Opinion

Reihan Salam

After Obamacare glitches, the case for default insurance

Reihan Salam
Oct 25, 2013 20:44 UTC

The Obamacare debate is entering a new phase. The problems plaguing the insurance exchanges have raised serious questions about the viability of the president’s health reform effort. The Obama administration and its allies insist that the exchanges will soon be up and running, and that they’ve already been successful. Yet at least some liberals are starting to wonder if the exchange model should be abandoned in favor of a single-payer, Medicare-for-all approach. John Cassidy of the New Yorker, an occasional Obamacare critic from the left, is just one of many liberals who’ve touted the virtues of a single-payer system, and it is easy to imagine future Democratic presidential candidates doing the same. Conservatives, meanwhile, have tended to characterize the failure of the exchanges as a reflection of the limits of government. Patrick Ruffini, a well-regarded conservative strategist, captured the views of many on the right in a short piece titled “How Healthcare.gov Discredits Liberalism.” We’re nowhere near a consensus on whether the kludgy mess that is Obamacare ought to be replaced. But serious questions are being raised across the political spectrum.

One idea that hasn’t drawn much attention is the role that default insurance might play in a future U.S. health system. This is despite the fact that low-cost default insurance might be the most straightforward way for the U.S. to achieve universal coverage at a price all Americans can afford.

Almost everyone, including President Obama, accepts that the process of signing up for insurance on the exchanges has proven quite difficult. But it hasn’t been impossible. A decent number of determined consumers have been able to sign up for coverage after many false starts. The concern is that the most determined consumers are presumably the ones who have the most to gain from insurance coverage, which is to say consumers who expect to have high health costs. The goal of the exchanges, and specifically of the generous federal subsidies offered to low- and middle-income people seeking coverage, has been to attract as many young and healthy consumers as possible, to ease the burden of providing medical care for the old and sick. There is still time to fix the exchanges, and the experience is gradually improving. Nevertheless, the initial hiccups have led to renewed calls for delaying implementation of the individual mandate. Until recently, these calls have been limited to Republican critics of Obamacare. Now, however, Democrats like Rep. John Barrow (D-GA), Rep. Gerry Connolly (D-VA) and Sen. Mark Begich (D-AK) have joined the chorus. To be sure, these Democrats, many of whom represent Republican states, are calling for a delay if and only if problems with the exchanges persist. But the prospects for delaying the individual mandate have greatly improved. And such a delay will make it even less likely that young and healthy consumers will sign up for coverage.

This leads us back to default insurance. In their book Nudge, Cass Sunstein and Richard Thaler famously made the case for “libertarian paternalism,” an approach to public policy that relies heavily on “choice architecture.” Rather than explicitly mandate a certain kind of behavior, like saving for retirement, Sunstein and Thaler recommend “nudging” people towards making responsible choices by making them opt-out and not opt-in. Those of us who are too lazy to sign up for a retirement savings program, including one with a generous employer match, are also generally too lazy to take affirmative steps to disenroll from such a program. For example, Sunstein and Thaler cite a study by economists Brigitte Madrian and Dennis Shea, which found that initial enrollments in a generous retirement savings program jumped from 49 percent to 86 percent when the program went from requiring employees to opt-in to requiring them to opt-out.

Given that Sunstein was an important member of the Obama White House, having served as director of the Office of Information and Regulatory Affairs, you might wonder why the Obamacare exchanges were built around getting people to actively sign up for insurance instead of creating a Nudge-style default option. The most obvious reason is that a default option would have to be very inexpensive to avoid sparking a backlash, and Obamacare has a strong built-in bias against low-cost catastrophic coverage and in favor of more generous comprehensive coverage.

Instead of a divorce, the GOP needs primary reform

Reihan Salam
Oct 18, 2013 16:15 UTC

A few days ago, an older and wiser friend of mine and I had a lengthy conversation about divorce, that most cheerful of subjects. He noted that one of the surest signs of a marriage in trouble was that both parties were convinced that they had been forgiving of various betrayals and accommodating of various foibles, yet this generosity hadn’t been reciprocated. Naturally, this brought to mind the increasingly strained relationship between Tea Party conservatives and Republican regulars. What better way to describe how Ted Cruz must feel about John Boehner, the sellout, and how John Boehner must feel about Ted Cruz, the zealot?

