A news service for the people of Michigan from the Mackinac Center for Public Policy

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Health Care Compact Bill Would Shift Power Back To The States

State Senate bill has 20 cosponsors; shifts choices from D.C. to the states and could reduce entitlement spending

Legislation recently introduced in the Michigan Senate to authorize the state's entry into a multi-state Health Care Compact. If approved by Congress - and the chances for that may be less unlikely than they first appear - this would profoundly shift the balance of power away from the federal government and back to the states in a critical area.

The multi-state Health Care Compact would devolve all regulation in this area to states and turn over funding for the two largest health-related social welfare programs — Medicare for the elderly and Medicaid for the poor — to states through no-strings-attached block grants.

One of the cosponsors of Senate Bill 973, Sen. Patrick Colbeck, R-Canton, put it this way in an email to Cap Con, “In the spirit of the 10th amendment, (the compact) yanks authority back to the states …”

While its immediate subject is health care, the compact potentially represents an important step toward restoring the constitutional balance envisioned by our Founders. Its real value is to "pick a fight" between state political establishments and Washington on federal overreach. The goal is to force members of Congress into making a “which side are you on” choice.

To put it another way, the compact could convert vague concerns over an abstract concept — federalism and the federal government’s usurpation of same — into a sharp political issue that engages the passions of regular people.

For example, it’s not hard to imagine some members of Congress who supported the unpopular Obamacare submitting to pressure from voters in their states by approving the compact, or risk paying a political price for opposing it.

Some have expressed concern that the compact’s Medicare and Medicaid block-grant provisions may lock Congress into spending fixed amounts on those entitlements. This is a misreading not only of the compact, but of the Constitution itself. No Congress — and no previously approved multi-state compact — can decree how much any future Congress must spend. A sitting Congress can always vote to cut appropriations, and to revise the formulas by which any program’s spending levels are determined.

Moreover, devolving of these massive social welfare programs down to the states could shift the current spending dynamic in a highly constructive manner by changing the incentives on federal lawmakers.

Once Congress turns over funding and management of Medicare and Medicaid, the temptation for federal politicians will be to cut spending on them. Members will begin to ask, “Why should we spend more for something that benefits state politicians?”

That incentive to reduce spending will only increase when some of the 50 state “laboratories of democracy” start adopting reforms that squeeze more bang from the bucks that do get spent. For example, Michigan could replace Medicare’s restrictions and artificial price controls with voucher-like insurance subsidies similar to what Congressman Paul Ryan, R-Wisc., has proposed for future beneficiaries. The state could both save money and remedy Medicaid’s broken promises by converting it into a “cash and counseling” program for the truly indigent.

There is universal consensus on the center-right that Washington has trampled the Founders’ vision by running roughshod over the principle of federalism. Decades of complaining about this has had zero impact. The compact potentially converts those ineffectual complaints into a focused conflict on the issue, imposing a cost on politicians who side with Washington over their own states.

There really is no downside to the compact — except for those who oppose the Founders’ vision, and instead favor the Wilsonian/Rooseveltian/Obamian one of ever larger and more centralized government. Without innovative strategies to change course, that’s the path we’re likely to remain on.

In a statement on the compact, state Sen. Geoff Hansen, R-Hart, said, “I encourage my colleagues to move quickly.” With 20 cosponsors — a majority of the 38 member state Senate — there is no reason it cannot.

The companion bill in the House authorizing compact entry is House Bill 4693, sponsored by Rep. Tom McMillin, R-Rochester.