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The Genealogy of Obamacare

Harking back to the worst of the New Deal.

Jan 13, 2014, Vol. 19, No. 17 • By JAY COST
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We are already seeing signs of this with Obamacare. The paltry provider networks, insufficient drug formularies, high deductibles, and outrageous out-of-pocket limits offered by the insurance exchanges are all a consequence of insurers’ pursuing their bottom lines in the context of the government’s extensive regulations. Will young and healthy consumers, another vital moving part in this massive system, actually purchase policies such as these? If they do not, then insurers, stuck with predominantly older, sicker, and therefore more-expensive-to-cover enrollees, will be forced to jack up premiums or deductibles even more, making their policies less attractive still to healthy customers. 

These are not the only interests from which Obamacare requires cooperation. Will hospitals behave the way the planners expect? Will drug makers? Will small employers? Will large businesses? The list goes on and on. Importantly, every assumption that proves mistaken has the potential to blow up another assumption, then another, then another, creating a cascade of failure. 

Unfortunately, even when they fail, such grandiose plans do not necessarily disappear from the national landscape. The NIRA did, as the Supreme Court struck it down in its famed Schechter Poultry decision, but the AAA largely survived. Indeed, after the Court struck down the original law, Congress quickly passed a new version that addressed the constitutional issues the justices had flagged. Congress did so not because the policy had succeeded; in the South, at least, the AAA destroyed the fragile farm economy, replaced it with nothing, and contributed directly to the urban crises of the postwar era. Rather, the program was reinstituted because key groups found it profitable and used their position in our pluralistic system to retain a favorable status quo. Eighty years later, Congress’s annual ritual of passing the pork-laden farm bill is a reminder that the AAA has survived in a form that the New Dealers would surely deem perverse.

That is the great danger of Obamacare—not merely that it will fail, but that it will fail and cannot be undone. The best chances conservatives had to do away with Obamacare altogether have come and gone. Now, Obamacare is not merely a policy problem, it is a political problem as well, and the two are inextricably linked: The program damages health care as a whole while favoring key groups who can be expected to fight to protect their new benefits. It is not enough that conservatives develop good policy alternatives to solve the problems Obamacare creates; they must also adopt innovative political strategies. 

 

Success is far from guaranteed, as history indicates. Generations from now, Americans might still be stuck with the ill effects of Obamacare, just as we are still saddled with the corrupting remnants of the AAA. 

Jay Cost is a staff writer at The Weekly Standard.

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