What Is Federalism in Healthcare For?

Author:Gluck, Abbe R.
Position::Themed Issue on Federalism

Table of Contents Introduction I. Summary of Key Findings II. Healthcare Federalism, Old and New A. An Abbreviated History of Federal Interventions in Healthcare B. Patterns of National Intervention C. Theoretical Underpinnings of Healthcare Federalism III. Federalism Under the ACA A. The ACA's Federalism as Drafted B. The ACA's Flipped Federalism as Implemented. C. Study Methodology IV. The Medicaid Expansion A. Four Waves of Dynamic, Negotiated, and Horizontal Medicaid Expansion 1. Early, generous implementers: the first wave 2. NFIB and the second wave.. 3. Waivers, concessions, and the third wave 4. Renegotiated deals, political change, and the fourth wave B. Federalism Attributes: States as Individual Republics; Local Variation and Control 1. Intrastate differences as a countervailing force to partisanship 2. Autonomy and local variation V. Insurance Exchange Implementation A. Cooperation, Resistance, and Autonomy in Dynamic Exchange Implementation.. B. Under-the-Radar Adaptation and Engagement: Hybrid Federalism and the "Secret Boyfriend Model" 1. Split exchanges 2. Hybrid exchanges: federalism born of necessity, federalism in secret C. Horizontal Federalism in Exchange Implementation: More Cooperation than Competition 1. Interstate cooperation. 2. Thought-leader states.. 3. A middle ground between one and fifty options. D. Intrastate Differences, Redux E. "Picket Fence Federalism" F. Deconstructing "Federalism" Attributes. VI. Federalism Values, Old and New A. Federalism and Democracy Goals B. Federalism and Policy Goals 1. ACA federalism and Medicaid outcomes 2. ACA federalism and exchange outcomes C. Federalism, Regulation, and Law. D. Federalism and Healthcare Conclusion Introduction

Federalism is all the rage in health policy again. For the past eight years, President Obama's Patient Protection and Affordable Care Act (ACA), which designated the states as its frontline implementers, has been cited as a particularly prominent example of modern federalism. (1) Indeed, the ACA has been deemed a prototypical example of federalism in dozens of articles--many of them not only about healthcare. (2) With the new Administration, federalism has stayed at the forefront of the healthcare policy conversation. The bills proposed to replace the ACA, as well as the executive branch's administrative efforts, are heavy on state options and waiver opportunities. (3) But every Republican proposal likewise has kept the federal government squarely in the picture, preserving many of the ACA's distinctive national-level interventions while also preserving the ACA's state-centricity. (4) At the same time, and despite the laser focus on state-federal relations under the law, little detail has emerged on how the ACA's federalism actually operates in practice and what, if anything, is noteworthy about it.

This Article builds on a research effort we conducted with colleagues at the University of Pennsylvania that tracked the details of the ACA's federalism-related implementation from 2012 to 2017. The work was driven by many questions. Central among them were: Does the ACA actually effectuate "federalism," and what are federalism's key attributes when it is entwined with national statutory implementation? How did the ACA's federalism take shape, and what was its purpose? A federal law on the scale of the ACA presented a rare opportunity to investigate how modern federalism works from a statute's very beginning.

The deep description that we develop in this Article gives rise to an almost unmanageable number of questions about federalism theory. It deconstructs assumptions about federalism made by theorists of all stripes--not just constitutional law-oriented federalists, who focus on formal separation, but also those who call themselves the "new school" federalists, who acknowledge and celebrate the importance of states' role in the administration of modern federal statutes. (5) The findings also uncover a theoretical muddle when it comes to healthcare law and policymaking: Without a clear conception of the U.S. healthcare system's goals, how can we know which structural arrangements serve it best, much less whether they are working?

