What's the Matter With New York?

While looking for information on Deval Patrick's new idea for controlling costs in Massachusetts (more on which later), I came across this opinion piece in the Huffington Post, titled "New York City Sinks If Health Care Reform Fails".  I find this a bit surprising, because first of all, New York City already has a third of its residents on Medicaid; and second of all, the city already has all the man features of the proposed insurance plan except the mandate.  What it doesn't have is the taxes, which are likely to fall much more heavily on New Yorkers than almost any other jurisdiction, when you consider the combination of high unionization and high incomes.

This is a question my father has been asking for a while, and I don't have a good answer for:  what is the distribution of the taxes and benefits for the proposed plans?  While whatever pooling benefits arise out of the exchanges and mandate probably stay in state, the revenue side probably represents a net transfer from blue states to red states.  That may be why Scott Brown won an election promising to take down the plan (though conservatives would probably argue that the declining popularity of Massachusetts' own version may have more to do with it).

Thomas Frank would no doubt be rolling in his grave, except that thankfully as far as I know he's still alive and well.  Does the political economy of this represent something fundamentally wrong with American politics?  Or is it a tribute to our admirable willingness to look beyond parochial self-interest?