• About
  • Contact
  • Staff
  • Home
  • Essays
  • Forum
  • Podcasts
  • Book Reviews
  • Liberty Classics

December 14, 2012|Douglas Holtz-Eakin, interposition, Medicaid, PPACA

Interposition: An Update From the Cliff

by Michael S. Greve|

If (as looks likely) a significant number of states decline to participate in Obamacare’s “exchanges” or in its Medicaid expansion (or both), I wrote last week, the Affordable Care Act may well crumble and collapse within the President’s term in office. Herewith a few additional thoughts, occasioned by news from the Beltway swamp.

Exchanges. Today’s Washington Post carries a front-page article, breathlessly announcing that conservative critics “slam GOP states for ceding control [over ACA exchanges] to feds.”  The Post’s intrepid reporter identifies three such critics: one member of the world’s oldest profession (insurance industry consulting); one worked-on-ACA Senate staffer turned Harvard prof; and former CBO director and McCain adviser Douglas Holtz-Eakin, who

warned that the administration could impose too many regulations, ultimately ruining the exchanges and opening the door to a “Washington takeover of health care.” He added, “If conservatives allow it to happen, they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems.”

Newsflash: this particular train left the station long ago. The notion that state governments could fend off the feds and help to establish workable, affordable health insurance regulation within the framework of the ACA, within a federal regulatory system that Mrs. Sebelius can change any day of the week with a mere wave of the hand, is charitably described as illusory. It’s also politically suicidal: the feds will blame the inevitable policy failure on state officials (and regulate some more), and all the officials can do is blame back. That is a losing game.

I stick to my story: state officials’ incentives are powerfully aligned with the right institutional (federalism) strategy and arrangement, which is to let a single government be responsible for results. The administration wanted this regime; now, let it own and run it. For the duration, the correct state strategy isn’t Albert Speer’s (“let’s hang around to keep worse things from happening”); it’s to figure out sensible policy options that promise to work, and to attract support, when the system crashes. AEI’s Tom Miller has a terrific piece (link no longer available) on what such reforms might look like; it merits careful reading, prompt attention, and wide dissemination.

Medicaid is where the ACA has come to intersect with the “fiscal cliff”—more precisely, the administration’s resolute refusal to contemplate any entitlement cutbacks. The Supreme Court’s decision and opinion in NFIB v. Sebelius, recall, held that the states receipt of funds for the “old,” pre-ACA Medicaid program cannot be conditioned on their willingness to participate in the ACA’s expansion of Medicaid. The decision removed the feds’ stick to bludgeon states into acceding to an expansion. My own view is that the “stick” was never more than a small twig; but in any event, all that’s left now is the carrot—the feds’ promise to pay 100 percent (after 2019, 90 percent) of the newly covered Medicaid recipients (everyone up to 133 percent of the poverty line). Understandably, the states don’t trust that carrot, and so the administration is attempting to dress it up: no Medicaid cutbacks. A few weeks ago, there was still bipartisan support to curb a widely used state scheme (called “provider taxes”) to overcharge the feds for Medicaid services. Now, the administration has yanked even that proposal off the negotiating table. Anything to bamboozle states into the ACA, on the theory that current officials may be cynical enough to say “yes” while letting future officials deal with the sure-to-come screw-over.

What this means is that Medicaid expenditures (state and federal), predicted to grow at seven-plus percent anyhow, will shoot through the roof over the next two years. (Another Post article today provides a foretaste.) Consider: the ACA prohibits states from cutting existing services (for fear that states might dump Medicaid clients now and then re-enroll them under the far more generous expansion formula), and the administration will continue to police those requirements very stringently. Rock-bottom provider payments won’t be cut further, for fear of alienating that vital constituency. And  as just seen, even blatant strategies to milk the system are now off-limits. The administration’s strategy is to pour torrents of Fed-created dollars into cooperating states and to hold out yet-greater riches for fence sitters (“Come on in—the water is warm and the spigots are open.”). States, for their part, will want to hold out, for Game Theory 101 reasons.

NFIB v. Sebelius may have strengthened the states’ hand in the perennial game of chicken that is “our federalism,” but only at the price of making it yet more expensive. This stuff, too, needs rethinking—and soon.

Michael S. Greve

Michael S. Greve is a professor at George Mason University School of Law. He is the author of The Upside-Down Constitution (Harvard University Press, 2012).

About the Author

Friday Roundup: December 14th
Can the Federal Government Take State Property?

