Health care repeal is a terrible, terrible idea

Last week, in a 47-51 vote, the U.S. Senate rejected an amendment to the Patient Protection and Affordable Health Care Act. Sadly, this vote will not end the Republican push to repeal ObamaCare. Going forward, Republicans are mounting a two-pronged assault on the health care reform’s individual insurance mandate before it comes into force in 2014. The first line of attack is to challenge the law in court, arguing that compelling all citizens to purchase health insurance is an unconstitutional overstep of the federal government’s powers. The second is to de-fund the agencies tasked with policing the mandate, which amounts to a de facto repeal.

Their chances for repeal are not bad. InTrade pegs the probability of a Supreme Court decision against the mandate at around 40 percent — the prospect of de-funding is even more likely, as Republicans have a roughly two-in-three chance of controlling both chambers of Congress in 2013.

However, while the political prospects of a partial repeal (ending the mandate while retaining the rest of the health care reforms) may be better than that of a complete repeal, the consequences would be far worse. Health care reform depends upon two components to tackle the adverse selection problem in insurance markets: a requirement that insurance companies sell insurance to all individuals, and a system of incentives that compel all individuals to purchase insurance. Without assessing penalties on those who do not purchase insurance (which, along with targeted subsidies, is ObamaCare’s adverse selection cure), the American health insurance market will go into a death spiral of rising premiums and disappearing insurers. We’ve seen the pernicious effects of partial reform already — in the children’s non-group insurance market, where flaws in the health care act put a shall-issue reform into effect before an individual mandate — the market has disappeared entirely. Partial repeal would work like partial reform writ-large, to the detriment of not just ObamaCare’s future beneficiaries, but to all Americans.

What is ironic is that of all the components of health care reform, the insurance mandate should be the one which Republicans find least objectionable. Conservatives, with their distaste for both income redistribution and government spending, should be keener to enhance the penalties of the mandate so that the act’s means-tested insurance subsidies can be substituted out. They should also be much more interested in tweaking the guaranteed issue of health insurance, introducing allowable forms of price discrimination so that the chronically healthy are not forced to subsidize the chronically ill. Obama’s profligate expansion of George Bush’s Medicare Part D is also deserving of GOP brickbats.

It is possible, of course, that the Republican moves against the insurance mandate are merely a feint. If Republicans demonstrate that the president’s flagship reform is vulnerable to attack, they might find the administration more receptive to calls for revision. Certainly there was a whiff of blood in the water during the State of the Union address, as the crushing unpopularity of the law obliged the president to offer Republican legislators the opportunity to submit improvements.

Unfortunately, there is little indication that the siege now being laid upon the insurance mandate is part of any more sophisticated plan. If Republicans truly intended to use the insurance mandate as a hostage in future negotiations, by now we would have seen someone in the leadership float a list of demands in the form of a compromise plan. Furthermore, Republicans have left themselves few means of exit— the court challenges to ObamaCare, once raised, cannot be dismissed by mere political convenience, and the riled members of the GOP’s base will react poorly to a late-game strategic shift after being proselytized for so long on the evils of mandated insurance.

No, it is more likely that the campaign against ObamaCare will be stubbornly carried to its bitter end. It is hard to imagine that Republicans at any level will look at the political calculus and see any benefit to a compromise that preserves the mandate. It is the most unpopular component of an unpopular law, and its rationale is so difficult to explain to non-economists that even Obama (who, in 2008, campaigned vigorously against an insurance mandate) seems doubtful of its merits. Republican state governors will find diatribes against the law a convenient way of boosting their deficit-fighting bonafides. Republican representatives will find opposition to the mandate as an easy means of satisfying the demands of their base and inuring themselves against future primary challengers. Republican presidential candidates will find that unflinching criticism of ObamaCare is the newest shibboleth for entry into the 2012 campaign.

In short, the stage looks set for a trainwreck. Republicans, denied their opportunity for full repeal, are now locked into a path that will leave the wasteful goodies of ObamaCare untouched even as it ruins the law’s necessary market reforms. Democrats, who futilely tried to sell ObamaCare as a retributive act against evil insurance companies, look ready to double down on their mistake, thus squandering their opportunity to reverse the law’s unpopularity. At this point, there is little else to do but to look to Justice Anthony Kennedy, the Supreme Court’s swing vote, with fingers crossed.

Anonymous over 13 years ago

"Conservatives ... should be keener to enhance the penalties of the mandate so that the acts means-tested insurance subsidies can be substituted out."

In other words, conservatives could try to make the penalties harsher. Is this a serious suggestion?

"They should also be much more interested in ... introducing allowable forms of price discrimination so that the chronically healthy are not forced to subsidize the chronically ill."

But wouldn't this defeat the purpose of the law, which was, in fact, to have the chroncially healthy subsidize the chronically ill? Why would Democrats go along with a reversal of this?


You seem to be straining to identify tweaks the Republicans could have made to PPACA, in order to portray their current efforts to void the law as unreasonable.

It is not unreasonable to insist on constitutionality of laws passed by Congress. Congress does not have power to do anything justified by econometric arguments. The expansion of the interstate commerce authority to include inactivity (where previously only activity was regulated) effectively removes any meaningful limits on federal government power. Unleashing this tyranny is a danger we cannot tolerate, no matter how well-intentioned the purpose. Congress must find some other way to reform the health insurance market that does no violence to the Constitution, and economists will just have to deal with the fact that they are not omnipotent. Why should conservatives should treat PPACA as settled fact, when the greatest onus is always on Congress to treat the Constitution as a settled fact?

The Republicans are not cynically fighting PPACA to whip up support from the base. There are serious constitutional objections to PPACA, and carefully written rulings by two federal judges give credence to those concerns. I don't believe that one party or another should have a monopoly on defending the Constitution, but the Democrats' refusal to abide the constraints of our country's charter leaves us little choice.

Anonymous over 13 years ago

A final thought.

If there are reforms in PPACA worth keeping, those provisions can be re-passed after PPACA has been repealed or overturned. Congress can pass a new law using a more transparent and inclusive legislative process than the one used for PPACA. PPACA was written hastily behind closed doors, and in retrospect without much thought. It is flawed even viewed through the lens of PPACA supporters -- a severability clause to prevent the whole act from being declared unconstitutional was in an initial draft but left out of the final dreft, the law contained a hugely unpopular 1099 IRS reporting provision, and as you pointed out, the law botched the sequencing of shall-issue and mandate provisions for children's non-group insurance, resulting in the disappearance of that market. Who knows what other flaws unpleasant surprises come to light as the law is being implemented and regulations written to enforce it? Repeal it and replace it.

Scott about 13 years ago

The first person - bravo - I enjoyed reading what you wrote vs someones opinion! I feel that waste leads to fraud and fraud leads to a lot of wasted dollars! If there's a 5 profit margain in HC - than that cost each american over 1500 in profit each yr - good thing its mandated!!!