Saturday, March 27, 2010

Repeal vs. Reform, Update

The intellectual momentum within the conservative/libertarian movement is for repeal of Obamacare. The political reality, over the next three years, or more, might be different.

Yuval Levin, a thoughtful and prolific thinktanker at the Ethics and Public Policy Center, makes a forceful case for repeal; he has written cover story of the April 5 issue of The Weekly Standard, entitled, simply, "Repeal: The Overthrow of Obamacare." No doubt Levin is correct when he suggests that Obamacare will raise prices and degrade coverage and treatment.

But a dilemma is seen early on in the piece. Levin sets up a dichotomy between liberals, who favor government-mandated universalism, and conservatives, who favor a free market. As we shall see, conservative thinking is a bit more complicated than that. But let's let Levin make his case:

Liberals argue that the efficiency we lack would be achieved by putting as much as possible of the health care sector into one big “system” in which the various irregularities could be evened and managed out of existence by the orderly arrangement of rules and incentives. The problem now, they say, is that health care is too chaotic and answers only to the needs of the insurance companies. If it were made more orderly, and answered to the needs of the public as a whole, costs could be controlled more effectively.

So liberals heart "one big system." But then Levin sets up the conservative view, describing it as the hope that healthcare would be the sum total of private-sector choices, choices to be clarified by more transparent pricing. That's the ideal, anyway, according to Levin:

Conservatives argue that the efficiency we lack would be achieved by allowing price signals to shape the behavior of both providers and consumers, creating more savings than we could hope to produce on purpose, and allowing competition and informed consumer choices to exercise a downward pressure on prices. The problem now, they say, is that third-party insurance (in which employers buy coverage or the government provides it, and consumers almost never pay doctors directly) makes health care too opaque, hiding the cost of everything from everyone and so making real pricing and therefore real economic efficiency impossible. If it were made more transparent and answered to the wishes of consumers, prices could be controlled more effectively.

And so, Levin concludes, "Liberals and conservatives want to pursue health care reform in roughly opposite directions." Yes, there's plenty of division between liberals and conservatives, tut there's more to what conservatives, and their business allies, think. Many free-marketeers also favor universalism, aka "one big system," and they think, correctly, that government action can help establish universalism; indeed, government action should establish univeralism.

That's why many--although by no means all--conservatives and liberarians have supported the interstate commerce clause of the Constitution, so the individual states could trade freely with each other. Such a focus on universality has also spearheaded the efforts, over the centuries, to harmonize and rationalize railroad gauges, commercial law, weights and measures, time zones, and production standards. And that's why, today, most libertarian theorists have joined with the business community--at least the big business community, the businesses that are most heard in Washington DC--to support free trade and free trade treaties and umbrella groups, such as NAFTA, CAFTA, and the World Trade Organization. Libertarians embrace the theory, while big business, and many small businesses, may or may not embrace the theory, but they definitely embrace the idea of big market. For the past 60 years most big businesses, for example, have supported European integration, including the European Union.

In other words, many on the business-oriented right embrace "one big system," because it's good for business, by creating a large and predictable common market, even if critics say that such integration comes at the expense of national sovereignty.

And back in the US the same phenomenon could happen on healthcare. Levin and many others want repeal of Obamacare, but the US Chamber of Commerce doesn't, or at least won't work for it, according to USCC president Tom Donohue. Plenty of businesses, and others who count themselves on the side of large-scale harmonization and rationalization, might well decide that they like the new system, or will find themselves in the "reform" camp, but not the "repeal" camp.


  1. Jim, I totally disagree. The single reason the businesses would waht reform instead of repeal is that the bill incentivizes the businesses to be bad stewards of their employees' health, by making it cheaper for them to pay fines for no health care options than it would be to pay for their employees' health care. This is not by accident. This is the first lever Obama et al are using to make a public option make sense. This alone makes me want to rip the bill from the House's hands, throw it in the mud, and stomp on it. Cadillac plans? Why should it be an offense to offer your employees more expensive health care? HOw can it be right to tax certain higher priced prosthetics? If you read these things with a jaundiced eye, you see how much of a money and power grab this is, more so than any other purpose. This stuff needs to be flushed and for Congress to start over, with real boundaries, objectves and goals. If you go to my blog,, you'll se a treatise on what I believe should happen wih healthcare.

