Philadelphia Reflections

Reversing Madison's Scheme

Senator Lamar Alexander of Tennessee

Senator Lamar Alexander of Tennessee was once the Governor of Tennessee. He, therefore, faced the eternal problem of finding enough revenue to cover the expenditures of the state government, which quickly runs against a barrier. Local taxes cannot be raised significantly higher than in other states -- before the wealthier inhabitants start moving to some cheaper state. In our current era of the welfare state, the federal government has the option of dumping expensive welfare programs onto state governments, as a local responsibility to pay for. The net effect of this maneuver is to attract poor people to move toward states with generous welfare programs, and rich ones to move away. That is, a disincentive has been created for making welfare programs any good. Politicians obviously do not like to discuss this matter openly, so I will take the personal responsibility for stating that this perverse disincentive is the main reason Medicaid is the absolutely worst medical program in any state, chronically underfunded everywhere. Therefore, when Obamacare dumped 15 million uninsured persons onto the Medicaid rolls, it doomed them to underfunded medical care, as they will soon discover.

Constitution

Since this situation was created by the Constitution, only amending the Constitution can repair it. However, the U.S. Supreme Court might discover enough elasticity in its penumbras and emanations to permit a few demonstration projects, and this discussion proceeds on that assumption. Senator Alexander proposed the federal government trade financial responsibility for Medicaid to the states, in return for accepting responsibility for K-12 education. Horse-trading of this sort might have some political utility, but for demonstration projects, it is surely better to limit the number of variables in order to reach a firm conclusion, sooner. There is always a danger of unintended consequences from shifts of this magnitude, and the public knows it. Therefore, a swap is always twice as politically dangerous as a single experiment. Some other time, or maybe in some other states, but don't mix them up.

Medicare program fact

In policy circles, there is a knee-jerk reaction that moving Medicaid to the federal government would be to create a "single-payer system", which some people favored, anyway. However, the purest form of single payer would include all medical care for everybody, into Medicare for the elderly. The hidden elixir in only moving Medicaid for the poor into the Medicare program lies in the fact that Medicaid already has a means testing; if you only want to improve the care of the poor, it is undesirable to mix them with everybody else. Presumably, by the time this becomes an issue the Democrats will be anxious to undo what they have done, while the Republicans will be inspired to let them cook in their own juice. However, there will be a brief interval in which the central controversy will seem to be one of repealing Obamacare, so an adroit leader might be able to slip a demonstration project through in the uproar.

The issue of attracting immigrants in the course of designing state welfare programs is a general one, not confined to health care. It is not even confined to the state government, as the vexing problems of a porous border illustrate on a national scale. Think tanks need to put the issue on their permanent discussion list, and foreign experiments need to be analyzed as well.

Originally published: Wednesday, May 16, 2012; most-recently modified: Tuesday, June 04, 2019