Recent Popular Posts

  • Popular
  • Today Week Month All
  • Building the Tiers of Judicial Review June 24, 2015
  • Crisis of the Calhoun United March 20, 2013
  • The Public Option Leads to Government Domination of Health Care January 30, 2020
  • Obama’s Less Orwellian Terrorism Speech December 7, 2015
  • Lessons of the French Revolution February 20, 2020
Ajax spinner

Related Posts

Related

Book Reviews

A Mirror of the 20th-Century Congress

by Joseph Postell

Wright undermined the very basis of his local popularity—the decentralized nature of the House—by supporting reforms that gave power to the party leaders.

Read More

The Graces of Flannery O'Connor

by Henry T. Edmondson III

O’Connor’s correspondence is a goldmine of piercing insight and startling reflections on everything from literature to philosophy to raising peacocks.

Read More

Liberty Classics

Rereading Politica in the Post-Liberal Moment

by Glenn A. Moots

Althusius offers a rich constitutionalism that empowers persons to thrive alongside one another in deliberate communities.

Read More

James Fenimore Cooper and the American Experiment

by Melissa Matthes

In The American Democrat, James Fenimore Cooper defended democracy against both mob rule and majority tyranny.

Read More

Podcasts

Stuck With Decadence

A discussion with Ross Douthat

Ross Douthat discusses with Richard Reinsch his new book The Decadent Society.

Read More

Can the Postmodern Natural Law Remedy Our Failing Humanism?

A discussion with Graham McAleer

Graham McAleer discusses how postmodern natural law can help us think more coherently about human beings and our actions.

Read More

Did the Civil Rights Constitution Distort American Politics?

A discussion with Christopher Caldwell

Christopher Caldwell discusses his new book, The Age of Entitlement.

Read More

America, Land of Deformed Institutions

A discussion with Yuval Levin

Yuval Levin pinpoints that American alienation and anger emerges from our weak political, social, and religious institutions.

Read More

Recent Posts

  • The Just Restraint of the Vicious

    For some contemporary criminal justice reformers, devotion to ideology leads to illogical conclusions about human nature and character change.
    by Gerard T. Mundy

  • Too Immature to be Punished?

    When I look back on my own life, I think I knew by the age of ten that one should not strangle old ladies in their beds.
    by Theodore Dalrymple

  • A Badge of Discrimination

    The British National Health Service has spoken: Wear the badge or declare yourself to be a bigot.
    by Theodore Dalrymple

  • A Judicial Takeover of Asylum Policy?

    Thuraissigiam threatens to make both the law and the facts in every petition for asylum—and there are thousands of them—a matter for the courts.
    by Thomas Ascik

  • The Environmental Uncertainty Principle

    By engaging in such flagrant projection, the Times has highlighted once again the problem with groupthink in the climate discussion.
    by Paul Schwennesen

Blogroll

  • Acton PowerBlog
  • Cafe Hayek
  • Cato@Liberty
  • Claremont
  • Congress Shall Make No Law
  • EconLog
  • Fed Soc Blog
  • First Things
  • Hoover
  • ISI First Principles Journal
  • Legal Theory Blog
  • Marginal Revolution
  • Pacific Legal Liberty Blog
  • Point of Law
  • Power Line
  • Professor Bainbridge
  • Ricochet
  • Right Reason
  • Spengler
  • The American
  • The Beacon Blog
  • The Foundry
  • The Originalism Blog
  • The Public Discourse
  • University Bookman
  • Via Meadia
  • Volokh

Archives

  • All Posts & Publications
  • Book Reviews
  • Liberty Forum
  • Liberty Law Blog
  • Liberty Law Talk

About

Law & Liberty’s focus is on the classical liberal tradition of law and political thought and how it shapes a society of free and responsible persons. This site brings together serious debate, commentary, essays, book reviews, interviews, and educational material in a commitment to the first principles of law in a free society. Law & Liberty considers a range of foundational and contemporary legal issues, legal philosophy, and pedagogy.

The opinions expressed on Law & Liberty are solely those of the contributors to the site and do not reflect the opinions of Liberty Fund.
  • Home
  • About
  • Staff
  • Contact
  • Archive

© 2021 Liberty Fund, Inc.

This site uses local and third-party cookies to analyze traffic. If you want to know more, click here.
By closing this banner or clicking any link in this page, you agree with this practice.Accept Read More
Privacy & Cookies Policy
Necessary Always Enabled

Subscribe
Get Law and Liberty's latest content delivered to you daily
  • This field is for validation purposes and should be left unchanged.
Close