The PPACA Didn’t “Entrench” the Health Insurance Industry

The latest health care thread involves several people making an assumption that’s worth debunking.   Feeble heighten-the-contradictions arguments against the PPACA generally involve claims that the PPACA made “real reform” less likely because it entrenched the health insurance industry.   The obvious problem with this argument is that the PPACA did no such thing.   The health insurance industry is profitable, and as long as it is allowed to cherry-pick customers and has no obligation to use any particular percentage of premium revenues — both of which were true under the status quo ante — it was going to continue to be.   The idea that the health insurance industry would wither away had the federal government just did nothing is sheer fantasy.    And you know who didn’t think that the PPACA was a good deal for the health insurance industry?  The health insurance industry.   Because the insurers expressed some initial tepid support for reform in the abstract, there is an ongoing perception among many people that the Obama administration cut a deal with the health insurance industry.   But, as both Remedy and Reaction and Obama’s Deal clearly report, there was do such deal.  The administration did cut deals with the pharmaceutical industry and with practitioners, but not with the health insurance industry.   And as a result, the industry spent immense amounts of money (as JfL points out, 40% of the Chamber of Commerce’s budget!) trying to kill the PPACA.    Ultimately, the insurers withdrew their nominal support too, but it doesn’t matter anyway.  I am just amazed to see progressives believe that the stated positions of industry lobbies matter more than where they spend their dollars, which is unimaginable in any context other than finding pretexts to attack Obama.  (Wal-Mart says they’re not anti-union, so I guess we have to take them at their word!)   The health insurance industry certainly doesn’t agree that the PPACA was a good deal for them, and they’re right.   It immediately places substantial restrictions on them,  it doesn’t make single-payer less likely, and Laura points out it makes the hybrid public/private systems (cf. France, Singapore) that are even better than single-payer a little more likely.

As for the related argument that the restrictions on the health insurers won’t matter at all because of “regulatory capture,” this is a faux-sophisticated argument. First of all, it proves too much — by the same logic, we might as well repeal the Clean Air Act and the Civil Rights Act because we can’t insure perfect enforcement, which is silly.   Moreover, the PPACA will much less subject to regulatory capture than many other areas of regulation.   Regulatory capture is most prevalent when 1)legislation established vague goals that have to be put into practice by regulatory agencies, and 2)regulations provide diffuse, indirect benefits to the population as a whole that don’t apply to individuals in particular.    The PPACA provides clear statutory rights to direct benefits.   If insurers refuse to provide insurance based on pre-existing conditions, they’re not going to be able to stay out of court.   This is not to say that a Republican administration couldn’t have done significant damage to the PPACA as it was being implemented, and might make enforcement worse at the margin even after it has.    One of the people involved in this discussion does, in fact, tend to ignore the consequences of Republican appointments to federal agencies and the federal judiciary for after-the-fact implementation in favor of onanistic fantasies about how losing the White House is secretly winning.  (Spoiler: it’s not me!)

Then, let us deal with some of the most misplaced self-flattery in known internets history:

if something makes actual reform more difficult, it may not improve the status quo. By your logic, legislators should never oppose a bill due to a poison pill provision.

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