Health and Federalism

The Corner notes that despite the White House’s comments, the Republican Health Coverage proposal has been available online for months. But there’s a big problem with it. And it lies with the states.

Stepping back, while Republicans have asserted—for a long time—that they’ve had a usable plan of their own on the table, there is not a single mention in their proposal regarding universal coverage to all citizens who lack it. (Which has always been the president’s core goal for a health care plan.)

The closest we find is in Division B, Title 2:

PAYMENTS TO STATES. — FOR PREMIUM REDUCTIONS IN THE SMALL GROUP MARKET. — If the Secretary determines that a State has reduced the average per capita premium for health insurance coverage in the small group market in year 3, in year 6, or year 9 (as defined in subsection (c)) below the premium baseline for such year (as defined paragraph (2)), the Secretary shall pay the State an amount equal to the product of — (i) bonus premium percentage (as de-fined in paragraph (3)) for the State, market, and year; and (ii) the maximum State premium payment amount (as defined in paragraph (4)) for the State, market, and year.

So basically, their primary incentive mechanism for reduction in uninsured citizens is…financial gifts to states. The bill then tasks the states with “reducing the average per capital premium for health insurance coverage in the individual market.” If a state somehow manages to cut the cost of private insurance plans in their state, they get a reward. In the form of federal dollars. This is as close as it gets to “expanding coverage.”

The rest of the bill deals mostly in boilerplate, like tort reform (which is included in a watered-down form in the current bills), a reduction of funding for comparative effectiveness research, and a reiteration of party commitment to…Medicare.

What’s really more interesting, however, is the concept of a federalism that is meant to somehow coexist with two overtly anti-federalist proposals: 1) the expansion of insurance companies’ influence across state lines, which would inevitably (as evidenced by the evolution of American telecommunication, communications service, and retail industries over the past 20-30 years) lead to less competition due to intra-industry mergers and acquisitions, and 2) the intrusion of state governments into local free markets. The contradition is totally unresolved in this bill. Yet it’s meant to be the crux of a novel insurance coverage program. How is this supposed to work? And, when all is said and done, how would this leave the states, other than overburdened and quite possibly bankrupt?