Republican Dilemma

by on March 24, 2017 in Economics, Politics

We are down to the wire in Congress: will the Republican party be able to live up to its six year old promise to eliminate the Affordable Care Act [aka Obamacare]? As I write this, a few hours before the vote in the House of Representatives, the answer appears to be no.

The reasons for this potential abandonment of what had become a critical element of true Republicanism is that old fashioned Republican ideology has come up against modern social reality. It is impossible to square the two. Either you are a hard old guard Republican who abhors the prospect of any government involvement in the economy, in society, and in particular, in health care. Or you are a realist who accepts that Obamacare changed the rules and infiltrated the government ever more deeply into the social fabric, from which it is now impossible to retreat.

This clash its tearing the Republicans apart.

There may be some of you who cling to the notion that the Republicans have a theory of public or social policy. Allow me to disabuse you: they don’t. In their world there is no “public” or “social”. Those of us old enough to recall Margaret Thatcher will also recall her ludicrous claim that there is no “society” only a whole bunch of individuals. That is the perspective through which to analyze the Republican health care plan.

It isn’t a health care plan. It is an effort to re-assert the notion that individuals are entirely and exclusively responsible for their own health care, including making a choice as too whether to have insurance. In order to achieve this deconstruction of society the Republicans need to avoid any policy that might perpetuate government involvement in that realm of individual choice.

Hence their desire to eliminate the so-called mandate that forced younger healthy people to buy insurance, which in turn allowed the overall pool of insured people to be less risky and less expensive. Through time the mandate was reining in premium price increases by achieving its goal: lower risk means lower premiums. Health care cost inflation in the Obamacare era was lower than in the previous decade in part due to this improvement in the insurance pool.

Another feature of the Republican effort is to eliminate the so-called ten plan requirements. This was a list of ten elements that Obamacare forced all health plans to include. They are all everyday types of things including maternity and emergency room coverage. The Republicans have always opposed this as a restriction on choice. They argue, absurdly and ingenuously, that people ought not be forced to pay for something like maternity coverage. That gets them into the position of arguing that a young man who, obviously, is unlikely to get pregnant, ought not to be forced to buy a plan that is designed to cover the costs of pregnancy. This is the kind of argument that sounds foolish and is actually more foolish than it sounds. The entire premiss of insurance — of any kind — is that some people buying the coverage will never use it. This allows there to be enough funding in the plan to pay for those who will use it. Interestingly, Republicans never use the example of a woman being forced to buy coverage for prostate cancer screening. The Republicans routinely reek of sexism when they try to give examples of their advocacy of choice.

In any case, if we expand the Republican argument beyond their targeted Obamacare list we could, in a sort of reductio ad absurdum arrive at health care plans that covered only one ailment. And the insurance market would collapse because of the rampant adverse selection that such a situation would unleash.

Adverse selection is that circumstance where people only buy insurance when they know they will use it. This means that there is no pool of low risk people to provide the funds to cover the cost of those of higher risk. The Republican effort to increase the choice of plans available in the market is doomed because it runs afoul of adverse selection. Premiums will rise rapidly for those in higher risk categories, for example the elderly, and many insurers will decide that rising risks and payouts make the market so unprofitable that they will exit. The market will then collapse.

These are just examples of the knots the Republicans are tying themselves in as they try to confront social policy. Paul Ryan, their leader in the House, has been explicit: he sees repeal of Obamacare as a step towards undoing the “nanny” state. That phrase belongs in the 1980s and ignores the massive upheaval in our social fabric wrought since Reagan and his attack on the middle class — also in the name of individual responsibility. Health care costs have risen dramatically since then. The average household’s income has stagnated and the workplace is massively less secure. Ryan’s approach is not to improve health care policy, but to re-design it so there is no room for community or social action. The superior logic of social democracy that would drive us towards a single payer health care system is an anathema to Ryan, so he forced to hobble us with an even worse version of our already poor health care system.

Trumpcare, which I suppose is what we ought call the Republican plan even though Trump is sublimely disconnected from it and ignorant of its consequences, is a disaster for American families. But it delivers on two key planks of Republican ideology: it attacks the “nanny” state, and it includes a huge tax cut for the rich.

That’s all we need to know in order to understand the urgency that the Republican leadership is displaying as it tries to corral its troops for a vote.

Except, it appears, that quite a few Republicans in Congress fear for their re-election chances and have suddenly embraced the nanny state because their voters like government help in getting them health care.

Such is the conundrum when an outmoded ideology runs smack into modern social reality. Not to mention modern democracy.

And, somewhere, Trump is playing golf.

 

Addendum:

I alluded to the new social reality that the Republicans are facing with their outmoded ideology. It might be better to refer to it as a new socio-political reality. It has been well documented that profoundly anti-social politicians such as Reagan and Thatcher were unable to undo well-established social programs even though they reviled those programs as debasing their neoliberal core values. Go to this 1996 paper by Paul Pierson to see his explanation of the argument that social progress occludes political reaction in such circumstances. His argument explains the Republican dilemma well.

 

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