 Good afternoon and welcome. I'm Barry Rave, a professor here at the Ford School and the director for the Center of Local, State, and Urban Policy. We are delighted and close up to co-sponsor this event with the School of Public Health, the Jeral Ford School of Public Policy, and we want to acknowledge in particular support that we received from the Gill Lohman and Martha Darling Health Policy Fund. I'm delighted to have Martha with us here today to pursue this event. Federalism has been called many things. I'm not sure I've ever seen the title fractious before, but it certainly fits this case well now and historically. I must confess that there was a time a couple of decades ago where I was working on a doctoral dissertation trying to come to terms with federalism. A little tiny slice of that involved Medicaid. And not understanding what Medicaid was, why it was created, and how it worked, did not understand it, and I went into what is then and now in the world's great bookstores, the Seminary Co-op Bookstore at the University of Chicago, and found this book, The Policy and the Hierocracy. Blood red, notice. It was all in bright red, but you can see the spine has been faded from a science question. Chapter 7, Medicaid and Commercial Market Strategy for the Poor by Frank Thompson. It really opened up for me an understanding of how Medicaid came into being and how it worked. And here we are a few decades later with the book length version with all kinds of new content called Medicaid Politics, Federalism, Policy Durability, and Health Reform, just released late last year by Georgetown University Press by Frank Thompson. Frank, as many of you know, is one of our nation's leading scholars in the area of health politics and policy. It's a real privilege to invite him here to the Ford School. He is serving on the faculties of the University of Georgia and the State University of New York at Albany, where he's held a series of administrative posts. Frank is a fellow at the National Academy of Public Administration and now is a member of the faculty at Georgetown. We're very pleased to have him here to talk about his book, but also put it into the immediate context whereby Medicaid has gained even new saliency and new direction that some of us probably could not have anticipated just a few years ago. We're also delighted to be joined by Scott Greer, a colleague from the School of Public Health, the Department of Health and Management Policy. Scott works in a number of areas directly relevant to this. It has also thought about issues of centralization and decentralization of health politics and policy in federated and multi-level systems, including the European Union. Scott was a visiting scholar with us in close-up during the fall term. It's great to have you here with us today. With that, we're going to ask Frank to provide extended remarks on his use on fractious federalism and the future of Medicaid. Turn things over to Scott for some reaction and reflection. And then, as you can see, the table will allow for us to have some Q&A, and hopefully we'll open this up for extended conversation. But before going any further, please do extend a warm welcome to Frank Thompson as we welcome him to our campus. Thanks, Barry. Very kind. Let's see. Thank you very much, Barry, for those very kind introductory remarks. Let me say how much of a pleasure it is to be at the Ford School. I was telling the students, I met with it noon, that if we looked at the top 20 research campuses in the country, I'd been in every one, had been in every one, except for some strange reason, Ann Arbor. So it's been a great, great privilege and treat to come and get acquainted with the campus. I would also note that I had the great good fortune, probably, oh gosh, 25 years ago, to when Gerald Ford visited the University of Georgia and I was head of the Department of Political Science, to actually sit next to him and moderate a session where he responded, made remarks and responded to a lot of questions. I've had very great respect for him and I'm very pleased to be here. Okay, let's get to showing the road. And Barry, because I know we've got too many PowerPoints, I'm targeting to end about 10 to 2. Does that sound sensible? And we'll give us, got a chance here. All right. So I wanted to open, I know there's a lot of stuff to read in this thing, but I wanted to open with two themes. And the top theme is from one of the founders, James Madison, which is all about fractious federalism. Madison did not envision, among the founders, that political parties would come to play as great a role in the political system as they've come to play. But I do like the line about the potential to resist and frustrate the measures of each other. They understood that they were building intentions in this federal system from the get-go. The second quote is from Aaron Woldowski. Aaron Woldowski founded one of the first schools of public policy in the University of California, Berkeley. He's a foremost authority in the budget process, a major political scientist. But somewhat, what is it, 25 years ago, he offered an observation about public service where you have a contentious environment where people, the key sides of the political spectrum do not agree in the challenges that poses for people committed to public service and bureaucracies. And as I've interviewed and talked to people who are trying to implement the Affordable Care Act in a context where there is at least one party hoping that they will fail miserably at it, I thought that sort of captured since I have of public service being one of the hardest, the highest service because it's the hardest service. All right. So it's about Medicaid. A lot of you are familiar with it. You've read the initial chapters of my book, but just a sort of reminder, Linda Johnson goes off, signs Medicaid, Medicare legislation into Harry Truman's home in Independence, Missouri. And it gets going in 1965, a fiscal entitlement to the states, big enrollments over $400 billion federal and state monies spent each year on Medicaid. A lot of it, majority of it going to long-term care. This ensures that most people on Medicaid are getting sort of basic healthcare services, but the money is substantially in long-term care. Okay. So a bit on the book and its sort of core theme. The first part of my talk today sort of draws from the book and in a sort of once-over-lightly sense gets at some of the core themes. The second part I want to consider where we are now with some of the developments that are really happening after I finish the book and we'll speculate a little bit on where Medicaid may be heading. But in any event, the book focuses, as those of you in Barry's class knows, on the period from Clinton and then into the Obama years. And I make a number of justifications for IA. I think this is an especially fruitful period to study Medicaid. But the biggest single reason that I think it's fruitful is that it was during this period, and it was Clinton-led, there was a major movement through waivers and other means to devolve authority to the states over the Medicaid program. The Clinton administration was a clear watershed in this regard, and I think it makes for an interesting sort of period to follow. I then deal with this sort of paradox. There are a lot of pessimists about Medicaid. There are all sorts of reasons why people think Medicaid wasn't going to have much staying power or were to constantly erode over time. There's a classic line, a program for the poor is a poor program, by which they mean it's not only poor, it helps the poor, but it just doesn't have any political muscle associated with it. There's a whole among economists, a theory called the Leviason theory, which argues that states in their quest for economic development will gradually erode redistributed benefits for poor, lower income people. There's a welfare magnet version of that, and it's sort of an oversimplified form. There's this kind of race to the bottom notion whenever you turn programs for the poor over to the states. There's recent evidence that declining trust in government, which has been, as you know, quite marked since the 1960s, also has particularly negative implications for redistributive programs, those that take from people who got money and shift to low income folks. So there was a lot of reasons in the literature to be pessimistic, that Medicaid would have much staying power, that it wouldn't just show a steady pattern of erosion over time, and indeed