Aaron and Butler agree on federalism?
The Washington Post
July 6, 2003
Four Steps to Better Health Care
By Henry J. Aaron and Stuart M. Butler
For at least 20 years, commentators have bewailed the lack of adequate health insurance among growing numbers of Americans. For an even longer time, analysts and experts have warned that health care costs were rising unsustainably. Yet no consensus has formed on what to do about these twin adversities. Conservatives propose encouraging individuals to buy private health insurance and placing more reliance on market forces. Liberals continue a struggle initiated during the New Deal to provide publicly financed health coverage. Neither has persuaded the other.
The result: a political standoff that has blocked an honest evaluation of any major approach and has left everyone frustrated. Meanwhile, the ranks of the uninsured swell, health costs soar, and states and businesses cut benefits.
It seems clear to us that the political logjam in Washington will continue unless we take a different approach. We believe that approach involves exploiting the unique strength of American federalism. Specifically, we urge Congress to authorize individual states to carry out any of a broad range of strategies to reduce the number of uninsured people within their borders. And Congress ought to reward states with grants sized according to their progress toward agreed targets.
… we are certain that health policy cannot improve unless it moves off dead center, where it has been stuck for a generation as more Americans have lost coverage and costs have exploded.
Henry J. Aaron is senior fellow in economic studies at the Brookings Institution. Stuart M. Butler is vice president for domestic policy studies at the Heritage Foundation.
http://www.washingtonpost.com/wp-dyn/articles/A10659-2003Jul4.html
Comment: Using American federalism as a model of reform is certainly not a new concept. In recent years it has been supported by members of the academic community, including Theodore Marmor and Jonathan Oberlander, and by politicians, including Paul Wellstone and John Tierney.
Like every other political solution, details matter. Can this serve as an avenue for reform which would truly bring together individuals with views as diverse as Brookings’ Henry Aaron and Heritage’s Stuart Butler? Is their concept of a state-federal approach a model of consensus on which most of us can agree, or is it just another “strange bedfellows” attempt to twist rhetoric into creating the appearance of an acceptable compromise? Well, let’s look at the four steps that they propose.
(1) Congress would specify goals, which would include reducing the number of uninsured people over several years. … Congress would have to define a minimum level of coverage to classify a person as “insured.” … such standards should sustain the Medicaid entitlement… Defining what constitutes insurance for others — those not entitled to Medicaid and lacking private or public health coverage — would be controversial and difficult, because reasonable people disagree passionately on whether good insurance must provide comprehensive coverage or simply less-expensive catastrophic protection, with individuals being subject to price incentives for other costs. … One way of avoiding a political impasse on this issue might be to allow some variation in basic benefits among states, provided the plans are of equivalent value.
(2) … Congress would pass a “federal policy toolbox” of options that would be available to states. This menu would include tax credits to individuals for the purchase of group insurance or to businesses for mandatory employment-based coverage; Medicaid or other public program expansions; individual mandates; plans that focus on children or the near-elderly; so-called association plans; or an expansion of the Federal Employees Health Benefits Program to nonfederal workers.
(3) … states willing to participate could choose one or more items from this menu or propose their own strategies that they found suitable to the needs and preferences of state voters, within the minimum federal standards. Single-payer plans could be tested on a limited scale, avoiding a clash over the law governing large corporate plans.
(4) Congress would commit in advance to provide grants to each participating state in addition to current federal funding, based on the state’s progress toward the agreed goals.
So is this a consensus or a compromise? Unfortunately, it is neither. It is a capitulation to the conservative policymakers who are currently in charge of the nation’s policy agenda.
First, allowing “variation in basic benefits” would result in both financial insecurity and impaired access for those with the greatest needs, defeating the very purpose of insurance.
Second, the “federal policy toolbox” contains primarily a list of options strongly supported by conservative organizations such as the Heritage Foundation. They are mechanisms that perpetuate inequities in health care and fail to control the administrative excesses and other waste in our system.
Third, the token acknowledgement that a single payer plan could be tested is an empty promise since the restrictions (limited scale testing, and exempting ERISA-protected plans) do not meet, in any way, the definition of a single payer plan. Testing the model proposed would certainly result in a failed experiment. But then applying the false label of “single payer,” and then dismissing the single payer concept forever, would certainly help to advance the agenda of the conservatives.
Even the fourth element of their proposal, federal funding, risks underfunding of health care if the concept of “grants” were to be interpreted as “block grants,” allowing the federal government to reduce its participation to a defined contribution model.
Just because Aaron is willing to use the federalist model to let the conservatives take control of the reform process, does this mean that Marmor, Oberlander, Wellstone, and Tierney are wrong? Absolutely not! Single payer reform may very well be initiated on the state level, just as Canada established the first single payer program in a single province (Saskatchewan). Any state that decides to adopt a single payer system would require, at a minimum, that federal tax funds already dedicated to health care would need to be folded into the state health care budget. That would require enabling federal legislation, a federalist approach.
Two pathways to single payer reform are possible. Much preferred would be a single, national program that would provide everyone with affordable, comprehensive care. Even though we have been at a political impasse for decades, we must not let up on our efforts for real reform. In fact, we must intensify them. But in the meantime, we can also continue our efforts to establish single payer systems within individual states. We will need a federal-state partnership, and even the conservatives support the concept that states should have control over their own matters, including health care.
Legislation supporting a federal-state partnership should require that federal funds be used appropriately to ensure universal coverage with an adequate benefit package, but it should not prohibit the state from allocating those funds in a manner that reduces administrative waste and improves equity. A bona fide single payer program must be allowed as an option for the individual states, if not a mandate.