Scott Greer and Frank Thompson: Fractious Federalism And The Future Of Medicaid

>> Barry Raven: Good afternoon and welcome.  I'm Barry Raven [assumed spelling], professor here at the Ford School and the Director for the Center of Local State and Urban Policies.  We are delighted at Close Up to cosponsor this event with the School of Public Health, the Gerald Ford School of Public Policy, and we want to acknowledge the particular support that we've received from [inaudible] and Martha Darling [inaudible].  We're delighted to have Martha with us here today to pursue this event.
>> Federalism has been called many things.  I'm not sure I've ever seen the title practice before, but it certainly fits this piece well now and historically.  I must confess that there was a time a couple of decades ago when I was working on doctoral dissertation trying to come to terms with federalism.  A little tiny slice of that involved Medicaid and not understanding what Medicaid was, why it was created, or how it worked.  Did not understand it and I went into what is then and now one of the world's great bookstores, the [inaudible] Bookstore at University of Chicago and found this book.  [Laughter] Policy and Democracy.
>> Blood red, notice.
>> It was all in bright red.  As you can see the spine has been faded from [inaudible].  [Laughter] Chapter Seven.  Medicaid and commercial market strategy for the poor, [inaudible].  [Laughter] It really opened up for me an understanding of how Medicaid came into being, how it works, and here we are a few decades later [laughter] with the [inaudible] version with all kinds of new content called Medicaid Politics, Federalism, Policy Durability, and Health Reform, just released late last year by Georgetown University Press by Frank Thompson.  Frank, as many of you know, is one of our nation's leading scholars in the area of health politics and policy for the [inaudible] privileged to invite him here to the Ford school. He has served on the faculties of the University of Georgia and the State University of New York at Albany where he's held a series of administrative posts.  Frank is a fellow at the National Academy of Public Administration and now is a member of the faculty at Georgetown, and so we're very pleased to have him here to talk about his book, but also put it into the immediate context whereby Medicaid has gained even new saliency in the directions that some of us probably could not have anticipated just a few years ago.  We're also delighted to be joined by Scott Grier [inaudible], a colleague from the School of Public Health, the Department of Health and National Policy.  Scott works in a number of areas directly relevant to this.  It is also thought that issues of centralization and decentralization of how politics and policy in federated and multilevel systems including the European Union.  Scott was a visiting scholar with us in Close Up during the fall term. It's great to have you here with us today.  With that, we're going to ask Frank to provide extended remarks on his views on [inaudible] federalism and the future of Medicaid, turn things over to Scott for some reaction and reflection, and then as you can see, the table will allow for us to have some Q and A and hopefully we'll open this up for extended conversation.  But before going any further, please do extend a warm welcome to Frank Thompson.  Welcome to our campus.
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[ Applause ]
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>> Frank Thompson: Thanks, [inaudible].  Let's see.  Thank you very much, Barry for those very kind introductory remarks.  And let me say how much of a pleasure it is to be at the Ford School.  I was telling the students I met with at noon that if we look at the top 20 research campuses in the country, I've been in every one -- had been in every one except, for some strange reason, [inaudible], so it's been a great, great privilege or treat to come and get acquainted with the campus.  I would also note that I had the great good fortune, probably -- oh gosh, 25 years ago, to -- when Gerald Ford visited the University of Georgia and I was head of the Department of Political Science to actually sit next to him and moderate a session where he responded -- made remarks and responded to a lot of questions, and I've had very great respect for him and I'm very pleased to be here.  Okay.  Let's get the show on the road.  And Barry, because I know we've got too many Power Points, I'm targeting to end about 10 to two.  Does that sound -- Sound sensible and will give Scott a chance here.  All right.  So I wanted to open -- I know there's a lot of stuff to read in this thing, but I wanted to open with two themes.  And the top theme is from one of the founders, James Madison which is all about [inaudible] federalism.  Madison did not envision among the founders, that political parties would come to play as great a role in the political system as they've come to play.  But I do like the line about the potential to resist and frustrate the measures of each other.  They understood that they were building intentions in this federal system from the get go.  The second quote is from Aaron Wooldovski [assumed spelling].  Aaron Wooldovski founded on of the first schools of public policy, at the University of California Berkley.  He's the foremost authority in the budget process, a major political scientist.  But some -- what is it, 25 years ago, he offered an observation about public service where you have a contentious environment where people -- the key sides of the political spectrum do not agree and the challenges that poses for people committed to public service and bureaucracies.  And as I've interviewed and talked to people who were trying to implement the Affordable Care Act in a context where there is at -- where there is at least one party hoping that they will fail miserably at it, I thought that sort of captured a sense I have of public service being one of the hardest -- the highest service because it's the hardest service.  All right.  So, about Medicaid.  A lot of you are familiar with it.  You've read the initial chapters of my book, but just a sort of reminder, Harry Truman -- I'm sorry Lyndon Johnson goes off, signs Medicaid, Medicare legislation, and to Harry Truman's home in Independence, Missouri.  And it gets going in 1965.  The fiscal entitlement to the states.  Big enrollments, over $400,000,000,000 federal and state moneys spent each year on Medicaid.  A lot of it-- the majority of it going to long-term care.  This is -- ensures that most people on Medicaid are getting sort of basic health care services.  But the money is in -- substantially in long-term care.  Okay.  So a bit of -- a bit on the book, and it's sort of core theme.  The first part of my talk today sort of draws from the book in a sort of once over lightly sense gets at some of the core themes.  The second part, I want to consider where we are now with some of the developments that really happening after I finished the book, and we'll speculate a little bit on where Medicaid may be heading.  But in any event, the book focuses, as those of you in various classes knows, on the period from Clinton and into the Obama years.  And I make a number of justifications for why I think this is an especially fruitful period to study Medicaid.  But the biggest single reason that I think its fruitful is that it was during this period, and it was Clinton-led, there was a major movement through waivers and other means, to do devolve authority to the states over the Medicaid program.  The Clinton administration was a clear water-shed in this regard, and I think it makes for an interesting sort of period to follow.  I then deal with this sort of paradox.  There are a lot of pessimists about Medicaid.  There are all sorts of reasons why people think Medicaid wasn't going to have much staying power or would constantly erode over time.  There's a classic line -- a program for the poor is a poor program, by which they mean it's not only poor it helps the poor, but it just doesn't have any political muscle associated with it.  There's a whole -- among ecomomists, a theory called the Libiason [assumed spelling] Theory which argues that, you know, states in their quest for economic development will gradually erode benefits -- redistributed benefits for poor or lower income people for the -- and there's a welfare magnet version of that, and it's sort of, you know, an oversimplified form there's this kind of race to the bottom notion whenever you turn programs for the poor over to the states.  There's recent evidence that declining trust in government, which has been, as you know, quite marked since the 1960s, also has particularly negative implications for redistributed programs, those that take from people who've got money and shift to low income folks.  So there was a lot of reasons in the literature to be pessimistic, that Medicaid wouldn't have much staying power.  That it wouldn't just show a steady pattern of erosion over time.  And indeed what I argue in the book is that there's a side of Medicaid in this period I was examining that eroded appreciably.
