Quick Update

Apologies for the prolonged blogging hiatus. I’m not dead yet, just snowed under—I’ll resume my regular blogging at the nearest occasion. Herewith a forthcoming law review piece on the “Medicaid ruling” of NFIB v. Sebelius. The gist of it: NFIB didn’t really do very much about the horrendous economic incentives that drive the program.

“Not very much” doesn’t mean “nothing”: on the margin, the ruling may have increased some states’ willingness to forego the “opportunity” to expand the program even further; and in the short term it is an opportunity. To illustrate: in my home state of Virginia, newly elected Governor McAuliffe promised to finance big road-building investments—how? By participating in the Obamacare Medicaid expansion.

It’s the long-term costs that are ruinous. Not that that would concern a single-term governor. The question is, how big is the margin? Not big enough for Arizona, which has decided to join. This study strongly suggests that the consequences will be very bad. It’s a sad story. Sadder still is the larger story: Medicaid is ruinous with or without Obamacare.

Michael S. Greve

Michael S. Greve is a professor at George Mason University School of Law. From 2000 to August, 2012, Professor Greve was the John G. Searle Scholar at the American Enterprise Institute, where he remains a visiting scholar. His most recent book is The Upside-Down Constitution (Harvard University Press, 2012).

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  1. says

    The term “health insurance” is a misnomer, because it does not insure health; it insures the patient’s assets in the event of an expensive episode of illness, and provides varying degrees of access to medical services that might be unavailable otherwise. Medicaid provides a crucial contrast with this concept. Medicaid allows states to place liens on assets to recover certain costs paid for medical care. Whereas health insurance protects assets from being depleted by medical expenses, Medicaid authorizes the taking of them, under certain circumstances. The more conspiracy-minded may suspect that the Medicaid lien provisions are simply the camel’s nose under the tent to allow the government to tax assets to pay for the healthcare system.

    In addition, physicians cannot stay in practice with a patient population that consists of too high a proportion of Medicaid patients, for the simple fact that many Medicaid reimbursements are below the cost of providing the care in question. As a result, access to many providers is limited by the structure of Medicaid. Medicaid does allow access to some care where patients might otherwise receive none, but this accomplishes little that had not been provided previously by charity care.

    Medicaid puts assets at risk and limits access to care, the exact opposite of two of the main benefits of health insurance.

  2. gabe says


    Another brilliant analysis. It seems that the “hidden fingers” of taxation are sufficiently robust to corrupt even the better of our politicians (no, I don’t mean McAuliffe).

    Have recently been reading on structure induced problems as a result of the 17th Amendment. Your piece makes me wonder whether even a pre- 17th Amendment US Senator would be able, or want to, resist this “delightful” form of state revenue enhancement. I doubt it. After all, historically they more closely resembled Hamiltons cautionary comments than Madisons “structural protectors”

    take care

  3. Mike Greve says

    very good question, gabe, and right suspicion. In fact you’d think that the more Senators represent states AS STATES they’ll fight for the local political establishment, and screw the voters/taxpayers. In my native Krautland that’s the system. The empirical evidence is messy, and there’s an argument the other way; the most plausible version is Todd Zywicki’s (my buddy and colleague across–I can dredge it up). But there’s ZERO evidence or reason to think that repealing the amendment would improve things.

    The actual changes that made a difference are 1. the income tax amendment (which I actually favor) and 2. the end of the hard money constraint at the federal level (which I DON’T favor). Once you combine relatively hard budget constraints at the state level with very weak fiscal or monetary constraints at the national level, you get our system. The Founders had no reason to expect that.

  4. gabe says


    Makes sense what you say especially the hard vs weak fiscal constraints and the consequent role of Senators.
    I agree that we are too far gone at this point to even think that repeal of the 17th would make any difference.
    If you have a reference for Zywicki (something shorter than your masterpiece (which was great) I would appreciate it.

    take care

  5. JimBrock says

    One new amendment would do the job:

    The Federal Government is forbidden to exspend any money to finance any project within the several states.

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