Laboratories of Democracy, Part 2

Experimentation in how states would move toward universal health care coverage was written into the DNA of the Affordable Care Act. The law allowed any state to petition for a waiver that would enable it to enact its own brand of reform — including versions that did not include an individual mandate to purchase coverage or penalize employers who didn’t provide it – as long as their plans met the basic criteria of the law in terms of covering most people, providing comprehensive coverage, being affordable, and not increasing the federal deficit.

President Obama yesterday offered to move up the date for states that want to pursue their own visions of reform from 2017 to 2014. Stories in today’s press billed this as an effort by the administration to assuage conservative critics who’ve filed suit against the law and governors from both political parties who fear its economic impact. Medicaid expansion accounts for about half of the newly covered people under reform. Even with the feds picking up 90 percent of the tab, many states in today’s fiscal environment are wary of any new obligations — even one where they’re only on the hook for 10 percent.

As I wrote last month, leaving states to implement reform provides Americans with a classic example of federalism in action, one that may or may not lead to a common system across the U.S. In the early part of the 20th century, states began setting up unemployment and workers compensation insurance systems. The former became a shared federal-state responsibility with common features across the U.S. The latter remained unique to each state. Ohio, for instance, has a single-payer workers compensation system and insurance companies are prohibited from selling policies in the state.

For health care, many states now under Republican control will probably move to some form of voucher system, perhaps moving Medicaid and the uninsured into individualized plans sold through exchanges that meet the lowest common denominator level of coverage allowed under the law. If they think that will be a panacea to their financial ills, I suggest they read Bob Laszewski’s “Conservative Magic Bullet” column.

The laboratories of democracy model works for all sides of the political spectrum. Let Gov. Mitch Daniels of Indiana experiment with a combined Medicaid/uninsured voucher system. Massachusetts (dare we call it Romneycare?) already has a functioning state exchange that was the model for the reform law. A single-payer system is now moving forward in Vermont. If I had to bet on which system would deliver better care at lower cost, I’d put my money on Vermont.

But what I think doesn’t matter. That’s the great thing about federalism. It allows for experimentation, and then meaningful choice and change based on real world experience. Those who would strike down the law are opposing one of the cardinal tenets and the genius of the Founding Fathers, and the president yesterday was wise to remind voters of that fact.

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect, The Washington Post and The Fiscal Times. You can read more pieces by Merrill at GoozNews, where this post first appeared.

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