Opt Out Federalism

Ezra Klein writes:

If the Affordable Care Act isn't as stable as it could be, every state will want the power to modify the plan so it'll work better for them. Some will take advantage of that power by adding an individual mandate. Some will try out various conservative theories of how best to structure the bill. Some, like Vermont, will try to push towards single payer. And those that do nothing will act as a control group to a grand health-care policy experiment -- though not, I think, to the benefit of their residents. [. . .] the practical effect will be of making the legislation very similar to the federalist ideas I mentioned earlier in the week.

There is political merit in this approach. Consider this from The Hill:

Senate Republican leaders will push a proposal sponsored by Sens. Lindsey Graham (R-S.C.) and John Barrasso (R-Wyo.) to allow states to opt out of federal requirements to add millions of beneficiaries to Medicaid rolls.

Experts project the law could add 15 million to 23 million people to Medicaid, putting substantial pressure on state budgets. “Medicaid is a real weak link” to this law, said Graham. “You’re going to have Democrat and Republican governors complaining about Medicaid expansion under the bill and how it will affect their states.

“The next debate is whether states should have a say about waivers for states,” Graham said.

This is a pretty ridiculous idea. If in fact the concern is the cost of Medicaid expansion, states can opt out of that already. Apparently the real issues are elsewhere. Via Joan McCarter, Sam Stein explains:

What sets Graham and Barrasso apart is that under their approach, states wouldn't have to institute their own sets of reforms before leaving the federal system. With the current law or the Wyden-Brown alternative, the Health and Human Services secretary could grant a waiver....

[W]hile Graham might argue that the pure opt-out clause is the equivalent of repealing and replacing Obama's bill, the likely end result of his legislation would that a good chunk of the country simply fails to push any additional reform.

"It looks like what they are introducing is a straight-up opt-out which would allow states to gut the law without implementing anything in its place," a top Democratic Senate aide said.

It seems unimaginable that the Obama Administration would agree to this. But perhaps they would agree to the Wyden-Brown plan:

Sens. Ron Wyden (D-Ore.) and Scott Brown (R-Mass.) introduced the “Empowering States to Innovate Act.” The legislation would allow states to develop their own health-care reform proposals that would preempt the federal government’s effort. If a state can think of a plan that covers as many people, with as comprehensive insurance, at as low a cost, without adding to the deficit, the state can get the money the federal government would’ve given it for health-care reform but be freed from the individual mandate, the exchanges, the insurance requirements, the subsidy scheme and pretty much everything else in the bill.

I think how Medicaid fits into this would have to be rethought. Federalizing Medicaid would be a good way to address the concerns of states about costs and "clear the brush," so to speak regarding the "reform" aspects of the Affordable Care Act (mandate, exchanges, regulations, etc.)

Seniors and the less well off could have single payer federal public insurance options and then the states, while meeting the objectives of the Affordable Care Act, could go their own way.

This seems to me to be the type of solution that the Obama Administration would find very appealing and which Republicans could claim as a victory over "ObamaCare."

This approach shows political promise in my view.

Speaking for me only

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  • Display: Sort:
    Wasn't Medicaid federalized and then (none / 0) (#1)
    by Militarytracy on Thu Feb 03, 2011 at 11:57:40 AM EST
    Bush II defederalized it?  I can never remember how all that went down.  oculus remembers though, she is always straightening me out on that.

    No (none / 0) (#2)
    by Big Tent Democrat on Thu Feb 03, 2011 at 11:59:22 AM EST
    Medicaid has always been a block grant program that states can opt out of.

    like public schools? (none / 0) (#14)
    by diogenes on Fri Feb 04, 2011 at 06:27:11 PM EST
    States still pay their full income tax but don't get the 50% match; thus, other states get more money.  Your medicaid opt-out idea for states is like telling people that they are of course free to "opt out" of public schools--but that they still have to pay school taxes to support them.

    Here in TN (none / 0) (#3)
    by me only on Thu Feb 03, 2011 at 12:11:31 PM EST
    the recent Democratic Governor had to cut TNCare (our version of Medicaid) dramatically.

    Had to? (none / 0) (#4)
    by Big Tent Democrat on Thu Feb 03, 2011 at 12:15:06 PM EST
    Not really. CHOSE to. Taxes can go up you know.

    Heresy. Although CA Gov. Brown (none / 0) (#5)
    by oculus on Thu Feb 03, 2011 at 12:31:54 PM EST
    is intent on keeping recent tax increases; if he can get the voters to ok the extensions.  

    The governor cannot actually (none / 0) (#6)
    by me only on Thu Feb 03, 2011 at 12:42:47 PM EST
    do that.  The legislature did not send him a bill authorizing a tax increase.  He wasn't a dictator.  

    So, I stand by the governor had to.


    I see your point (none / 0) (#7)
    by Big Tent Democrat on Thu Feb 03, 2011 at 12:50:32 PM EST
    He had to because the legislature would not fund the program.

    Fair enough.


    It is a lot more complicated than I am making (none / 0) (#8)
    by me only on Thu Feb 03, 2011 at 01:18:33 PM EST
    it out.  TNCare funding is approximately 25% of the state budget.  Bredesen eliminated about 350,000 people from the rolls (the cuts I was mentioning), but the number of people on the program today is the same as it was (1.2 million) in 2005.  Funding has risen from $6.9 billion to $8.2 billion.

    Our new Saudi Prince, er, I mean governor is faced with a $1 billion funding shortfall next year.  And it is going to get a lot worse over the next five years.  This year they have decided to limit the number of doctor visits the program will allow.

    Raising taxes in TN is a very dicey proposition.  Our state income tax (which less than 10% of the citizens are even aware of) provides very little revenue.  Any tax increases are sales taxes or sin taxes.


    RE: how is this a win? (none / 0) (#9)
    by Bornagaindem on Thu Feb 03, 2011 at 01:26:13 PM EST
    If only the seniors and the poor go on a " single payer federal public insurance option"  how is that a win? The problem with a bill that isn't single payer is that private insurance try to cover only people who never get sick and that way they make money. If the federal government is left covering all the seniors (and I understand that they already do that- except the repug rip off  called the medicare advantage system) and the poor who are among the most sick then we get a bad two tiered system that will cost way too much and be played by politicians as welfare for the lazy. Single payer only works when it includes healthy people.

    The less well off (none / 0) (#10)
    by Big Tent Democrat on Thu Feb 03, 2011 at 01:28:43 PM EST
    generally use care less frequently.

    Medicaid is not as expensive as Medicare or private insurance.

    It is a win precisely because the cost differential between public and private insurnace will be well revealed.

    Plus, more people get health care. Not an insignificant issue.


    In the US or in countries that (none / 0) (#11)
    by me only on Thu Feb 03, 2011 at 02:42:20 PM EST
    have more government spending on healthcare?

    Bernie Sanders has a better idea: (none / 0) (#12)
    by Mr Natural on Thu Feb 03, 2011 at 09:55:22 PM EST
    Fine. Then opt out of drug prohibition, too (none / 0) (#13)
    by SeeEmDee on Fri Feb 04, 2011 at 08:30:33 AM EST
    If we're going to play 'Chinese restaurant' with odious Fed laws, then it's past time for the States to stop assisting Feds with drug prohibition laws, and rollback to pre-1914 Harrison Narcotics Act levels, where States maintained control.

    Sauce for the goose, sauce for the gander...