Republican Senators are selling their latest Obamacare repeal and replace bill under the premise that it gives more power to the states, and this is a good thing. Instead of the federal government spending money on premium subsidies on the exchanges and paying Medicaid bills for those covered by the Medicaid expansion, the bill would take all that money, put it in one big pot, and send it out to states on something close to a per-capita basis, with little direction or mandate regarding what to do with it. This is called “block granting” — instead of paying for whatever needs arise (e.g., the mandated subsidy for someone on the exchanges), the federal government sends a fixed sum of money to states for them to use as they see fit.
The bill also reduces the amount of money in that big pot. States will have to figure out how to deal with those reductions, which would be unevenly distributed. But almost surely, states will have to scale back coverage, meaning people will lose access to care. So even if you like block granting, there are plenty of good reasons to oppose the bill. But should you like block granting?
On its face, the strategy would seem to have some advantages. Maybe it is really true, as Republicans often claim, that states can experiment and innovate, or that they have better information about what residents of their state need. It…