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And that is Medicaid is a service entitlement.  Now Medicaid as you -- I think most of you know, is an entitlement in a two-fold sense.  One is a fiscal entitlement to the states.  If Michigan spends x dollars on its Medicaid program, the federal government is required at a certain match rate to give Michigan the money.  It's not that they can't cap it.  It's fiscal entitlement.  But the second sense in which Medicaid was historically an entitlement was as a service entitlement.  That is, once a state, subject to a certain federal regulation said that certain people were eligible for some set of benefits, people all over the state had to -- were qualified to get those benefits and you couldn't do -- you couldn't cap them.  You couldn't say, "Well, we're running out of money in the state so now we're going to start up a wait list and when time comes we'll give you these benefits."  Once you were deemed eligible for Medicaid, it meant that the state was supposed to provide that service even if it was putting a lot of immediate fiscal stress on the states.  In any event, the argument in the book -- a sort of once-over lightly here is that in this period from 92 through to the present really, or really 2010 I guess, there was a steady erosion in this sense of Medicaid is a legal entitlement to you.  And a number of things were at work there.  But principally it was waivers.  And under waivers, which I'll talk a little bit more about later, states increasingly won the right to do certain Medicaid benefits in particular parts of the state, say managed care, but not in others.  So the Medicare -- the Medicaid benefits of a state might vary appreciably by where you live, which county you were in in Michigan or whatever state you would want.  So there was a paring down of this statewide requirement through long-term care waivers designed to create home and community-based -- more options for home and community-based services.  States also won the ability to establish wait lists, for especially in the area of long-term care.  So if there's an intellectually disabled individual who at the age of 18 wants to transition into a group home and receive home and community-based services in that home, there's often a significant wait list. Depends on the state.  Medicaid is all about state variation, as you know.  But wait lists became much more prominent than they had been before.  Another development to weaken Medicaid is this service entitlement was a set of statutory decisions of the repeal of something called the "Borne Amendment" in 1997, which had given providers of services access to federal courts to complain that states weren't living up to their obligations under the Medicaid law.  And as a result of the appeal of that amendment and then a set of court decisions that I won't belabor with you here, the ability of providers or Medicaid enrollees to go to federal courts to enforce their Medicaid rights increasingly diminished.  So the story -- so there was a lot of recapitulate pessimism about Medicaid's staying power.  And if you just look at the sort of legal service entitlement aspect of it, it's a case of erosion.  But -- and this is sort of the story line of the book, if you look elsewhere about Medicaid, it's a story of growth.  It's a story of expansion.  In the book, I show how, in all 50 states, even the most conservative, Medicaid expenditures and enrollees per person in poverty steadily increased over this period from 1992 into 2010, and then finally we had -- and this I had no idea was going to happen when I started writing this book, but sometimes you get lucky.  And finally we had the Affordable Care Act, Obama Care, applies in 2010, and low and behold, of the 30 plus million people that were slated to gain coverage over -- under Obama Care - he now endorses that term, half of them were to gain through a Medicaid expansion.  And the specifics of the Affordable Care Act are that if you -- than any individual under 133% of poverty with some manipulation on how they count income -- it goes up to 138%, anyone under that income level would be then eligible for Medicaid.  And that was  --  Medicaid then was to be the floor of a national -- it's not quite, there are gaps in the coverage, but in a substantial expansion in the insurance coverage in the United States.  So there was this huge -- in terms of enrollments, spending, Medicaid increasingly took off.  I look at other markers in the book, too.  I don't rely purely on these numbers, and I argue that, for instance, Medicaid made a lot of progress in being smarter about long-term care, it used to put everyone in institutions, nursing homes.  It increasingly, in the Clinton period, we grew the amount of long-term care provided in a home and community, rather than in a nursing home or another large institution grew from about 15 to 45%.  I think, although the evidence is somewhat mixed, that the movement of Medicaid enrollees to managed care was on the whole a good thing.  There were other signs and evidence that Medicaid, for all its problems, I'm not portraying this as the kind of insurance program you'll all want to get on, but it -- for all its problems, it was yielding positive outcomes in terms of access and in terms of health outcomes.  [Pages turning] Okay.  And I mention a couple other things there.  Let me move on here.  And so, so the case is that Medicaid sort of confounded some pessimists and was remarkably durable and sort of a growth story.  And so what's going on?  Why would this -- why would this pattern unfold?  And the top line on this chart just refers to that, sort of the constraining model of federalism.  You know, the welfare magnet, states are not good to design each of your programs to.  But there is an alternative sort of perspective that the federal system -- my colleague Dick Nathan is a big proponent of -- a former colleague Dick Nathan is a big proponent of this, but others, too -- that the dynamics of federalism, rather than leading to the contraction of the welfare state, in a certain sense lead to its expansion.  There's some work out of Europe too to this effect.  So this notion is that federalism can be catalytic.  It would fit more easily with the sort of growth and what I argue is enhanced durability during this period.  But the literature of sort of catalytic federalism is in my view sort of underspecified.  What are the more precise dynamics that are interacting to drive, in this case, Medicaid growth?  And so you'll see listed there on the Power Point what hit me as -- and they weren't unique to me, by the way, some of them, others I think I played up a good bit more than it had been in the literature.  But it's sort of a list.  So there's no question, the Medicaid funding source -- or I'm sorry, the Medicaid formula is a fiscal stimulus.  If Michigan is considering expanding its Medicaid program, it knows it will only -- you know, it will pay, I guess now people were telling, I forget -- Medicaid matches a little above 50% in the state [inaudible].  So at a minimum, it knows for every dollar it invests in Michigan, it leverages a federal dollar.  In the case of the Affordable Care Act, federal policymakers, even if they might have in a dream world preferred another kind of health insurance expansion, they knew they could leverage a certain amount of state effort and preserve a certain amount of state effort by working through this.  So the funding formula is huge in this equation.  The second point toward positive social construction -- Medicaid increasingly, I argue it partly because of the wealth, it became de-linked from the notion that there were a whole bunch of poor women -- you know, welfare folks that it moved forward.  Also Medicaid increasingly in long-term care became a program for the middle class.  And so, much more positive social construction than you get oftentimes for programs that serve the poor.  I know we've had a lot of talk about takers in the last campaign, but still, I think Medicaid is -- it came over time to be viewed more positively.  I won't go into the supporters, providers, and advocates.  
