THE BLOG
08/20/2009 05:12 am ET Updated May 25, 2011

The States of Health Care Reform

Over at The Foundry, Conn Carroll points to today's New York Times piece about (Democratic) governors' resistance to the expansion of Medicaid included in the various health care reform bills circulating Congress. He writes:

Governors worry that Obama's plan for a major expansion of Medicaid not only will break the bank in Washington, but also in the states--since they would be required to kick in part of the costs.

But Carroll - and the NYT - have the implications of this dispute all wrong. America's Affordable Health Choices Act, the House version of health care reform legislation, would expand eligibility for Medicaid to 133% of the federal poverty level, but "The cost of care for those newly enrolled in Medicaid as a result of this policy would be paid by the federal government, with no state contribution."

So the tab for expanded coverage would not be pushed down to states (and, in New York, to New York City and other localities), at least in the most complete reform bill we currently have. What governors are actually - quite rightly - concerned about is that down the road, the federal government's willingness to pay for an expanded Medicaid program will diminish as the feds assume more responsibility for the costs of health care.

This raises a critical issue about intergovernmental relationships: how do we keep the federal government honest, relying on state and local governments to provide important services, while making sufficient investments in state and local capacity to do so?

While in the longer term we should think deeply about federal-state-local relationships, governors should focus now on the immediate benefits of reform for their state budgets (and for their states' economies), which will enjoy less pressure from services provided to the uninsured once reform passes. This is less a debate about health care reform and more a debate about federalism.

(It is also important to note that the Medicaid changes will not take effect until 2013, undermining the governors' claim that their current budget woes justify abandoning the expansion of Medicaid.)