The Health Care Shell Game: Why Not Leave Policy to the States?

In my latest blog post for Learn Liberty, I take on arguments against decentralizing health care policy to the states on the grounds of fiscal capacity:

So if federal ACA spending were cut or even zeroed out, why couldn’t states that like the legislation simply reinstate the same taxes and spending that the federal government currently uses under the law? If the net budgetary impact of the health care law really is zero, there is no inconsistency with state balanced-budget requirements…

[T]he federal government faces a stricter constraint than the states in one crucial respect: its total debt burden is much larger. Federal debt is already greater than 100% of GDP, leading to higher interest costs and crowding out private investment. Expanding the debt even further would only exacerbate these serious problems.

State and local debt is much lower, at about 16% of GDP. State and local governments are much more fiscally responsible than the federal government, and that’s precisely what gives them room to spend if there’s a good reason for it.

More here.

2 thoughts on “The Health Care Shell Game: Why Not Leave Policy to the States?

    1. Not since the Great Recession, but these are (presumably) extraordinary circumstances. If productivity growth got going again, investors would need to be compensated for putting their funds in federal bonds rather than global equities.

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