The Power of Ideology: A Conservative “Alternative” to Obamacare

Republicans hate Obamacare and mostly go around threatening to repeal or defund it. Every so often, somebody attracts their attention with the complaint that they have never said just what their preferred alternative would be. So they worry a little bit and play around and then trot out a half-hearted proposal, which would strike most sensible people as a woeful joke of an effort actually to reform what needs reforming in U.S. health care. They look at their proposal for a while, then say, “Naaah,” and go back to denouncing Obamacare.

Princeton health economist Uwe Reinhardt caught the conservatives in the midst of one of these periodic pauses, and analyzed for the “Economix” blog of the New York Times one of the “alternative” plans:

http://economix.blogs.nytimes.com/2013/11/22/a-conservative-alternative-to-obamacare/?_r=0

Based on Reinhardt’s previous writings, I rather doubt he’d give such a plan the time of day, but he’s commendably even-handed, and willing to give the conservatives credit for at least offering something to talk about.

The specific plan is alluded to in general terms in a recent piece in the Wall Street Journal, but according to Reinhardt is most fully fleshed out in a report commissioned by the American Enterprise Institute, optimistically entitled “Best of Both Worlds”:
http://www.aei.org/issues/best-of-both-worlds/

Reinhardt insists that there is enough major stuff in the details to make it mandatory to read the entire report, but then proceeds to offer a brief summary/overview. Being lazy, I will address only his summary.

Reinhardt begins by saying that the AEI authors want to get away from the redistribution of income that accompanies the Affordable Care Act, aka Obamacare, taking money from the healthy to pay for the sick, regardless of their income level.  I find this puzzling. Fire insurance redistributes income from those whose houses don’t catch fire to those whose houses do catch fire, and becomes affordable precisely to the degree that most of our houses don’t catch fire most of the time. (This is what current critics of the individual market in Obamacare call “being forced to buy coverage you’ll never use.”) Now, I would have thought that this is a basic feature of any actuarially sound insurance plan, and it seems odd that this would be the first thing people want to eliminate, especially if they want the private insurance market to be their savior.

But wait, there’s more. The authors don’t want to get rid of redistribution, and indeed apparently agree with the feature of Obamacare that most sticks in conservative craws—the redistribution of wealth from the rich to the poor.  They are okay with that redistribution, they just want it to be outside of the insurance market. So the plan calls for a combination of individual plans closely tailored to each individual’s supposed risk of having various diseases in the future, with a series of federal premium supports to help anyone who cannot afford the resulting coverage to obtain insurance.

I’m sure there’s more, but let me cut to the chase. As I read the summary version, what we have here is a strange mix of things that actually are already part of Obamacare but have been rearranged, and other things that don’t make very much sense but are made necessary to keep the jury-rigged plan held together with duct tape.  I would assert that what seems to be at the root of all this is not a desire, on the part of a set of smart economists, to build a sensible health plan from the ground up, and to put in the right mix of market measures and government regulations needed to accomplish that basic goal. Rather what seems to be going on is an overriding need to create a plan that can be called “free market” or “private enterprise,” regardless of whether it makes any sense or even whether it is all that different from Obamacare in ways that matter.

I assert that economism is characterized by just this sort of love affair with ideology over practical results.