Can This Marriage Be Saved? Federalism and the Future of U.S. Health Policy Under the Affordable Care Act

Abstract

As with all transformational laws, the Patient Protection and Affordable Care Act, hereinafter referred to by its popular name, the Affordable Care Act (ACA or the Act), derives its power from the extent to which it realigns prior relationships and from adding new rights and duties: Between individuals and government through the creation of a right to accessible, affordable health insurance and a concomitant “personal responsibility” to secure it; between the insurance industry and the government through reforms aimed at assuring access to affordable coverage; between larger employers and workers through the Act’s “shared responsibility” requirements; and between health care providers and public and private insurers through provisions aimed at long-term restructuring in how health care is organized and paid for. But it is fair to say that no relationship within the health care system is more affected by the Act than that between the federal government and state governments. Indeed, the ACA establishes a legal approach to national health reform that, at its core, rests on the shoulders of this relationship. First, the Act expands the pre-existing federal-state partnership in the regulation of health insurance while establishing a new Marketplace for affordable coverage. Second, the Act expands the joint federal-state investment in health care for the poor (this time, with the lion’s share coming from the federal partner) through an expanded Medicaid program. As of May 2013, the Congressional Budget Office (CBO) has estimated that by 2022, twenty-five million Americans will gain coverage as a result of this recalibrated set of relationships. This Article takes a closer look at the two federalism relationships—one regulatory, the other investment—that lie at the heart of the Act. I surmise that even if sputtering and fragile, the regulatory partnership actually is built to weather current conditions and that ultimately, it will enable full implementation of the market reforms that the Act sets in motion. I also conclude, however, that at least where coverage of poor adults and their families is concerned, the Medicaid relationship is sufficiently under water to necessitate a federal fallback system, comparable in spirit to the federal fallback that has been designed for the regulatory side of the ledger. Creating such a fallback is essential if the nation is to avert the terrible spectacle of allowing any individual state to exclude its poorest residents from coverage.