Yes, There Is a Good Alternative to Obamacare
Despite liberals’ claims


Yuval Levin

There is of course plenty of room to argue about how this kind of approach should be designed (the temporary risk pools in Obamacare, for instance, are a good model of how not to design it), but does Yglesias really think that there simply is no way to address the problem of covering people with pre-existing conditions other than Obamacare, and that this problem is the reason for the kind of approach that law would take? The under-65 population of the United States is on the whole a fairly healthy population and makes for a perfectly reasonable overall risk-pool for insurers, and the idea that insurers just won’t cover any but the youngest and healthiest members of that population seems based on a caricature of how insurance works.

The most interesting part of Yglesias’s argument, though, is the idea that addressing this problem is basically all that Obamacare does: that it starts by wanting to create an individual market and does the three things you have to do in order to create one — an individual mandate, a minimum-benefits package, and subsidies. This is why he says we basically agree with him on the ends, but that the means require Obamacare.

In fact, however, Obamacare is a huge step in the opposite direction of the one we propose. It proceeds from the premise that the solution to our health-care problem is to give the government significantly more power as a regulator and a purchaser of health insurance — a regulator through the new exchanges which (despite the fact that they share the name “exchanges” with an idea that has also been part of some conservative health-care proposals) are essentially a means of turning private insurers into a few large public utilities; and as a provider through a massive expansion of Medicaid. (The government’s role as a provider was also to be expanded through a public-insurance option in the exchanges, which was crucial to the logic of the law since it would have created an additional public system that could impose Medicare-style price controls for younger Americans, but had to be withdrawn at the last minute for political reasons, making the resulting legislation a little less horrible but a lot less coherent.) The idea is then to use the government’s increased muscle, together with new price controls in Medicare, to force down health-care costs.

The trouble is that the cost explosion is in the first place largely a function of the way the government has used its power as a provider and regulator of health insurance. The open-ended structure of Medicare and of the employer-based-insurance tax exclusion, together with the way Medicaid costs are shared by states and the federal government, have created huge incentives to spend more on health care, and therefore pushed costs upward. Obamacare would double down on an approach to limiting Medicare costs that has failed for decades, would massively expand Medicaid without reforming it, and would largely keep in place the tax exclusion while adding a new entitlement on top of it. It would exacerbate the causes of the cost problem while moving us further away from a real market in health insurance. And along the way it would also basically end the insurance business, create an unconstitutional mandate to buy coverage, and massively increase both spending and taxes. Yet in describing the law, Yglesias ignores most of what it would actually do and claims it’s all about addressing the pre-existing-conditions problem while moving away from the employer-based insurance system.

This selective focus is very much in keeping with the pattern of recent defenses of Obamacare. Others among its champions, most notably Ezra Klein, have recently taken to arguing that conservatives who want to transform our health-care entitlements into premium-support systems should also support Obamacare, since that’s what its “exchanges” would do. Leaving aside the fact that this is not actually what the exchanges would do (and that starting from the Medicare system is quite different than starting from the employer-based insurance system), each pundit suggests that the particular element he takes up is all there is to Obamacare, so that supporters of one alternative or another should really support Obamacare. But taken as a whole, Obamacare would move us far in precisely the wrong direction, which is why its opponents want to undo it as a whole and try instead to control costs by better enabling consumer choice and competition.

If the argument for Obamacare now amounts to the argument that there is no alternative solution to the problem of pre-existing conditions, then opponents of the law are in a stronger position than we imagined. That, of course, is yet another reason why Republicans should champion a specific alternative.

— Yuval Levin is editor of National Affairs and a fellow at the Ethics and Public Policy Center. Ramesh Ponnuru is a senior editor at National Review.