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Obviously, there whole set -- I mean, for nursing homes, Medicaid is huge.  Hospitals, it's huge.  There's a whole community and there's advocacy groups out there, especially for people with disabilities, that fervently support Medicaid.  We had -- part of the Affordable Care Act expansion is just this fleeting period when the democrats ran things.  That's what the fourth bullet -- I think many of you know the last time the democrats had a democratic president and essentially a filibuster proof majority in the Senate was under Jimmy Carter in the first term, 1977-78.  And at that point, there were a lot more conservatives in the Democratic Party.  Now we've had, of course, this sort of polarization and an ideological sorting.  So it's very rare.  But let me -- yeah, I think I've got the time -- just pick up on the last two items on this list that I think create a sort of catalytic forces for growth, because I think I've -- my work does more to develop than heretofore in the Medicaid literature in any event.  So let me turn the page.  The intergovernmental lobby.  Governors to the floor.  And the reference to Sam Beir [inaudible] there is simply to Harvard professor, great student of federalism, very [inaudible] as well, who in 1978 wrote an article in the Political Science Review, and there was a lot of concern that with all the great society programs of Lyndon  Johnson, the federal government was just becoming so powerful and the states were this puny force that was not able to influence things much.  And Sam Beir said there's too much anxiety about this, that states are still have a lot of clout within our federal system, and one reason is federal government relys on them to implement things.  There's a huge amount of influence that can be exerted if you're the implementing agent of a federal program."  And then the second thing he pointed out, which is really what this slide is about, is the role of the -- what he called the "intergovernmental lobby," and I focus on governors to a great degree.  And in the book, I argue that while governors are -- and what the governors want, and partisan factions of the governors' want is certainly not determinative in terms of what happens to Medicaid policy, but that there is a strong preference on the part of federal policymakers, members of Congress or our President when they want to do things to Medicaid to at least have significant support, especially among members of their own political party, governors of their own political party at the state level when they do things.  Governors -- if you think of them, and I'm not going to go into it in the interest of time, but they have, when they speak, they're not just any interest group.  They have a good bit of legitimacy.  They command a lot of media attention.  And for federal policymakers to ram a federal change in Medicaid statute through with great opposition from governors, especially those of their own party, is not something that federal policymakers consider lightly.  So this relates to what I'm going to talk about in a few minutes.  So I want to -- if you look at the Power Point, it talks about gubernatorial preferences during ordinary political times.  And in general, governors prefer -- they like all the money Medicaid gives them, and they prefer the more money -- the second point, the more money the better.  If they could get an even better match rate, that's terrific.  And then they want -- they don't want any strings attached to the money.  They'd love to be able to spend it most any way.  And I'm not impugning them, they're -- for good reason they think they know how to spend it better than the federal government often does.  So during ordinary political times, this is the way governors tend to behave.  And I argue in the book -- the book, as those of you in the class know, goes into some length about the failed efforts of Newt Gingrich who was driven by a set of republican governors to get Medicaid converted to a block grant in the 1990s.  And this was led by John Engler.  He's a major figure in the book, as well as Tommy Thompson.  But I  argue that in the period after that failed, that gubernatorial preferences turned kind of ordinary in the sense that I'm using the phrase here, and increasingly Clinton -- you remember this devolved more and more give them waivers kind of approach have.  It was kind of, to use a phrase that's much in the news these days, a certain kind of grand bargain.  Governors, I'm going to give you all sorts of waivers.  You're going to be able to shape it more the way you want.  And increasingly governors, and including republicans, lost much incentive to go after a block grant because if they could get Medicaid as a fiscal entitlement and still have a lot of flexibility, why bother to spend all your time then, you know, working on a block grant which almost always means less money?  So I argue then that in that period afterwards, there was a sort of spirit of acceptance of Medicaid.  And if you look at the major Medicaid expansions, whether it's Weld and Romney in Massachusetts, Christie Todd Whitman in New Jersey, Governor Petocky in New York, a lot of them were the, you know, these expansions under waivers were led by republican governors.  The final bullet is just -- and I'll come back to it -- whether in these intensely partisan times, whether governors will behave more now as members of a grand -- republican governors in particular -- as a grand party coalition.  I am a faithful member of the party and we don't like Obama Care.  Or whether the sort of pragmatism that I've found in republican governors during these ordinary political times will reassert itself. Okay.  So let me see how I'm doing on time.  Let me move on here.  Let me go to the waiver part of it.  Remember there were sort of six variables I looked at.  And I think my analysis of waivers is that it was a major sort of fuel for the Medicaid expansion, partly for the reasons I've alluded to earlier.  But there are two basic kinds of waivers as the first two items on this slide indicate.  There were the 19 -- Section 19 -- Medicaid is a Section 19 Social Security Act, and these waivers passed in -- authorized in 1981 were designed to move people from institutions into home and community-based services.  There are about 300 of these waivers -- states operate home and community-based service under these waivers.  About 300 of them out there now.  Two thirds of all money that Medicaid spends on home and community-based services is done under waivers.  So it enticed states, for reasons I won't get into here, my argument is, to do a lot more home and community-based service delivery than would have ever occurred if they had to stick within the broiler plate of the Medicaid statute.  The other kind of waiver, which are the real big enchilada waivers, are the demonstration waivers which were approved Section 1115 Social Security Act was around in 19 -- it was approved in 1962 before Medicaid's birth.  But the bottom line here is that for the first, what 25 years of the Medicaid program, the federal government was very reluctant to grant these major demonstration waivers.  Some of the -- Bruce Flattick, a former official who ran the -- was in health care financing administration estimates there were about 50.  Clinton came in and says to the states, "Come one, come all.  I''m..." You know, he had stipulations.  It wasn't any old thing.  But he got behind giving states much more discretion making and much easier to get these kinds of waivers.  And as a result, we had some of the -- a lot of innovation by the states.  Those republican governors I mentioned.  And of course then we had the big bang of states as laboratories of democracy.  Romney Care in Massachusetts, which was a product of negotiation -- the Bush administration did not want to renew a demonstration waiver that Massachusetts had since the mid-90s to do managed care and expand enrollments.  And in the wake of that negotiation, Mitt Romney, working with Ted Kennedy, came up with this template for virtually, almost universal healthcare in Massachusetts.  And then that became, of course, the foundation for Obama Care subsequently.  And the last couple of points -- I'm not going to go into them now, but the argument of the book -- in the interest of time.  
