Obscured amid the controversy over crowd size and the women’s march that followed was the substantive policy at the heart of President Trump’s inaugural address. That came in the language about “we are transferring power from Washington, D.C., and giving it back to you, the people,” and is being followed up with a reported congressional initiative to turn Medicaid, the federal healthcare program for the poor, into “block grants to the states.”
States already exercise substantial discretion over Medicaid. And it may be that the proposed changes are an improvement over the current system. Local control puts decisionmakers closer to end-users, shortening the distance that information needs to travel, and making it easier to adjust programs to local circumstances, as Ira Stoll notes. But it’s worth remembering that there are some drawbacks, too. First of all, “block grant to the states” still often gives the politicians in Washington and their lobbyist hangers-on ample opportunity to play a role in directing the cash flow. At the state level, meanwhile, the “block grant” provides an opportunity for government spending unconnected to the act of revenue-raising. It’s practically free money, so the state and local officials want to spend as much of it as possible.
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