A Possible Reconciliation-Only Bill: Block Grant To States

If Democrats are looking for a political “win” on health care reform and a brand new bill that would be easy to sell to American people, one option is a reconciliation-only bill that just provides block grants to states. The concept is very simple. Democrats would decide how much they wanted to spend (say, $600 billion), and then spend it as block grants given to states to figure out their own way to deal with health care reform. Ideally, the block grant would come with a waiver to ERISA laws to give states more flexibility.

The idea is simple, clean, and easy to explain. The whole bill would only need to be a few pages long. It would simply give money to each state based on some formula for the states themselves to decide how best to increase insurance coverage. The block grants would come with only a few restrictions that the money only be used to increase insurance coverage and insurance quality. Politically, the idea is difficult to attack because there are no details to attack, that is all left to the states.

How states use the money would be up to them. It could be Medicaid expansion, Massachusetts style exchanges with subsidies, expand programs like Washington's basic health plan, a system that subsidizes employer mandates, a universal basic care program through massive expansion of community health centers, a universal, state-run extreme catastrophic insurance plans, etc. It would be smart to include a bit of a stick to encourage states to act. For example, after one year, if the state fails to pass a law to deal with their block grant, it would automatically be directed to a modest Medicaid expansion in the state.

Democrats would promise that after five years there would be an evaluation of each state's ideas to see if any state or group of states should serve as a model for further reform. It could be sold as the right response to Republican complaints about a “one size fits all” solution, and complaints about how the bill is too long and hard to understand.

Policy-wise, this is far from an ideal solution, but, politically, it might be the simplest and least unpopular path for the Democrats to achieve something big on health care reform. It is easy to understand and easy to explain. It would allow Democrats to say they listened to the American people, and changed in response to the complaints they heard. Most importantly, from a political standpoint, the idea would be for states to quickly expand existing programs that they already have to help the uninsured. If this new bill started helping people right away, instead of four years from now, it might convince Americans that the Democrats controlling Washington are actually passing laws to help regular Americans.

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