what I argue in the book is that there's a side of Medicaid in this period I was examining it, but it eroded impressionably, and that is Medicaid is a service entitlement. Now Medicaid, as you, I think most of you know, is an entitlement in a two-fold sense. One, it's a fiscal entitlement to the states. If Michigan spends X dollars on its Medicaid program, the federal government is required at a certain match rate to give Michigan the money. It's not the can't cap it, it's fiscal entitlement. But the second sense in which Medicaid was historically an entitlement was as a service entitlement. That is, once a state, subject to a certain federal regulation, said that certain people were eligible for some set of benefits, people all over the state had to, were qualified to get those benefits, and you couldn't do, you couldn't cap them. You couldn't say, well, we're running out of money to the states and now we're going to set up a wait list and when time comes we'll give you these benefits. Once you were deemed eligible for Medicaid, it meant that the state was supposed to provide that service, even if it was putting a lot of immediate fiscal stress in the states. Any of that, the argument in the book, sort of once over lightly here, is that in this period from 92 to the present, early 2010, I guess, that there was a steady erosion in this sense of Medicaid as a legal entitlement to you, and a number of things were at work there. But principally it was waivers, and under waivers, which I'll talk a little bit more about later, states increasingly won the right to do certain Medicaid benefits in particular parts of the state, say managed care, but not in others. So the Medicare, the Medicaid benefits in the state might vary appreciably by where you live, which county you were in, in Michigan, or whatever state you would want. So there was a paring down of this statewide requirement. Through long-term care waivers designed to create home and community-based, more options for home and community-based services, states also won the ability to establish wait lists, especially in the area of long-term care. So if there's an intellectually disabled individual who at the age of 18 wants to transition into a group home and receive home and community-based services in that home, there's often a significant wait list. It depends on the state. Medicaid is all about state variation, as you know. But wait lists became much more prominent than they had been before. Another development to weaken Medicaid as this service entitlement was a set of statutory decisions, the repeal of something called the Bourne Amendment in 1997, which had given providers of services access to federal courts to complain that states weren't living up to their obligations under the Medicaid law. And as a result of the repeal of that amendment and then a set of court decisions that I won't belabor with you here, the ability of providers or Medicaid enrollees to go to federal courts to enforce their Medicaid rights increasingly diminished. So the story, so there was a lot of recapitulate pessimism about Medicaid staying power. And if you just look at the sort of legal service entitlement aspect of it, it's a case of erosion. But, and this is sort of the storyline of the book, that if you look elsewhere about Medicaid, it's a story of growth. It's a story of expansion. In the book I show how in all 50 states, even the most conservative, Medicaid expenditures and enrollees per person in poverty steadily increased over this period from 1992 into 2010. And then finally we had, and this I had no idea was going to happen when I started writing this book, but sometimes you get lucky. Finally we had the Affordable Care Act, Obamacare, a class in 2010 and lo and behold, of the 30 plus million people that were slated to gain coverage over under Obamacare, he now endorses that term. Half of them were to gain through a Medicaid expansion. And the specifics of the Affordable Care Act are that if you, that any individual under a 133% of poverty but with some manipulation on how they count income, it goes up to 138%. Anyone under that income level would be then eligible for Medicaid. And that was, Medicaid then was to be the floor of a national, it's not quite, there are gaps in the coverage, but of an substantial expansion in the insurance coverage in the United States. So there was this huge, in terms of enrollment, spending, Medicaid increasingly took off. I look at other markers in the book too. I don't rely purely on these numbers. And I argue that, for instance, Medicaid made a lot of progress in being smarter about long-term care. It used to put everyone in institutions, nursing homes. And increasingly, in the Clinton period, we grew the amount of long-term care provided in a home and community rather than in a nursing home or another large institution grew from about 15% to 45%. I think, although the evidence is somewhat mixed, that the movement of Medicaid enrollees to manage care was on the whole a good thing. There were other signs and evidence that Medicaid, for all its problems, I'm not portraying this as the kind of insurance program you all want to get on, but it, for all its problems, it was yielding positive outcomes in terms of access and in terms of health outcomes. Okay, and I mentioned a couple other things there. Let me move on here. And so the cases then Medicaid sort of confounded some pessimists and was remarkably durable and sort of a growth story. And so what's going on? Why would this pattern unfold? And the top line on this chart just refers to that, sort of the constraining model of federalism. You know, the welfare magnet states are not good to assign redistributive programs to, but there's an alternative sort of perspective that the federal system, my colleague Dick Nathan is a big proponent of, former colleague Dick Nathan is a big proponent of this, but others too, that the dynamics of federalism, rather than leading to the contraction of the welfare state, in a certain sense lead to its expansion. And there's some work out of Europe too to this effect. So this notion is that federalism can be catalytic. It would fit more easily with the sort of growth and what I argue is enhanced durability during this period, but the literature of sort of catalytic federalism is in my view sort of underspecified. What are the more precise dynamics that are interacting to drive, in this case, Medicaid growth? And so you'll see listed there on the PowerPoint what hit me as, they weren't unique to me by the way, some of them, others I think I played up, could be more than it had been done in the literature, but that's sort of a list. So there's no question, the Medicaid funding source is a, I'm sorry, the Medicaid formula is a fiscal stimulus. If Michigan is considering expanding its Medicaid program, it knows it will only, you know, it'll pay, I guess now people were telling me, Medicaid matches a little above 50% in the state of Middleton. So at a minimum, it knows for every dollar it invests in Michigan, it leverages a federal dollar. In the case of the Affordable Care Act, federal policy makers, even if they might have in a dream world preferred another kind of health insurance expansion, they knew they could leverage a certain amount of state effort and preserve a certain amount of state effort by working through this. The Medicaid funding formula is huge in this equation. The second point toward positive social construction, Medicaid increasingly, I argue it partly because of the wealth, it became delinked from the notion that there were all a bunch of poor women, you know, welfare folks, that it moved forward. Also Medicaid increasingly in long-term care became a program for the middle class. And so a much more positive social construction than you get oftentimes for programs that serve the poor. I know we've had a lot of talk about takers in the last campaign, but still I think Medicaid is, it came over time to be viewed more positively. I won't go into the supporters, providers and advocates, obviously the whole set, I mean for nursing homes, Medicaid is huge. Hospitals, it's huge. There's a whole community and there's advocacy groups out there, especially for people with disabilities that fervently support Medicaid. We had, part of the Affordable Care Act expansion is just this fleeting period when the Democrats ran thing. That's what the fourth bullet, I think many of you know the last time the Democrats had a Democratic president and essentially