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But the argument of the book is that this waiver -- willingness to use waivers, facilitated a kind of policy learning.  It facilitated this grand bargain between the governors and the federal government that I mentioned a little while ago.  And was a source of growth and expansion in the program.  Now however, we turn to the sort of looking forward part of the talk.  And so we had this -- in this period I studies it, I argue a pretty stunning move forward by Medicaid.  And so now I turn to the issue of will this have staying power in the current era.  And of course in the case of Medicaid, as you all know, in the wake of the 2012 Supreme Court decision, the Medicaid expansion essentially became an option for the states rather than mandated.  And so there are a range of issues present now that we're present in the past.  We have enormous federal debts.  States, for a whole range of reasons, are in some of the most precarious financial circumstances that they've been, easily over the last 20 -- 30 years.  And so, just looking at the debt issue alone, we have this issue of how -- what is the federal government going to do to cope with the debt.  And I look at a couple of what I call bipartisan approaches.  And [inaudible] Simpson, in terms of how they would treat Medicaid, [inaudible] Simpson leaves Medicaid alone pretty much.  It's about a $60,000,000,000 savings over a 10-year period.  But another bipartisan -- good faith bipartisan proposal, [inaudible], really does alter Medicaid a good book, and I think would alter some of the dynamics that fueled Medicaid's enhanced durability.  And then we come to a parts approach, I argue, in this period.  And that is the republican initiative to retrench Medicaid.  In the book, I talk about how after Gingrich failed to get the block grant going and, you know, follow John Engler's lead, you know, or to see John Engler and Tommy Thompson, that the republican governors pulled back from any desire to see Medicaid block granted, taken away as a fiscal entitlement.  And in 19 -- so in 2003, when President Bush came up with his own version of a block grant proposal, the republican governors -- very difficult to find anyone who wanted to support it.  Moreover, there was this sort of bizarre almost [inaudible] congressional appearance by Tommy Thompson, who was then Secretary of Health and Human Services, in which he denied that the proposal was a block grant at all.  And it led to this    -- if you like reading congressional testimony -- it led to this, this is not a block grant says Thompson and Henry Waxman says "Yes it is.  No it isn't.  Yes it is."  This goes on for about a page.  Denying that -- you know, you'd even want to mention the phrase block grant.  I mean, how ugly and politically unappealing.  Well, let me just say that that changed when the Tea Party had a big victory in 2010 and Mr. -- Representative Ryan's proposal obviously for Medicaid is -- would not only convert it to a block grant, but would carve $800,000,000,000 out of the program over a 10 year period, compared say to Simpsons [inaudible] 58 or even the [inaudible] 100 -- $200,000,000,000 in a 10 year -- in a 10 year period.  So what -- and of course Romney and Ryan ran on this, and I guess what is interesting to me and other colleagues like my friend Colleen Grogan at Chicago who's been saying, "It's getting risky for politicians to attack Medicaid in these times" -- that at least among the [laugh] leadership of the republican party, they don't think it's very risky to attack Medicaid.  How, if they ever got close to doing this block grant, the republican governors would respond, whether as pragmatists, because this would be devastating fiscally for them, or whether they would be loyal members of a partisan coalition I think is a very interesting question.  Okay, so by my reckoning, I've got five minutes here.  And let me see what I'm going to pick to do.  Let me just -- I want to focus on this just very, very briefly.  And I realize that Mitt Romney did not win the presidency.  But what Mitt Romney quotes here, and then the republican party platforms endorsement indicates, that presidents -- and I would argue Clinton, with waivers, have without gaining congressional approval for action, enormous discretion to shape the context of a policy, and to see whether it succeeds or fails.  I doubt legally whether Romney could have done what he said he did -- you know, what he promised to do, if he'd have one the election.  But could he have severely impeded, assuming he couldn't get it repealed in Congress, the implementation of the Affordable Care Act?  Absolutely.  I made an argument elsewhere that I won't go into today.  So I'm sort of highlighting then, and this is my particular research interest for the moment.  I'm going to very briefly barrel on.  So one of the things I'm looking at now that wasn't in the book and I still haven't researched adequately, is the Obama administration's strategies for dealing with the implementation of Medicaid, and now needing to coax the states to do it voluntarily.  Originally it was, you've got to do this if you want to keep your Medicaid program.  Now, the Obama administration confronts a circumstance where, you know, it has to think its Medicaid strategy.  And I'm not going to go into the first -- these are things I'm writing about, but I'm going to leave them aside.  I'm going to go to the strategies in the wake of the Supreme Court ruling in June 2012.  And essentially what the Obama administration has done -- you know, a lot of states, especially those that didn't like it so much, said, "Oh, now that the court has ruled, you'll let us do half the expansion.  We won't have to do the whole thing.  We'll do a partial expansion."  The Obama administration has just ruled that out.  It's all or nothing.  You've got to do the whole 138% of poverty or forget about it.  And -- but I would point to one additional strategy here before I move on, since I've talked a lot about waivers.  In the last couple of weeks, there's a possible leverage point on the waiver front.  The state of Oklahoma, Governor Mary Thalin announced, we don't want to be part of this Obama Care.  She's actually very pragmatic, reasonable in a lot of senses.  She's under a lot of pressure.  But she said, "We do want to renew a waiver that has covered a certain group of people up to 200% of poverty.  And the initial response of the Obama administration is, we don't see a reason to extend this waiver.  If you want to cover these people, sign on to the Medicaid expansion.  And I was listening to Scott Walker -- I didn't listen, but I read the clip on Scott Walker in Wisconsin or Mike Penstone in -- Governoror Penstone in Indiana.  They all seem to be saying, "Oh we don't want to do this Medicaid expansion, but we do want to continue these nice waivers we have.  The degree to -- one of the things I'm going to be watching is the degree to which the Obama administration plays hard-ball on waiver renewals in an effort to sort of put the screws on governors to opt for it.  I don't know the degree they'll do it, but the Oklahoma case intrigued me.  All right.  Racing on.  I'm down to about my last two minutes here.  So I -- this -- I think there's a case that over time, most states will participate in the Medicaid expansion.  And if you look at the early Medicaid program, it took a while for states to sign on.  That is, in 1965.  but I do think, as I mentioned before, that partisan polarization to a degree we remain as polarized, and Obama Care is seen as the end of freedom in the United States in certain Tea Party circles, and in certain states it may make it harder.  It may be the buy-in we saw after 1965 won't be as great.  And this is -- am I on the right slide?  Yeah.  Right.  This is the grand finale, so to speak.  So the early returns on state participation in the Medicaid program, you know, obviously you say, well, the democrats it's sort of assumed will eventually sign on in this period.  There have been by my count, at least among the governors, six republican governors who've signed on for the Medicaid expansion.  There was a group of governors out west -- Nevada, New Mexico, and then Governor Jan Brewer in Arizona, who signed on and the sort of working assumption is that they're looking at Latinos as the demographic and Latinos want this.  There's North Dakota that's signed on.  And then your very own governor, Governor Snyder has signed on, and John Kasich of Ohio has signed on.
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So there is some movement.  What Chris Christie will do in New Jersey is still a great mystery.  We're all waiting, and we'll have to see.  But let me just conclude then with the comment, but the last item on this slide, that one of the -- you know, one of the big issues in terms of whether we achieve national goals with this Medicaid expansion is what large populate -- the 10 most populous states do.  And in that regard, Florida, Georgia, and Texas may be critical to whether the ACA's enrollment goals are met because these -- and they've all rejected, at least to this point, the Medicaid expansion.  And they are home to over 20% of the people in this country who lack health insurance and would be eligible for Medicaid coverage.  So that's it.  Thank you.
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[ Applause ]
^M00:40:58
I didn't clear the thing for you.  Sorry.
