Yuval Levin and Ramesh Ponnuru have generated a debate by proposing an idea that goes beyond simple repeal of ObamaCare: an insurance tax credit.
Levin and Ponnuru spell out their basic argument and discuss opposing views in a new article for National Review Online.
Obamacare is a huge step in the opposite direction of the one we propose. It proceeds from the premise that the solution to our health-care problem is to give the government significantly more power as a regulator and a purchaser of health insurance — a regulator through the new exchanges which (despite the fact that they share the name “exchanges” with an idea that has also been part of some conservative health-care proposals) are essentially a means of turning private insurers into a few large public utilities; and as a provider through a massive expansion of Medicaid. (The government’s role as a provider was also to be expanded through a public-insurance option in the exchanges, which was crucial to the logic of the law since it would have created an additional public system that could impose Medicare-style price controls for younger Americans, but had to be withdrawn at the last minute for political reasons, making the resulting legislation a little less horrible but a lot less coherent.) The idea is then to use the government’s increased muscle, together with new price controls in Medicare, to force down health-care costs.
The trouble is that the cost explosion is in the first place largely a function of the way the government has used its power as a provider and regulator of health insurance. The open-ended structure of Medicare and of the employer-based-insurance tax exclusion, together with the way Medicaid costs are shared by states and the federal government, have created huge incentives to spend more on health care, and therefore pushed costs upward. Obamacare would double down on an approach to limiting Medicare costs that has failed for decades, would massively expand Medicaid without reforming it, and would largely keep in place the tax exclusion while adding a new entitlement on top of it.
