Green Bay Makes The Case For Federalism

Yesterday, Barack Obama visited Green Bay, Wisconsin, to tout that city’s successful efforts to rein in the costs of healthcare. Obama used the occasion to make the case for federal healthcare reform, modeled on the success of Green Bay and other cities like it. But Green Bay’s experience teaches a very different lesson: when the federal government butts out, state and local governments can experiment creatively. This, rather than a national health policy, has the potential to ultimately solve our country’s vexing healthcare-related challenges.

Picture this: a room full of a hundred bureaucrats in the Department of Health and Human Services in Washington, D.C., tasked with evaluating the costs and benefits of a particular medical procedure. Most have been in the department for twenty or thirty years, while others have volunteered for rotations in other government agencies like the Department of Education or the Department of Transportation. None has spent any significant amount of time in the private sector. None has lived outside of the D.C. area in decades. Few have direct experience in thehealthcare industry.

Now picture this: fifty different states, each with dozens of municipalities, formulating healthcare policy at a local level. Some of these policies are objectively superior and constituencies in other states and cities can apply pressure on their elected representatives to adopt the same reforms. Other policies are simply more appropriate to the circumstances of that particular state. Either way, there is room for customization, trial and error, and emulation.

Which of these two scenarios is likely to yield more innovation and better results for patients?

This was one of the Founders’ central insights. They argued that a federal system allows for a diversity of approaches, making it more likely that somebody somewhere will discover the approach that works best. Justice Louis Brandeis later articulated it thusly: “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Put differently, federalism provides at the governmental level what the free market provides in the private sector. It fosters competition, resulting in a dialectic process that enables good ideas to clash openly with bad ideas. The bad ideas can be discarded along the way, while the good ideas can be honed and replicated. There are other ways to achieve progress, butmillennia of human experience suggest this is the best.

Green Bay provides concrete evidence in support of this theory. The city’s health system has implemented electronic medical records, limited access to certain procedures that it has deemed costly and ineffective, and promoted treatments that reduce the prevalence of conditions that require expensive medical care. In doing so, it has attracted attention from other cities in Wisconsin and other states throughout the country, some of which are already incorporating elements of Green Bay’s healthcare reforms. This is precisely how federalism is meant to work.