>>That's fine.  I just need a clock so I don't rabbit on.  So first I want to second what Barry said and what I'm sure you've already concluded, which is that this is a wonderful book.  And one of the reasons that it's a wonderful book is that it's based on knowing a lot about policy, which necessarily involves understanding politics, but also knowing what the politics are about, because ultimately this is about the disposition of a whole lot of money, a whole lot of interests, a whole lot of waste, which is also known as a revenue stream for many people, and a whole [inaudible background talking] lot of people's lives.  And the reason that matters is that we're having a temporary inconvenience in political science, which is presently the study of the Democratic Party.  It paints a traditional picture of American politics as negotiated with weak parties, lots of transactional behavior, side payments, pork barrel, and so forth.  As a Europeanist, I quite prefer the political system we appear to be living in now, at least among the republicans, where you find out what the party leadership says and then you recognize that the legislators will weakly march to do what they're told.  And I say that because most of what I'm going to say is, political science in the sense of the study of the Democratic Party politics.  And I want to highlight something that Frank mentioned, which is just what a series of near-misses the entire Medicaid program and the Affordable Care Act has recently experienced.  If the election had gone differently, we could be looking at vast, vast changes in every aspect of health policy passed as the Ryan budget under reconciliation, and well, we'd have a lot to do.  [Laughter] So, [turning pages] sorry -- I changed the order of the things I'm talking about.  What I want to focus on primarily is what this teaches us not just about Medicaid, but about federalism.  And federalism, as Frank said, gets blamed for a lot, right?  It gets blamed for race to the bottom, that if you entrust some sort of a tax to the state or some kind of a regulatory authority to the state, they will rapidly compete it away.  It used to be that if you wanted to charter a corporation, you had to have a public purpose.  Delaware said, "Hell, you don't need a public purpose."  And that's why practically every place you -- every company you know of is headquartered in Delaware formally.  Likewise, we used to -- many states still do, regulate credit cards and how they can behave towards you.  South Dakota decided that they didn't need to regulate credit cards, and the result is that you send all of your credit card statements, or bills, or payments, to South Dakota.  They get blamed for inequality.  Well, that's by definition.  If you're going to have a federal country, you are accepting the proposition that a sick baby will have different life chances based on where its parents live.  Okay?  Deal with it.  You have another option.  It's called France.  [Laughter] And, of course, it brings complexity.  I mean, just try to explain the Affordable Care Act to somebody who isn't -- at least to some extent, a junkie for American politics, American public administration, and American health policy.  And look at the simplifications even among very savvy people.  We talk about implementation of the Affordable Care Act.  Oh, that's how it looks from Washington, right?  They got their legislation passed.  Now they're going to implement it.  Well, from the point of view of Lansing, this isn't implementation.  This is actual legislation.  This is one of the bigger and more consequential things that the legislature in the state of Michigan has had to argue about.  And I don't think they saw it as their role to meekly put through whatever emerged from Washington.  So complexity, inequality, and potentially a race to the bottom.  These are all fairly heavy charges to levy against federalism.  But you could argue in response that in no sense is it the problem.  And this is where I become contentious I think.  Because across the board, if you want to look at the structure of American public policy, it's not so much in the states frustrating each other as it is in way that our fragmented executive system-- or relationship between executive two houses of a really fractious legislature and the courts managed to check and balance each other.  That whole thing you hear in high school.  Politics still works extraordinarily well.  And you see this in most [inaudible].  Sub-national governments, which we politely call then in order to disguise all the different variations between Polish [inaudible] and the Flemish community and American states, generally exercise the autonomy that they have within the framework set by larger government, by federal government in the United States.  They exercise it within their capacities as a lobby.  The national government as an association is a lobby.  Washington has many lobbies.  After financial services, health is the largest source and employer of lobbyists.  And there's wonderful stuff about -- in the book about the reverse lobbying to which the governors were subjected.  Because if you're a lobby with enough clout to get attention such as the AARP or the NGA, you're also a lobby with enough clout that people who want to influence your decisions are going to intervene seriously and try to modify what you do.  And there's wonderful and highly instructive stories about that.  Quebec incidentally considered joining the National Governor's Association.  And because somehow they think that the United States would be more friendly to a small Francophone society.  [Laughter] And they pretty rapidly ended the experiment when they realized this is a lobby.  You know, we might as well hire [inaudible] or Webber [inaudible] to represent us, because in Canada, Quebec swaggers in and they have practically diplomatic relations.  Joining the NGA, different thing. So here we have Medicaid as basically a nice example.  Right?  The states vary within what they law says.  The states vary within what inter-government relations says.  As was pointed out, Massachusetts' behavior has in large part been triggered and shaped by the structure of Medicaid and Medicaid waivers.  It's not just that a bunch of democrats and Mitt Romney decided that they were going to restructure the healthcare system.  And this -- what matters is flexibility, money, legislation.  And that also brings to bear a rule of politics which is nobody actually cares about federalism.  People care about politics.  Notably this is why state's rights is a technical term for racism.  The only exceptions are the Quebec's of the world, of which there are none in the United States, where their political agenda is precisely their own autonomy.  [Pages turning] Now what does that mean?  That means that it's actually Medicaid is pretty rational.  It doesn't look rational, but it is, because fiscal federalism 101 says that you want to do two things at the largest possible level.  Set basic citizenship rights and pool risks.  It says you don't want to administer and make little decisions at the largest possible level because Washington is a very, very long way away from Ishpeming and Escanaba.  So is Lansing, but that's a different question.  [Laughter] So from that point, and that's what federations are.  When you actually compare them, federations are pretty good about moving the money around at the biggest level and having delivery and policy experimentation and implementation at much, much lower level.  Now that points to executive federalism, which in the context of the very polarized American politics with the extraordinary level of party discipline that I mentioned might not be such a bad thing.  Because think of the Canadians.  Canadian party politics are obscenely complicated and I don't recommend studying it unless you like real head-scratchers.  [Laughter] But Canadian voters, it turns out, have a much simpler problem than American voters if they don't like something.  They have to apportion blame between Ottawa and their [inaudible] premiere.  That's a much simpler problem then figuring out why we don't have the public option or why we don't have Medicaid block grants in the United States.  And it's messy.  Well, so what?  Are you going to redesign your constitution because it's ugly?  Politics-- it'll rapidly become encrusted and barnacled with all sorts of other fixes.  If you get the basics right, if the money is being distributed on a level that prevents the thing essentially a bad insurance scheme, and you deliver the policy on a level where people have a chance to experiment, where failure is confined, where disappointment is limited to a single place, then you've actually done a pretty good job and you've done what pretty much all the other decentralized countries in the world come up with.  It's frankly infantile to say you want to throw that all aside and, you know, decentralize insurance regulation to the states in the theory that we'll have some nice clean market, because rapidly again it will become complex.  
^M00:49:50
So one of the things that the Scottish government, of all people, like to say, and I've never seen an academic patent put on this, but it's beautiful, and I'll leave you with it, is that in making policy, there's a trilemma.  Trilemma is when there's three choices and you can have two, right?  Good, cheap, and quick.  Choose two.  Well, the federal-- the policy trilemma is agreed, everywhere, and now.  You can have your policy agreed and now in some places.  Texas doesn't agree.  You can have a policy that's agreed everywhere and that's Germany and that's why their policies take 30 years to pass.  You can have a policy that's everywhere and now and come practically to the brink of a civil war.  And you might argue that the structure of American federalism and the structure of Medicaid is not just rational in the sense of getting the money and the laws in the right place despite the ugliness, despite the fact that none of you ever want to be on Medicaid.  But also because it's a pretty good reflection of the ultimate decision that even if we tried to order pizza, we couldn't achieve simultaneously agreed, everywhere, and now in this room.  [Laughter] Thanks for the opportunity to be here.
