Health Affairs

Back in 2004, Henry Aaron and I authored an article in Health Affairs arguing that granting states sweeping powers to experiment with health reform – within federal guidelines – would be the best way of achieving a bipartisan breakthrough at a time when health reform was at a virtual standstill.  In the Spring of 2008 we called again for that approach, adding that even if there were to be national action a true federalist component would improve reform over time.

So how do we view the President’s recent proposal, in effect the Wyden-Brown bill, to advance the date of a provision in the Affordable Care Act (ACA) that would give states some latitude to “opt out” of important parts of the ACA in certain circumstance?  It turns out that our reactions, seen in this and Henry’s accompanying post, differ quite a bit.

I do have what might be called practical objections to the Obama-Wyden-Brown form of federalism, as I noted recently in a Perspective in the New England Journal of Medicine. One is that it continues to lock state initiatives into a very costly level of benefits. Another is that it precludes states from including Medicaid, SCHIP and other program in their proposals for modifying the ACA.  This would limit the possibilities for states to chart a radically different path, whether they seek a market-based system or single payer.  Moreover, advancing the date of the ACA “federalism” provision from 2017 to 2014 is still not soon enough to encourage states to invest in bold approaches — states need to be able to apply right now for such waivers in order to plan.

But at the heart of our different reactions are two deeper factors.  One is a plain fact – a national bill has passed since we wrote in Health Affairs.  The other is that there is a basic difference in our visions of the best process to achieve good and continuous health reform.

Take the ACA itself.  Henry and I differ on whether it is a good enough foundation for the permanent reform of our health system.  Henry believes it is.  I believe the ACA is a major mistake on multiple fronts and that it will set off a series of regulatory and spending battles that will ultimately force this or a future Congress to repeal or drastically re-engineer it.

So from my perspective, the President’s proposal or Wyden-Brown would need to permit states truly to opt out of the ACA.  I’d agree with the proviso that the state’s alternative proposal must plausibly meet the vision of achieving adequate, affordable health care for all Americans, and that a state must be held to account for achieving its goals.  But the President’s view of state initiative fails that test.  Not only would state flexibility be severely limited, but the arbiter of what states could try would be the Secretary of HHS.  In both of our articles, Henry and I argued that to get broad bipartisan buy-in to the idea of allowing states to try bold initiatives, approval would have to come from an outside commission or other similar body rather than the Secretary.  Otherwise one side would resist flexibility, believing that its ideas would be stymied, and state flexibility would just become a device to advance faster down the other ideological road.

In my view, Republicans today have good reason to be very skeptical that an Obama Administration would take an even-handed view to proposals from the right, left and center.  Only an alternative approval process, with far greater freedom to opt out of the core elements of the ACA, will assuage their concerns.

On a deeper level, though, Henry and I have always differed on where the main engine of federalism should reside in the case of health care reform.  We both agree that there must be a combination of federal and state action.  But to achieve structural, innovative and continuous reform in a huge and complex field like health care, I believe the driving force must be bottom-up experimentation in both the private and public sectors.  That leads me towards private markets and state initiative. My friend Henry, by contrast, retains his (mistaken!) confidence in the federal government and national leadership.

This entry was posted on Friday, March 11th, 2011 at 10:23 am and is filed under All Categories, Health Reform, Policy, Politics, States. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.