Overview
One of the pillars of the American political system is federalism, or the separation of powers between the federal and state governments. With its roots in the Constitution, it strikes a balance between regional autonomy and centralized power, enabling states to tackle local issues while the federal government takes care of issues of national significance. However, health care is a constant source of conflict since it sits at the nexus of these authorities. Debates on whether health care should be administered locally or centrally are exacerbated by its very personal character, economic ramifications, and diverse geographical demands. Using examples from the past and present, this essay examines why health care is still a contentious topic under federalism and suggests possible ways to heal the division.
Health Care and Federalism: A Structural Conflict
Federalism reserves certain rights for the states under the Tenth Amendment and gives the federal government additional authorities, such as controlling interstate trade and ensuring the general welfare. Despite not being specifically addressed in the Constitution, health care affects both governmental levels. States control insurance markets, provide provider licenses, and manage public health programs, while the federal government shapes health policy via programs like Medicare and Medicaid. Because the federal and state governments have different goals and philosophies, this shared duty leads to conflict.
This conflict is best shown by the 2010 Affordable Care Act (ACA). The National Federation of Independent Business v. Sebelius (2012) case challenged the Affordable Care Act’s requirement that people buy insurance. The Supreme Court decided that states may choose not to expand Medicaid without forfeiting current funding, but it maintained the requirement under Congress’s taxation authority. The fundamental tenet of federalism—that states have a high degree of autonomy—was emphasized by this ruling. By 2025, 39 states had extended Medicaid, but others, like Florida and Texas, had resisted, citing philosophical objections to federal encroachment and financial concerns. These conflicting decisions show how federalism supports inequities in access to care while yet enabling states to customize policy to local priorities.
Historical Background: The Function of Federalism in Health Care Discussions
Federalism has historically influenced health care discussions. President Lyndon Johnson’s establishment of Medicare and Medicaid in the 1960s represented a major government involvement in health care. Medicaid is a combined federal-state program that covers low-income people, whereas Medicare is a federal program that covers the elderly. States’ latitude in implementing Medicaid resulted in differences in eligibility and benefits; some, like California, provided substantial coverage, while others, like Alabama, imposed more stringent requirements. These variations demonstrate the dual nature of federalism: it produces unequal results while accommodating local preferences.
Federalism has presented challenges to previous national health care reform initiatives. States’ rights arguments and concerns about centralized management were two factors that contributed to the derailment of President Harry Truman’s 1945 plan for universal health care. Similar worries that a federal requirement would erode state sovereignty contributed to the failure of President Bill Clinton’s 1993 Health Security Act. These historical instances show how the structure of federalism makes it difficult to reach an agreement on health care policy because states protect their borders from what they see as federal intrusion.
Why Health Care Is Still Controversial
1. Ideological Differences Regarding the Function of Government
Ideological disagreements over the role of the government in healthcare are exacerbated by federalism. Progressives often support a robust federal involvement, claiming that universal coverage guarantees state-by-state fairness. On the other hand, conservatives place a strong emphasis on state sovereignty because they think local governments are better able to comprehend the demands of their constituents. The adoption of the ACA made this gap clear. While conservative states like Georgia opposed the ACA’s exchanges and subsidies, pointing to market inefficiencies and reliance on government funding, progressive states like New York welcomed the program.
This division is further shown by the discussion around single-payer schemes like “Medicare for All.” Advocates contend that by standardizing care throughout the country, inequities would be lessened. Many state officials are among those who oppose it, arguing that it would hinder states’ capacity for innovation. As an illustration of the practical difficulties in enacting significant changes even at the state level, Vermont’s 2011 attempt at a single-payer system at the state level failed because of excessive expenses.
2. Fiscal Federalism and Economic Factors
The expense of health care—$4.5 trillion a year, or 18% of the US GDP in 2023—intensifies discussions about federalism. Medicaid expenditures are heavily borne by the states; depending on the state, 50–75% of the financing comes from the federal government. While wealthy states, like Massachusetts, may afford to augment programs, poorer states, like Mississippi, are highly dependent on federal funding. When federal programs, like as ACA subsidies, demand state contributions or compliance, this fiscal federalism causes conflict because some states oppose what they perceive to be unfunded requirements.
This tendency is emphasized by the opioid epidemic. States with the worst overdose rates, like as West Virginia, applied for federal funding for treatment programs while simultaneously putting local policies like prescription drug monitoring into place. States seeking for customized solutions opposed federal attempts to standardize responses, such as CDC recommendations on prescribing opioids. This tug-of-war illustrates the difficulty of federalism in striking a balance between local freedom and national norms.
3. Regional Differences in Medical Requirements
Federalism causes policy fragmentation yet enables states to handle particular health issues. Because of provider limitations, rural regions like Montana need different approaches than metropolitan ones like Illinois. For example, Illinois concentrated on hospital capacity, whereas Montana increased telemedicine to enhance access. Although these customized strategies are in line with the ideals of federalism, they make national changes more difficult since one-size-fits-all policies may not be enough for a range of demands.
This problem was highlighted during the COVID-19 epidemic. While some states, like South Dakota, gave priority to economic reopenings, others, like California, enforced stringent lockdowns. State rules and CDC federal instructions often clashed, confusing the public and producing inconsistent results. As a reflection of state liberty in public health, vaccination rates by 2022 ranged greatly, from 80% in Vermont to 55% in Alabama.
