Hey Congress, How About Proposing Actual Alternatives to Obamacare?


Writing in the Wall Street Journal, Ramesh Ponnuru (AEI, National Review) and Yuval Levin (National Affairs, Ethics and Public Policy Center) argue that the Republicans should propose a concrete alternative to Obamacare. I think they are correct that if the GOP actually wants to improve health-care policy—as opposed to simply enjoy immense political gain in the near-term—it needs to do more than slow-clap as the good ship ACA goes down.

Their basic idea is replacing Obamacare with 

a flat and universal tax benefit for coverage. Today's tax exclusion for employer-provided health coverage should be capped so that people would not get a bigger tax break by buying more extensive and expensive insurance. The result would be to make employees more cost-conscious; and competition for their favor would make insurance cheaper….

Medicaid, the country's health insurance program for the poor, "could be converted into a means-based addition to that credit" and people with pre-existing conditions would have access to "coverage through subsidized, high-risk pools."

None of this is particularly radical or out of step with most people's experience in every other aspect of our lives, where we figure out what we want from many alternatives. At its core, it simply suggests injecting more and clearer market mechanisms into an area in which vagueness rules. Quick: Do you know how much your last blood test cost you or your insurer? The answer is almost certainly no. But you probably know how much your car's last oil change cost.

Ponnuru and Levin note that "conservative policy experts have long proposed such approaches" but were rebuffed by House Republicans in 2009, who chose instead to offer "an alternative to ObamaCare that did nothing about today's market-distorting tax policy and thus did not do much to help the people whom that policy—by inflating premiums—has locked out of the insurance market."

There's a strong case to be made that their plan doesn't go far enough in addressing cost issues (Medicare!) and there's a reason to be queasy any time "tax benefits" float into conversation (our tax code is already complicated enough). But their basic idea is worth exploring and discussing not just on the nation's op-ed pages and blogs, but in Congress.

At the top of the required-reading list for Congress and other policy analysts should be Ronald Bailey's 2009 Reason story, "In Health Care, Nobody Knows Anything." Bailey starts by paraphrasing the screenwriter William Goldman's famous maxim about Hollywood and noting that premiums had doubled over the past 10 years. He then proceeds to lay out a clear and concise case for increasing basic market competition by dismantling 

the McCarran-Ferguson Act of 1945 that allows state governments to regulate the business of insurance without federal government interference. The Act is, in part, responsible for the evolution toward state insurance markets dominated by just a few large insurers. Consumers cannot purchase insurance policies that are not licensed by their state insurance commissions and which do not incorporate all the mandates imposed by those commissions. Congress and the states should open up competition between insurance companies by enabling "regulatory federalism" that would allow individuals and employers to purchase health insurance from other states.

At the same time he calls for changes that would allow more competition among insurance providers (and a move toward actual risk-based coverage, rather than pre-payment plans that obscure and drive up prices), Bailey also argues for deregulation among health care providers.

For example, many states have certificate of need programs that forbid the construction of new health care facilities without prior regulatory approval. Passed by Congress in 1974 as a cost-cutting measure, the ostensible purpose of the programs is to keep health care costs low by requiring advance approval by state agencies for most hospital expansions and major equipment purchases. But regulations don't really work that way. "Market incumbents can too easily use [certificate of need] procedures to forestall competitors from entering an incumbent's market," according to a 2004 Federal Trade Commissionreport. In fact, "programs can actually increase prices by fostering anti-competitive barriers to entry." State enforced monopolies increase prices? Who knew?

Read the whole thing. And then read Reason's ongoing coverage of Obamacare.

The disastrous rollout of Obamacare has given the country another chance to address problems with the health care industry, all of which stem from a massive lack of exactly the same basic market mechanisms that have allowed so much progress in virtually every other area of our daily lives, from coffee shops to the online world to airline ticket prices.

Yes, health care is a specific market that requires certain specific rules and regulations. But that doesn't mean it requires fewer market and pricing signals (the muffling of which always helps powerful interests in a given industry).

Now is the perfect time to propose real alternatives that even if not perfect actually increase the ability of individuals to make meaningful choices that will affect their lives. Here's hoping that congressional Republicans and Democrats rise above themselves to actually do something that might help us all rather than simply position their partys for 2014 or 2016.

NEXT: US Jobless Claims Fell to 339,000 Last Week


  1. At my work I got forced into a “Silver” plan, and just found out that none of the family’s doctors will accept it.

    1. “It’s a great time to be Silver!”

      1. “If you like your doctor…”

  2. Repubs had six years during the Bush era to do something, even something as simple and obvious as lifting the ban on interstate sales. They chose to do nothing. And why in the hell should we now expect them to step forward either out of a desire to do something meaningful or the sillier notion of helping save O-care?

    1. “Do nothing” was exactly the right choice.

    2. Lifting the ban on interstate sales. Just imagine, the Commerce Clause actually being invoked for its intended purpose!

  3. Eliminate legislation that promotes artificial scarcity?!?!

    That’s just crazy talk!

  4. Do you know how much your last blood test cost you or your insurer?

    Well, I do and I was pissed. When my wife was pregnant a little over two years ago, she was carrying the gene for cystic fibrosis. Our future children were only slightly fucked if I too was carrying the gene, so I was tested as well. The good news, I am not carrying the gene.

    The bad news, my blood test was not covered and it was $500 fucking dollars.

    1. I wonder how much of that $500 was real cost.

      1. Yeah, it couldn’t be much.

        But now I have maternity coverage right? So I can get all the blood tests I want?

      2. It was real cost to CPA.

        What was the provider’s cost? What difference does that make? That question too often leads down the “profits are teh evul!” path.

