The Next Step After Obamacare: Federalizing Medicaid

Blog Post by: Greg Anrig , on April 30, 2013

Back in 2010, I wrote an article for the journal Democracy and then a longer issue brief for the New America Foundation arguing that Medicaid, the joint federal-state health insurance program for low-income Americans and many nursing home residents, should be completely federalized. Now, as part of New America’s newly released opus Renewing the American Social Contract, I make the argument anew in the context of developments since the enactment of the Affordable Care Act.

The substantive rationale for federalizing Medicaid is stronger than ever, given that less than half of the states have agreed to expand the program as Obamacare envisioned to cover a large portion of currently uninsured Americans. By relying on states to administer and partially fund government coverage for low-income citizens, Medicaid has always varied enormously in its reach and effectiveness across the country, compounded by poor administration due to nebulous accountability, fragmented responsibilities, and, at best, political ambivalence. The ongoing recalcitrance of so many states even when the federal government would finance virtually all the costs of the expansion under Obamacare lays bare how deeply dysfunctional our continuing reliance on state governments remains in carrying out services for the poor.

The knottier set of questions relate to aligning the political forces that might push toward ultimate federalization of Medicaid. While that remains a long-term project, the ongoing financial pressures on state governments attributable to rising Medicaid costs make many of them a strong prospect for eventually throwing their support toward a federal takeover. Moreover, politically powerful health care providers and insurers in states resisting Obamacare are recognizing that they are missing out on federal largess that would otherwise be available to them. For now, they are putting their efforts behind pushing recalcitrant state capitals to expand Medicaid, but they may ultimately come to see that cutting the states out of the picture entirely could be more to their benefit. Finally, an organized national effort driven by groups that become disillusioned with Obamacare’s shortcomings could well coalesce around the idea of federalizing Medicaid as a more effective way of coming closer to achieving universal coverage.

There are a lot of interesting and important questions about the idea of federalizing Medicaid, which I try to wrestle with in considerable detail. But in any case it’s not too soon to think about it as part of the next phase of health care reform.

Tags: obamacare, medicaid, anrig,

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