Last week the American political establishment was shaken to its foundation when the Republican Party leadership withdrew the American Health Care Act (AHCA) just before the vote was to be taken on the floor of the House of Representatives. Besides being a most unusual procedure, it exposed a fundamental split in the country,reflected not merely in Congress but within the Republican Party. GOP purists, represented by the House Freedom Caucus, demanded more significant roll backs in socialized medicine that were contained in the Ryan plan. Their refusal to back the plan, after years of promising complete repeal, doomed the bill.
Given the political and popular landscape, the legislative fiasco should cast serious doubt that Washington will ever be able to take any meaningful steps to roll back government involvement in health care. Although widely considered a failure of design and execution, Obamacare seems to have succeeded in one important mission: It has created an even greater dependency on government in the health care marketplace. Getting government out is now much more difficult than it was just eight years ago. This may have been the democrats' plan from the start. As a result, the choice conservatives now face is to embrace an increasingly complex, cumbersome, and inefficient public/private hybrid system, or to acknowledge the political reality and make the most palatable lemonade they can from the lemons that are available. Believe it or not, that may argue for a deeper embrace of socialized medicine.
Contrary to the current rhetoric, Obamacare was not in fact America's first foray into socialized medicine and it did not represent the kind of crossed Rubicon that Republicans like to accuse it of being. The door had first been opened in the Second World War when government imposed wage controls that gave incentives to employers to bundle health insurance into compensation packages.1 When the government then made employer-provided insurance tax deductible, such plans became the norm. But the government really charged into the market in 1965 with the creation of Medicare and Medicaid. For many years, Republicans have had to twist themselves into logical pretzels in order to argue that Obamacare is socialism while Medicare is not.
In granting a brand new entitlement, Obamacare did nothing to address the problems that have plagued the U.S. health care system for decades. It did not encourage competition among insurers, it demanded a "one size fits all" approach to coverage, and most egregiously did nothing to contain the rising medical costs that threaten to bankrupt the nation. To add insult to injury, it required that people buy insurance that they really didn't want.
Although the Ryan plan removed the obligation of individuals to buy coverage, it made many of Obamacare's shortcomings worse. It left pre-existing condition requirements in place, which would guarantee that premiums and deductibles would continue to rise. It did not relax the state restrictions on insurance competition, nor did it seek to contain medical costs. In other words, the Ryan plan would have put Republicans on the same hook from which the Democrats are now hanging. The alternative of a repeal without a replacement, so much wished for by the hard right, would have created the kind of political chaos that would virtually guarantee a Republican massacre in 2018 and 2020.
However, Republicans may still, for now, be able to lay claim as the party of fiscal responsibility. And as a result, I would suggest a basic cost-benefit analysis. It is clear from almost any standpoint that the socialized health care available in other developed nations like the UK, Canada and the 34 developed free market economies of the Organization for Economic Co-operation and Development (OECD) delivers health care more efficiently than in the U.S.