “This dual regulation is likely to create unnecessary cost and confusion and produce no added value,” they said.
The state commissioners also say the federal government has a poor record in protecting consumers. They cite “inadequate federal oversight and action” in overseeing the marketing of the Medicare Advantage policies — plans that private insurers offer as a federally regulated alternative to government-provided Medicare coverage.
Even some consumer advocates agree that the states should continue to serve as insurance regulators, even if the federal government sets the ground rules. “You always want the states to be the first responder,” said Jerry Flanagan, a health care advocate for Consumer Watchdog in California.
Others are more wary of the Senate legislation. Putting the states in charge of enforcing federal law “is going to be a disaster,” said Timothy S. Jost, a law professor at Washington and Lee University, who recently wrote about the issue in The New England Journal of Medicine.
One of Mr. Jost’s main concerns is that the states will not be given enough money for their new responsibilities.
“There are going to be significant enforcement costs,” he said. And while the Senate bill would provide money for the creation of the exchanges, he predicts there will be no continuing flow of federal money to help the states monitor insurers year to year, resulting in what he describes as an unfunded mandate.
Notably, even though insurers oppose a new federal agency, the industry’s main trade group, America’s Health Insurance Plans, wants a national uniformity of ground rules so that the states do not have too much leeway to interpret any new legislation.
Karen Ignagni, president of the trade group, said, “What doesn’t work now is a 50-state approach.”