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Beyond Nelson: Let’s Federalize Medicaid

December 25th, 2009, 08:12 am admin Leave a comment Go to comments

As Jed notes there’s good in the deal that Nelson got for Nebraska in the health bill–more assistance for more people who need it. Nelson says that he doesn’t consider it “a special deal for Nebraska,” and will remove it if his govenor requests it.

As a governor — and my colleague is a former governor — we fought against federal unfunded mandates. And as a senator back here, I’ve also fought against unfunded and underfunded federal mandates. And this was in fact exactly that. While we weren’t able to get in this legislation an actual opt-out or opt-in for a state-based decision, what we did get was at least a line, if you will, so that in the future other states are going to be able to come forward and say, hey, either the federal government pays for that into the future or the state will have the opportunity to decide not to continue that so that we don’t have an unfunded federal mandate.

The opt-in or opt-out of the Medicaid funding would be rather disastrous, but there’s a glimmer of a very good idea in this, detailed by Ezra.

[A]s Tom Harkin points out, it could eventually lead to good policy. “When you look at it, I thought well, God, good, it is going to be the impetus for all the states to stay at 100 percent [federal funding],” Harkin told reporters. “So he might have done all of us a favor.”

Harkin is right about this. One of the best things the bill could do would be to federalize Medicaid, and federalizing the Medicaid expansion is a good first step. Greg Anrig explains why here. That doesn’t mean it’s not galling that Nebraska got such a sweet deal. But this is the consequence of organizing our legislature around states. Nelson’s parochial payoff is a lot closer to the intent of our system than, say, Joe Lieberman’s ability to hold the bill hostage to his idiosyncratic and shifting opinions on Medicare buy-in.

This would strengthen the Medicaid program tremendously. Anrig:

Since its inception in 1965, Medicaid’s financing has been shared jointly between the feds and state governments. That arrangement has much to do with Medicaid’s huge shortcomings: wide state-to-state variations in eligibility rules and benefit levels, chronic under-funding, and limited medical options for beneficiaries. Because the program primarily covers adults and individuals with low incomes, along with nursing home residents, it has never benefited from broad political support….

Federally run insurance programs like Social Security and Medicare are vastly more efficient and effective than federal-state counterparts like Medicaid and unemployment insurance. Economies of scale, uniform national rules, and the inability of 50 state governments to each do mischief to the programs have demonstrably led to far superior results for national social insurance.

The problem that would arise, because the problem is destined to arise, is the Stupak problem. As it is now, states decide whether or not to allow abortion funding under Medicaid, with the states that allow it creating a firewall between state and federal funding. Given that abortion is immune from all those arguments for states rights, Nelson and Stupak would probably not allow that to continue.

But in terms of expanding healthcare to millions in a cost-effective way, this would be a good one.

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