Why Centralize?

Avik Roy’s concern about the latest iteration of health care insurance reform, expressed in his Washington Post op-ed, is that it has the wrong balance between administration by the states and “market-oriented” reforms:

The core idea in the bill is to take the money Obamacare spends on expanding coverage to the uninsured and give it to state governments in the form of block grants. States, in turn, could use these block grants to address the health-care needs of their populations.

It’s an attractive idea, in theory. Let states become laboratories of democracy, with some states using market-based approaches and others using government-centered ones — and then we’ll see who does best at covering the uninsured.

But Cassidy-Graham, in its current form, would put a heavy Washington hand on the federalism steering wheel. The bill would make it relatively easy for blue states to expand the role of single-payer health care, while making it rather difficult for red states to achieve market-oriented reforms. Lawmakers would be wise to revise the law so that it is more evenhanded.

You would think that would attract more progressives to the plan but apparently not. What attraction does a centralized national system hold for progressives? Such a system for the United States would be unprecedented. It wouldn’t be like Canada’s system—Canada’s system is administered by the provinces. Such a system would be an order of magnitude larger than the systems of the United Kingdom, France, or Germany and two orders of magnitude larger than Switzerland’s. Size really does make a difference and my experience has been that size rarely results in greater efficiency.

But I think the notion of market-oriented reforms in health care is illusory as well. Can the problems with our health care system really be remediated with changes on the demand side alone? I’m skeptical. I think that changing the supply side of the health care equation is what’s really needed but that, apparently, is off the table.