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The Obamacare Bailout

Big government in bed with big insurance.

Feb 3, 2014, Vol. 19, No. 20 • By JAY COST
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Not only was business very good at playing defense, it grew quite adept at playing offense as well, using expert lobbying and smartly placed campaign contributions to tilt the public policy needle in its favor. Moreover, businesses are happy to play both sides of the aisle in this effort. It is not really about defending the free enterprise system against the radical New Left, which is what initially induced businesses to get into the lobbying game so aggressively in the 1960s. It is now about padding the bottom line. Thus, a quasi-socialist Democrat can be a friend of business, provided he is willing to fight for a special carve-out during an obscure subcommittee markup of a complicated, 1,000-plus-page bill about which the public knows nothing.

Political scientists used to speak of “iron triangles” connecting lobbyists, bureaucrats, and legislators. Today, the old triangles have morphed into vast networks of embedded, interconnected interests that depend upon and support one another. Politicians, bureaucrats, lobbyists from all sorts of factions—very much including labor, consumer, and environmental groups—can all coordinate to channel public funds for private plunder. To borrow a phrase from political scientist Theodore Lowi, this is “interest group liberalism” run amok, with businesses now playing a dominant role in the dispensing of goodies by Uncle Sam. Indeed, the surest sign that Obamacare was going to be bad for America was the announcement that Walmart and the Service Employees International Union had joined with the left-wing Center for American Progress to push for the business mandate. 

Cleaning out this hornet’s nest of access and favoritism should be the policy priority of conservatives, for three reasons. First, it is an obvious political winner. Politicians are always in search of “valence” issues that split the public 80-20. Inappropriate access to government largesse is such an issue. Ordinary Americans, whether liberal or conservative, Democrat or Republican, hate it. Second, leadership from conservatives on this issue would help rebrand their movement, or at least make it harder for Democrats to have their cake and eat it, too. 

Third, it is necessary to deal with this problem in order to peel back Obamacare, the quintessential product of today’s venomous policy-making process. So much of the debate about Obamacare overlooks the fact that the Democrats effectively purchased private sector buy-in through such policies as this “risk corridor.” In fact, Obamacare is festooned with payouts to every imaginable business and trade group that has a stake in American health care. These were important not merely in securing passage of the law in the first place, but also in sustaining it over time because they give these groups a vested interest in its “success.” 

Conservatives are right to acknowledge that to repeal Obamacare they must highlight how the law is hurting people, develop feasible policy alternatives, and generally keep the issue front and center before the public. Fine. But in addition it is necessary to expose the perverted method by which bills become laws in 21st-century America. The federal register is chock-full of laws that the public does not like or that unjustly hurt people, but that persist because some well-placed interest group draws some sort of rent from them. So it is with Obamacare. Until conservatives assault this quid pro quo system, Obamacare will never go away. 

One place to start this project is the impending insurance industry bailout. Conservatives can hoist liberals on their own petard: The demagogues who railed against greedy insurance companies are now set to bail those companies out, even as average people have to pay increasingly onerous tax penalties to guarantee perpetual profits for the industry. As valence issues go, this one probably breaks 99.9-0.1, with only President Obama, congressional Democrats, and insurance industry CEOs and their immediate dependents opposed. 


Yet such a campaign need not end with an attack on this Obamacare bailout. For half a century, government and business have become more and more entangled, with bureaucrats, congressmen, congressional staffs, and lobbyists trading rents not just, crudely, for campaign contributions, but also for information, job opportunities for themselves and their protégés, favors of all kinds. Far too often, the public good is considered last. This is big government at its worst—and one of the best places for conservatives to take a stand.

Jay Cost is a staff writer at The Weekly Standard.

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