Our key descriptive findings are summarized in Part I. In brief, we find the ACA's federalism to be exceedingly dynamic and adaptive. The statute's framework has turned out to be only a starting point for a robust vertical and horizontal process of intergovernmental bargaining, through which states and the federal government implement the law through copying, negotiating, and adapting. The statute's structural architecture is also decidedly nonessentialist from a federalism perspective (6): That is, federalism's commonly cited attributes--including autonomy, cooperation, variation, and experimentation--have been generated across virtually every kind of state-federal arrangement in the statute's implementation. Those federalism benefits, in other words, have not been dependent on any architecture of either state-federal separation or entanglement.

As one example, take Medicaid, the public insurance program for low-income individuals. Some states expanded Medicaid eligibility precisely as the ACA's text laid out; others chose not to expand at all; still others negotiated (and renegotiated) waivers to tailor Medicaid to their liking, in ways less than ideal to the Obama Administration. (7) All of these states experienced autonomy; all of their choices generated policy localism and experimentation. Waiver states arguably cooperated with the federal government and dissented simultaneously. Were the waiver states more or less cooperative than other expansion states? Were they more or less autonomous than states that did not expand at all? In the end, it proved impossible to assign weights to the different ways in which federalism attributes emerged and to the structural architectures that produced them because they emerged from virtually every possible state-federal arrangement under the law.

This does not mean that we conclude that federalism is an empty concept or that it does not exist in the ACA. Instead, we stake out a new place on federalism's messy spectrum. On one end, some scholars insist on an all-or-nothing conception, one in which state power is derived from separation from the federal government and the Constitution draws the critical lines. (8) On another point on the spectrum are those who see arrangements like the ACA and say that federalism does not exist at all; they instead see mere decentralization and use of states in a subservient and managerial way. (9) Still others brand themselves modern federalists and see state activity within federal frameworks as nonsovereign activity that both serves nationalism and works as a safety valve for the expression of dissenting views. (10) The details of the ACA's implementation do not fully support any of those stories.

To the contrary, our findings make clear that the ACA's implementation is indeed a story about state leverage, intrastate governance, and state policy autonomy, even within a national statutory scheme. That these, and other common federalism values, were effectuated independently of any particular structural arrangement or formal separation may be difficult for some federalism aficionados to swallow, but it is a key conclusion of this Article and one we think offers a new perspective. It also complicates what it means to be an essential attribute of federalism. For instance, we found that policy variation and experimentation--two oft-referenced federalism attributes (11)--were generated as much in the various nationally run insurance exchanges as in the state-run exchanges. Those attributes thus do not seem unique to federalist arrangements, even though theorists typically call on federalism to produce them. Sovereignty does not seem absolutely necessary either, although it played a key role at times. And with respect to autonomy, full structural separation of states from the ACA (i.e., total nationalization) would have diminished state power far more than did giving states the lead implementation role that they had. More than anything else, we found that state participation and choice, rather than any particular structural allocation, gave states the most power under the statute.

To be sure, aspects of the ACA's implementation will not resonate with federalism scholars at all. For starters, we begin with the view that national intervention in healthcare is unavoidable and that the ACA was not a unique interloper in an otherwise exclusive sphere of state authority. That will be anathema to the constitutional law-tethered federalists. But as we illustrate, the ACA is only the latest instance in a long pattern of incremental, national healthcare interventions. (12) That history renders mostly irrelevant constitutional arguments about federalism in healthcare and the views of classic federalists who slice the world into separate compartments of federal and state authority. Instead, state-federal allocation in healthcare has been, from the beginning, a feature of congressional design more than of any constitutional mandate requiring exclusive domains. One of us has called this "intrastatutory federalism": federalism arrangements produced by federal statutes themselves. (13)

Further, the ACA's deployment of the states, even as it empowered them, has almost certainly helped enact and entrench the statute. That is a nationalist end, served by state-implementation means, and one that most would not associate with traditional federalism values. The existence of these vectors of state power and state service in the same story complicates it tremendously.

In the end, however, these different expressions and aims of federalism matter only once we define what federalism is supposed to be and what it is for. Federalism is a term that today is difficult to pin down. (14) The complications our study uncovers underscore how...

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