Before Republican Sen. John McCain imperiled buddy Sen. Lindsey Graham’s last-ditch Obamacare replacement bill, Graham used the words “socialism or federalism” to position his alternative to the unfortunately named Affordable Care Act.
“Here’s the choice for America: socialism or federalism when it comes to your health care,” Graham lectured the news media. Here Graham insinuates he’s come up with a non-socialist solution to America’s health-care problems, and that answer, he claims, is federalism. In reality, Graham’s proposal is also socialism, with the government continuing to manage the health care and insurance industries. The measure also uses a tortured version of federalism that is governed from Washington DC, much like Obamacare.
Socialism is not federalism’s opposite. Moreover, federalism is not some form of alternative to socialism. In fact, socialism can and often does coexist with federalism, both in the United States and around the world.
Let’s Get Our Terms Straight
Federalism is a means of sharing power between a national government and individual states or provinces. The word federalism is often misunderstood because the word itself seems to connote an emphasis on federal authority. In America, the federal authority is supposed to be limited to a set of items written and named in the U.S. Constitution, among which do not appear the words “health care.” Items not specified there are supposed to be the purview of state governments.
Socialism is a system in which government controls the means of production and redistributes wealth for the benefit of the collective society. There are various iterations of socialism, with greater or lesser state controls depending on the program, country, and state. Socialism mixed with federalism is already endemic in an assortment of programs administered jointly by the U.S. and state governments, such as food stamps, welfare, and unemployment insurance.
Both Obamacare and its Graham-Cassidy alternative employ aspects of socialism. Obamacare’s socialist features are numerous, but most Americans are aware of a few: Every American is commanded to buy health insurance. Insurance companies are instructed to offer polices with specific features, and insurance prices are highly regulated. Both buyer and insurer face government penalties for failure to comply with the government’s edicts regarding the purchase and sale of insurance. The government uses a complicated mixture of subsidies and tax credits to control insurance prices and make purchases more affordable (with negligible success).
While Graham-Cassidy would repeal many odious Obamacare provisions, such as the requirement for individuals to buy insurance, the proposal’s central feature embodies both socialism and federalism. The bill would give states $1.7 trillion for seven years to administer government health and insurance programs regulated and controlled by the government. That’s the socialism part. States wouldn’t be required to participate, and those that do would get to select from a list of programs to offer. That’s the federalism part.
The Socialism Might Be Slightly Smaller, But It’s Still There
Obamacare also uses federalism, some by design and some by accident. For example, states are given permission to decide whether they’ll create their own insurance exchange, but for those that do, exchanges must be administered according to the federal government’s rigid regulations. States are also allowed to decide whether to expand Medicaid to a larger pool of applicants, although as originally conceived, states were required to expand the program. The U.S. Supreme Court upholding Obamacare as constitutional also struck down the compulsory aspects, allowing states to make the expansion determination on their own.
One could argue that Graham-Cassidy is less socialistic and more federalistic than Obamacare, and that in this Congress, it’s the best we can get. Sadly, that might be true. Proponents of the bill note that the measure starts to roll back many of Obamacare’s most criticized elements, and that it would give states far more power to design and implement reforms. But critics point out that while it transfers responsibility to states, it still leaves intact the very essence of Obamacare. The chief difference is that governors and state legislatures would command much more of the administration now left to Washington DC.
A major problem with Graham’s “socialism or federalism” remark is that it perpetuates the myth that state governments don’t engage in socialism, that because it’s coming from Idaho or Arizona or Texas, it must not be socialism. That socialism is something that only a national government would do. States have long been incubators for a host of socialist policies. These include land use planning, rent control, occupational licensure, and progressive tax systems, many designed to redistribute wealth and manage the economy in one way or another. In the years leading up to Obamacare, states, as well as the federal government, had been implementing more and more stringent (some would say socialist) control over medicine and insurance.
Graham is right that we need not choose socialism to fix America’s health care problems. And he’s right that federalism—true federalism in which states have autonomy to act without federal control or authority—must be part of the solution. But he’s wrong to imply that his bill isn’t socialistic or that ends federal management of health care, because neither is true.