Molly Ball of the Atlantic recounts the quasi-mutinous musings of various conservative luminaries, like Glenn Beck of TheBlaze, Erick Erickson of RedState.com, and Sean Hannity of Fox News, among others. As recently as 2010, the notion that the Tea Party movement would bolt from the GOP to establish a party of its own would have seemed absurd. But now, in the wake of a fiscal showdown that’s proven to be an utter fiasco for congressional Republicans, the idea of a bona fide divorce is gaining credence. Among the Tea Party faithful, there is a widespread conviction that the effort to defund Obamacare would have proven successful had Speaker Boehner and his anxious allies been tougher, and more willing to risk breaching the debt ceiling. Republican regulars, meanwhile, are largely convinced that the defund Obamacare effort was a hopeless indulgence that exacted a real political cost. At least one critic of the Tea Party movement, David Frum of the Daily Beast and CNN, has argued that Republicans would benefit if “the Sarah Palins and the Ted Cruzes who have done so much harm to their hopes over the past three election cycles” were to bolt.

This isn’t the first time libertarian-minded conservatives have contemplated a formal exit from the GOP. In the 1970s, William A. Rusher, the publisher of National Review and a staunch, Rockefeller-hating Goldwaterite, frequently made the case for a new conservative party, which he hoped would be led by Ronald Reagan. After Reagan’s narrow defeat in the 1976 contest for the Republican presidential nomination, however, the former California governor stood by his moderate rival Gerald Ford, and in doing so he dashed the hopes of Rusher and other third-party enthusiasts. The Libertarian Party, established in the early 1970s, has long been divided over whether to appeal to disaffected Republicans or hippies. In the 1980 presidential election, the Libertarians achieved great success by espousing a pacifist, left-leaning brand of “low-tax liberalism,” while in 1988 the party turned to Ron Paul, the libertarian populist who would later make waves as a Republican presidential candidate in 2008 and 2012. The 2012 Libertarian presidential nominee, former New Mexico Gov. Gary Johnson, an unpretentious Republican who combined familiar Tea Party bromides with a commitment to ending the War on Drugs, had some promise as an alternative to Mitt Romney, but in the end his candidacy proved to be a footnote, in part because the septuagenarian Paul stole his thunder. The Constitution Party, first established as the U.S. Taxpayers’ Party in 1991, is a vehicle for a hard-edged Christian conservative politics that has never found much success. And in 2000, Pat Buchanan tried to transform Ross Perot’s Reform Party into a nationalist conservative party in line with his own idiosyncratic, anti-trade populism.

How to fix the GOP’s discipline problem

Reihan Salam
Oct 4, 2013 20:28 UTC

As the government shutdown grinds on, the Republican leadership in the House is struggling to unite GOP lawmakers around a fiscal deal that Senate Democrats and the Obama administration would be willing to accept. Speaker John Boehner has reportedly said that he is willing to rely on Democratic votes if necessary to pass an increase in the debt ceiling. Yet he also insists that he will fight for spending cuts and entitlement reform in any debt ceiling bill, in a nod to conservative members who are convinced that he is eager to sell them out.

Whether or not Boehner succeeds, it is increasingly difficult to deny that the Republican negotiating position is being constrained if not dictated by a small minority of 30 or so members from safe seats who seem largely indifferent to leadership demands, or rather leadership requests. The result is that the much-derided Republican establishment is in a state of panic, sensing that GOP intransigence will lead the party to squander the political opportunity created by the president’s declining fortunes and the persistent unpopularity of Obamacare. How has party discipline broken down to this extent, and what, if anything, can Republicans do to restore it?

First, it is important to recognize that this chaotic confrontation wasn’t supposed to happen. At the start of the year, congressional Republicans seemed eager to return to regular order, in which, essentially, the House majority brokers with the Senate majority to pass legislation, which the president can then sign or veto. Yuval Levin, writing for National Review Online, argued that for the right, the central political problem with the endless succession of fiscal showdowns is that they inevitably made the president, as a unitary figure, look better than the often-fractious House Republican conference. Regular order, in contrast, would demand that Senate Democrats put up or shut up by codifying their commitments, not all of which are popular in hotly-contested states, in real legislation. House Republicans and Senate Democrats would be on a relatively level playing field, while the president would be relegated to the sidelines. But the regular order strategy didn’t come to fruition, both because Senate Democrats were reluctant to play along and because a determined minority of House Republicans couldn’t reconcile themselves to the fact that the ordinary legislative process left them with very little leverage.

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