The Moral and Financial Case for Federalizing Medicaid

Millions of U.S. citizens are too poor to buy health insurance but not poor enough to qualify for Medicaid.  And this “not poor enough” problem varies, state by state, depending on the generosity of local governments.  In some states, a person’s income can sit below the poverty level, and that person still won’t qualify for Medicaid.

Obamacare was supposed to change all that.  It required state Medicaid programs to offer coverage for anyone whose income was 133% of the federal poverty limit or lower.  The federal government even committed itself to paying for most of the cost of adding folks to the Medicaid rolls. That changed with the Supreme Court’s June decision, concluding that the federal government should not be able to coerce states into expanding their Medicaid programs. And it may change even more if Mitt Romney is elected, and he succeeds in reducing the role of the federal government in directing the program.

Like Romney, I believe strongly that there are many government functions better left to states than to the feds.  And a whole bunch that are better left to locals than to states, too.  I am glad, for instance, that the park and recreational sports programs my children have enjoyed over their lives have been run by people who are immersed in the local community.

But healthcare is too big, too expensive, too complicated, and too important to leave to locals.  Sometimes budget pressures are simply too strong to allow locals to do what they know they need to do.  I was reminded of that fact when reading Michael Willrich’s book Pox, a history of the 1900 smallpox epidemic in the United States.  As I have written about in other posts, a major reason the epidemic claimed so many lives was that huge numbers of Americans went unvaccinated.  As some put it at the time, we were “the least vaccinated country in the civilized world.”  In part, Americans went unvaccinated because of libertarian tendencies, and battles over religious freedom.  In part, people were skeptical of vaccines because they didn’t buy the science.

But another reason we lacked vaccinations was because local governments were often responsible for the costs of vaccines.  In Kentucky, for instance, the majority of African Americans were unvaccinated even though the epidemic was rampant in those communities.  In Middlesboro, Kentucky, around 90% of people did not receive the vaccine.  The town simply couldn’t afford it.  The consequences were as predictable as they were horrible, with people dying unnecessarily and the disease spreading, glad to take advantage of local budget shortfalls.

Poverty and illness are not spread evenly across society.  They run together like a high school clique.  Which means the poorer a local community, the greater its financial needs.  Leave communities to provide health insurance on their own, and the poor will suffer that much more.

We need to work hard to limit the size of our entitlement programs in the United States.  But we should also work to distribute those entitlements fairly across communities.  That is not a job best left to the locals.

Peter Ubel is a professor of business administration, medicine and public policy. This commentary was originally published in "Forbes" on Oct. 18, 2012.