Summarizing the Best Arguments Against PPACA

You could argue that the past week has been somewhat discouraging for opponents of PPACA. The president has mocked opponents of the law for going through "stages of grief." Vox.com recently published a piece critical of opponents of the Patient Protection and Affordable Care Act (hereafter PPACA), saying that they were afflicted with Obamacare Derangement Syndrome. None of the events, though, have weakened the core reasons for opposing PPACA. Instead of doing a point-by-point rebuttal of Ezra Klein's argument, I thought it might be more useful to put together a foundational list of "good reasons to oppose PPACA."

We'll start, though, with the opposite: what are good reasons to support PPACA?

1. A belief that health insurance is a moral imperative.
2. Faith in the ability of a non-single payer centralized program to control costs.
3. A desire to protect President Obama and the remainder of his agenda from a crushing defeat and embarrassment.

Most support for PPACA comes straight from point 1: that health insurance is a moral imperative. My contention would be that if you believe in point 1, there are many better solutions to the problem of the uninsured than PPACA. But that's a separate argument. Why oppose PPACA at all?

There has been so much sound, fury, and writing about PPACA over the last few years that it is often hard to keep track of all of the arguments. Some of the arguments against PPACA were not particularly persuasive, but others really were, and may have gotten lost in the heat. That is my starting point for writing here: there are lots of good reasons to oppose PPACA vociferously, and it would be nice to have those available in one place. So here are eight reasons:

1. The centralized, top-down nature of PPACA will squelch disruptive innovation.
2. The pre-PPACA environment was incredibly flawed. PPACA exacerbates those flaws.
3. The law has created some undeserving winners.
4. The law has created some undeserving losers.
5. The employment effects on both the demand side and the supply side are troubling.
6. The story of the law's passage does not reflect well on the law itself.
7. The Obama administration has shown utter disdain for the rule of law in implementing this legislation.
8. Even the "conservative" ideas in PPACA--like its use of High Deductible Health Plans (HDHPs)--are distorted and perverse.

What follows are a bunch of links from the last half decade of debate and argumentation, and lots of blockquoting. I intend to return to this post somewhat regularly.

1. The centralized, top-down nature of PPACA will squelch disruptive innovation.

I have read hundreds of articles on health care policy, health insurance, and PPACA over the last half decade. Of all of those, French writer Pascal-Emmanuel Gobry wrote the most compelling critique of PPACA and the progressive approach to government and reform more generally. Gobry proposes an interesting thought experiment, imagining if the Internet had emerged as those "in the know" in the early 1990s had expected: as some sort of "connected/interactive TV device." His thought experiment went on:

What would be the state of internet innovation under such a global network? It’s very easy to see that it would be much lower. Because the network would be controlled by gatekeepers, it would be much harder to start things. It would be a walled garden. 

Is this something you agree with? That if the “internet” had been a walled garden there would have been much less innovation on it? 

There would be no Google (the thing would have its own search interface). There would probably be no Amazon (instead the Barnes & Noble of the world would have their own storefronts to which they would dedicate almost no resources and would suck). There certainly would be no Wikipedia, or Twitter, or Business Insider. There would be services! People could certainly “communicate” and “shop” but with nowhere near the kind of efficiency and ease of use and innovation that we have today.

The internet has emerged as a wonderful source of value for humanity because of the very decentralized way in which it emerged. He continues:

Now, imagine, still, that we’re in 2013 in this walled garden internet alternate universe. Everyone’s on the network and it “works” well enough. Now imagine that someone writes that the global network is actually horrendous and that we would have so much more innovation if there were no gatekeepers. That person would be universally seen as crazy. First of all, they would say, why are you saying that we need a global network, since we already have one? Second of all, they would say, why are you saying there’s no innovation, since there is already plenty? I mean, we can shop and communicate and leave each other messages. 

If you described the internet as it exists on this universe to someone from that parallel universe, they would never believe you. Imagine describing Twitter to such a person. Imagine saying, well, we should have an open internet because then people could communicate in 140-character bursts. Or Wikipedia. An open internet is a good idea because people could work on a collaborative encyclopedia that anyone could edit. Yeah, like that’ll work! Oh, and the most profitable thing on the internet would be “search” and the search company would be so profitable that it would come out with self-driving cars. People would think you were just a complete lunatic.

I find this to be an incredibly powerful thought experiment, because it is one way to visualize the difference between the seen and the unseen. Gobry proposes that there is a similar world available to us in health care and health care delivery, discussing the "hints" of such a system--like "health care advocates" and dramatic cost reductions in heart surgery in India. Gobry's suggestions here are all about disruptive innovation, but it is near-impossible to get disruptive innovation in a centralized system where the stakeholders are all heavily vested in the status quo. Disruptive innovation is what could lead to new life-saving medical procedures. It's what could increase the available supply of medical practitioners. It's what could slash the costs of expensive tests and treatments. We can't do those things from the top down; they just don't happen, because the stakeholders are too powerful, and innovation is too hard to control and direct. PPACA essentially makes that future less likely. And those of us who are complaining about it in twenty years while we suffer through long waits, rationing, and astronomical prices will probably be described as "complete lunatics." It's disheartening, but that's the future.

