Myth versus Fact: Governance Reform
Myth: The Health Care Compact is a health care policy reform.
Fact: The Health Care Compact is a governance reform.
The Health Care Compact is an interstate compact – which is simply an agreement between two or more states that is consented to by Congress – that restores authority and responsibility for health care regulation to the member states (except for military health care, which will remain federal), and provides the funds to the states to fulfill that responsibility.
Based on the core belief that health care is too large and complex to manage at the federal level, the Compact simply changes who decides. After all, we can’t expect Washington bureaucrats to solve a problem that they’ve helped create over the past several decades.
The Health Care Compact moves the responsibility and authority for regulating healthcare from the federal government to the states. Today, health care spending exceeds $2.3 trillion annually and the industry employs more than 14 million people. There are 2,688 pages of regulations for Medicare and Medicaid alone.
Centralized planning of an industry that is thislarge and complex is not possible, and has never been successful in the history of mankind. By comparison, the US military "only" spends about $1 trillion and employs about 2.5 million people - and has the benefit of providing a public good, rather than a consumer service.
By pushing responsibility and authority down to the states, the problem becomes much more solvable. A federal system impacts 300+ million people. Many states have only a few million citizens, and there are dozens of developed countries in Europe and elsewhere who have effective regulatory regimes operating at this scale.
Ask yourself the following questions:
- Which transportation system runs more efficiently? Your state highway system or Amtrak?
- Would your state university get better results if it was run by the Department of Education?
- Which security system is more responsive and effective? Your local sheriff's department or the TSA workers at the airport?
- Which must operate with a balanced budget? Federal or state government?
State governments, of course, are not perfect. State officials have the same types of incentive and power relationship issues as federal officials. But they serve smaller districts, live closer, and are more accountable to their citizens than the bureaucrats in Washington DC. And the elected officials are easier to replace because of small district sizes.
Given a choice between a state-based and a federally-regulated healthcare system, we believe that the people will prefer returning responsibility to the states.