The Health Care Chasm & Means-Ends Federalism

Making the rounds today among health care policy wonks is a new set of polling data from Gallup showing encouraging declines in the rate of Americans that lack health insurance. Nationwide, the uninsured rate has declined from 18% of Americans to 15.7%. Not surprisingly, states that have complied with Obamacare – by running their own health exchanges and expanding Medicaid – have seen sharper declines in their ranks of the uninsured than have intransigent states. Vox helpfully illustrates the insurance gap:


This is early empirical evidence of the health care chasm that we are likely to see: the Red State – Blue State Divide, where the force and effect of health care reform depends on your geography. I’ve written before (as have others) about how morally indefensible it is for Red State governors to refuse free federal money to expand Medicaid to cover the poor and near poor. The federal government is offering to cover 100% of the expansion costs in the near term, and at least 90% in the long term and ever after – yet Republican governors have nonetheless found it politically expedient to spurn Obamacare and leave nearly 6 million people stuck in a coverage gap.

Despite legal guarantees to the contrary, Republican officials insist that they will be left holding the bag for the costs of expanded Medicaid if Congress withdraws funds. This has been repeatedly debunked. The federal Medicaid expansion match won’t decline barring some change in the law.

The conservative resistance to the Medicaid expansion is not just hollow, but also deeply overwrought. The Medicaid expansion functions as exactly the kind of pro-state experimentation federal program that compassionate conservatism (is that still a thing?) ought to encourage.

Suppose the federal government had created a program that offered states block grants to provide universal health insurance for all people up to 138% of the federal poverty line. While providing the funding, the government would remain completely agnostic as to the means that states used to achieve full coverage, allowing for experimentation. Vermont could adopt a single-payer Medicaid system; Texas could adopt a voucherized premium-support system.

Suppose further that the federal government also set expansion of traditional Medicaid as a default fallback option in the event that a state didn’t have any novel alternative idea. Moreover, the value of the grants could have been tied to what it would have cost the states to follow the default Medicaid expansion option, with the federal government guaranteeing that it will fund at least 90% of the expanded coverage.

This hypothetical almost sounds like it could have been a conservative, states-rights federalist proposal. But it also happens to be largely how the Obamacare Medicaid expansion has worked in practice.

The Department of Health and Human Services has been highly receptive to granting waivers to accommodate alternative state proposals to expand coverage outside of traditional Medicaid. States have been able to receive Medicaid expansion funds while altering or abandoning all together the expansion of traditional Medicaid. The waivers are conditional on states covering the same number of people, at roughly the same cost, as the Medicaid expansion would have.

So far, Arkansas, Michigan, and Iowa have been granted waivers, while other states such as Pennsylvania pursue them. Arkansas received a waiver to create a “private option” system, where instead of expanding Medicaid, it used Medicaid expansion funds to purchase private insurance for people below 138% of the poverty line.

This flexibility on the Medicaid expansion is emblematic of the Obama administration’s pragmatic means-ends federalism. The Medicaid expansion is functionally a grant to the states to provide health insurance to millions of poor and vulnerable Americans. The administration has defined the end goal, yet the means of how the states get there are entirely negotiable.

Which is entirely in keeping with the Obama’s philosophy throughout his presidency. He holds liberal goals, but is pragmatic and amenable to the means that are used to get there. He’ll pursue universal health care – but is wholly willing to do it on the back of a private insurance system. He’ll seek to narrow the achievement gap across races of students – but is fine with unionless charter schools helping us along.

With free federal money and ample room for state accommodation, recalcitrant governors have no excuse to leave millions of vulnerable citizens in health insurance limbo. These individuals are “too rich” for traditional Medicaid (in Texas, this means they make 20% of the poverty line) but too poor to be eligible for health exchange subsidies. Perhaps this class of people, deprived of any benefit from health care reform, will make governors like Florida’s Rick Scott pay in reelection battles. But for now, despite Obama’s amenable federalism, our health care divide begins.


One thought on “The Health Care Chasm & Means-Ends Federalism

  1. Pingback: What would conservatives do with Medicaid? | J.DODGE blog

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