2. The pre-PPACA environment was incredibly flawed. PPACA exacerbates those flaws.

One of the reasons that I thought that Mitt Romney would never win the Republican nomination back in 2011 was because of the obvious Romneycare/PPACA link. PPACA was a major potential source of votes for Republicans, if the right messenger could hit the right message. (I expected Tim Pawlenty to emerge as the guy. Oops.) But Ramesh Ponnuru and Yuval Levin of National Review crafted a compelling message for Romney that really hits at the core issue of PPACA: it entrenches the bad parts of the previous status quo. As a state governor, Romney could not sweep away the pathological problems of the American system of health insurance; considering the flaws of the system, Romneycare was a valiant attempt to solve the problem of the uninsured. But the federal government must address those flaws in any solution, not further entrench them. An example: a man named John was in a precarious situation; he was hanging off of a cliff. If he were alone, his best solution would be to jump to a landing nearby to save himself from a much worse fall. But if his friend Lauren were standing at the top of the cliff, Lauren shouldn't help John jump to the landing; Lauren should help pull John up! That is, in short, what the Romneycare/PPACA message should have been.

Unsurprisingly, the milquetoast Romney campaign never went there. But this critique of PPACA from Ponnuru and Levin is spot on:

The perversity of Obamacare is that instead of addressing the ways in which federal policies make an efficient and competitive health-care system impossible, it doubles down on those policies and adds a highly convoluted system of further public subsidies and oppressive rules on top of them. In short, Obamacare takes a bad health-care system and makes it much worse, in ways that are likely to exacerbate the grave problems with American health-care financing and to be very difficult to reverse once fully implemented. 

Thus Obamacare takes a Medicare system that stifles innovation and prevents competition, and maintains its irrational structure while subjecting it to a rationing board that will undermine access and quality. ... Obamacare vastly expands Medicaid without reforming its structure — intensifying the incentive for overspending and drawing more middle-class Americans into a segregated, subpar health system. ... Obamacare adds to the economic distortions created by today’s system by leaving the tax treatment almost entirely unchanged but placing a new entitlement program alongside it and subjecting both to an additional onerous layer of regulations. ...

Obamacare, in other words, takes each of the three parts of our deeply troubled health-care-financing system and makes every one of them worse, by making them less market-oriented, less efficient, and less innovative. 

Any conservative who doesn't acknowledge that American health care had serious problems prior to the passage of PPACA is a disappointment. (John Hudak notes that this might be because Republicans' "key voters" tend to already have health insurance. There may be some truth to this.) But PPACA didn't really address the central problems of American health insurance. In many cases, it exacerbates them.

3. The law has created some undeserving winners.

Tim Carney of the Washington Examiner is the blogosphere's foremost expert on crony capitalism and handouts to big business. A century ago, Carney would have been a plains Democrat and probably a supporter of William Jennings Bryan. But that is no longer the Democratic Party. Carney has been all over the crony capitalist, corporatist overtones of the law:

Yes, they opposed provisions regarding Medical Loss Ratios (basically capping the legally allowable profit and overhead that health insurers can make), but the heart of the bill – an individual mandate paired with rules requiring insurers to accept all comers and controlling the pricing tiers they have – was a package the insurers proposed even before Obama was sworn in. 

Throw in the subsidies for insurers and the laws requiring employers to cover employees, and you’ve got a bill full of insurer-friendly provisions. It’s noteworthy that on the ObamaCare case before the Supreme Court, the top health insurance lobby is not arguing to overturn the law, but is simply arguing that if the court kills the individual mandate, it must also kill the must-issue and “community rating” regulations. 

And just as a reminder, the biggest single-industry lobby in the country, the Pharmaceutical Research and Manufacturers of America, supported the bill and dedicated millions of dollars to supporting Democratic incumbents who might face electoral trouble for their “Aye” votes. 

The other biggest health-sector lobbies – the American Medical Association and the American Hospital Association – also supported the bill.

Carney also identified some of the direct benefits to pharmaceutical companies from some e-mails that were released back in 2012:

Obamacare emails made public last week show that Obama is skilled at publicly pretending to fight a supposed bad guy -- the drug lobby, in this case -- while ensuring neither side actually gets hurt, both sides get paid, and everyone can be chums afterward. 

Throughout his campaign and while pushing his health care law, Obama regularly spoke as if he were sticking it to the drug industry. But these were phantom punches. Sometimes, the emails show, the drug lobbyists didn't even blink an eye. 

