Federalizing Medicaid

Nicole Huberfeld, University of Kentucky College of Law

Abstract

Medicaid is undeniably important both in terms of funding for the states and in terms of support for the healthcare system, but it is also a constant source of tension between the federal government and the states. Many governors currently claim that states need more control, but history shows that devolution of the Medicaid program in the name of state autonomy increases existing disparities in care and access. Instead, this essay asserts that the response should be to federalize Medicaid. The Patient Protection and Affordable Care Act (PPACA) expands Medicaid to cover everyone up to 133% of the federal poverty level, which is a step toward federalizing Medicaid by creating universal eligibility combined with almost total federal funding for new enrollees, but it is an incomplete federal capture of Medicaid. Some states have not responded enthusiastically to this expansion of Medicaid. In a lawsuit filed the same day the act was signed, approximately twenty states followed the lead of Florida’s Attorney General in challenging the constitutionality of PPACA. They claim to be coerced into continuing to participate in Medicaid; yet, the states have asked for more and more federal funding while expecting no concurrent increase in federal oversight. Medicaid is often described as a classic example of cooperative federalism, but the program’s design is creating more discord than cooperation. An overlooked fact is that Medicaid is not a purposefully structured cooperative federalism program. Medicaid is an outgrowth of very old assumptions about the poor and the role that localities have played in providing welfare-type programs. None of the small number of past proposals to federalize Medicaid has grappled directly with the reasons that Medicaid does not satisfy federalism goals, and thus a key reason for modernizing Medicaid’s structure has been ignored. This essay first discusses the history of Medicaid and its cooperative federalism approach, focusing on the persistence of the two themes of states’ rights and limiting benefits to the deserving poor in the creation of Medicaid. The paper next considers the modern Supreme Court’s interpretation of federalism and reconciles the competing ideas of dual sovereignty and cooperative federalism, which inherently conflict yet coexist in the caselaw. This section applies a new understanding of these disconnected ideas to the Medicaid program and to the current multi-state litigation regarding PPACA’s constitutionality. Finally, the paper provides additional reasons that Medicaid should be federalized by bringing the focus back to the benefits of nationalization for Medicaid enrollees, who seem to be lost in the federal-state debate.