^M00:50:56
[Applause]
^M00:51:00
>> You want to stay up?
>> Yep.
^M00:51:02
[Noises] 
^M00:51:06
>> Thanks to you both.  You know, I hadn't realized we were going to be talking about Uzbekistan, but...
>> [Inaudible].
>> About seven years ago, the state of California launched a nationwide effort to create a coalition of other jurisdictions that would join them [inaudible].  That process has begun and the only other partner that California has is Quebec.  [Laughter]  So federalism [inaudible].  We wanted to allow for both presentation and opportunity for a series conversation and question and answer.  If you would like to take questions from the floor, when you are recognized, if you'd just [inaudible], Brian will bring a microphone.  If you'd identify yourself and ask your question, and we'll get going.  Who would like to begin the conversation?  Please. [Pouring liquid].
>> Hi.  I'm [inaudible], an assistant professor here and [inaudible] depends on this topic because like I studied [inaudible] differences in federal taxation, spending, and also half French and half Southern so I have a very complex relationship with federalism, both centralist and de-centralist, and I've lived in both Quebec and in California, so I'm all over the map.  So one thing I thought was really interesting, and I talk to people about waivers.  I'm still trying to understand how waivers work.  But one thing I do understand is that the matching rates in America are very unequal.
>> Right.
>> Depending on the state.  So [inaudible] New York, the federal government matches one for one for every dollar the state spends.  In Michigan, we get two dollars for every dollar that we spend.  And in Mississippi, you get three dollars.  So I find that pretty interesting, on top of the fact that the poverty line isn't indexed for local cost of living or local age levels.  And so it's a lot easier in a sense to qualify.  And some of these [inaudible], which are already getting these big matching grants.  So I think it's kind of fascinating that the political equilibrium that we've seen has been the blue states that are kind of more liberal, right, getting lower matching rate, having lower eligibility rates, but these red states that don't care so much, okay, but they support the matching system because they're coming away with huge amounts of money, right?  And so, at least that's my guess.  And so what I see in the future, all right, is that we have to deal with some way of reforming the system, because the trajectory of healthcare costs over the next 30 or 40 years.  In Canada, they actually decided to apportion the grants on a per capita basis so that they don't have -- they have basically a block grant per person, okay, regardless of where they live.  I think that's a much better system, in a sense.  Although it'd be even nicer to say, hey, Florida's got a lot of old people, so maybe the fact that they have more people in long-term health care.  Maybe they should get more money.  So do you think there's any -- I want to rephrase this to a question, okay, so [laughter]  if we -- there is a lot of concern about the [inaudible] healthcare [inaudible].  We probably need to do something about containing the costs in the long term.  And what I'm curious is how do you see the politics of this changing as sort of, you know, the Ryans and the Romneys of the world trying to find solutions.  And as states like Georgia and Texas, their incomes are rising, it seems like.  And so maybe then the red states are going to start becoming less advantaged with these programs.  I'm not sure that's going to happen.  But as we've [inaudible].  And now I'm not sure that's going to happen anymore.  And so, what I'm curious is what do you think that A, Medicaid has become a wasteful system because of the matching system, especially in some of these states?  And B, do you think there is a way for it in terms of reforming it to sort of deal with the long-term prospects over the next 30 to 40 years?
>> Well, I'll start.  Let me go to one.  And I may not have heard you right on your empirical assertion, and then I'll try to deal with the waste thing and hold my feet to the fire if I forget -- if I forget the question.  But you're right on the federal match in places like Mississippi and so forth in the deep south and other places have much more fiscal incentive to do Medicaid because the record is that they do not do it.  That the sources -- you know, they look the gift horse in the mouth.  And it's a testimony to political culture and political ideology.  So the formula, if one defines a successful formula as convincing the sort of poorest states to get benefits up where richer states have them, it's been a miserable failure.  In the book, I trace every state increase their expenditures in a [inaudible] per poor person.  And I asked, well is there a convergence?  You know, are we getting more alike?  But no,  you know, the coefficient of variation is as high as ever on that kind of front.  So let me go to the waste question.  Obviously, there are all sorts of issues we face in trying to contain costs in this country and so on and so forth.  Is there waste in Medicaid.  You know, they have -- there's some calculation of fraud among government programs and I think Medicaid probably is up there at the top.  But I would argue, if you look at Medicaid, plenty of warts on this program, but it is a bare-bones program.  What Medicaid pays per -- and they have different kinds of enrollees.  Taking care of people with disabilities, as well as, in long-term care issues are expensive.  I would argue that it is really a bare-bones program.  Costs per beneficiary are less than Medicare, God knows, private insurance.  And they don't pay, you know, provider network adequacy is a real issue, because they don't pay a lot of providers.  They pay worse than the other programs.  So, when I hear the sort of Ryanesque, oh, we can take 800,000,000,000 over 10 years and everything -- you know, we're going to figure out a way to make Medicaid more efficient, I just don't know -- it's a really bare-bones program.  Is there waste?  I'm sure there's some waste.  But I -- I think if you try and cut it, you really are, there's going to be a price to pay in access or health outcome.  You know, that's just a take on it. 
>> I'd also say the book is very good.  You know, buy the book.  It's very good about how Medicaid's actually not the terrible program that we've been repeatedly told it is.  Again, I don't think any of you -- I don't recommend it to you.  But it's not the Hell of bad care and endless waits that it's often portrayed to be.  I would just say, being comparative again, the US has a small distinction in compared to federalism as being the only country that doesn't have any kind of flat-out redistribution for no particular purpose from sub-national government to sub-national government, right?  We have no equivalent of just slicing off a big chunk of revenue from [inaudible] and [inaudible] in order to keep Berlin stylish.  And a lot of the time, that's because we pass our programs as being about redistribution to people, right?  This is the ecological fallacy of red and blue states, is that programs will often redistribute successfully to poor people in red states who are either voting democratic or not voting because there are various red state issues.  And that's why the federal government has transformed the south, you know.  Look at the south before The New Deal and you can see very clearly the long-term, you could argue, Democratic Party incentive, or liberal democratic party incentive, to spend a lot of money creating a welfare state in the south over the objections of the people who run most of the south.  It's also never a technical discussion.  You don't hire economists to design [inaudible] compliance system that will deliver the correct incentives.  That's the fantasy of the IMF.  You can only do that if you're the IMF lording it over poor countries.  In rich countries, you hire the economists for the specific purpose of telling you how your side will win and lose in a particular negotiation.
>> Hi.  I'm Adrianna McIntyre, and I'm a [inaudible] degree student with [inaudible] public policy.  
^M00:59:52
I had a question about the durability of Medicaid, and I was wondering what you think the implications are of the demographic shift with baby-boomers reaching 65 in record numbers and essentially feeding a growing dual-eligible population.  What does that mean for the program in the future?
