With the defeat of national health reform, many liberals have looked to the states as the source of health policy innovation, and many in the new Republican majority also support increased state control. Michael S. Sparer argues that states by themselves cannot satisfy the liberal hope for universal coverage or the conservative hope for cost-containment.

He also points to two critical drawbacks to a state-dominated health care system: the variation in coverage among states and the intergovernmental tension that would accompany such a change.

Sparer analyzes the contradictions in operations between the New York and California Medicaid programs, and questions why New York spends an average of $7,286 on its Medicaid beneficiaries and California an average of $2,801. The answer is rooted in bureaucratic politics. California officials enjoy significant bureaucratic autonomy, while New York officials operate in a decentralized and interest-group dominated environment.

The book supports this conclusion by exploring nursing home and home care policy, hospital care policy, and managed care policy in both states. Sparer's dissection of the consequences of state-based reform makes a persuasive case for national health insurance.