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Daniels and Obamacare, Round Two
When conservatives start defending expansion of government, we’re in serious danger.


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Michael F. Cannon

All three critiques are rife with errors and omissions. Turner writes that the Daniels plan “operates much more like private insurance” than regular Medicaid does. No, it doesn’t: About 70 percent of Medicaid enrollees receive some or all of their care through privately managed-care plans. Turner calls the Daniels plan “a bridge to private insurance,” but she never addresses the incentives it creates to remain dependent on government. Mills claims the Daniels plan prevents crowd-out of private coverage by “requiring that an individual must be uninsured for six months before he or she is eligible.” Yet health economist Jonathan Gruber, who advised the Clinton administration to implement such waiting periods, later found that “if anything these provisions cause crowd-out to rise, not fall.” Goldberg incorrectly claims, “Indiana does not have a Medicaid program for families up to 200 percent of poverty,” because he (like Turner) confuses the program with the type of coverage it offers. Goldberg says I overstate enrollment growth in Indiana’s Medicaid program; I link to my source, he does not. He illogically analogizes the Daniels plan (which expanded Medicaid enrollment) to the 1996 welfare reforms (which reduced welfare rolls) and to education vouchers (which do not expand eligibility for government subsidies).

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If Daniels wanted to demonstrate that HSAs are superior to Medicaid as we know it, he should have put existing enrollees into HSAs, rather than expand Medicaid to make his point. It’s no excuse to say the feds wouldn’t have let him; if that’s true, Daniels should have pushed for more flexibility or eliminated regulations that make health insurance and medical care unaffordable for low-income Hoosiers. Instead, he expanded government.

Conservatives need to adopt a more discerning attitude than “If it says HSA, it must be good.” I hope no one would support a government takeover, such as Obamacare, just because the coverage it mandated was an HSA plan. Nor should anyone support a Medicaid expansion — a step toward a government takeover — because it creates government-subsidized HSAs. Turner thinks my criticisms are “odd” given that the Cato Institute has long been a champion of HSAs. Allow me to turn that around: When the Cato guy tells you someone is corrupting the idea of HSAs, pay attention.

Neither Turner nor Mills nor Goldberg disputes my claim that Daniels is undermining the effort to repeal Obamacare. Instead, Turner defends Daniels’s decision to implement the law because “if no state exchange is in place and the law is not repealed or overturned, then the feds will come in and surely institute an aggressive government-controlled program.” The first false premise here is that the feds will set up an exchange if Daniels doesn’t. “The future is uncertain about a federal exchange,” argues Twila Brase, president of the Citizens’ Council for Health Freedom, who is fighting the creation of an exchange in Minnesota. “Why should we do the feds’ work when they might never achieve the exchange without our help?” The Obama administration is counting on the states to help them entrench the law; Daniels is collaborating. The second false premise is that state-run exchanges would (or could) prevent Obamacare from becoming “an aggressively government-controlled program.” All the rules would be written in Washington; who administers those rules is irrelevant. (In the current issue of National Review, I explain in greater detail why there is no reason whatsoever for states to be creating an Obamacare exchange, and why governors doing so are cementing the law in place.) Daniels orchestrated a letter to HHS Secretary Kathleen Sebelius, in which he and 20 other governors threatened not to create exchanges unless their demands were met. Sebelius told them to drop dead. Has Daniels gone wobbly?

But my jaw dropped when I read this in Turner’s post: “While there are differences about this in the free-market policy community, I am advising governors to set up a minimal exchange . . .” Differences, indeed. I’m pretty sure I’m not the only one who sees a problem with conservatives praising the expansion of government health-care programs and advising governors to erect Obamacare’s new health-care bureaucracies.

Daniels has an Obamacare problem that could hurt the repeal movement if he doesn’t deal with it. Turner is creating more Obamacare problems. This isn’t the first time conservatives have danced with the devil on health-care questions (see Massachusetts), but with health-care freedom now at its moment of maximum peril, that needs to stop. It will probably, however, take more than just the usual voices of protest to stop it. Tea Party and traditional conservative groups should perhaps spend less time attacking congressional Republicans over relatively minor tactical disagreements, and more time educating the governors, state legislators, and (yes) policy wonks who are actively implementing Obamacare in their own backyards.

Michael F. Cannon is director of health-policy studies at the Cato Institute and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It.



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