>> Well, I think if they're aware -- if they stay aware of what Medicaid can do for them, it'll be a further force bolstering Medicaid durability.  These numbers aren't precise, but something like 65% of middle class people enter nursing homes paying for themselves and within a year, they wind up on Medicaid.  Medicaid has become a major long-care -- I mean it is the long-term care program for people who've essentially never been on welfare, are not one of these -- what's the phrase, dependents, sort of takers, who nonetheless at the end of life, run out of luck.  And somebody's got to take care of them.  So I would think that that's a force, and the duals as well -- a force for enhanced Medicaid durability.  Middle-class people needing the program, on the other hand, getting people to recognize what Medicaid is -- how Medicare doesn't really give you long-term care, that isn't easy.  Although I must say, in terms of Kaiser Polling, it is quite amazing the number of people -- I think it's 50-60% who've been on Medicaid or know someone who's been on Medicaid. And I know in the context of middle-class parents with intellectually disabled or developmentally disabled children, great numbers of them know a whole lot about Medicaid and they are as ferocious of defenders of the program as I think you'll find anywhere.
>> David Pelton.  [Inaudible] the likelihood [inaudible] with gun control, the likelihood that some states will move further [inaudible].
>> Right
>> Will reject that care [inaudible].
>> Right.
>> In the direction of [inaudible] and socialism. [Inaudible] two states right next to each other, say maybe Michigan and Illinois [inaudible] state and one where it's [inaudible].
>> If I understood the question correctly, I think in terms of this sort of polarization that's going on, and there's the literature which I haven't read that talks about not only are we ideologically getting that way, but that people are literally voting geographically with their feet, that you know.
>> [Inaudible] mass migration.
>> Yeah.  You know, that conservative people live more in Texas and if you're liberal, you know, you live more in New Jersey.  I haven't [inaudible] analyzed that very carefully.  But I do believe that unlike the first Medicaid program, where it took about five years to get -- it was 65 this was passed.  Five years for every state except Arizona to sign on.  That this time could be different.  That there may be ideological hold outs in places like Texas or the deep south which are really unified republican governments now contrary to what it was for most of our history, the republicans control both houses of the legislature and they run the government.  So it'll be interesting to me whether, you know, they ever do come on board and whether this variance that I think you're talking about as a result gets wider and wider.
>> Hi.  I'm Ruth Deagen, a student here at the school [inaudible].  You're talking about [inaudible] expenditures over time as a sign of Medicaid's durability and I wonder if you also think of that as a threat to its durability given that as it takes up a larger and larger percentage of the state budget, it becomes a target for cuts.
>> There is a down side as well, as an upside.  Peter Orsock [assumed spelling], who's, you know, the -- worked for President Obama, has been very much in the forefront of those who argue that Medicaid is hurting higher education and other functions.  And especially with the cost growth that you mentioned, the sort of relentless increases of costs, even to what I would argue is a relatively bare-bones not so wasteful program, there are really hard choices out there in terms of how much you can -- the states I'm thinking of in particular, put into Medicaid.  And I have no -- other than that the higher education community is a whole lot weaker politically than the Medicaid community, I'd probably -- that's not a right or wrong kind of an answer, but it's just, you know, it is a down side, you're right.  People do talk about cutting it.  But again, I'm struck with the Ryan program, [inaudible] in Washington, a policy player said that no governor in his or her right mind would possibly support the Ryan plan if it ever became possible.  Now it's been all sort of talk, and nobody was going to pass it.  Now what we mean by right mind in these times is up for grabs, but it would have devastating impacts on the fiscal pressures that states would face if anything like that came to close.
^M01:06:01
[ Noises ] 
^M01:06:11
>> Thank you.  Hi.  Jason Buckbem [assumed spelling].  I'm a student in Health Management and Policy.  My question for the panelists is around some of these odd incentives that you get for duals, where a state might invest in better long-term care, pay more out of its own pocket even though it's getting the match, the savings accrued in Medicare.  And I know there's been more attention to this in recent years and the duals demos and the special office created in the ACA, but it still seems like a fundamental tension, and I can't think of any other state-federal partnership program that his this kind of terrible incentive built in.  I was hoping to hear you thoughts.
>> There's got to be some other program that does it [laughter].  I don't know what it is, though.  You've got me there.  But I disagree with you.  If we get a system where we don't put people in the hospital so much, we keep them in the, you know, reduced hospital re-admissions for the elderly, say, and states are absorbing the cost and Medicare is getting off scott free-- or not scott free, but with less expenditure, there ought to be a way of sharing the savings.  And of course they're working on it.  And I don't-- there's obviously been no breakthrough.  Hope springs eternal, but you're right on the basic dysfunction in the incentive structure.
>> David Jones, School of Public Health Doctoral student.  I was at a speech-- or at an event recently where I saw a republican congressman give a speech, and he said that one of the reasons that the implementation of the ACA is failing so miserably is because states were involved in the drafting of the legislation.  So, strong assertion.  I'd be curious to hear you talk a little bit more about the role of states in the legislative process.  You talked about the governor's association and...
>> Right.
>>  ...from that point moving forward, what, if anything the Obama administration or Congress could have done that would have led to different outcomes.
>> I-- you know, I hear the argument from time to time that if only there would have been greater reaching across the isle, and we would have come up with something.  But I find -- and I'll get to your more specific point in a minute, but I just -- having read countless books on the past -- or some books on the passage of Obama Care, and then focused on particular on Medicaid, I just don't think this if only they would have tried to reach out to us.  I just don't think it's true.  In the case of the states, the governors, for understandable reasons, were very, very concerned about whatever the match rate would be.  And there were some certifiably crazy proposals out of the US Senate.  Some by democrats, which argued that they didn't want to give this very enhanced 100% early 90% match and they even talked about, well, states could borrow money to cover their you know, share of the -- and really, just terrible ideas.  And the governors fought back on that front very fearful of an unfunded mandate and were quite vigorous.  And people on the Hill began to read it.  
^M01:09:39
Early on, the National Governor's Association tried to get, you know, a group of governors together to offer sensible input, but by I think the middle of 2009, this Obama Care, or the health reform had taken off into the realm of ideology, symbolism, if we can break Obama's back on this one, he'll be one-term president.  I just think it got elevated by July to never never land, and so when the democratic governors by and large said, "Oh yes, we will endorse -- we're for Obama and we'll endorse this," and the republican governors I think uniformly opposed it.  By that point, it had just come caught up in sort of I'm for it, you're against it.  And I think they governors had less, other than around the match rate, less influence than they otherwise would have.
>> Right here.
>> Right here.  Sorry.  So, my name is Claire Hutchins and I'm a first-year at the Ford School.  Kind of building off of, I believe your name is David -- comment, question.  Do you think that governors and states would have had a very different approach to the implementation of the ACA had this happened in better economic times?  I think a lot of states, they come back and say, you know, we're really worried about the fiscal implications, but had this been legislation of the late 90s, would they have looked at it differently.
>> Well, you jumped in too.  I think economic-- better economic times would have helped, but I really think this ideological shift or polarization we've seen over the last 30 years -- and political scientists have really sort of studied this fairly carefully -- you know, whether Rick Perry and the people in Texas would have liked this -- I mean,  times there were as bad as a lot of places.  It helped, but I think the political ideology really does matter.
