Opting In, Opting Out
Matt Compton observes that semi-optional federal programs are not a new idea in American politics:
Medicaid, for instance, is an opt-out program, but no state has ever chosen to take that step.
Federal highways are also an opt-out program, but we all follow the same speed limits.
To be more precisely, Medicaid and federal highways are, like a lot of federal K-12 policy, structured around conditional grants. The federal government makes funds available for certain purposes if states do certain things, and the states can choose not to do them. In the case of Medicaid I believe that Arizona actually held out for a long time before implementing the program. And to the day, the extent of the Medicaid benefits offered from state to state vary a great deal.
The “opt-out” structure of a public option would work differently since there wouldn’t be a net transfer of tax money involved. But for the federal government to enact a policy that works differently in some states than in others wouldn’t be a breach of any time-honored principle of government. What’s more, my strong suspicion is that a public option would either be poorly designed & implemented and flop, or else if it works as intended rapidly become available almost everywhere.
16 Responses to “Opting In, Opting Out”
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October 29th, 2009 at 10:18 am
I’m pretty sure Newt threw out the federal speed limits back in 96 — every state can decide their speed limits for themselves. Drinking at 21 is a federal requirement.
October 29th, 2009 at 10:21 am
Actually, I believe that Arizona opted out of Medicaid for a number of years.
October 29th, 2009 at 10:25 am
You are quite right. Arizona opted in to medicaid in 1986. One key difference is that medicaid required states to set up a program – opt in not opt out. That is like the original Carper proposal, not the Schumer modification replacing opt in with opt out.
It is true that the public option won’t involve Federal money flowing to a state. However, it is also true that opting out won’t reduce State Government spending. The public option involves no public spending (on average over 10 years). States contribute to medicaid, for example the Arizona state gov. spent over $ 2 billion in 2007
http://www.statehealthfacts.org/comparebar.jsp?ind=186#at.
From the point of view of state legislators this is a huge difference.
By the way AFDC was and TANF is different in every state. It’s the American way.
October 29th, 2009 at 10:41 am
Arizona was also resistant to the holiday celebrating Martin Luther King. Any state that is anti-holiday is pretty lame.
Matt:
What’s more, my strong suspicion is that a public option would either be poorly designed & implemented and flop, or else if it works as intended rapidly become available almost everywhere.
I agree and also suspect either they’ll pass a health care bill or they won’t pass a bill. I know that’s going out on a limb.
I would bet money though that even if a public option is relatively poorly designed and implemented, it will still be a relative success given the low bar for success. And I bet once US troops leave Iraq, Maliki will have the peaceniks favorite freedom fighter Muqtada Sadr assassinated. Probably the day after troops leave. He should leave for Iran right now.
October 29th, 2009 at 10:55 am
The “opt-out” structure of a public option would work differently since there wouldn’t be a net transfer of tax money involved.
HAHAHAHAHAHAHAHAHAHAHAHAHAhahahahahahahahahahaha!!!!!!!!!!!!!!!!!!!!!!!!!!
October 29th, 2009 at 11:06 am
Further to my last comment, here’s the language from the Committee Report on the Baucuscare bill (and recall that Buacuscare doesn’t even set up a true public option, just co-ops):
So when Matthew writes “there wouldn’t be a net transfer of tax money involved”, he’s lying, as that language shows.
October 29th, 2009 at 11:31 am
I am a pretty staunch free market kind of guy but I really don’t see what the big deal is letting states opt out of a public option. Its just another insurance company. In any state there would be people who want to sign up for that insurance company and people who do not, but letting some sign up for it doesn’t hurt the ones who want something else.
And likewise for hospitals- if they think the public option is not paying high enough rates then they don’t have to accept the public option at all. its just another insurance company. I can’t see how there would ever be a groundswell of voters taking a stand and saying that they just do not want the public option to be offered in my state! To me the only people who would want to opt a state out of a public plan would be politicans in the pocket of insurance companies and providers.
October 29th, 2009 at 11:33 am
If this could be done without a net transfer of tax dollars, that is without taxpayer support, then why is it being done through the government at all? If this was possible, then why not simply start a member-run non-profit that provides healthcare to all Americans who want to purchase insurance from that non-profit?
We can argue that health care is worth spending federal money on, the same way we spend money on roads and schools. But don’t tell me it isn’t going to cost money.
October 29th, 2009 at 11:38 am
Arizona was also resistant to the holiday celebrating Martin Luther King.
But of course.
Arizona’s governor at that time, Evan Mecham, was a real wingnut.
