State and Federal Roles in Health Care: Rationales for Allocating Responsibilities

Citation: Bovbjerg R.R., Wiener J.M., & Housman M.G. “State and Federal Roles in Health Care: Rationales for Allocating Responsibilities,” in J. Holahan, A. Weil, & J.M. Wiener (Eds.), Federalism and Health Policy, Washington, DC: The Urban Institute Press, 2003.

Abstract: This chapter explains how American federalism apportions responsibility for domestic policy between federal and state governments, and sometimes localities, often in overlapping ways. Starting in colonial times, debates have simmered--or raged--about what government should have responsibility for which function. For 200 years after the Bill of Rights, federal responsibilities grew, but the “New Federalism” of the 1990s increased reliance on states.

Arguments for relying on states versus the federal government can be grounded in political philosophy. States are said to be closer to the people, for example, so that policymakers “know the territory.” On the other hand, the federal government may be preferred because problems or solutions cross boundaries or because only a national policy can assure equitable distribution of services and comport with Americans’ sense of national citizenship.

Market principles also contribute to federalism debates. Having states in charge allows them to serve as “laboratories of democracy” and can spur inter-state competition to improve efficiency as well as useful policy innovation. But national action may be needed to avoid a “race to the bottom,” especially in policies affecting income distribution.

Finally, pragmatic considerations seem most important for most issues, most of the time. Citizens and policymakers ask what government performs best on a particular issue in their era. Thus, how states have exercised their enhanced authority in our New Federalism era matters a great deal. The rest of this book focuses on state policymaking and implementation in health care and financing for lower-income Americans. The following chapters assess past state accomplishments, the extent to which current policies can be sustained or move forward, and options for reallocating responsibilities.