Repeal. Repeal and Replace. Replace with What?

An Owl-Eye Opinion

Friday, July 13, 2012—The misnamed "Patient Protect Protection and Affordable Care Act" must be repealed. It threatens our lives, steals our liberties, and chokes off our chances to pursue happiness. But this atrocity could never have passed if most Americans realized that many of the problems they face are cause by previous government interventions, interventions variously well-meaning, cynical, self-serving, vengeful, or tyrannical. It is the ignorance of the electorate that allows the Act's partisans to demand we put forward schemes to replace it with, schemes with as much compulsion and restriction as this abominable Act itself.

We should always be prepared, when invited to the enemy's battleground and challenged with his weapons, to fight on those terms and win. Our goals are free-market reforms; his are locking people out of choices in the name of The Greater Good and on the pretext of protecting people from poor choices, from "predatory" marketplaces, and from "heartless" employers.

If the problem is poor choices, the answer should be to give the consumer more good choices. What is a poor choice for one may be the right choice for another; one size never fits all. If the problem is a "predatory" marketplace, the answer is to increase the number of players and force them to compete by removing restrictions; predators cannot survive when goods are plentiful because they will be undercut. If the problem is that employers make the wrong choice for some or all of their employees, the answer is to take the choice away from the employer and give it to the consumer, for whom it is being purchased in the first place.

The obstacles to this are woven at both State and Federal levels. The Income Tax Code allows the employer to deduct the cost of employee health benefits, but it limits how the employee can deduct such costs. This can be rectified by changes to the tax code, and it would even be possible to require large employers to allow employees to take their health benefits in the equivalent cash, to be deposited in a Health Savings Account, or in the form of a voucher that could be used to purchase insurance.

The biggest obstacle to the deployment of a free marketplace in health insurance is the welter of State laws and regulations which limit choice and portability, force the marketplace to cross-subsidize, and protect established, entrenched sellers in the market to the detriment of competition and the consumer. At the end of the nineteenth century, the movement began to expand Federal power in order to curb abuses in the States. The Federal Leviathan has instead created its own wall of corruption, making it necessary to breach both walls to achieve reform. Any reform that breaches only one can quickly be removed, neutralized or perverted because its benefit will not have reached the people, and it will have gained no constituency.

But so long as the Income Tax exists and free market partisans hold the Legislature and the Executive, the Federal Leviathan can be turned against the State restrictions. We should not be afraid to restrict the choices of government, especially those government choices which restrict the choices of individuals. A sufficiently large majority in Congress could limit the health care deduction or voucher purchase of insurance to policies which meet all of these criteria:

1. They are purchased in a marketplace that does not require minimum coverage nor mandates the purchase of routine or preventative care with the purchase of insurance (risk mitigation) (nor vice-versa).
2. They are purchased in a marketplace which does not restrict sale across State Lines, nor is subject to any change of coverage in moving across State Lines (but allowing for a difference in premium or benefit for actuarial—NOT—statutory reason).
3. They use co-insurance rather than co-pays, or else they limit the use of co-pays to a fixed maximum in value paid, after which co-insurance replaces the co-pay. (An insurer would be allowed to enter into an agreement to draw the co-insure—but not the co-pay—from a customer's HSA.)

The first provision ensures that people can seek the coverage they want and purchase it if any seller wants to sell it, without having to cross-subsidize other people. (Any subsides should involve the explicit expenditure of public monies: no unfunded mandates on private-sector businesses!) The second provision prevents States from protecting the entrenched providers within their borders. The third provision exposes the actual costs incurred for the patient to the patient, providing an incentive to seek lower prices—which will force health-care providers to find ways to lower prices instead of ways of reducing the cost of paperwork at the patient's expense. Any vouchers issued, any premium support, should be subject to the same restrictions. As a practical matter, States should probably be given time to comply. This could be done by allowing policies already purchased to be paid out of the monies in question for a limited period, perhaps seven months. This will give State Legislators time to act—and to feel the heat if they don't—while minimizing the time in which pressure can be brought to bear to corrupt the Federal reforms. Once the reforms are effective, it will be harder to corrupt them.

We need to fight on other fronts as well.  When the enemy brays "Donut hole!" we must shout them down with "personal responsibility" and "sharing the cost."  We need an effective and truthful alternative to every catchphrase they employ, and we need to wield them without shame or apology.

While I'd gladly replace the Income Tax with a National Sales Tax, the enemy has placed this weapon on the battlefield, and will fight to keep it there so long it is never employed against them. Employing it against them will make it easier to replace it.

G. K. Chesterton wrote “War is not ‘the best way of settling differences; it is the only way of preventing their being settled for you.” Should not we say the same of politics, for, as von Clausewitz famously wrote, war is politics carried on by other means? Then let us not be afraid to use the enemy's weapons against him, for it may be the only way to force him to abandon them.