October 29th, 2009 at 11:44 am
We can argue that health care is worth spending federal money on
I’m glad you concede that, since a lot of federal money is already spent on health care. In fact the U.S. already spends more public money per capita on health care than France, the UK, Sweden, Canada, and, well, just about everyone but Norway, Slovenia, Luxembourg, and Monaco. (Look for the number 2862.)
October 29th, 2009 at 11:48 am
…well, I was using the PPP table, and I have no idea whether that’s better or worse than the other exchange table. So you may want to strike Sweden and France from that list. Still, the US spends a buttload of federal money on health care. (And “If nonprofit public options would work, why haven’t they already come into existence?” is a silly argument.)
October 29th, 2009 at 11:54 am
Actually unless a federal program is directly involved in national security or regulating/enabling interstate commerce or otherwise dealing with inter-state relations, federal programs pretty much have to be opt-in or opt-out.
“States’ rights” folks should realize that we do still follow the Constitution after all. If their state maintains due process rights and has no trade with any other state, pretty much the only time they’ll have to deal with the federal government is for matters of national defense.
Of course states are not economically self-sufficient (and pretty much any sort of federal policy can affect trading patterns between states and thus falls under the inter-state commerce clause) and get money from the feds (which money naturally has strings attached, e.g. “you want us to help build highways in your state? well, then your state has to have a drinking age of 21″) — but if a state wants to have an 18th century economy and otherwise minimize its commerce with other states and not need any federal money, there is only so much the feds can do to it.
But do people really want states like that?
Really, the Constitution is an amazingly flexible guide for federalism. In an economic environment where the states are de facto independent, the federal government doesn’t have much power over them. But in today’s interconnected economic environment, the fed gets the power it needs. And if a state wants to “opt-out”, it can turn on, tune in and drop out economically. But what kind of state would want to do that? Even the most “States’ rights” oriented of states don’t generally nowadays like to shoot themselves in the foot like that.
October 29th, 2009 at 12:02 pm
If this was possible, then why not simply start a member-run non-profit that provides healthcare to all Americans who want to purchase insurance from that non-profit?
Isn’t the idea that the money involved is to use to start-up and later expand the program. I thought the idea was that the operating costs of the program would be covered by premiums, etc., but that the federal government would provide the seed money (where would a member run non-profit get seed money from?). The other role of having the federal government was to coordinate the formation of one big huge non-profit that (being backed by Uncle Sam) would have tremendous leverage in the market to negotiate favorable terms and thus keep costs down (as competitors would have to provide similar services at similar prices to compete).
Now whether it’s reasonable that money would only be needed to start-up this big giant coop and the only role of the feds would be to organize this behemoth and give it the muscle to help keep prices down is debatable (and some would just assume not have real competition against the established insurance market anyway). But I thought the idea being sold was that the main cost of the public option would be having the upfront costs for starting the thing paid for by the government.
October 29th, 2009 at 2:14 pm
Matt, if the argument is so silly then answer it.
Instead you’ve just pointed out that we ALREADY spend buttloands of federal money without producing the level of care observed in those countries. Which seems to me to support the idea that there are other institutional problems in the American context that will prevent a “European-style” health care system from being revenue-neutral here.
The simple fact is this has to be a government program because it will need tax dollars to support it. Which might be better anyway, but you are either dishonest or stupid to say that it will not lose money.
October 29th, 2009 at 2:20 pm
the extent of the Medicaid benefits offered from state to state vary a great deal.
The “extent” varies.
The “benefits” vary.
October 29th, 2009 at 11:13 pm
Matt, if the argument is so silly then answer it.
You have a good point; I shouldn’t have described it as a “silly argument.” It isn’t an argument. You didn’t provide any evidence that anyone but the government could create a privately run non-profit that could provide health care for everyone. I mean, this doesn’t even rise to the level of the brain-dead glibertarian argument that the market will provide everything we need, since market forces depend on profits, and we’re talking about a non-profit.
Instead you’ve just pointed out that we ALREADY spend buttloands of federal money without producing the level of care observed in those countries. Which seems to me to support the idea that there are other institutional problems in the American context….
Good! You’re doing well! The American health care system is a very different institution from European systems, and that’s why our health-care spending is so inefficient!
…that will prevent a “European-style” health care system from being revenue-neutral here.
Er, no. It suggests that the lack of a European-style health care system (whatever that means; there are many European systems) is making our health-care system very inefficient.
Now, when most right-wingers start talking about this sort of unique American institutions that means that Americans can’t have anything nice, they’re usually two or three posts away from blaming black people and possibly Mexicans. If that’s what you’re about to do, I’ll tell you to get stuffed preemptively, and we can all save some time. If not, my apologies.