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Monday, November 17, 2014

"That's what I'm afraid of..."

This June, about a month or two before the original Halbig decision,  I was talking with my co-blogger and sharing some of my thoughts on healthcare policy and ACA.  I'm not big on making hard and fast predictions, but exploring various scenarios and thinking about relative probabilities is a common practice.  More about that later.  There were a handful of issues that could have been addressed with targeted pieces of legislation that could have drawn solid bipartisan support.  Instead we got a serious CF that has barely evidenced all of the related problems it will cause.  The political realities make outright repeal very unlikely, however, there is a path forward.  First, let's look at the following historical example of a really lousy piece of legislation which was eventually stripped down to something more manageable.  In an article titled  Let's Taft-Hartley Obamacare by Paul Moreno:

It is increasingly clear that the Affordable Care Act is not going to be either completed or abolished, regardless of what happens in November or in any envisionable future election. It is locked in, but in a peculiarly limited way.

But Obamacare will not be as locked in as, say, Social Security, the Civil Rights Act, or Medicare. As critics have pointed out, those programs were enacted with bipartisan support. Obamacare has enough shortcomings and complications that it will probably track that most accidental of New Deal legislation, the National Labor Relations Act of 1935, which made organized labor the most powerful interest group in America for half a century.
Almost everyone expected the Court to strike down the Wagner Act. Indeed, many liberals wanted the Court to do so, to highlight the conflict between the New Deal and judicial conservatism. Thus the Wagner Act passed the Senate 63 to 12 and passed the House without a recorded vote. The best explanation for the lopsided majority was not consensus in favor of the bill, but the conviction held by many of its opponents that the Court would strike it down — so why incur the enmity of organized labor for nothing?

To nearly everyone’s surprise, the Court upheld the Wagner Act in April 1937, shortly after Roosevelt had threatened to pack it. Suddenly, the country was saddled with an act that might not have passed at all, and certainly not in as radical a form, without the Supreme Court wild card. However, the Democratic majorities were so overwhelming in 1935 (70 to 20 in the Senate) that the NLRA probably would have passed, albeit by smaller margins, had the assumed Supreme Court strikedown not been a factor.

The public was soon put off by the militant tactics — especially the sit-down strikes — employed by the new unions of the Congress of Industrial Organizations (CIO), which had broken away from the more conservative AFL. Roosevelt packed the NLRB with CIO partisans, which alienated both employers and the AFL.

When the Republicans won control of Congress in 1946, for the first time since the beginning of the Depression, they enacted the Labor-Management Relations Act (Taft-Hartley). President Truman vetoed it, calling it a “slave-labor bill,” but Congress overrode the veto. (Many believe that Truman expected and actually wanted his veto overridden. He saw that Taft-Hartley was a much-needed correction to the Wagner Act, and this way he could get it while still keeping the support of the AFL and CIO.)  Taft-Hartley did not go so far as to repeal the Wagner Act. Instead, it maintained its fundamental principles while prohibiting some of the most abusive union practices. Most important, it allowed states to adopt “right-to-work” laws prohibiting compulsory union membership. The nation’s labor markets adjusted to the new regime, until today private-sector union membership is about where it was before the Wagner Act.

When the Roberts Court upheld the Affordable Care Act in 2012, we found ourselves again saddled with an act that probably would not have passed at all, and certainly not in so radical a form, had not the president and Democrats in Congress resorted to every trick in the book to enact it. But the Court left enough openings to significantly curtail it. House Republicans have already taken some small steps, as when they repealed an arbitrary $2,000 cap on deductibles in small-business health-insurance plans.

Some have always been there — like allowing interstate competition in health insurance. (Ironically enough, the liberal New Deal Court invited Congress to do this in 1944, and it declined.) The Court has held that Congress cannot force the states to expand Medicaid, and some Republican governors have taken a stand here. Other provisions, such as the religious-freedom exemptions, also present possibilities. More will open up if and when the Republicans take control of the Senate; outright repeal will be a possibility only if and when they take the presidency, too. But we can still have a Taft-Hartley improvement in the meantime.

So there is historical precedent...

In an article titled  Reforming the Reform Kevin Williamson has some fun which also includes some historical perspective, after which he concludes:

You guys had your shot at this, and you passed the law — but you still managed to blow it. But there are more intelligent, market-based, consumer-driven alternatives, and they are ultimately what’s going to end up getting enacted. We’re here to help — whether you like it or not.

James Capretta and Yuval Levin offer their ideas about a transition to something better.  Their article Getting there: How to transition from Obamacare to real health care reform  begins with the following observations:

Obamacare—or at least the version of it that the president and his advisers currently think they can get away with putting into place—has been upending arrangements and reshuffling the deck in the health system since the beginning of the year. That’s when the new insurance rules, subsidies, and optional state Medicaid expansions went into effect. The law’s defenders say the changes that have been set in motion are irreversible, in large part because several million people are now covered by insurance plans sold through the exchanges, and a few million more are enrolled in Medicaid as a result of Obamacare. President Obama has stated repeatedly that these developments should effectively shut the door on further debate over the matter.

Of course, the president does not get to decide when public debates begin or end, and the public seems to be in no mood to declare the Obamacare case closed. Polling has consistently shown that more Americans oppose the law than support it, and that the opposition is far more intense than the support. The law is built on a foundation of dramatically expanded government power over the nation’s health system, which strikes many voters as a dangerous step toward more bureaucracy, less choice, higher costs, and lower quality care. The beginning of the law’s implementation does not appear to have eased these fears, and in some cases has exacerbated them.