  2. It is most apparent that the Congress voted in the majority for the Bill and the President has or will sign it into the law. That in and of itself makes a total repeal most unlikely. There are a few acceptable and desired points displayed and a reform at some later date would retain the passages that are universally desired and forwarding to a revamped fiscally fair law that takes into consideration insured and medical practitioners. I think the Democrats failed to look at repercussions of shortchanging the doctors versus all the faith they had in a self serving AARP and the AMA representing a small portion of doctors in the USA. The other very shrewd and business oriented medical men and women who we need in a desperate way are not going to take a dime on the dollar. The very individuals that the Democrats declared as their raison d're are going to end up waiting to the point of getting fired or running around different states in order to find inexpensive care.

  3. So I’m wondering what happens if the individual purchase mandate is struck down as unconstitutional. It would then be up to the court to decide whether the remaining provisions of the act stand. (See If the court decided to save the rest of the act, would it not then be politically possible to reform the reform to simplify it so that:

    1) Everyone gets medical treatment even if they CAN'T pay for it (often the case already, except the failure to make this rule of thumb into a law or AMA policy or some other policy led to the legislative debacle that will have resulted in the unconstitutional provision – the difference would be an explicit federal reimbursement to patients, the most impoverished of whom would be eligible for mandatory credit from providers pending federal reimbursement)

    2) People who CAN pay for medical treatment and/or insurance get personal tax deductions for treatment and/or insurance

    3) A repeal of the employer deduction causes people to shop for their own insurance and/or pre-paid treatment and/or treatment on demand, resulting in price pressure on suppliers and putting people back in charge of their own medical decisions by creating genuine direct customer-provider markets for medical care and insurance

    #1-3 could happen, assuming the court doesn’t throw out universal coverage along with the individual mandate – couldn’t it?

    I don’t know – just wondering here how reforming the reform might move us to a system that is better than both the status quo and the status quo ante-HCR.

    Another potential constitutional problem came to mind while pondering this: Doesn’t universal coverage convert Medicare into a pernicious form of age discrimination? Until now, there's been a rational basis for a minimum age for federal health care, i.e. Medicare (we can’t afford to cover everyone so we need an arbitrary cut-off so we can afford to cover older people). Now the government has decided we can afford universal coverage. If federal law gives everyone access to health care, why should some people get one form of health care (under the new bill) and others get different health care (under Medicare)?

    Just because someone happens to fall on one side or the other of an arbitrary age threshold? Thanks to reform, there is a much weaker case for a rational basis, a compelling state interest, or whatever the proper equal protection test is for such obvious age discrimination. Couldn’t the ultimate result be means testing that applies to a unified system of federal medical assistance for those in need whether or not one happens to be a Medicare beneficiary? And wouldn’t a genuine market for medicine plus generous assistance to those who couldn’t otherwise afford to participate in the genuine market subsidize serious medicine instead of starve it? Granted, people who were led by the government to believe that their Medicare taxes were a form of health insurance for their old age would have a legitimate beef against means testing of “their” benefits – but perhaps a 50-year phase-out of non-means tested Medicare would pass constitutional scrutiny. Again, just wondering.

  4. I guess we have a horse race. But one way or another Healthcare has to be fixed. Hopefully before summer camp closes and the winter of our discontent begins.

  5. I think we are overlooking the $2,000 some odd premium that because the insurance is mandatory will be required of everyone. My first 35 years (I am now 59)were spent living in New York City. I am sure in all that time I have touched down in every corner of the City of New York. I will say unequivocally that in my judgement there will be nothing but defaults at that price point. People have enough problems with credit card debt and layoffs and believe it or not although I was born shortly after WWll, I am telling you that that $2,000 plus is still a million dollars for countless New Yorkers. Add that to what all of us know is going to be the level and quality of care that in and off itself will be difficult to arrange for low payers. We have to all get together and tune this bill up.