4. Constitutional and Legal Restraints
The Constitution-based legal structure of federalism restricts federal control over health care. Although states have primary control over intrastate operations, such as provider licensure, the Commerce Clause permits regulation of interstate insurance markets. These lines are often at the center of challenges to federal health rules. The Supreme Court limited coercive government demands in South Dakota v. Dole (1987), but maintained federal requirements on highway funding to enforce a drinking age. This case strengthened states’ power to oppose federal policy and affected the Medicaid ruling under the Affordable Care Act.
Following Congress’ removal of the penalty associated with the individual mandate, recent cases, such as California v. Texas (2020), contested the validity of the Affordable Care Act. Although the lawsuit was rejected by the Court, it brought to light persistent conflicts between federal and state jurisdiction. As states use federalism to resist federal overreach, such court cases guarantee that health care will always be a contentious issue.
Case Studies: The Implementation of Federalism
Case Study 1: Medicaid Extension
The effect of federalism on health care was made clear by the ACA’s Medicaid expansion. Uninsured rates dropped dramatically in states that expanded, like as Oregon, going from 14% to 6% by 2019. Smaller drops were seen in non-expansion areas, such as Texas, where 17% of people lacked insurance in 2023. Due to coverage gaps for low-income populations in non-expansion states, this imbalance spurred discussions about equality. Federalism gave states a choice, but proponents of state sovereignty hailed the freedom, while detractors said it increased inequality.
Case Study 2: Cost of Prescription Medicines
As a result of federal inactivity, states have experimented with medication price changes. Because it violated the Commerce Clause, Maryland’s 2019 bill to stop generic medication price gouging was overturned in court, demonstrating federal restrictions on state innovation. Although implementation is still sluggish because of federal regulation, Florida’s FDA-approved 2020 medicine importation program from Canada demonstrates how states might use federalism to manage prices.
Case Study 3: Health of the Reproductive System
Jackson after Dobbs v. Jackson States now have more authority over abortion laws, according to the Women’s Health Organization (2022). While Texas implemented almost complete prohibitions, states like California increased access. Federalism’s ability to accommodate a wide range of ideals is shown by this patchwork of laws, but it also highlights its difficulties in guaranteeing uniform rights. States become major battlegrounds as a result of the federal government’s limited engagement, which is restricted to financial constraints like the Hyde Amendment. This intensifies national arguments.
Possible Ways to Close the Gap
It is necessary to strike a balance between state autonomy and national norms in order to resolve health care disputes within the context of federalism. The following are suggested remedies based on the ideas of federalism:
1. Models of Cooperative Federalism
Cooperation between the federal and state governments, or cooperative federalism, may lessen conflict. One such example is the Children’s Health Insurance Program (CHIP), which was created in 1997. States may create coverage plans for children while adhering to federal regulations thanks to CHIP, which provides federal funding for state-administered programs. Extending comparable models, such block grants for preventative care or mental health, might match state freedom with federal objectives. For example, federal funds and state telehealth programs may be combined in a federal-state cooperation to alleviate the scarcity of rural providers.
2. Promoting Innovation in the State
As shown by Section 1115 Medicaid waivers, the federal government might use waivers to encourage state innovation. States like Indiana combined increased coverage with conservative ideals by testing health savings accounts via waivers. Without requiring consistency, a national clearinghouse for state innovations may promote best practices by exchanging data on public health, medication prices, and telemedicine. If federal funding were available, Oregon’s integrated care organizations—which combine mental and physical health services—might serve as an example for other states.
3. State Opt-Outs with Federal Backstops
States might choose to complement or opt out of a federal baseline for health care access, such as a public option, which would guarantee minimal standards. Although this strategy is similar to the ACA, it might be improved to lessen coercion. For example, low-income citizens might be covered by a public option offered in non-expansion states without requiring governments to implement it. In order to maintain local sovereignty, states might choose private sector alternatives, like Utah did with its limited Medicaid expansion.
4. Commissions that are Bipartisan
Health care reform discussions might be facilitated by a bipartisan federal-state committee. A commission modeled like the 1988 Pepper Commission, which established CHIP, might suggest changes that strike a balance between autonomy and equality. Diverse viewpoints might be ensured by including stakeholders, governors, and federal representatives. By addressing medication pricing via a commission, for instance, legal disputes like the one in Maryland would be avoided and federal-state accords on importation or price limitations might result.
5. Improving Transparency and Data
Making well-informed decisions is essential to federalism, but progress is hampered by data inequalities. Standardized metrics on outcomes, costs, and inequities might be made available to states via a federally financed national health data platform. States might utilize this to contribute to national benchmarks and customize policy. For example, federal funding may be guided by monitoring opioid treatment results across states without requiring consistent regulations.
Implementation Difficulties
There are challenges with these options. Bipartisan attempts may be hampered by ideological differences, as seen by the divisive ACA discussions. New projects are limited by budgetary restrictions, since the government debt is projected to reach $34 trillion by 2025. Reforms may be delayed by legal challenges based on the limitations of federalism, as seen by the Dobbs and ACA lawsuits. Conflicting federal-state COVID-19 rules undermine public confidence, making agreement more difficult. It will take little measures to overcome barriers, beginning with politically neutral fields like children’s health or telehealth.
In conclusion
The fundamental conflict of federalism—juggling state autonomy and national unity—is the source of the controversy surrounding health care. Examples from the past and present, including as Medicaid expansion, medication prices, and reproductive health, demonstrate how federalism both facilitates and sustains a variety of solutions. The goal of suggested remedies such government backstops, incentives for innovation, and cooperative federalism is to balance these conflicting interests. Policymakers may work toward a system that guarantees fairness without compromising local autonomy by upholding the ideals of federalism while recognizing the universal significance of health care. Collaboration, data-driven innovation, and a dedication to mending divisions within a divided federal system are the keys to the future.