In what is one of the better articles pursuing this theme,  How to Transcend Obamacare Avik Roy begins:

It turns out that repealing Obamacare is not our only hope for reversing the triumph of the entitlement state. Indeed, there may be an even better one.
We can learn two things from Switzerland and Singapore. First, that there are countries out there with freer health-care systems than our own. Second, that it is possible to have one of the freest economies in the world while also ensuring that every citizen has health insurance.

The impressive results of Switzerland and Singapore drive home a powerful message: that health care works best when individuals have more control over their own health spending. The Left can’t bring itself to believe this; there, it’s an article of faith that “disinterested” government experts will make better and more cost-efficient decisions for you than you would make for yourself.

But the examples of Switzerland and Singapore also drive home the problem with focusing solely on Obamacare. If we were to spend all our capital “repealing and replacing” Obamacare, we might not have enough left to tackle the real drivers of unsustainable single-payer health care in America: Medicare and Medicaid.
In short, migrating future retirees and low-income Americans onto exchanges could yield substantial benefits to the quality and cost of subsidized health coverage. But there’s no reason we should accept the Obamacare exchanges as they are.

 Instead of forcing Americans to buy insurance plans that they neither need nor want — the Obamacare way — we should convert the exchanges into real marketplaces, places where people can voluntarily buy coverage that is suited to them. We can do this by repealing Obamacare’s individual and employer mandates, and by rolling back the plethora of new federal regulations and tax hikes that make insurance more costly without improving its quality.
 More than four-fifths of Americans receive federally subsidized health insurance; in Switzerland, only about one-fifth do. That’s the difference between an entitlement leviathan (ours) and a true safety net (theirs).
 The good news is that we can do this. We can solve the problem that conservatives care about more than any other — that America is broke — while actually making the health-care system work better for everyone. The poor and the sick and the elderly will benefit from higher-quality, fiscally sustainable health coverage. And average tax-paying Americans will benefit from affordable insurance, lower long-term tax liabilities, and a consumer-driven health-care system that is centered around them rather than the bureaucracy.
It’s time for conservatives to bring Reagan’s lesson to health reform. Instead of waiting for Obamacare to fail, we should instead devote ourselves to liberating the entire U.S. health-care system from government control. If we do that, and demonstrate the value of our economic principles with tangible results, it won’t matter whether we have formally repealed Obamacare. We will have transcended it, and solved the most important policy problem of our time: that of unsustainable government spending. If we want our children and grandchildren to inherit the country we grew up in, we have no time to waste.

Returning to the conversation mentioned at the beginning of this post -

The main point was that we should probably not be overly gloomy.  After a bunch of struggles healthcare access and affordability will probably be much better 10-20 years hence, despite the law.  More importantly, there are many things happening in the healthcare and life sciences arenas that will allow for the kind of creative destruction that will improve things dramatically.  (To be addressed in a future post.)  I think this is the high probability scenario.  The progressives in their usual clueless manner  will of course think that their law brought this all about.  Then he replied, "that is what I'm afraid of."


Bret said...

Yup, that's what I said.

On the surface, the question is whether future innovations in healthcare will happen "despite the law" or "because of the law." However, those really are one and the same. If the law didn't exist, a different (possibly overlapping) set of innovations would've occurred, and the innovations that do occur will occur in an environment in which the law exists.

So the probably substantial innovations that will occur in healthcare over the next couple of decades will indeed happen both "despite the law" AND "because of the law." Obamacare advocates will correctly point to the law as part of the reason for the specific innovations. And I will still say "despite the law," referring to the fact that I believe that there would've been far more and far better innovations without it.

Peter said...

Good luck, but I worry that you have an adversary at least as invidious as the dishonesty of statists screaming that universal public coverage for contraceptives was envisioned by the Founders. That would be complexity, friend of demagogues everywhere. Why is American healthcare so damn complicated and difficult to explain? Nobody understood Obamacare, but even before I had a hard time figuring out how your system worked. I read your links and, while they sounded good, I really couldn't follow them. It seems that every other country's healthcare, whatever the model, can be described essentially in one paragraph of basic English. It's pretty hard to recognize lies when nobody can figure out the truth.

Clovis e Adri said...

Concernig this excerpt:

"We can learn two things from Switzerland and Singapore. First, that there are countries out there with freer health-care systems than our own. Second, that it is possible to have one of the freest economies in the world while also ensuring that every citizen has health insurance."

It makes me wonder if the author has ever been to Switzerland.

I definitely wouldn't describe their system as "freer".

erp said...

... we should instead devote ourselves to liberating the entire U.S. health-care system from government control

Can we extend that to liberating everything else not expressly stated in the Constitution as being under government control as well?

Howard said...

American Healthcare and finance - "a hodgepodge of historical accidents." See how simply it can be described.

More seriously we have a messy combination of group(usually employer based) and individual private insurance, government operated (Veterans Administration) and government sponsored single payer (Medicare for elderly and Medicaid for the poor)heavily rule bound but delivered by private physicians. That covers most of it. The CF of Obamacare was well enough understood beforehand by some people on opposing sides with the often noted bug/feature divide.

I could go back further but the tax deduct-ability allowed for employer provided coverage in the wake of WWII wage and price controls introduced a major distortion. In the 1960s M & M started and eventually became the 800 pound gorilla in the room. Throw in a few other odds and ends mix and give some time, voila.

One history on BCBS blog, other descriptions may also have validity.