Moving Medicaid Policy Decisions to the Feds

Tyler Cowen thinks that one way to reduce the fiscal burden on States is to move Medicaid to the Feds.  Wisconsin may be taking a first step in that direction.  Wisconsin Governor Jim Doyle, having to make $400 million in Medicaid cuts, left these cuts up to Federal Medicaid officials.  Newsweek reports that “The fixes, most of which kicked in this summer, were a predictable mix of new contracts and procedures (incentives for natural birth will save $4 million in C-sections).”

Although the State/Federal funding arrangement is the same, Wisconsin’s shifting decisionmaking power to the Feds may augur for a more centralized Medicaid program.  Governor Doyle believes that shifting these decision reduce the power of lobbyists.  According to teve Barton, president of the hospital lobby Wisconsin Hospital Association believes that shifting decisions to the Feds means lobbyists lost influence, officials were insulated from blame, and lawmakers were shielded from “tough votes.”

This politics-free honeymoon, however, will likely be short-lived.  If State Medicaid decisions are made at the Federal level, lobbyists will simply move from Madison to Washington.  In fact, lobbying may increase since the cost of these political wrangling will be less expensive if all Medicaid decisions are centralized.

As long as some form of government–State or Federal–runs healthcare, believing that these decisions will be free of lobbying influence interests is naive.


  1. So you think that removing government from healthcare will eliminate lobbyists? Maybe so, but that trade-off would be more expensive in lives and dollars by shifting costs to other bloated admin costs, and removing the public health assurance mandate that only government oversight can bring.

    Perhaps you’re forgetting that corporate healthcare is the most inefficient rationer of preventive and primary healthcare, and the mechanism that is least able to universally assure even basic, accessible care to all in need.

    Healthcare for profit is a failed model for such a basic human need. Believing otherwise is naive, indeed.

  2. Your post seems to suggest that Wisconsin Medicaid officials simply outsourced all decision making responsibilities to the Feds to arrive at the $400 million savings goal. This, I believe, doesn’t adequately describe the role state officials had in determining where to achieve the savings. As the linked article from Stateline explains, “Medicaid Director Jason Helgerson and his staff [were] ultimately responsible for sorting through…ideas aimed at reducing costs and improving health outcomes.” Furthermore, a large chunk of the savings ($200 million, in fact) came from renegotiating state contracts with HMOs.

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