End Medicaid’s Crony Federalism
GOP governors should refuse the White House’s deals and fight for Medicaid reform.

New Jersey governor Chris Christie at a press conference, Jan. 24, 2013


James C. Capretta

Last year, in an otherwise dispiriting opinion, the Supreme Court handed the nation’s governors an important victory in NFIB v. Sebelius. The Court ruled that the Medicaid expansion mandated in the law was an unconstitutional infringement on state prerogatives. Specifically, the federal government does not have the authority to impose coercive penalties — by withdrawing existing Medicaid funds — on states that refuse to enact Obamacare’s Medicaid expansions.

This is no small matter. The law won’t come close to reaching “universal coverage” if the nation’s governors refuse to expand their Medicaid programs. Which is why these governors, and most especially the 30 Republicans among them, have substantial power and leverage to bend national health-care policy in their direction — if they play their strong hand correctly.

Unfortunately, many of the GOP governors are acting otherwise. Seven Republican governors — including Chris Christie, John Kasich, and Rick Scott — have announced their intention to essentially go along with the Medicaid expansion, and several others are thinking about following their lead.

Not surprisingly, the White House and HHS secretary Kathleen Sebelius are doing all they can to pick off one GOP governor at a time. When Governor Kasich announced his support for the Medicaid expansion a month ago, he said he had been in touch with top White House aide Valerie Jarrett, who had assured him the administration would be open to making special concessions for Ohio. In Florida, Governor Scott’s announcement was accompanied by HHS’s approval of a broader Medicaid waiver program for the state that doesn’t fundamentally alter the nature of Obamacare’s government-centric approach to health-care reform. And news stories now indicate that Governor Tom Corbett of Pennsylvania is planning to meet with Sebelius within the month, no doubt to see what kind of special deal he can secure for his state.

The latest Medicaid frenzy involves a Democratic governor from a red state, Mike Beebe of Arkansas. There was no prospect of securing approval for a straight Medicaid expansion from the state’s Republican-dominated legislature, so Beebe came to Washington recently with what he expected to be a long-shot request: Would HHS allow Arkansas to use the federal money from the Medicaid expansion to purchase private insurance for those who would otherwise have qualified for Medicaid?

In another indication of how desperate the White House is to get red-state America to buy into Obamacare, HHS officials have told Beebe they are open to the idea. Predictably, now more Republicans are interested in getting the same “deal” as Arkansas, even though no one in HHS or Arkansas has yet fully explained what the deal would entail.

The GOP governors engaged in these direct negotiations with the White House are playing a loser’s game, and throwing away a historic opportunity to secure fundamental and lasting reform of the Medicaid program. Even if individual states are able to secure concessions from HHS and the White House, the “deals” they strike will be in the form of temporary and inconsequential “waivers” (the terms of which will always be subject to administration amendment and revision, too). What’s worse, these deals are no way to run a national program. Why should one state receive more favorable treatment than others? And why should the administration be allowed to “buy off” states with federal taxpayer funds in the first place?