>> My name is Justin Ladder and I'm a grad student in the econ department.  So one thing that I noticed with sort of medical expenses in the United States, especially in the last several decades is that they're being driven more and more by chronic, long-term illnesses like Type 2 Diabetes, heart disease, and various forms of cancer.  Many of these diseases are also highly correlated with poverty.  [Inaudible] people have Type 2 Diabetes because they can only afford to eat crappy food and live a crappy lifestyle basically.  And I'm wondering if there's been any serious discussion on policy of using consumption taxation to not only create the money to pay for these diseases but also to discourage those behaviors as a form of containing the cost.  I know that's something [inaudible] a lot, but I don't hear it on national stations at all.
>> Right.  [Inaudible].  There is an effort within some Medicaid -- some states to make Medicaid patients more individually responsible about their health and there's sort of a notion that if they're having a health problem, a lot of it is due to bad habits.  But the level of sort of penalty or sentence structure they set up, it's not clear to me whether, you know, how much of an impact it's had.  Beyond that -- I don't know if you have anything, but I take you point, but I haven't heard anything very major, especially around a consumption tax in that respect, at least in the Medicaid realm.
>> I think the last place I would look for comprehensive coherent tax reform would be Washington.  It's hard enough to do it on a state level, if you were in Michigan over the last couple of years.  So I think you'd look for individual governments trying it out.  New York State and New York City seem to be particularly fond of such experiments.  And potentially it would diffuse.  I don't think the diffusion literature tells us that's true or not.  I'd also say that that's part of a broader subset of things that everyone in the world is dealing with which is that we have a lot of welfare states and health programs that were set up essentially on the premise that you needed some kind of cover for when you were off work.  Then you needed some kind of cover for the medical bills.  And then they usually add something for doctor bills.  That's the rough progress of health insurance development in the US and that's the rough progress of its development in a lot of places.  The problem is this does not produce a system in any country that's particularly well suited to complex co-morbidities, chronic problems, or anything to do with the long-term care wave that's coming at us.  The Class Act, which has now been cut, was an intellectually interesting effort to try it.  The United Kingdom's commissioned a number of reports which they've run into the sand as soon as they saw the budgetary estimates.  And the result is that I think you have a lot of ferment, and as far as I can tell, no really good ideas.  On what you do about systems that are very, very good at paying, you go to hospital, reasonably good at paying you to go for episodes of care of the doctor.  Largely poor, despite all the PR, at getting you to do, you know, live a healthier lifestyle.  And absolutely out of ideas on questions of long-term care.  And that includes going back to what do you do with dual-eligible's.  There's a range of other ideas world-wide which range from even more expensive and silly than dual-eligible's through to throw grandma off from a train.
>> I would like to ask about what happens when governors and legislatures are on a different track.  In Michigan, we have republican governor, republican legislature.  But they don't agree about what to do with Medicaid.  Do either of you have any suggestions of what's likely to be the next step and what might be done?
>> I don't -- certainly don't know the case in Michigan.  Jan Gruer in Arizona has a similar problem.  You know that -- it will be very interesting.  There's a book out recently on whether governors get their way with legislatures, and one part of it deals with sort of the non-budget items and have, you know -- there's variance of course in particular circumstances.  But they have a hard time winning on a lot of their sort of substantive proposals, and this is in the aggregate, so I'm not talking about Medicaid in particular.  When it comes to budget items, however, and budget proposals, governor -- the track record of governors is pretty impressive dealing with legislatures, and I don't know where, you know, it's obvious it's got budget implications, and it's obviously a substantive proposal.  I don't know how strong the Tea Party is among the -- you know, sort of the republicans of Michigan.  But you're right.  Came out we had this separation of power fragmented system.  So what governors want may not carry the day.
>> In 30 seconds.  There's also executives have to have some kind of outcome legitimacy.  They can do something and claim credit for it.  You can say want Rick Snyder did, and then do you like it or not?  Legislators, being in the House of Representatives or being in the Michigan Assembly, the main thing they do is take positions and they're often fiercely policed by all sorts of factions within the party for the positions that they take.  So structurally, it's much easier to look like a sensible person and leader as a governor than as a member of the House of Representatives, where you're pretty much condemned to look like a blow-hard much of the time.  The other point is, who would be a member of the Michigan state legislature?  Or the California state legislature?  You're good enough to run an enterprise of that scale and complexity.  You're personable enough to get elected, and what at age 40 you're going to abandon your obviously successful career for an eight-year term limited career break, so you can be surrounded by a rabble of ideologues in their 20s quite frequently.  I mean, who would be a legislator in these states?  
>> I wanted to go back to Affordable Care Act and the expansion of Medicaid and the -- certainly based on Massachusetts' experience the requirement for vastly increased numbers of primary care physicians...
>> Great.
 >> ...because of the expansion and what the potential is there for addressing some of these behavioral issues from in effect going to a public health model rather than the [inaudible] to get more families started on the right foot from birth, but everybody's covered but birth now just because of reimbursement requirements.  But the whole point of having that coverage more comprehensively and perhaps messages more comprehensively developed from a public health perspective.
>> That model.  I think it's an absolutely great idea and I'm beginning to follow this and the degree to which states attempt to encourage that kind of public health model I think will be very -- it's tricky.  It's not going to be easy given the sort of interests that are running around in that system.  
^M01:19:49
The other point I would make, and I think this is part of your remark is that I am hopeful that, you know, as the demand for sort of primary care providers increases, that nurses -- at least nurse practitioners will gain more ability to deal with certain, you know, basic sort of health issues which could also, if done right, might facilitate this sort of public health kind of perspective.  And we'll see, there's certainly movement.  I think some movement in that direction, but I haven't tracked it at all [inaudible], but it's -- you're right.  It'll be a real pressure point.
>> There's also a case for more efficiency and better use of people because we're in a world-wide healthcare workforce shortage.  And given that the United States is a country with essentially no concept of cost containment, we've been hoovering up medical professionals from the entire planet.  Well-- particularly India, at some point, India's actually going to have enough jobs for all those access doctors, and if China doesn't start exporting doctors, we're in the soup.  The whole world's getting older together.  Much of the world is getting richer, and the United States is structurally dependent on essentially pillaging India, and I don't think that's a long-term viable strategy.
>> And so we come to the end of a conversation [laughter].
>> On pillaging India [laughter].
>> [Inaudible] remarkably durable [inaudible] but the fault lines are really extraordinary, whether that is within the state, between state and nations, and even, and we didn't have time for conversation, what happens when a second-term termed limited president does not like the reaction of some governors, and the very possibility, which I hadn't thought of before, waivers being withdrawn or made more difficult when normally the presumption of waivers is they are expanding exponentially.  Does that become even still a kind of a bit of an intergovernmental power play and tool?  I guess we stay tuned as we move into another decade of Medicaid.  With that please join me in thanking our panelists.
^M01:21:53
  [ Applause ]