Many of you will not like what I have to say in this blog article, but I am not in this to become popular. I tell it as I see it, based on my years of experience, my scholarship and my commitment to classic libertarian values.
While President Trump and the Congressional Republican leadership were fighting for the American Health Care Act, there was a lot of support from libertarians and conservatives for the Congressional Freedom Caucus as they resisted the bill. For example, on March 22 the Washington Post reported:
As members of the House Freedom Caucus elbowed past reporters to enter their Wednesday meeting, a slim backpack-toting man slipped in almost unnoticed. He was Michael Cannon, director of health-policy studies at the libertarian Cato Institute, and he was offering some advice on why Republicans’ American Health Care Act needed to die. A chart-packed three-page memo, given to every member, warned that passage would mean the GOP would absorb “blame for the ongoing collapse” of Affordable Care Act exchanges, split the right (“the left will be motivated”) and “risk single-payer” after Republicans lost. “Why would they take that bullet?” Cannon said after leaving the meeting.
Cannon was not the only one, explains the Post:
As some Republicans consider whether to smother the AHCA, they’ve gotten regular and robust backup from the right’s major policy institutions. Heritage Action for America, which Republican leaders quietly (and sometimes less quietly) accuse of needing opposition to exist, has refused to budge on the bill and announced Wednesday that it would “score” a vote for it, counting it against a member’s rating. FreedomWorks, which organized a rally against the bill a week ago, has also continued to campaign against it. And on Tuesday evening, Freedom Partners — hub of the political network backed by billionaire industrialists Charles and David Koch — sent out a new denunciation of the AHCA. “The AHCA in its current form fails to fully repeal Obamacare and would lead to even higher costs and fewer choices for Americans,” said policy director Nathan Nascimento. ... The Club for Growth, which continues to oppose the AHCA, is out with ads in swing states warning that “Ryancare” would amount to “doubling down on disaster” and keeping everything voters hated about the ACA.
I disagree, but before I explain why, let us first run through the main features of the American Health Care Act:
The bill amends title XIX (Medicaid) of the Social Security Act (SSAct) to limit, based on enrollment, federal funding for Medicaid beginning in FY2020. Beginning in 2020, the bill eliminates: (1) the enhanced federal matching rate for new enrollees made eligible for Medicaid by PPACA, and (2) the state option to extend Medicaid coverage to such enrollees. At least every six months, states must redetermine the eligibility of enrollees made eligible for Medicaid by PPACA. The bill repeals other changes made to Medicaid by PPACA and modifies additional Medicaid provisions. Cost sharing reductions for low-income individuals are eliminated after 2019.
The limitations on Medicaid spending are highly necessary and cannot come soon enough. Medicaid is ruining state budgets all over the country, and is a fiscal poison pill even for states that did not adopt Medicaid expansion. Limitations from the federal government will begin a very much needed Medicaid reform process.
It would also be of great help in preventing another rise in the federal deficit.
So what else is in the AHCA?
This bill amends the SSAct to establish the Patient and State Stability Fund to provide funding to states for the stabilization of health insurance premiums and other purposes.
This is a debatable feature. If used well, it can be an instrument for free-market health insurance reforms; without this Stability Fund it is more difficult, but not impossible, to remove government from the health insurance market. Alas, a reasonably good feature if used for the right purposes.
Health insurers must increase premiums by 30% for one year for enrollees who have not maintained continuous coverage over the previous year.
Illogical. Makes no sense.
The bill amends the Internal Revenue Code to modify premium subsidies and eliminate the subsidies after 2019. The bill repeals the small employer tax credit for employee health insurance expenses, the penalties associated with the individual and large employer mandates for minimum essential health coverage, and other PPACA taxes and tax increases.
As a package, these measures are good. They set the stage for deregulation of health insurance and for the opening of a national insurance market. If the Freedom Caucus had supported the AHCA they could easily have used these measures as a platform for the next step of reforms.
The bill establishes a refundable tax credit in 2020 for certain taxpayers who purchase health insurance on the individual market. The bill revises rules for health savings accounts.
Again, items that facilitate free-market reforms.