a filibuster-proof majority in the Senate was under Jimmy Carter in the first term in 1977-78 and at that point there were a lot more conservatives in the Democratic Party. Now we've had of course this sort of polarization and an ideological sorting. So it's very rare. But let me, yeah I think I've got the time, just pick up on the last two items on this list that I think created sort of catalytic forces for growth because I think my work does more to develop them than here to for in the Medicaid literature in any event. So let me turn the page. The Intergovernmental Lobby, Governors to the Four and the reference to Sam Bier there is simply to a Harvard professor, a great student of federalism, Barry Raib knows him well, who in 1978 wrote an article on the Political Science Review and there was a lot of concern that with all the great society programs of Lyndon Johnson the federal government was just becoming so powerful and the states were this puny force that was not able to influence things much. And Sam Bier said there's too much anxiety about this, that states are still have a lot of clout within our federal system and one reason is federal government relies on them to implement things. There's a huge amount of influence that can be exerted if you're the implementing agent of a federal program and then the second thing he pointed out which is really what this slide is about is the role of what he called the Intergovernmental Lobby and I focus on governors to a great degree and in the book I argue that while governors and what the governors want and partisan factions of the governors want is certainly not determinative in terms of what happens to Medicaid policy but that there is a strong preference on the part of federal policy makers, members of Congress or a president when they want to do things to Medicaid to at least have significant support especially among members of their own political party, governors of their own political party at the state level when they do things. Governors, if you think of them and I'm not going to go into it in the interest of time but they have when they speak, they're not just any interest group, they have a good bit of legitimacy, they command a lot of media attention and for federal policy makers to ram a federal change in Medicaid statute through with great opposition from governors especially those of their own party is not something that federal policy makers consider lightly. This relates to what I'm going to talk about in a few minutes. If you look at the PowerPoint, it talks about gubernatorial preferences during ordinary political times and in general, governors prefer, they like all the money Medicaid gives them and they prefer the more money, the second point, the more money the better if they can get an even better match rate, that's terrific and then they want, they don't want any strings attached to the money. They'd love to be able to spend it most anyway and I'm not impugning them, for good reason they think they know how to spend it better than the federal government often does. So during ordinary political times, this is the way governors tend to behave and I argue in the book, the book as those of you in the class know goes into some length about the failed efforts of Newt Gingrich who was driven by a set of Republican governors to get Medicaid converted to a block grant in the 1990s and this was led by John Engler, he's a major figure in the book as well as Tommy Thompson, but I argue that in the period after that failed that gubernatorial preferences turned kind of ordinary in the sense that I'm using the phrase here and then increasingly Clinton, and remember this devolved more and more given waivers kind of approach Clinton have, it was kind of, to use a phrase it's much in the news these days, a certain kind of grand bargain. Governors, I'm going to give you all sorts of waivers, you're going to be able to shape it more the way you want and increasingly governors, including Republicans lost much incentive to go after a block grant because if they could get Medicaid as a fiscal entitlement and still have a lot of flexibility, why bother to spend all your time then working in a block grant which almost always means less money? So I argue then that in that period afterwards there was a sort of spirit of acceptance of Medicaid and if you look at the major Medicaid expansions, whether it's Weld and Romney in Massachusetts, Christie Todd Whitman in New Jersey, Governor Pataki in New York, a lot of them were, you know, these expansions under waivers were led by Republican governors. The final bullet is just, and I'll come back to it, whether in these intensely partisan times whether governors will behave more now as members of a grand Republican governor as a grand party coalition. I'm a faithful member of the party and we don't like Obamacare or whether the sort of pragmatism that I found in Republican governors during these ordinary political times will reassert itself. Okay, so let me see how I'm doing on time. Let me move on here. Let me go to the waiver part of it. You remember there were sort of six variables that I looked at and I think my analysis of waivers is that it was a major sort of fuel for the Medicaid expansion, partly for the reasons I've alluded to earlier but there are two basic kinds of waivers as the first two items on this slide indicate. There were the 19, section 19, Medicaid is section 19 Social Security Act and these waivers passed and authorized in 1981 were designed to move people from institutions into home and community-based services there are about 300 of these waivers, states operate home and community-based service under these waivers, about 300 of them out there now, two-thirds of all money that Medicaid spends on home and community-based services is done under waivers. So it enticed states, for reasons I won't get into here, my argument is to do a lot more home and community-based service delivery than would have ever occurred if they had to stick within the boilerplate of the Medicaid statute. The other kind of waiver, which are the real big enchilada waivers are the demonstration waivers which were approved section 1115 Social Security Act was approved in 1962 before Medicaid's birth but the bottom line here is that for the first 25 years of the Medicaid program the federal government was very reluctant to grant these major demonstration waivers. Some of the Bruce Flattick, former official who ran the Zen Healthcare Financing Administration estimates there were about 50, Clinton came in and says to the states come one, come all, you know, he had stipulations, it wasn't any old thing, but he got behind giving states much more discretion, making it much easier to get these kinds of waivers and as a result we had some of the, a lot of innovation by the states, those Republican governors I mentioned and of course then we had the big bang of states and laboratories of democracy, Romney Care in Massachusetts which was a product of negotiation, the Bush administration did not want to renew a demonstration waiver that Massachusetts had since the mid-90s to do managed care and expand enrollments and in the wake of that negotiation Mitt Romney working with Ted Kennedy came up with this template for virtually almost universal healthcare in Massachusetts and then that became of course the foundation for Obamacare subsequently and last couple of points and I'm not going to go into them now but the argument of the book in the interest of time but the argument of the book is that this waiver, willingness to use waivers facilitated a kind of policy learning it facilitated this grand bargain between the governors and the federal government that I mentioned a little while ago and was a source of growth and expansion in the program. However, we turned to the sort of looking forward part of the talk and so we had this in this period I studied it I argue a pretty stunning move forward by Medicaid and so now I turn to the issue of will this have staying power in the current era and of course in the case of Medicaid as you all know is in the wake of the 2012 Supreme Court decision the Medicaid expansion essentially became an option for the states rather than mandated and so there are a range of issues present now that weren't present in the past we have enormous federal debt states for a whole range of reasons are in some of the most precarious financial circumstances they've been easily over the last 20, 30 years and so just looking at the