How NOT to Save ObamaCare

Here is the CliffsNotes version of Holman Jenkins’s “How the GOP Should Fix ObamaCare” (The Wall Street Journal, 11/20/13). 

America has finally figured out OBC:  through the “mandate,” those who would prefer to buy or renew cheap, “substandard” insurance are being forced  to buy “standard” insurance (providing broader coverages but at a much higher price), in order to fund the provision of under-priced insurance to people with pre-existing conditions and people who are financially-needy.  The country is refusing to go along, and OBC is “dead on the vine.”  The Jenkins fix for OBC:  (a) allow the insurance companies to offer the sub-standard policies to everyone, at market prices (which would be much cheaper for the young and the healthy); (b) provide financial subsidies to the financially needy, to enable them to obtain insurance; and (c) provide indirect financial subsidies to those with pre-existing conditions by having the OBC exchanges  provide insurance for them at below-market prices.  Under this model, the subsidies to the unhealthy and the financially-needy would come from the feds and thus would be paid-for by the taxpayers generally, rather than being paid-for by forcing certain people to pay for better insurance than they preferred to buy.  It is still re-distribution, but now it is based upon wealth (via the tax code) rather than health.

In the Jenkins solution, the GOP allows the skeleton of OBC to remain:  the mandate survives, along with the subsidy for the needy.  In return, the Democrats abandon their prohibition of cheap, substandard policies.  In other words, everyone must have insurance, but “sub-standard” insurance is sufficient.  And then Jenkins goes all Pollyanna on us:  “And, down the road, by reforming OBC, much else could be reformed, including Medicare and the ill-begotten and destructive link between employment and health care.”  (italics added) 

Re-distribution based upon wealth, rather than health, might be an improvement, but, can’t the GOP cut a better deal than that?  “Down the Road” never comes, when you are dealing with the Obama crowd; their MO is, I get mine today, you get yours Down The Road.  Yes, OBC needs to be reformed, dramatically – and various conservatives (e.g., Rep. Paul Ryan, commentators Stephen Moore and Peter Ferrara) have already spelled it all out:  tort reform; lifting of bans on interstate offerings of insurance policies; general availability of Health Savings Accounts; removal of differences between tax treatment under group policies and tax treatment under individual policies; elimination of cross-subsidies and indirect subsidies built into insurance policies and premiums; restructuring of healthcare insurance as true insurance priced to reflect actuarial risk, not as vehicles for the delivery of subsidies and the furthering of social agendas.  In the conservative model, healthcare, and healthcare insurance, would be provided by the private sector via free markets, with Medicare, Medicaid, and OBC surviving as nothing more than programs to administer various types of financial support to the needy.  It is all there, fully articulated, already; has been, for some time. 

Why should the GOP, now holding substantial leverage because of the unpopularity of OBC and of the President himself, give up on comprehensive reform, merely in order to re-direct the bill for a massive subsidy-program from the young and healthy to higher-income taxpayers?  Pretty small beer.  Why not let OBC fall of its own weight, withholding the bailouts and subsidies for ransom until they can be exchanged for comprehensive reform?

 

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