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Nationalize Medicaid (Even More!)

Shailagh Murray reports that governors range from concerned to outraged that health-care reform will include a hefty Medicaid expansion that's going to further strain their already strapped budgets. Mitigating the situation is the fact that the bill won't go into effect until 2013, by which point state budgets should be in better shape, and the federal government is shouldering the lion's share of the increase.

But I'm happy to make common cause with the governors on this one. Medicaid shouldn't be a partnership between the feds and the states. It should be all fed, all the time.

The main reason is money. Medicaid is a counter-cyclical program. When the economy gets bad, the program gets more expensive. That's obvious enough: People lose their jobs and suddenly need help affording health-care coverage. Medicaid exists to help them. The problem is, that's the exact moment when state revenues go down, because people who lose their jobs pay less in taxes. And 49 of 50 states are required to balance their budgets, so they can't deficit spend.

The precise moment when Medicaid costs more and is most needed, in other words, is also the precise moment when states are least capable of increasing their contribution. The federal government, conversely, is able to deficit-spend during recessions, and often does. The federal spending pattern makes sense for Medicaid. The state spending pattern doesn't. Give it to the feds.

By Ezra Klein  |  October 5, 2009; 2:02 PM ET
 
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Comments

What about a federalized Medicaid-for-all?

Isn't that a more accurate description of single payer?

Medicare has no cost controls, Medicaid does. Any single payer system will looks lot more like the latter rather than the former.

Doesn't poll as well, I'm sure, but it is a more accurate description.

Posted by: wisewon | October 5, 2009 2:48 PM | Report abuse

To be contrarian: Yes, current Medicaid should be all federal, with standard benefits regardless of state of residence.

But it should be part of Medicare, not a separate program, and it should be open to all - with premiums paid based on income (including no premiums for the bottom of the income range).

We need simplicity, not complexity. We need a 'commonwealth' approach, not a welfare label that will always be the target of those looking for spending cuts. Social Security has lasted, in part, because it provides for all retirees. It would be gone nearly instantly if it was targeted solely at the bottom quintiles of the income structure.

You say we can't afford it? What about oil company subsides? The cost of Iraq/Afgan? The soon to be extended home mortgage subsidies (that cost on average >$40K per household served)? The ridiculously low max tax bracket for those 1% of taxpayers that hold over 50% of the companies wealth?

Posted by: JimPortlandOR | October 5, 2009 3:04 PM | Report abuse

error above: taxpayers that hold over 50% of the companies wealth?

should be country's wealth?

Posted by: JimPortlandOR | October 5, 2009 3:06 PM | Report abuse

I agree, and it would perhaps give states more wiggle-room in constructing/improving their own government health care options for those who need it.

And along the lines of what some of the other readers wrote, this might be a good opportunity to make some reforms to Medicaid altogether.

Two of the Roosevelt Institute Campus Network's (a progressive student policy think tank) members, students from Rice University, came up with an idea to extend Medicaid coverage on a sliding scale to low-income families that earn just above their Medicaid category's income threshold, in order to remove the perverse incentive to not meet one's earning potential solely to receive medical benefits. The entire idea can be found here:
http://www.rooseveltcampusnetwork.org/policy/10-ideas-health-care

-Rory, George Washington University
Roosevelt Institute Campus Network

Posted by: RooseveltInstituteCampusNetwork | October 5, 2009 3:32 PM | Report abuse

this makes so much sense. thanks for articulating it so well. i even saw david frum is in favor of this.

Posted by: schaffermommy | October 5, 2009 6:06 PM | Report abuse

I agree. Federalize it. Main problem is how to bring the revenue stream with it. How would that be done?

Posted by: cmpnwtr | October 5, 2009 11:09 PM | Report abuse


it's sort of eery hearing this as I think medicaid was LBJ throwing the states' rights crowd a bone in the name of bipartisanship, no? I could be wrong. If we have state-level public options will we be having a debate in 20 years to 'federalize the state public plans'?

Posted by: ThomasEN | October 6, 2009 10:39 AM | Report abuse

To be fair, some creative states have taken Medicaid's "cooperative federalist" structure and run with it in creative ways. Illinois' AllKids program (despite the financial havoc it created in conjunction with Blagojevich's awful management) is a good example. Massachusetts also used its discretion over Medicaid to fill some holes in its comprehensive plan. Given the large variability in health costs, it may not actually make sense to pull state governments entirely out of the funding game.

A better solution might be a federal guarantee to provide a set percentage of Medicaid funds as necessary to achieve the program's goals. Maybe you could even add some sweeteners in there to encourage states to hit certain goals beyond program minimums (e.g. covering all kids, covering higher income groups, reducing readmissions, etc...). Right now, states are effectively penalized for trying to achieve these goals.

Posted by: NS12345 | October 6, 2009 3:49 PM | Report abuse

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