debt issue alone we have this issue of what is the federal government going to do to cope with the debt and I look at a couple of what I call bipartisan approaches and Bull Simpson in terms of how they would treat Medicaid Bull Simpson leaves Medicaid alone pretty much it's about a $60 billion savings over a 10 year period but another bipartisan good faith bipartisan proposal Domenici Rivlin really does alter Medicaid a good book and I think would alter some of the dynamics that fueled Medicaid's enhanced durability and then we come to a partisan approach I argue in this period and that is the Republican initiative to retrench Medicaid in the book I talk about how after Gingrich failed to get the block grant going and you know follow John Engler's lead or to see John Engler and Tommy Thompson that the Republican governors pulled back from any desire to see Medicaid block granted taken away as a fiscal entitlement and so in 2003 when President Bush came up with his own version of a block grant proposal the Republican governor governor's very difficult to find anyone who wanted to support it moreover there was this sort of Bazar almost Orwellian congressional appearance by Tommy Thompson who was then secretary of health and human services in which he denied that the proposal was a block grant at all and it led to this like reading congressional testimony it led to this this is not a block grant says Thompson and Henry Waxman says yes it is no it isn't yes it is this goes on for about a page denying that you know you'd even want to mention the phrase block grant I mean how ugly and politically unappealing well let me just say that that changed when the Tea Party had a big victory in 2010 and Mr. Ryan Representative Ryan's proposal obviously for Medicaid is would not only convert it to a block grant but would carve $800 billion out of the program over a 10 year period compare say to Simpson-Bowles 58 or even the Domenici Rivlin $200 billion in a 10 year period so what and of course Romney and Ryan ran on this and I guess what is interesting to me and other colleagues like my friend Colleen Grogan at Chicago who's been saying it's getting risky for politicians to attack Medicaid in these times that at least among the leadership of the Republican Party they don't think it's very risky to attack Medicaid how if they ever got close to doing this block grant the Republican governors would respond whether as pragmatists because this would be devastating fiscally for them or whether they would be loyal members of a partisan coalition I think is a very interesting question okay so by my reckoning I've got five minutes here and let me see what I'm going to pick to do let me just I want to focus on this just very very briefly and I realize that Mitt Romney did not win the presidency but what Mitt Romney's quotes here and then the Republican Party platform's endorsement indicates that presidents and I would argue Clinton with waivers have without gaining congressional approval for action enormous discretion to shape the context of a policy and to see whether it succeeds or fails I doubt legally whether Romney could have done what he said he did he promised to do if he didn't win the election but could he have severely impeded assuming he couldn't get it repealed in Congress the implementation of the Affordable Care Act absolutely I've made an argument elsewhere that I won't go into today so I'm sort of highlighting then and this is my particular research interest for the moment I'm going to very briefly barrel on so one of the things I'm looking at now that wasn't in the book and I still haven't researched adequately is the Obama Administration's strategies for dealing with the implementation of Medicaid and now needing to coax the states to do it voluntarily originally it was you got to do this if you want to keep your Medicaid program now the Obama Administration confronts a circumstance where you know it it has to think it's Medicaid strategy and I'm not going to go into the the first these are things I'm writing about but I'm going to leave them aside I'm going to go to the strategies in the wake of the Supreme Court ruling in June 2012 and essentially what the Obama Administration has done you know a lot of states especially those that didn't like it so much said oh now that the court has ruled you let us do half the expansion we won't have to do the whole thing we'll do partial expansion Obama Administration has just ruled that out it's all or nothing you got to do the whole 138% of poverty or forget about it but I would point to one additional strategy here before I move on since I've talked a lot about waivers in the last couple of weeks there's a possible leverage point on the waiver front the State of Oklahoma Governor Mary Fallon announced we don't want to be part of this Obama care she's actually very pragmatic reasonable a lot of senses which is under a lot of pressure but she said we do want to renew a waiver that has covered a certain group of people up to 200% of poverty and the initial response of the Obama Administration is we don't see a reason to extend this waiver if you want to cover these people sign on to the Medicaid expansion and I was listening to Scott Walker I didn't listen but I read the clip on Scott Walker in Wisconsin or Mike Pence down in Governor Pence down in Indiana they all seem to be saying we don't want to do this Medicaid expansion but we do want to continue these nice waivers we have one of the things I'm going to be watching is the degree to which the Obama Administration plays hardball on waiver renewals in an effort to sort of put the screws on governors to opt for it I don't know the degree to do it but the Oklahoma case intrigued me alright racing on down to about my last two minutes here I think there's a case that over time most states will participate in the Medicaid expansion and if you look at the early Medicaid program it took a while for states to sign on that is in 1965 but I do think as I mentioned before that partisan polarization to the degree we remain as polarized and Obamacare is seen as the end of freedom in the United States in certain Tea Party circles and in certain states it may make it harder it may be the buy-in we saw after 1965 won't be as great and this is am I on the right slide? This is the grand finale so to speak so the early returns on state participation in the Medicaid program obviously you say well the Democrats will eventually sign on in this period there have been by my count at least among the governors six Republican governors who signed on for the Medicaid expansion there was a group of governors out west Nevada to Mexico and then Governor Jan Brewer in Arizona who signed on and the sort of working assumption they're looking at Latinos as a demographic and Latinos want this there's North Dakota that signed on and then your very own governor Governor Snyder has signed on and John Kasich of Ohio has signed on so there is some movement what Chris Christie will do in New Jersey is still the great mystery we're all waiting and we'll have to see but let me just conclude then with a comment but the last item on this slide that one of the you know one of the big issues in terms of whether we achieve national goals with this Medicaid expansion is what large popular 10 most popular states do and in that regard Florida, Georgia and Texas may be critical to whether the ACAs enrollment goals are met because and they've all rejected at least to this point the Medicaid expansion and they are home to over 20% of the people in this country who lack health insurance and would be eligible for Medicaid coverage so that's it thank you so you want me to I didn't clear that thing for you that's fine I just need a clock so I don't wrap it on so first I want to what Barry said in what I'm sure you've already concluded which is that this is a wonderful book and one of the reasons that it's a wonderful book is that it's based on knowing a lot about policy which necessarily involves understanding politics but also knowing what the politics are about because ultimately this is about the disposition of a whole lot of money a whole lot of interests, a whole lot of waste which is also known as a revenue stream for many people and a whole lot of people's lives and the reason that matters is that we're having a temporary inconvenience in political science which is presently the study of the Democratic Party it paints a traditional picture of American politics as negotiated with