The Wall Street Journal: Op-Ed by Senator Alexander: Time for a Medicaid-Education Grand Swap

Posted on May 16, 2012

Staring down steep tuition hikes, students at the University of California have taken to carrying picket signs. As far as I can tell, though, none has demanded that President Barack Obama accept a Grand Swap that could protect their education while saving them money. Allow me to explain.

When I was governor of Tennessee in the early 1980s, I traveled to meet with President Ronald Reagan in the Oval Office and offer that Grand Swap: Medicaid for K-12 education. The federal government would take over 100% of Medicaid, the federal health-care program mainly for low-income Americans, and states would assume all responsibility for the nation's 100,000 public schools. Reagan liked the idea, but it went nowhere.

If we had made that swap in 1981, states would have come out ahead, keeping $13.2 billion in Medicaid spending and giving $8.7 billion in education spending back to Washington. Today, states would have about $92 billion a year in extra funds, as they'd keep the $149 billion they're now spending on Medicaid and give back to Washington the $57 billion that the federal government spends per year on schools.

This trade would get at the heart of the problem with today's rising cost of college education: the policies that Washington has dreamed up and then handed off to the states to implement, costs and all. Chief among them: Medicaid.

When I was governor and we were allotting state tax money for roads, schools, state agencies and the like, we'd have to choose between spending on Medicaid or public higher education. When states are forced to spend more of their limited tax dollars on Medicaid, that usually means they spend less on education.

Last year in Tennessee, Medicaid funding was up 16% while state support for higher education was down 15%. As a result, tuition and fees at public four-year universities rose more than 7%.

At Tennessee Tech University, state funding has dropped 30% over the last three years—and the picture is not much different at other universities and community colleges throughout the nation.

In addition to saving states money, this Grand Swap could help improve the quality of education, both in colleges and K-12.

Because of the funding crunch, the quality of many of our higher education institutions is in serious jeopardy, and that's putting our nation's future in jeopardy. America's secret weapons in creating jobs since World War II have been innovation, technology and a trained workforce. We not only have the best colleges and universities in the world, we have nearly all of the best.

At the K-12 level, federal involvement has done little to improve quality. Federal funding for elementary and secondary education programs has increased by 73% over the past nine years, while student achievement has stayed relatively flat.

State and local leaders know best how to create an environment in which students can learn what they need to know to succeed in college and in careers. Decisions on whether schools and teachers are succeeding or failing should be taken away from Washington and given back to state and local governments. While Washington has provided some important advocacy and requirements for better reporting of test scores, most of the initiative for higher standards, better tests, more accountability and more parental choice has come from the states.

Then there's the Grand Swap's potential for strengthening Medicaid: A single manager, even if it is the federal government, would operate Medicaid more efficiently because it would be forced to implement the mandates it crafts.

So, how about it, Mr. President—a single Grand Swap for the long-term stability of tuition rates, student-loan rates, Medicaid and K-12 education?

Mr. Alexander, a Republican U.S. senator from Tennessee, is a former governor of that state, U.S. secretary of Education, and president of the University of Tennessee.