Obamacare Is the Only Game in Town

(Source: Pete Souza)

In his news conference last week President Obama mocked the Republican Party’s obsession with repealing the healthcare reform law, describing the quixotic goal as their “Holy Grail.” House Republicans have voted 40 times to repeal Obamacare, and some insurgent GOP Senators like Ted Cruz of Texas and Mike Lee of Utah are threatening a government shutdown if the law isn’t defunded.

Some Republicans responded to the president’s criticism with characteristic outrage, but an increasing number of conservative figures are blasting the repeal efforts and warning of dire political consequences for the party if Tea Party zealotry is allowed to force a government shutdown. Even Newt Gingrich this week called out Republicans for being relentlessly negative and for failing to offer any viable alternative to ObamaCare.

The only alternative idea offered by Republicans to solving our healthcare crisis is this: let industry lobbyists write the law so insurance companies can expand their profit margins further.

Initially the GOP line on healthcare reform was “repeal and replace,” but the replace part has since been jettisoned for a singular focus on repeal, without even the pretense of a comprehensive plan for lowering costs and expanding coverage to the uninsured.

But there is one dangerous proposal conservatives have been aggressively promoting for years. When Republicans are pressed on what their alternatives for healthcare reform are, they invariably raise the idea of allowing people to purchase insurance across state lines. This idea amounts to a religious-like belief. Many states are too heavily regulated, the thinking goes, and that requires perfectly healthy people in over-regulated states to buy pricey “Cadillac” plans that they don’t need. If only people could shop around for plans in other states, it would inject competition into the market, lowering costs and offering far more choice and flexibility for consumers.

This sounds sane and logical on the surface, but in actuality, as proposed by Republicans, it would have disastrous consequences for the healthcare system in this country, and costs would rise dramatically for the people who most need coverage.

This concept was a key component of the Republican “Pledge to America” back in the 2010 midterms before they regained control of the House. The proposal would repeal nearly all of the Affordable Care Act, and in its place initiate an aggressive new deregulation effort that would create what is commonly described by healthcare experts as a “race to the bottom.”

Under this system, insurance companies would naturally make a beeline to states with the least regulation and consumer protections, and the result would be policies that are extremely favorable to the insurance industry, but terrible for consumers.

Allowing people to buy insurance in other states isn’t inherently evil. Each state has unique and varying standards and regulations. For example, some states may require companies to cover products relating to diabetes, while other states don’t. This system does allow companies to monopolize the market in their respective states. Democrats believe there should be uniform federal standards for insurance companies that protect consumers, in which case this race-to-the-bottom concern would be addressed if cross-state purchases were allowed. In fact, ObamaCare allows insurance companies to make interstate “pacts” as long as they adhere to some basic regulations.

But Republicans vehemently oppose any type of regulation, so their proposal in Congress, introduced by U.S. Rep. Marsha Blackburn of Tennessee, would result in substantially lower quality coverage that would be more expensive. Meanwhile the insurance industry would literally be able to dictate the rules by taking advantage of a conservative state with lax regulations.

This ominous prediction isn’t theoretical—we’ve seen a similar concept at work. In the early 1980s the governor of South Dakota convinced Citibank to relocate their credit card operations to the state by agreeing to let them write the regulatory legislation. Not surprisingly, Citibank created a regulatory environment that was very favorable to the credit card industry, so other companies followed close behind, moving their business to South Dakota and creating jobs and more tax revenue. This may have been good for South Dakota’s economy but it was bad for consumers across the country who now had to contend with a profound lack of consumer protection, all just because one state legislature was for sale.

If Republicans had their way, they would do the same thing with the health insurance industry, allowing companies to set up camp in any state that was desperate for money and had a right-wing government, and then dish out sub-mediocre products to customers not just locally but across the U.S.

This is it. This is the Big Republican Idea to solve our healthcare crisis: just let industry lobbyists write the law so they can expand their profit margins further. Newt Gingrich is right; today’s GOP is intellectually bankrupt and devoid of ideas. Americans might not be sold on Obamacare, but right now it’s the only game in town.

 

Doug Daniels is a former staff reporter for Campaigns & Elections. He is the author of the forthcoming memoir Sifting Through the Wreckage.