weak parties lots of transactional behavior side payments, pork barrel and so forth as a Europeanist I quite prefer the political system we appear to be living in now at least among the Republicans where you find out what the party leadership says and recognize that the legislators will neatly march to do what they're told and I say that because most of what I'm going to say is political science in the sense of the study of Democratic Party politics and I want to highlight something that Frank mentioned which is just what a series of near misses the entire Medicaid program and the Affordable Care Act has recently experienced if the election had gone differently we could be looking at vast, vast changes in every aspect of health policy passed as the Ryan budget under reconciliation and well we have a lot to do so sorry I changed the order of the things I'm talking about what I want to focus on primarily is what this teaches us not just about Medicaid but about federalism and federalism as Frank said gets blamed for a lot it gets blamed for a race to the bottom that if you entrust some sort of attacks to the state or some kind of a regulatory authority to the state they will rapidly competed away it used to be that if you wanted to charter a corporation you had to have a public purpose Delaware said hell you don't need a public purpose and that's why practically every place that you every company that you know of is headquartered in Delaware formally likewise we used to many states still do regulate credit cards and how they can behave towards you they said that they didn't need to regulate credit cards and the result is that you send all of your credit card statement bills or payments to self-decolon they get blamed for inequality well that's by definition if you're going to have a federal country you are accepting the proposition that a sick baby will have different life chances based on where its parents live okay deal with it you have another option it's called France and of course it brings complexity I mean just try to explain the Affordable Care Act to somebody who isn't at least to some extent a junkie for American politics American public administration and American health policy and look at the simplifications even among very savvy people we talk about implementation of the Affordable Care Act oh that's how it looks from Washington right they got their legislation passed now they're going to implement it well from the point of view of Lansing this isn't implementation this is one of the bigger and more consequential things that the legislature in the state of Michigan has had to argue about and I don't think they saw it as their role to meekly put through whatever emerged from Washington so complexity inequality and potentially a race to the bottom these are all fairly heavy charges to levy against federalism but you could argue in response that in no sense is it the problem and this is where I become contentious I think because across the board if you want to look at the structure of American public policy it's not so much in the states frustrating each other as it is in the way that our fragmented executive system our relationship between the executive two houses of a really fractious legislature and the courts managed to check and balance each other that old thing you hear in high school politics still works extraordinarily well and you see this in most policies sub-national governments which we politely call them in order to disguise all the different variations between Polish boy-vod ships and the Flemish community and American states generally exercise the autonomy that they have within the framework set by the larger government by the federal government in the United States they exercise it within their capacities as a lobby the National Governors Association is a lobby Washington has many lobbies after financial services health is the largest office and employer of lobbyists and there's wonderful stuff in the book about the reverse lobbying to which the governors were subjected because if you're a lobby with enough clout to get attention such as the AARP or the NGA you're also a lobby with enough clout that people who want to influence your decisions are going to intervene seriously in trying to modify what you do and there's wonderful and highly instructive stories about that Quebec, incidentally the National Governors Association and because somehow they think that the United States would be more friendly to a small Francophone society and they pretty rapidly end of the experiment when they realize this is a lobby we might as well hire a Burston Marstall or a Weber-Shandwick to represent us because in Canada Quebec swagger's in and they have practically diplomatic relations join the NGA, different thing so here we have Medicaid is basically a nice example the states vary within what the law says the states vary within what intergovernmental relations says as was pointed out Massachusetts behavior has in large part been triggered and shaped by the structure of Medicaid and Medicaid waivers it's not just that a bunch of Democrats in Mitt Romney decided that they were going to restructure the healthcare system and what matters is flexibility money, legislation and that also brings to bear a rule of politics which is nobody actually cares about federalism people care about politics notably this is why states' rights is a technical term for racism the only exceptions are the Quebec's of the world of which there are none in the United States where their political agenda is precisely their own autonomy now what does that mean that means that it's actually Medicaid what does it look rational but it is because fiscal federalism one on one says that you want to do two things at the largest possible level set basic citizenship rights and pool risks it says you don't want to administer and make little decisions at the largest possible level because Washington is a very very long way away from Ishpenning and Eskenaba so is Lansing but that's a different question so from that point that's what federations are when you actually compare them federations are pretty good about moving the money around at the biggest level and having delivery and policy experimentation and implementation at a much much lower level now that points to executive federalism which in the context of the very polarized American politics with the extraordinary level of party discipline that I mentioned might not be such a bad thing because think of the Canadians Canadian party politics are seemingly complicated I don't recommend studying it unless you like real head scratchers but Canadian voters it turns out have a much simpler problem than American voters if they don't like something they have to a portion blame between Ottawa and their provincial premier that's a much simpler problem in figuring out why we don't have the public option or why we don't have Medicaid block grants in the United States and it's messy well so what are you going to redesign your constitution because it's ugly it'll rapidly become encrusted and barnacled with all sorts of other fixes if you get the basics right if the money is being distributed on a level that prevents the thing being essentially a bad insurance scheme and you deliver the policy on a level where people have a chance to experiment where failure is confined where disappointment is limited to a single place then you've actually done a pretty good job and you've done what pretty much other decentralized countries in the world come up with it's frankly infantile to say you want to throw that all aside and decentralize insurance regulation to the states in the theory that we'll have some nice clean market because rapidly again it'll become complex so one of the things that the Scottish government of all people like to say and I've never seen an academic patent put on this but it's beautiful and I'll leave you with it is that in making policy there's a trilemma trilemma is where there's three choices and you can have two good cheap and quick choose two well the federal the policy trilemma is agreed everywhere and now can have your policy agreed and now in some places Texas doesn't agree you can have a policy that's agreed everywhere and that's Germany and that's why their policies take 30 years to pass practically to the brink of the Civil War and you might argue that the structure of American federalism and the structure of Medicaid is not just rational in the sense of getting the money and the laws in