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Federalism and Health Care Reform

University of California, Berkeley

U.S. health care reform will take a largely decentralized state-controlled approach based on the belief that decentralization leads to greater democratic responsiveness, increased state-level innovation, and administrative efficiency. This article challenges these assumptions underlying the push for decentralization by presenting a literature review of the state-controlled Medicaid program and examining the relationship between decentralization and democratic responsiveness, innovation, and administrative costs. It questions the main claim—that state-controlled programs increase democratic responsiveness—on two fronts: First, whose needs do state governments respond to? Second, do states have the financial ability to respond to local needs? The article concludes by offering some reasons why the United States continues to favor a decentralized approach and notes that, in the absence of a centralized system, the nation continues to move toward methods of micromanagement to promote efficiency and effectiveness.

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