President Obama announced this week his support for legislation that would give states more flexibility in meeting the objectives of his signature health-care reform. He said that this change would give states freedom to innovate and act as “laboratories of our democracy.”
This use of states as “laboratories” makes sense to anyone who has considered the massive challenge of reforming health care in America. Centralized control of an industry that affects all 309 million Americans, has revenues of over $2.3 trillion annually, and employs more than 14 million people is not possible. Given the tremendous diversity of our population, any one-size-fits-all approach is destined to fail.
#ad#In many areas, states can be more effective regulators than the federal government. Which transportation system works more efficiently — your state highway system or Amtrak? Would your state university get better results if it were run by the Department of Education? Who is more responsive — your local sheriff’s office or the TSA crew at the airport? Which has shown itself to be better at managing risk — life-insurance companies (which are regulated by the states) or Wall Street?
Furthermore, state officials serve smaller areas, live in the areas they serve, and are more accountable to their citizens than their counterparts in Washington, D.C. Constituents feel they have stronger connections and more influence with state and local officials than they do with their representatives in Congress.
In order to effect real change, the president should support the idea of states’ assuming the primary authority and responsibility for health care. In other words, he should support the Health Care Compact.
A growing number of states are uniting around the Health Care Compact, which would give states both the primary responsibility for health-care regulation and full control over federal taxes spent on health care within their borders.
The Health Care Compact is a governance reform, not a health-care-policy reform. It would change who decides health-care policy, not who or what is covered. The Health Care Compact is needed because no centrally planned, top-down reform can fix health care throughout the United States. Instead, each state should craft its health-care policies to fit its specific needs. Some states may choose a single-payer system, while others may opt for a health-savings-account system with subsidies for seniors and low-income residents. Under the Health Care Compact, each state decides which plan is best for its citizens.
Citizens and state legislators in more than eleven states are working to get the Health Care Compact passed by their legislatures, and the compact is being actively discussed in at least 25 other states.
The interstate compact is not a radical idea. Compacts are simply voluntary agreements between two or more states, and when consented to by Congress, they have the force of federal law. Compacts have been used throughout America’s history, even before we adopted the Constitution. Authority for compacts was established in the Constitution (Article I, Section 10), and more than 200 such agreements have been developed.
President Obama’s decision to ease the opt-out requirements is a small step in the right direction, but it falls far short of restoring citizen control over health care, and fiscal sanity to Washington. The Health Care Compact offers a choice to the president and Congress. They can continue their partisan bickering over federal health-care reform, or they can embrace an approach that is more likely to succeed, one that brings control closer to the people by putting states in charge of health-care dollars and policies.
— Leo Linbeck III is vice chairman of the Health Care Compact Alliance, CEO of Aquinas Companies LLC, and a faculty member at both Rice University’s Jones Graduate School of Business and Stanford University’s Graduate School of Business. Eric O’Keefe is chairman of the Health Care Compact Alliance and CEO of the Sam Adams Alliance.