the right place despite the ugliness despite the fact that none of you ever want to be on Medicaid but also because it's a pretty good reflection of the ultimate decision that even if we tried to order a pizza we couldn't achieve simultaneously everywhere agreed and now in this room thanks for the opportunity to be here do you want to stand up? thank you both I hadn't realized we were going to be talking about Quebec and Scott seven years ago the state of California launched a nationwide effort to create a coalition of other jurisdictions that would join it in the harvest gap that process has begun and the only other partner that California has is Quebec so federalism is a deepening for the state of Quebec we wanted to allow for both presentation and opportunity for a serious conversation, question and answer if you would like to take questions from the floor when you are recognized, if you just pause, Bonnie will bring a microphone if you'd identify yourself and then ask your question and we'll get going would like to begin the conversation I'm David Alboy and this is the professor here I have a lot of opinions on this topic I study geographic differences and federal taxation spending and I also have French and I have Southern so I have a very complex relationship with federalism both centrist and decentralized and I've lived in both Quebec and California so I'm all over the map so one thing I think that was really interesting and I've talked to people about waivers I'm still trying to understand how waivers work but one thing I do understand is that the matching rates in America are very unequal depending on the state so in California and New York the federal government matches one for one for every dollar the state spends in Michigan we get two dollars for every dollar that we spend and in Mississippi you get three dollars so I find that's pretty interesting on top of the fact that the poverty line is an index for local cost of living or local wage levels and so it's a lot easier in a sense to qualify and some of these red states which are already getting these big matching grants so I think it's kind of fascinating that the political leverage that we've seen has been the blue states that are kind of more liberal getting lower matching grants and having lower eligible rates with these red states that don't care so much but they support the matching system because they're coming away with huge amounts of money and so at least that's my guess and so what I see in the future is that we have to deal with some way of reforming the system because of the sort of trajectory of healthcare costs over the next 30 or 40 years and in Canada they actually decide to apportion the grants on a per capita basis so they don't have, they have basically a block grant per person regardless of where they live I think that's a much better system in a sense although it would be even nicer to say hey Florida has a lot of old people so maybe the fact that they have more people that need long term healthcare maybe they should get more money so you think there's any I want to raise prices into a question okay so we have, there is a lot of concern about wasteful spending in healthcare relative to other you know, domains of like food clothing we're not so generous with we probably need to do something about containing costs in the long term and what I'm curious is how do you see the politics of this changing as sort of the rinds and the wrongies of the world are trying to find solutions and as states like Georgia and Texas their incomes are rising it seems like so and maybe that the red states are going to start becoming less advantaged with these programs I'm not sure if that's going to happen but you know, because we've seen these used to be economic backwaters that got big mention rates and now I'm not sure that's going to happen anymore and so what I'm curious is what do you think that A, Medicaid has become a wasteful system because of the matching system especially in some of these states and B, you think that there's a way a way forward in terms of reforming that to sort of deal with the long term prospects for the next 30 to 40 years oh, I'll start let me go to one and it may not have heard you right on your empirical assertion and then I'll try to deal with the waste thing and hold my feet to the fire if I forget the question but you're right on the federal match and places like Mississippi and so forth in the deep south and other places have much more fiscal incentive to do Medicaid but of course the record is that they do not do it that the sources they look a gift horse in the mouth and it's a testimony of political culture and political ideology so the formula if one defines a successful formula is convincing you know the sort of porous states to get benefits up where richer states have them it's been a miserable failure in the book I trace every state increased their expenditures and enrollees per poor person and I ask well is there a convergence you know are we getting more alike you know the coefficient of variation is as high as ever on that that kind of front so let me go to the waste question and obviously there are all sorts of issues we faced in trying to contain costs in this country and so on and so forth is there waste in Medicaid there's you know they have there's some calculation of fraud among government programs that I think Medicaid probably is up there at the top but I would argue if you look at Medicaid plenty of warts in this program but it is a bare bones program what Medicaid pays per and they have different kinds of enrollees taking care of people with disabilities as well as in long term care issues are expensive I would argue that it is it is really a bare bones program costs per beneficiary are less than a Medicare God knows private insurance and they don't pay you know provider network adequacy is a real issue because they don't pay a lot of providers they pay worse than the other programs so when I hear the sort of Ryan S God we can take 100, 800 billion over 10 years and everything you know we're going to figure out a way to make Medicaid more efficient I just don't know it's a really bare bones program is there waste I'm sure there's some waste I think if you try and cut it there's going to be a price to pay access or health outcome you know that's just a take on it I'd also say the book is very good it's very good about how Medicaid is actually not the terrible program that we've been repeatedly told it is again I don't think any of you I don't recommend it to you all of bad care and endless waits that is often portrayed to be I would just say being comparative again the US has a small distinction in comparative federalism as being the only country that doesn't have any kind of flat out redistribution for no particular purpose from subnational government to subnational government right we have no equivalent of just slicing off a big chunk of revenue from Bavaria and in order to keep Berlin stylish and a lot of the time that's because we pass our programs as being about redistribution to people this is the ecological fallacy of red and blue states is that programs will often redistribute successfully to poor people in red states who are either voting democratic or are not voting because they're various red state issues and that's why the federal government has transformed the south look at the south before the new deal and you can see very clearly the long term you could argue democratic party incentive or liberal democratic party incentive to spend a lot of money creating a welfare state in the south over the objections of the people who run most of the south it's also never a technical discussion you don't hire economists to design a Wixelian compliant system that will deliver the correct incentives that's the fantasy of the IMF you can only do that if you're the IMF lording it over poor countries in rich countries you hire the economists for the specific purpose of telling you how your side will win and lose in a particular negotiation Hi, I'm Adriana McIntyre I'm a dual degree student with Fordon School of Public Policy I had a question about the durability of Medicaid and I was wondering what you think the implications are of the demographic shift with baby boomers reaching 65 and record numbers and ostensibly feeding a growing dual eligible population what does that mean for the program in the future well I think if they're aware if they stay aware of what Medicaid can do for them it'll be a