Overall, the AHCA is an imperfect reform. From a strictly theoretical viewpoint, it made sense for the Freedom Caucus to oppose the bill.
However, politics is not theoretical. The fact of the matter is that the Freedom Caucus, which I assume is strongly in favor of reforming away entitlements, now missed a historic chance to actually get started on such reforms.
Conservatives and libertarians often complain that government spending just keeps growing, and that government just keeps expanding its presence in our lives. They are right - government only changes in one direction; the list of entitlement programs that Congress has repealed is about as short as the list of reliable French cars.
There is a reason why Congress has never repealed a major entitlement program: it is very difficult, politically as well as legislatively. The bigger the program, the higher the difficulty level of reforms. The entitlement program that is burdened with the highest level of difficulty, Social Security, will take 40 years to eliminate completely.
That, however, is no reason not to do it. On the contrary, it is all the more important that we get started. Every step in the right direction is a step worth celebrating; at no point is one step in the right direction worse than no step at all, even if we refuse to take that one step because we are holding out for a big leap. With a perfect zero score for entitlement repeal, Republicans - especially conservatives like the Freedom Caucus - should be celebrating every opportunity to take even a small step in the right direction.
It is even more incomprehensible why the Freedom Caucus resisted the AHCA when we take into account what a delay of reforms actually means. Nothing is going to happen this side of the summer, and it would make no sense for either side of the Congressional Republicans to bring up the issue again during the fall. This takes us in to 2018 and a mid-term election that the Democrats are going to use, mercilessly, to try to win back at least one chamber in Congress. When they do, any Obamacare reform, even a first step such as the AHCA, is dead on arrival. In the lead-up to next year's election, Democrats will go all-out to besmirch every Republican who has ever thought about reforming and repealing Obamacare. Enough GOP moderates are going to duck and hide and refuse to take the fight.
Even if they do, how are they going to convince voters that they can change the minds of the Freedom Caucus? How are they going to change the minds of the Freedom Caucus?
The bottom line, again, is that with the AHCA Congressional Republicans had a golden opportunity to show their voters in 2018 that they have gotten started, in other words that they have begun a process that no other Congress has ever begun - the repeal of a major entitlement program. That is enough to keep voters coming back to renew their majority, rather than staying home out of disappointment and contempt for "Washington as usual".
But it gets worse. We are going to pay a big price for what the Freedom Caucus did. In the Washington Post article quoted above, Cato Institute Director of Health Policy Studies Michael Cannon says that by beginning a reform of Obamacare, Republicans would be burdened with Obamacare's collapse and lose voters to Democrats. This is plain wrong, for two reasons.
First, I am left wondering what Cannon means by the "collapse" of Obamacare. No entitlement program has ever collapsed in American history; even if Obamacare was "collapsable" in its current form, the AHCA would bring alleviating measures that would delay that collapse. Thus, Cannon's point about an election backlash is invalid.
Secondly, the danger of single-payer health care did not arise with the Republicans trying to reform and repeal Obamacare. Every post-primary Democrat presidential candidate since Michael Dukakis has proposed single-payer health care in one form or another. But the idea of single-payer health care is even older than that, having been tossed around by Democrats and their allies in academia since the 1950s. Democrats are going to go for single-payer health care regardless of what Republicans do.
The problem is in fact the exact opposite of what Cannon suggests. After the death of the AHCA, Republicans have nothing to show for their promises to roll back Obamacare. Conservative voters are going to be more inclined to stay at home in 2018; as soon as Democrats get their hands on the White House and on Congress, they will complete the process that Obamacare started and subject us all to single-payer health care.
By leaving Obamacare intact, Congressional Republicans has let America sit perilously close to - in fact only a half step away from - the health care abyss that has degraded health care in so many European countries.
I am surprised that the Freedom Caucus does not see this. I am surprised that they think that the history of repealed entitlements somehow speaks in their favor. The exact opposite is true: while conservatives and libertarians continue to pout because they can't get everything they want right now, progressives and liberals are gearing up to once again apply their successful, gradual-reform strategy.
Only this time, they will achieve one of their most sought-after goals: to subject every American's health care to the world's largest entitlement program, and its governing body, which will be the largest government bureaucracy the world has ever known.