Beyond Obamacare
A response to our critics.


Ramesh Ponnuru

The president’s reelection, and the forthcoming implementation of Obamacare, do not mean that conservative opponents of the law should assume that it is set in stone and merely seek to tinker at its edges: That was the argument we made in the April 8 issue of National Review. Obamacare is unpopular, it is very poorly designed, it looks set to lead to rising costs and an insurance death spiral, its early provisions are not working out, and its fuller implementation next year seems increasingly likely to yield a train wreck.

As enacted, Obamacare appears untenable, and its problems are not cosmetic but fundamental. It cannot be fixed while remaining Obamacare, which means that the practical steps and the political coalition necessary to meaningfully reform it are the same ones necessary to repeal and replace it. Being clear about that — and offering an eventual alternative and some interim steps that could be taken while President Obama remains in office — would help bring that coalition to power. So the defeatism of some on the right regarding Obamacare is, in our view, simply not warranted.

The piece has drawn some critical responses in the past few days — from Ezra Klein, Kevin Drum, Matthew Yglesias, Jonathan Chait, and Josh Barro — which we wanted to address.

The first thing to note is that none of our critics actually defend Obamacare, and therefore none dispute the argument of the piece. Their dispute is entirely with what we propose instead — which our piece of course lays out only briefly and broadly, since we assumed that the argument that replacement is still the right way to think about things first had to be made. Their lack of interest in defending the law is interesting. Do they agree with us that Obamacare cannot work as enacted? Do they agree that piecemeal reforms will not work and Obamacare must be replaced? If they do, do they imagine that the party that forced this unpopular law down the country’s throat will be trusted to fix or replace it once it fails?

If they don’t agree that Obamacare is untenable (as we assume at least some of them don’t), how would they defend it? Do they not think it is headed for an insurance death spiral? Do they not think the financial incentives it sets up will result in far higher federal spending and far fewer insured Americans than its advocates promised? Do they think it will lower premium costs? Is it sustainable over time? Have you seen much of a substantive answer from the left to these commonly voiced concerns?

The critics of our piece offer no such answers, and actually suggest that we’re wasting our time repeating the obvious case against Obamacare. Several of them want to get right to a debate about what should replace it. That’s great. Not all of them, though, want to discuss the solution we pointed to. Kevin Drum acknowledges (twice) that he didn’t actually read our piece; he just read Yglesias and Klein (who just summarized Yglesias) and “sighed.” We know the feeling.

Klein mentions our piece but doesn’t take it up in detail because what we propose is not the formal position of congressional Republicans. Instead, he criticizes a post by Ben Domenech from last July. Domenech very ably responded. We also note that Klein’s case against allowing the purchase of health insurance across state lines appears to rely entirely on one 2005 CBO study that examined solely the direct effects of one specific piece of legislation. Models looking at the broader effect of allowing interstate insurance sales have tended not to agree with that study. We especially recommend this 2010 paper by Stephen Parente and colleagues, which modeled various forms of interstate insurance markets and also considered how interstate health insurance might work in combination with a change in the tax treatment of health care of the sort we’re proposing.

Barro argues that we should have devoted more space to the Obamacare replacement we would support. That’s certainly fair enough. We began from the premise that the continued need to press a wholesale repeal-and-replace agenda was what required an argument at this point, while the nature of the replacement could largely be taken for granted since its outlines (in a few different forms and levels of specificity) have been proposed in the past half decade by the last Republican president, the last two presidential nominees, assorted Republican members of Congress, and numerous right-leaning health wonks and observers (including both of us). Some details differ, but the basic approach is very widely shared on the right. The wonks, not surprisingly, have developed the ideas most thoroughly, and we especially recommend the version laid out by James Capretta and Robert Moffit last year and further detailed by Capretta in December. We did not get into as much detail in our piece, since it was not our main subject, but we recommend theirs as a model of where the best conservative thinking on an Obamacare alternative points.

The key element to note in their proposals, and those of the others linked above, is that they describe not merely a few discrete policies but a different approach to health-care financing: one focused on enabling a functional insurance marketplace in which equitably distributed federal subsidies flow to consumers and the power of those consumers creates incentives for high-value care. The tax exclusion for employer-provided care would be flattened and a credit of roughly equal value would be made available to small-business employees and to people without access to employer coverage, providing to all the benefit that today’s tax laws offer to some. People who receive their health insurance from larger companies would not, however, be allowed to use the credit to leave their company plans. That restriction, which could be loosened over time, would prevent company plans from being destabilized at the same time the individual market was being transformed.