further force bolstering Medicaid durability these numbers aren't precise but something like 65% of middle class people enter nursing homes paying for themselves and within a year they wind up on on Medicaid Medicaid has become a major long term I mean it is a long term care program for people who essentially never been on welfare are not one of these what's the phrase dependents or the takers who nonetheless at the end of life run on a lock and somebody's got to take care of them so I would think that that's a force in the duals as well a force for enhanced Medicaid durability for middle class people meeting the program on the other hand getting people to recognize what Medicaid is how Medicare doesn't really give you a long term care benefit isn't easy although I must say in terms of Kaiser polling it is quite amazing the number of people I think it's 50-60% who have either been on Medicaid or know someone who's been on Medicaid and I know in the context of middle class with intellectually disabled or developmentally disabled children great numbers of them know a whole lot about Medicaid and they are as ferocious the defenders of the program as I think you'd find anyone I'm sure all the likelihood some states will move further in the directions that I don't want to be told what to do you reject Medicare you have a trust on Shacka and more of the government as a state in the direction of you know France and socialism two states right next to each other maybe Michigan and Illinois with policies one where it's like a nanny state and one where it's the cold reality industry if I understood the question correctly I think in terms of this sort of polarization that's going on in the literature which I haven't read that talks about not only are we ideologically getting that way but that people are literally voting geographically with their feet you know yeah you know that conservative people live more in Texas and if you're liberal you know you live more in New Jersey I haven't ever analyzed that carefully but I do believe that unlike the first Medicaid program where about five years to get this is 65 that was passed five years for every state except Arizona to sign on that this time could be different that there may be ideological holdouts in places like Texas or the deep south which are really unified republican governments now contrary to what it was most of our history republicans control both houses of the legislature and run the governor so it will be interesting to me whether they ever do come on board and whether this variance that I think you're talking about as a result gets wider and wider you're talking in your book about the row of expenditures over time as a sign of Medicaid's durability and I wonder if you also think of that as a threat to its durability given that as it takes up a larger percentage of state budgets it becomes a target for costs there is a downside as well as an upside Peter Orson whose you know the work for President Obama has been very much in the forefront of those who argue that Medicaid is hurting higher education and other other functions and especially with the cost growth that you mentioned the sort of relentless increases of cost even to what I would argue is a relatively bare bones not so wasteful program there are really hard choices out there in terms of how much you can states I'm thinking of in particular put into Medicaid and I have no other than that the higher education community is a whole lot weaker politically than the Medicaid community probably and that's not a right or wrong kind of answer but it's just you know it is a downside you're right people do talk about cutting it but again I'm struck with the Ryan program Alice Rivlin the economist in Washington policy player said that no governor in his or her right mind would possibly support the Ryan plan if it ever became possible now it's been all sort of talk and nobody was going to pass it now what's what we mean by right mind in these times is up for grabs but it would have devastating impacts on the fiscal pressures that states would face if anything like that came close. Hi Jason Buxbaum I'm a student in health management and policy my question for the panelists around some of these odd incentives that you get for duals where a state might invest in better long-term care pay more out of its own pocket even though it's getting the match the savings accrued in Medicare and I know there's been more attention to this issue in recent years and the duals demos and a special office created in the ACA but it still seems like a fundamental tension and I can't think of any other state federal partnership program that has this kind of terrible incentive built in there's got to be some other program that's terrible. I don't know what it is though you've got me there but I just agree with you if we get a system where we don't put people in hospitals so much we keep them in the you know reduce hospital readmissions for the elderly say and states are absorbing the cost and Medicare is getting off Scott free or not Scott free but with a good less expenditure there ought to be a way of sharing the savings and of course they're working on it and I don't there's obviously been no breakthrough hope springs eternal but you're right on the basic dysfunction in the incentive structure. Yeah, David Jones school public health doctoral student. I was at a speech or at an event recently where I saw a public and congressman give a speech and he said that one of the reasons that the implementation of the ACA is failing so miserably is because states weren't involved in the drafting of the legislation so strong assertion. I'd be curious to hear you talk a little bit more about the role of states in the legislative process what you talked about the governor's association and right from that point moving forward what if anything the Obama administration or Congress could have led to different outcomes? I hear the argument from time to time that if only there would have been greater reaching across the aisle and we would have come up with something but I find and I'll get to your more specific point in a minute but I just having read countless books on the some books on the passage of Obamacare and then focused in particular on Medicaid I just don't think this if only they would have tried to reach out to us I just don't think it's true. In the case of the states the governor's for understandable reasons were very very concerned about whatever the match rate would be and there were some certifiably crazy proposals out of the U.S. Senate by Democrats which argued that they didn't want to give this very enhanced 100% early 90% match and they even talked about well states could borrow money to cover their you know share of the matter really terrible ideas and the governor's fought back on that front very fearful of an unfunded mandate and we're quite vigorous and people in the Hill begin to think that early on the national governor's association tried to get a group of governors together to offer sensible input but I think the middle of 2009 this Obamacare the health reform had taken off into the realm of ideology symbolism you can break Obama's back on this one he'll be a one-term president I just think it got elevated by July you know to never never landed so when the Democratic governors by and large said oh yes we'll endorse we're for Obama and we'll endorse this and the Republican governor I think uniformly opposed it by that point and it just caught up in sort of I'm for it you're against it and I think they governors had less other than around the match rate less influence than they otherwise would so my name is Claire Hutchinson I'm a first year at the Ford School kind of building off of I believe your name is David's comment question do you think that governors and states would have had a very different approach to the implementation of the ACA had this happened in better economic times think a lot of states they come back and say you know we're really worried about the fiscal implications but had this been legislation of the late 90s would they have looked at it differently well you jump into I think I think economic better economic times would have helped but I really think this ideological shift polarization we've seen over the last 30 years and political scientists have really sort of studied this fairly carefully you know whether Rick Perry and the people in Texas would have liked this I mean times there weren't as bad as a lot of