The Political Ironies of the Health-Reform Case

Last week, when the U.S. Supreme Court set aside three days for debate on the challenge to the federal health-care reform law brought by many states' attorneys general, marked a momentous point in American policy. Certainly, the various briefs and media reports have characterized the case as the ultimate showdown between conservative and liberal ideologies about the role of government.

The Affordable Care Act's requirement that individuals obtain health insurance and its mandate for states to provide Medicaid coverage to more lower-income individuals or risk the loss of Medicaid funds are viewed as by the law's critics as unprecedented extensions of federal authority.

Ironically, however, both of these issues arise from the avoidance of nationalization of power by the federal government. Rather than providing federal health insurance to all, as in Canada, or universal health care, as in the United Kingdom, our federal government has chosen to engage others — most notably private health-insurance companies and the states — in carrying out national health policies, both in the new health-reform effort and for Medicaid and Medicare before it.

When one looks at the federal Centers for Medicare and Medicaid Services, for example, less than 4,000 federal employees work for that agency administering both programs. Yet one study suggests that nearly 40,000 workers are involved in managing Medicare alone — mostly in the private sector working for private health insurers monitoring and overseeing Medicare payments to doctors and hospitals. Of course, this strong tradition of non-federal management of national goals is also reflected in Medicaid, for which state agencies are the primary agents.

Far from a referendum on an unprecedented federal power grab, the health-reform case is a test of the constitutionality of the tools of governance used to tap the energies of non-federal sectors in implementing national goals. Programs such as Medicaid can be fiscally onerous for the states, but are nonetheless far more decentralizing than if the federal government decided to deliver these services directly through legions of federal employees.

Similarly, the health-insurance mandate was at its heart a conservative proposal, designed to keep the private sector in charge of health insurance. To make it profitable for companies to extend coverage to everyone without regard for individuals' health status, some mechanism was seen as necessary to get potential free riders to sign up for insurance. So the mandate or something like it was considered essential to guarantee private profits in pursuing public goals.

Should the court rule that the individual-insurance and Medicaid mandates are unconstitutional, the justices might feel compelled to carefully delimit the scope of the ruling. Otherwise, federal grant programs and initiatives ranging from special education to No Child Left Behind to highway-funding mandates regarding motorists' blood-alcohol levels would come unraveled.

Indeed, if the court ruling were too far-reaching, this could have ironic implications for the federal role in our system. With limits on grants and private mandates, what would the federal government ever be able to do about health-care reform or the many other demands that stack up on Washington's doorstep in an increasingly interdependent and nationalized economy?

One outcome might be to discourage Washington from acting on those policy demands. However, should the policy goals prove to have deep public support, the federal government might well end up adopting far more centralizing strategies, including direct provision of services by Washington.

In the case of future efforts at health reform, this well could include single-payer health insurance through federal agencies and the nationalization of Medicaid as an entirely federal program alongside Medicare. It would be ironic indeed if a court ruling against the health-reform law ultimately brought about the fondest dreams of the progressive community.