Not at all. If, say, healthcare were not being taken over by the Federal government, it doesn't mean that all states would attempt to completely take over healthcare within their borders. They certainly weren't doing so before 2008.
Bottlenecking all of that power in Washington DC just makes it a more attractive target. If lobbyists had to maintain control across 50 states, the bar would be raised. In many cases, states would decide on ethical restraints upon lobbyists that would allow us to experiment with ways to control the damage that they do.
The state governments don't do these things because the federal government sucks the air (and tax revenue) out of the room. But people want these things, as evidenced by the fact that they keep voting for them. If the federal government was small, the state governments would be bigger and have higher taxes.
Having the power centralized in Washington does make it a more attractive target, but also subjects it to more scrutiny. In practice, state and local governments are far more corrupt than the federal government.
We already know that even within the context of "things that states can do", there is a tremendous amount of diversity amongst the states. This would continue even if states felt that they needed to fill some voids left by a defanged Federal Government. Federalism is a good thing. We see New York panicking and considering policies (like the "tax free zones/hiatus") they never would have in a vacuum because of revenue/brain drain to states like Texas that are more business-friendly.
In practice, state and local governments are far more corrupt than the federal government
They're corrupt in their own ways, but they don't have access to the levels of corruption of the Federal Government. State representatives can't legally inside trade on US stock exchanges. They can't even give themselves that kind of power. State representatives can't distribute national ethanol subsidies. State representatives can't bail out their buddies on Wall Street. The list of what States just don't have the power to do is really long.