        The only reason I care about a vendor’s cost is it gives me an idea what the lower bound for a negotiated price is.

    2. So are you angry that your insurance didn’t pay?

      Or angry that a company paid a team of Chemists and Doctors to identify the guilty genes, develop test for that gene, invested in lab equipment for that test, developed a process for sending your blood sample to the lab, and a process for sending results to your physician – AND they want to make a return on that investment?

      1. I suppose if it really costs that much than that is one thing, but I was mostly angry at insurance.

        I know we rant and rave about being forced into coverage you don’t need, but when you have coverage (in this case maternity) and I only did the test because it was related to my wife’s pregnancy, it was irritating to find out they wouldn’t cover it.

        1. It is always worthwhile to read the contract and check with your State Department of Insurance for mandated coverage in those situations.

          I’ve called my insurance provider on trying to deny me coverage the state requires. In those cases, offering to call the state DOI works wonders.

          1. Good call, I should have done that. At the time, I ranted and raved with some weenie on the phone when my wife convinced me to drop it because it was a small price to pay to know we didn’t have to worry about our baby having CF.

            1. it was a small price to pay to know we didn’t have to worry about our baby having CF.

              Sounds like the price wasn’t “too high”, then.

    3. My last blood test cost me around 100 bucks (at an Asian clinic). I get free blood tests from churches.

      Are blood tests for Cystic fibrosis more expensive? Otherwise, you got ripped off.

  5. The problem with republicans is that there is no relationship between what they say and what they do. Republicans often preach free market stuff that appeals to libertarians, so libertarians are thought to be more closely aligned with the right. But, while they talk free market, republicans don’t act free market (which is why libertarians should try harder to project a separate identity).

    Republicans will face all the same incentives that Obama faced if they try to promote an alternative health plan. They will have to promise lower costs to the population while promising (behind closed doors) higher profits to health care and insurance providers. This is not possible without huge government cash outlays, but that will be downplayed.

    As bad as Obamacare has been, short of an asteroid strike on DC, we’re stuck with it. Few are going to support going through this all over again with a republican plan and few believe the republicans are any more competent than the democrats (which is, of course, correct).

  6. Eh, this may be in some sense “the perfect time”, but asking for alternatives to Obamacare is like looking hard for alternatives to death camps.

  7. Had my first union contract vote yesterday. Well it would have been, but it would have been a guaranteed strike and the union didn’t want that, so pulled the plug on the vote the night before and signed an extension through the holidays (losing all of our bargaining chips in the process).

    My favorite bits: the union security/cheerleaders who surrounded the pissed off crowd that wanted to lynch its reps. And the bigwig on stage spending more time delicately explaining why he was calling it “obamacare” instead of ACA (crowd demographics were WAY black and/or democrat) than telling us anything they were actually trying to achieve for us.

    Anyhoo, on the labor front, from what I’ve seen the Unions only pretended to start realizing what they’d stepped in by supporting Obamacare about 6 months ago. Lets face it, they get more dues money from more part time workers. It’s win win.

    But the workers are just completely deluded. No idea the barrel they’ve been put over by voting for this shit. Part timers were up there ranting about pay raises, when they’ll be the first on the chopping block benefits and hours wise. The union and company are trying to keep full timers on board for a few months with bullshit rumors of a buyout that no one will see. The union’s just waiting for a legislative fix, or an executive one from Obama. It’s got nothing.


    I’ll be right over here, holding my breath.

  9. You realize, of course, that one alternative to OCare is just . . . no OCare.

    Not starting your analysis there shows you are falling into the
    “Something must be done!” fallacy.

    Thought experiment:

    OCare is repealed. And nothing else happens. Are we worse off? No. Ergo, OCare should be repealed.

    The unstated assumption that “Something must be done!” is a fallacy. Any analysis of “what should we do” has to have as one option “Nothing.”

    That said, the ideas proposed are, essentially, more repeals – repaeling CON, repealing state authority over insurance. Those work for me, but most of the “Don’t repeal, replace” nitwits are talking about subbing out OCare for some other flavor of command and control insurance.

    1. Not starting your analysis there shows you are falling into the “Something must be done!” fallacy.

      When proponents of emergent order tell proponents of central planning that they don’t like the plan, central planners respond with “well, what’s your plan?”

      It’s like trying to explain to a religious person that atheism is not faith that there is no god, it’s simply a lack of faith.

      1. Or: proposing to do X and having that rejected in no way obligates those who reject that to propose an alternative.

      2. well, what’s your plan

        “I was planning to have fava beans and a nice Chianti with dinner. Care to join me?”

  10. OK, newest story:
    “AP Source: Obama will allow insurors to continue sale of canceled policies”
    “Le state c’est moi”: Obo the 1st.

  11. Obama will allow insurors to continue sale of canceled policies

    Nice try.

    At the state level, those policies are most likely not cleared for sale for 2014. And the likelihood that they will get cleared in time is vanishingly small.

    1. That’s why we need a full roll-back to the previous criteria for clearance. If the federal government does this then the states will be under tremendous pressure to do the same, and they’ll have no good reason not to.

    2. Play this out all the way….

      The insurers will leave the dropped plans in the circular file and come next November we will hear Chocolate Jesus blame them for not reinstating said plans.


    But these ideas have been carefully crafted by Top Men.

  13. I just don’t understand how insurance plans carefully crafted to fit the political incentives of insurance regulators and legislators never seem to lead to economic efficiency in the marketplace.

    It’s bizarre.

    1. Its the KOCHtopus in action, P. No other explanation.

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