places it helped but I think the political ideology really does matter so one thing that I noticed with sort of medical expenses in the United States especially in the last several decades is that they're being driven more and more by chronic long-term illnesses like type 2 diabetes heart disease many of these diseases are also highly worthy of power a lot of people end up with type 2 diabetes because they can only afford to eat crappy food crappy lifestyle basically and I'm wondering if there's been any serious discussion at a policy level of using consumption taxation to not only raise money to pay for these diseases but also to discourage those behaviors that form containing cost I know that's something that I've talked about a lot but I don't hear it on the national stage at all right I'll just read the comment of Medicaid there is an effort within some Medicaid some states to make Medicaid patients more individually responsible about their health and there's sort of a notion that if they're having a health problem a lot of it is due to bad habits but the level of sort of penalty or set of structure they set up it's not clear to me whether how much of an impact it's had beyond that I don't know if you had anything about it I take your point but I haven't heard anything very major especially around a consumption tax in that respect at least in the Medicaid realm I think the last place I would look for comprehensive coherent tax reform would be Washington it's hard enough to do it on a state level if you were in Michigan over the last couple of years so I think you'd look for individual governments trying it out New York State and New York City seem to be particularly fond of such experiments and potentially it would diffuse I think the diffusion literature tells us whether that's true or not I'd also say that that's part of a broader subset of things that everyone in the world is dealing with which is that we have a lot of welfare state and health programs that were set up essentially on the premise that you needed some kind of cover for when you were off work then you needed some kind of cover for the medical bills and then they'd usually add something for doctor bills that's the rough progress of health insurance development that's the rough progress of its development in a lot of places the problem is this does not produce a system in any country that's particularly well suited to complex comorbidities, chronic problems or anything to do with the long-term care wave that's coming at us the class act which has now been cut was an intellectually interesting effort to try it the United Kingdom has commissioned a number of reports which they've run into the sand as soon as they saw the budgetary estimates the result is that I think you have a lot of ferment as far as I can tell no really good ideas on what you do about systems that are very very good at paying you to go to hospital reasonably good at paying you to go for episodes of care with the doctor largely poor despite all the PR at getting you to do live a healthier lifestyle and absolutely out of ideas on questions of long-term care and that includes going back to what you do with the dual-eligibles there's a range of other ideas worldwide which range from even more expensive and silly than dual-eligibles through to throw grandma from the train what happens when governors and legislatures are on a different track in Michigan we have Republican governor Republican legislature but they don't agree about what to do with Medicaid do you have any suggestions of what's likely to be the next step I don't certainly don't know the case in Michigan Jan Brewer in Arizona has a similar similar problem you know that it'll be very interesting there's a book out recently on whether governors get their way with legislatures and one part of it deals with sort of the non-budget items and they have a you know that there's variance of course in particular circumstances but they have a hard time winning on a lot of their sort of substantive proposals and this is in the aggregates I'm not talking about Medicaid in particular when it comes to budget items however in budget proposals governor the track record of governors is pretty impressive dealing with legislatures and I I I don't know where you know it's obviously got big it's got budget implications obviously a substantive proposal I don't know how strong the Tea Party is among the sort of the Republicans of Michigan but it's you're right came out we have this separation of powers fragment system so what governors want may not carry the day in 30 seconds there's also executives have to have some kind of outcome legitimacy they can do something and claim credit for it and then do you like it or not legislators be they the House of Representatives or be they the Michigan Assembly the main thing they do is take positions and they're often fiercely policed by all sorts of factions within the party for the positions that they take so structurally it's much easier to look like a sensible person and a leader as a governor than as a member of the House of Representatives where you pretty much condemned to look like a blowhard much of the time the other point is who would be a member of the Michigan State Legislature California State Legislature you're good enough to run an enterprise of that scale and complexity you're personable enough to get elected and what at age 40 you're going to abandon your obviously successful career for an eight year term limited career break so you can be surrounded by a rabble of ideologues in their 20s quite frequently I mean who would be a legislature in these states yeah I want to go back to Affordable Care Act and the expansion of Venicade and the only based on Massachusetts experience of the requirement for vastly increased numbers of primary care physicians because of the expansion and what the potential is there for addressing some of these behavioral issues from in effect going to a public health model rather than the illness model to get more families started on the right foot through from birth but everybody's covered birth now just because of reimbursement requirements but the whole point of having that coverage more comprehensively and perhaps messages more comprehensively developed from a public health perspective with that model I think it's an absolutely great idea and I'm beginning to follow this and the degree to which states attempt to encourage that kind of public health model I think will be very it's tricky and it's not going to be easy given the sort of interests that are running around the system the other point I would make and I think this is part of your remark is that I am hopeful that as the demand for sort of primary care providers increases increases that at least nurse practitioners will gain more ability to deal with certain basic sort of health issues which could also if done right might facilitate the sort of public health kind of perspective and we'll see there's certainly movement I think some movement in that direction but I haven't tracked it at all empirically and it'll be a real pressure point there's also a case for more efficiency and better use of people because we're in a world-wide healthcare workforce shortage and given that the United States is a country with essentially no concept of cost containment we've been hoovering up medical professionals from the entire planet well particularly India at some point India is actually going to have enough jobs for all those excess doctors and if China doesn't start exporting doctors we're in the soup much of the world is getting richer and the United States is structurally dependent on essentially pillaging India and I don't think that's a long-term viable strategy and so we come to the end of a conversation I'm pillaging India I'm against it it's remarkably durable has been noted but the fault lines are really extraordinary whether that is with in a state between state and nation and even if we didn't have time for conversation what happens when a second-term term-limited president does not like the reaction of some governors and the very possibility which I hadn't thought of before waivers being withdrawn or made more difficult when normally the presumption of waivers is they are expanding exponentially does that become even still a kind of an intergovernmental power playing tool I guess we stay tuned as we move into another decade of Medicaid with that please join me in thanking our panelists for joining us thank you