The Magazine

The Health of the States

The real lesson of the Romney health care plan.

Dec 18, 2006, Vol. 12, No. 14 • By JAMES C. CAPRETTA and YUVAL LEVIN
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Indeed, other states are experimenting, too. In Florida, for instance, outgoing governor Jeb Bush has launched a Medicaid reform under which beneficiaries will get vouchers, with the amounts adjusted based on health risk factors, which they can use to buy private coverage from state-approved plans. The proposal is a radical departure from the traditional fee-for-service approach to Medicaid, injecting much-needed competition into the program, and giving the state more direct control over its Medicaid budget.

Because the Medicaid program is mostly run by the states but largely funded by the federal government, states seeking to innovate almost always need federal approval for their plans. Massachusetts and Florida both sought and received extensive federal Medicaid waivers. The most constructive role the federal government can play in helping provide greater and more stable and portable access to private insurance in the coming years would be to extend such waivers more broadly, or, through legislation, to remove the need for waivers altogether.

Some states may well implement bad health care reforms, of course. But part of the genius of the federal structure--as conservatives used to know--is that at least a bad state idea will be limited in application, and will provide a cautionary model to others. That is not the case with ill-advised federal laws.

Since no broader reform of the system seems plausible in any case in an era of divided government, such standing waivers or legislative reforms should be the focus of the federal approach, at least for now. Massachusetts has stepped up to address its health care problems its own way. In the coming years, the prospects for broader access to private health insurance, as opposed to a government takeover of the health care sector, rest on other states' taking the initiative as well. The federal government should get out of their way.

James C. Capretta is a First Focus fellow and Yuval Levin a fellow at the Ethics and Public Policy Center. Capretta also does policy research for the health insurance trade association.