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Tuesday, April 5, 2011

Disentangling the House Republican Health Care Budget: Redistribution, Government and Federalism

There is a saying in politics. “Elections have consequences.” In 2011, the impact of the 2010 election was particularly obvious in that the Republicans had gained control of the legislatures of Wisconsin and Ohio as well as the U.S. House of Representatives.  While the governments of Wisconsin and Ohio were going after public-sector unions (or restricting them to reduce government deficits), the House Republicans had their eyes on health-care.  Rep. Paul Ryan, an up and coming Republican from Janesville Wisconsin—a town with high unemployment after the auto plant there closed—was producing a budget that he claimed would cut $5 trillion over 10 years. His proposal reflected, or conflated, two salient traditional Republican aims: to shift power from the U.S. Governments to those of the states and to reduce the size of government. These are distinct, albeit not disparate, goals. Shifting power does not in itself imply or mandate a reduction in the size of government. For example, in shifting public health-care policy, an expansion of government could result if enough states develop programs further-reaching than what Congress had enacted.  Of course, as per the nature of federalism, particularly in an empire-scale instance, the resulting health-care programs would differ from republic to republic, given the innate heterogeneity that exists at such a scale.
Because restoring a balance of power to a federal system is distinct from decreasing (or increasing, for that matter) the size of government, it is important to distinguish them in Rep. Ryan’s proposal.
The New York Times points to the two aims in observing that “while saving large sums for the federal government, the proposals on Medicaid and Medicare could shift some costs to beneficiaries and to the states.” Shifting costs to the beneficiaries involves or implies a reduction in the size of government, while shifting costs to the states impacts the balance of power in the federal system. It is in the public interest for such items to be distinguished in debate and legislative votes because the people could want one without the other.
Under Ryan’s proposal, according to the paper, “Medicaid would be transformed into a block grant, with a lump sum of federal money given to the states to care for low-income people. States would be given more discretion over use of the money than they have under the current federal-state partnership.” Even though increased discretion adds to the power of state governments relative to the federal, or general, government, block grants maintain state dependence. In fact, if health-care is not among the enumerated powers of the U.S. Government, it could be argued that lump sum payments to the states for health-care are unconstitutional; otherwise, spending for the general welfare would eviscerate even having enumerated powers at all.
Regarding the “size of government,” The New York Times reports that “(f)or future Medicare beneficiaries — people now under 55 — Mr. Ryan’s proposal calls for the federal government to contribute a specified amount of money toward the premium for private health coverage. Under the traditional Medicare program, the government reimburses doctors and hospitals directly.” The “specified amount” element is “less government” than is an open-ended entitlement.

At the time of Rep. Ryan’s proposal, Medicaid and Medicare were open-ended entitlements. Anyone who met the eligibility criteria was entitled to benefits. Under a fixed lump sum, Republicans say the federal government could better predict and control its costs under Medicaid and Medicare, which as of the beginning of 2011 insured more than 100 million people and accounted for more than one-fifth of the federal budget. Unless the states would pick up the added costs (which would shift the taxing and spending federal balance), beneficiaries of these programs would be at risk for more of the costs if health-care costs rise.

Rep. Jan Schakowsky, a Democrat and a former executive director of the Illinois State Council of Senior Citizens, said “Mr. Ryan and the Republicans are declaring war on entitlements — and war on the elderly and the poor. . . . Beneficiaries will end up paying more.” The New York Times also reports that as of 2011, “(a)bout half of Medicaid recipients are children. Nearly two-thirds of the money spent on Medicaid benefits is [sic] for low-income people who are 65 and older or disabled.” For his part, Rep. Ryan said “he was not cutting Medicaid and Medicare, but rather slowing their growth rate. Furthermore, he insisted that if health costs for a group of patients exceeded the federal payment in a given year, the insurer would have to absorb the cost.” Finally, Rep. Ryan “claimed his proposal is equitable because Medicare would pay less on behalf of higher-income beneficiaries, and they would pay more of the cost of their health coverage.”
Whether the beneficiaries or insurance companies pick up the slack, the fact that public funds would not be used means that government would be reduced from what it otherwise would be. Yet if the states pick up the slack, the balance of federalism rather than the size of government would be changed. Moreover, in addition to the size of government (and federalism) elements, the matter of redistributive justice is involved. It is no wonder that these elements are conflated in the public sphere.
I contend that legislative representatives have an obligation to more clearly distinguish the elements of federalism, the size of government, and redistribution in public policy proposals. A desire to shift power to the states can be better distinguished from the questions of redistributive justice and the related matter of the size of government (and latter two can be better distinguished, since, for example, government could be expanded in a way that helps or hurts the poor, for example). Democracy itself would be improved were the people, either directly via a referendum or indirectly through representatives, able to decide on the three elements one by one. In fact, a decision for greater federalism would mean that questions of the size of government and redistribution would be decided on both the state and the federal level.