Let Fifty Flowers Bloom: Health Care Federalism after National Federation of Independent Business v. Sebelius

Abstract

Conventional wisdom is that the American public does not want to think too long or too hard about Medicaid. Medicaid’s reputation has long been big, complicated, and widely misunderstood. The 2012 presidential election campaign has been much about Medicaid, but Medicaid is a subject we love to talk around. Yet, our next president will be compelled to think and speak explicitly and fluently about Medicaid because Medicaid is the budget-buster of government funded health insurance. Its budget busting propensities are most pronounced at the intersection of Medicaid and the government-funded health insurance program we do love to discuss: Medicare.

This paper’s thesis is that everything possible will happen: if somebody can imagine it, some state will try it. This paper first looks at the pre-ACA past of Medicaid. It considers the past role of Medicaid in our health care system and how the Supreme Court has understood that role. It next considers the roles that Medicaid is likely to play in our health care system post-implementation of the Medicaid opt-in in 2014. It also considers the role Medicaid may play under a repeal and replace of the ACA scenario. It finally considers the implications of transformed health care federalism for the implementation of the ACA.

This paper focuses on what the ACA is more than what it is not. The ACA’s individual mandate is Constitutional, as is the Medicaid expansion, in large part. The states have been re-enforced in their historic roles as Medicaid makers or experimenters. A close reading of the statute and the NFIB opinion with an understanding of the background of health care markets is in order to provide a counterweight to the tendency of Americans to use the ACA as 'something of a blank slate onto which Americans … [impose] their own hopes, fear and concerns.'

Keywords: Affordable Care Act, Medicaid, Medicare, government funded health insurance, Federal budget, Federalism, State laboratories

JEL Classification: H51, H72, H77, I11, I18, K23