Your Health Care Freedom, for a Mess of Pottage

Posted by John LaPlante in Medicaid on Nov 17th, 2009 | no responses

When federalism is vigorously practiced–that is, when states are not merely administrative units of the central government–it provides another “check” or “balance” that our political system is known for. State political leaders can tell the national ones, “Hey, what are you doing? Stop it!”

While federalism may “get in the way” when it comes to systematic reform, that can be a good thing, much like a fire wall can keep a disaster in one part of the building from burning down the rest of the house.

But when the central government passes out money like candy, resistance from the states to bad ideas is weakened.

I thought of all this when I read in the Washington Post that people in state capital cities are “giddy” about the money that Congress is doling out to shore up Medicaid programs. (Medicaid, which pays for health care for the poor and, these days, not-so-poor, is actually not one program but 54, for each state and various territories.)

Some states are more “generous” than other states when it comes to Medicaid. They extend benefits and offer Medicaid to more and more people when they’re swimming in tax receipts. But when the receipts slow, financial trouble comes to that state. Except if, as has happened three or four times during the history of Medicaid, Congress gives states more money. And that sounds great if you’re a state official, except it only postpones the day of reckoning. For while the cash infusion may be temporary, adding more people to Medicaid dependency creates a political dynamic that makes it harder to balance the state budget down the road. Given the track record of Medicaid, it’s also not terribly good for patient health.

An official with the Council of State Governments understands the danger for state officials: “[Federal bonus money buried in the health reform bill] would force states to absorb huge new Medicaid cost loads, and they want states to look past their immediate crisis and believe it’s going to be okay. It’s a sugarcoating to help them swallow a very bitter pill.”