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You Can’t Improve on Obamacare



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At least not much; and not because it’s such a great piece of legislation.

In today’s New York Times, columnist Ross Douthat becomes the latest writer to call for tweaking the legislation, at least if repeal fails. It would be nice to have that option. But I think it holds much less promise than Douthat does.

Douthat writes, “Republicans should work to deregulate the new health care exchanges, so that high-deductible, catastrophic coverage can be purchased as easily as comprehensive plans.” Daniel Oliver, chairman of the Federal Trade Commission under Reagan, once noted that regulations don’t grow like weeds. They grow like orchids: Someone lovingly nurtures their development. State legislature after state legislature has listened to provider lobbies to add to the list of requirements for procedures that insurance has to cover—in effect, outlawing high-deductible, catastrophic insurance in the portions of the market over which they have jurisdiction. Why should we expect things to work differently at the federal level?

In fact, the popular regulations Douthat’s proposal would leave in place militate strongly against freedom for catastrophic insurance. If insurers are to charge all comers at the same price regardless of risk, because they can’t “discriminate” based on pre-existing conditions, then they will have an incentive to offer plans that don’t appeal to high-risk customers. Regulators will have to crack down on insurers to keep them from gaming the system created by this basic regulation.

Douthat follows other analysts in proposing an alternative to the individual mandate. He would “establish limited enrollment periods (every two years, for instance) when people with pre-existing conditions could buy into the new exchanges without being denied coverage. Anyone who failed to take advantage wouldn’t be able to get coverage for a pre-existing condition until the next enrollment period arrived. This would reduce the incentive to game the system, without directly penalizing Americans who decline to buy insurance.”

This idea has always seemed politically naïve to me. If we are truly willing to let people with pre-existing conditions go without health insurance, then why should we have Obamacare in the first place? The design of the whole program is driven by this exact problem. Much of the Left would reject this idea as cruel, and much of the Right would reject it as a form of governmental rationing; and both complaints would have some merit.



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