States Become Laboratories of Healthcare

 

U.S. Supreme Court Justice Louis Brandeis is credited with coining the phrase “laboratories of democracy” to describe state governments. He used this phrase in 1932 in his opinion in the case New State Ice Co. v. Liebman to describe “how a state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Today, some states are following this suggestion as they respond to recent changes in ObamaCare by the Trump administration. Liberal states are pushing back on Trump’s de-regulation while conservative states are embracing these changes with more of their own.

For example, ObamaCare imposed a mandate for the first time in our history that forced all Americans to purchase health insurance or pay a tax penalty. This so-called Individual Mandate was so unpopular it was loosely enforced by the Obama administration. The Trump administration repealed it entirely as part of the tax reform bill of 2017.

But now some states are requiring their own residents to pay the tax penalty again – to their state. The State of New Jersey just imposed a “state Individual Mandate” for any resident who fails to purchase health insurance.

Stephanie Armour, healthcare reporter for The Wall Street Journal, says this practice is gaining popularity in liberal state governments. Other liberal states with mandates include Vermont, Massachusetts, and Oregon.

The Trump administration recently increased flexibility of short-term health plans that are non-compliant with all the ObamaCare regulations in order to give patients options to purchase less-expensive plans. Republican state governments have embraced these plans while Democratic state governments have taken steps to limit such plans. The Trump administration also is allowing flexibility in selling plans outside the ObamaCare exchanges. Some states are blocking these changes for their residents. Some conservative state governments are adding work requirements for able-bodied adults who receive Medicaid support.

The different approaches of various states reflect the broad national divide on the issue of healthcare. Conservatives want to give people more flexibility to choose the insurance plan that best meets their needs. Liberals believe the government should make those decisions for you. They are still trying to preserve ObamaCare, despite its failings, and reject Trump administration efforts to fix some of the problems.

Is this a good or a bad thing?

I regard this as a good thing. This will give states the freedom to devise their own healthcare systems and measure the impact on their state without forcing the rest of the country to go along. Liberal states can preserve all the awful regulations of ObamaCare while conservative states can enjoy the freedom of deregulation. The people of each state can decide for themselves if they are better or worse off. It won’t take long to measure the differences.

The differences will impact not just healthcare but state economies as well. Armour says, “ The states’ accelerating tendency to peel off in different directions will have significant financial repercussions for nearly 30 million U.S. small businesses, about 17 million people who buy individual coverage, 75 million Medicaid recipients and scores of hospitals and insurers.”

This trend should continue as long as complete repeal and replacement of ObamaCare is stymied by Congress. The “laboratories of democracy” should soon reveal which direction Americans prefer. I’m betting on an exodus from blue states where high taxes and high healthcare costs will eventually make residence there economically – and medically – unaffordable.

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