David Frum

08.04.12

The Overheated Case Against Romneycare

health-insurance-regulation

Philip Klein writes a rebuttal to my praise for Romneycare. At the core of his argument is found this remarkable—even breathtaking—statement:

Some of us simply don’t believe that the way to fix our health care system is for the government — whether at the federal or state level — to mandate, regulate and subsidize the purchase of health insurance.

"Some" may disbelieve these things, but even among conservatives, it is unlikely to be a very big "some."

No government subsidy for the purchase of health insurance? Already in 2008, the exclusion of employer-provided healthcare benefits was subsidized to the extent of $131 billion a year, the single biggest tax expenditure in the tax code.

The ill effects of this subsidy are pretty notorious by now. Equally notorious is the difficulty of eliminating it. The concept of exchanges + mandates was developed (and advocated by conservative Republicans for almost two decades) precisely in order to work around the subsidy. Philip may think it would be neater and cleaner to eliminate it outright? Good luck to him in finding even a corporal's guard of Republicans in House or Senate who will publicly agree.

No government regulation of health insurance? Insurance regulation in the United States dates back almost to the very beginning of the republic. States took the lead through the 19th century. In 1945, the Supreme Court declared the federal government's authority over insurance—to which Congress responded by passing a law returning regulatory power to the states. But whether it's done in Washington or the states, insurance regulation is inescapable. In the nature of things, insurers are tempted to take excess risks in pursuit of higher investment returns, for the famous reason that if the risk pays off, the insurer wins; if the risk fails, the policyholder loses.

No government mandate? Really? What about the federal mandate requiring all hospitals that receive Medicare payments to treat all patients regardless of ability to pay? Would Philip abolish that? What about Medicare? Functionally, isn't the Medicare payroll tax a compulsory insurance premium for a program all Americans qualify for at age 65? Must that go out the window too?

The debate over Obamacare has driven many conservative writers to espouse positions much more radical than they held four years ago—very likely, much more radical than they will hold four years from now—and certainly more radical than anything a Republican majority in Congress would ever actually do. I think Philip's words provide an almost laboratory-pure example of just such a polemical tendency.