Should the US have 50 Medicares and Medicaids?

post by Bill Gardner

Brendan Saloner has a great post about federalism and social policy. He discusses whether all Americans should have similar protection, or whether states should have increased discretion about devising a local safety net. The Republican Governors resisting Obamacare would, presumably prefer the latter. The director of Health and Human Services for South Carolina argues that 

South Carolina is not Massachusetts or Vermont no matter how desperately the think tank crowd would want it to be.  We have wildly different rates of poverty, educational attainment, racial mix and economic bases which are the primary drivers of health. Massachusetts was 93% insured prior to their reforms because of their wealth; they weren’t wealthy because they were 93% insured.

Letting states evolve their own solutions to social welfare is attractive, just because that's a more democratic way to proceed. A future world in which big countries devolve into smaller, loosely affiliated countries might be a better place than a future of increased centralization (i.e., East Asia, Eurasia, and Oceana). In addition, decentralization of socialized health insurance is feasible: Each Canadian province has its own health insurance plan, supported by provincial taxes. 

There are, however, several practical problems, all related to scale. First, insurance works better when you have a larger pool of beneficiaries. Second, information technology systems have high fixed capital costs. It's not that expensive to purchase a system that just cuts checks, but if you plan to measure health care quality, monitor population health, or in any way manage care, you are into serious money, and small states will not be able to afford it. Finally, many people suggest that having the individual states experiment with social programs will allow us to learn what works. But having 50 states self-select health care policies is not an optimal experimental design. You'd learn much more from experiments reached across the whole country and randomized by county, or by whether a Medicare participant's social security number was odd or even. In addition, having 50 individual health insurance systems means you largely lose the ability to pool national data to study a problem -- this is a major limitation of the Canadian system.

So there is no clear answer to whether the US should have 50 independent health insurance systems. But the question will be coming up repeatedly in the next few decades.

Comments

[Brad F]

I would add that while NYS, my home, has a "unique" Medicaid program, as compared to Georgia, the problems upstate residents face here are more similar to rural Georgia than that of NYC folk. Similarly, the same can be said of Atlanta residents and say, Valdosta.

With a majority of US citizens in urban locales, the trade offs are not so clear. The laboratory of democracy calls, and the "let the 50 flowers bloom" slogans certainly have merits. However, scale and efficiency seemed to get lost in the mix when couched in in the warm and fuzzy tones of federalism. I dont want to gloss over the advantages of that approach, but it sometimes seem those (not all) that propose it, dont weigh the trade offs and possibility that on the net net, an "all in" approach may have more heft.

However, no one model is a home run. We do have to make a choice though.