[snip] 

Over the following weeks, the emails show, drug lobbyists, White House officials and aides to Sen. Max Baucus hammered out a deal that formed the backbone of Obamacare. 

The final bill would subsidize prescription drugs, force states to include drug coverage in Medicaid, and expand private insurance coverage of drugs. Also, the White House pledged to oppose policies that Obama had promised on the campaign trail: allowing reimportation of prescription drugs and empowering Medicare to negotiate for lower prices on the drugs Medicare is paying for. In return, drug companies would offer a discount to some senior citizens, and would spend millions of dollars on ads supporting the bill and the lawmakers who backed it. 

But after the deal was complete, in late July, Obama publicly delivered a play-fight piledriver to the drug lobby. "I understand that some will try to delay action until the special interests can kill it," Obama said in the Rose Garden on July 21. The president warned that his opponents "would maintain a system that works for the insurance and the drug companies, while becoming increasingly unaffordable for families and for businesses." 

After that speech, Republican Pfizer lobbyist Anthony Principi, a former Bush Cabinet member, wrote in annoyance to PhRMA lobbyists and other top drug lobbyists. "We're trying to kill it?" he asked sarcastically. "I guess we didn't give enough in contributions and media ads supporting hcr [health care reform]. Perhaps no amount would suffice." (The pharmaceutical industry gave $1.2 million to Obama in the 2008 election, according to the Center for Responsive Politics, the most it had ever given to a candidate, and more than triple its contribution to John McCain.) 

Hall wrote back: "Billy [Tauzin, president of PhRMA] and I were at the WH today. We raised this issue with Jim Messina." Messina was deputy chief of staff and one of the drug industry's main points of contact. "Jim said that he went into the Oval [Office] and talked to the President." Messina reportedly asked Obama, "Why was this in the sppech?" [sic.] Hall writes that "Obama said, 'I was wondering the same.' Attributed to young speechwriter."

The law was a complete giveaway to entrenched interests. The Obama Administration called them stakeholders.

4. The law has created some undeserving losers.

One of my favorite PPACA-related anecdotes pertained to NPR's talented health care correspondent, Julie Rovner. Anyone who listens to NPR regularly (as I do) knows that Rovner is sharp on health care: she reports well and adds clarity to often-complicated situations. But even Rovner was swept up in the fervor of the heady days of 2012. Jonah Goldberg has the story:

In the wake of the Supreme Court ruling upholding the Affordable Care Act (a.k.a. "Obamacare"), NPR's "Talk of the Nation" held a seminar of sorts at the Aspen Institute's legendarily pretentious Ideas Festival. Someone in the audience asked NPR health policy correspondent Julie Rovner this question: "Today's decision is a positive decision for the estimated 50 million uninsured Americans. Who are the losers today?" 

Rovner seemed to struggle to find losers. She came up with insurance companies that want the so-called individual mandate — now a punitive tax according to the Supreme Court — to be much more punitive. After thinking through her answer, she later added that another group of losers might be the citizens of states whose governors opt to not participate in the law's expansion of Medicaid.

Rovner is a public policy reporter, and most public policy decisions have to do with identifying winners and losers. Good public policy minimizes the pain that losers feel so that they are less likely to object to new policies vociferously. But in her enthusiasm for the law, Rovner could not see past the surface of this legislation: there are many losers hidden just underneath the shiny exterior. Jay Cost of The Weekly Standard has been beating this drum the most vociferously.

Losers in the schema include people whose new insurance is more expensive or otherwise less satisfactory because of the new regulations, seniors whose Medicare Advantage program will be peeled back (or whose local hospital stops taking them because of cuts to Part A), businesses who cannot afford the mandates, people who lose their employer insurance as a consequence of the new business mandates, young and health people who [sic], and others. Importantly, the administration's delays speak to the potential coalition of the losers, as almost all of them have been designed to keep these groups from realizing the harm they are due to suffer before the 2014 midterm election.

I suspect Cost would have added "young and healthy people who would prefer not to pay for comprehensive health insurance" if he were to edit it. (Per reason 1, I would also add the millions of Americans who will suffer in a future of less innovation.)

The people who are losers in this schema have long been protected by both sides in an unwritten political agreement, which vouches that the only people the government "takes" from are those with plenty to spare. The rule was: you do not redistribute money and security away from the middle class to accomplish some policy objective. The Democrats broke this rule, largely out of cowardice. They wanted to hide the trust [sic] costs of the legislation. Rather than put together a straightforward tax that hit everybody equally (like the Social Security tax), they created a convoluted system to fund the program, such that people whose premiums have gone up are paying an implicit tax, one that happens not to be collected by the government.

I heartily agree with this. The law's losers have been hidden for political reasons.

5. The employment effects on both the demand side and the supply side are troubling.

In general, I am skeptical of most economic study estimates, particular from government studies; there are too many variables, too many ways to massage the data, and too many assumptions to make to model anything confidently. But I think that theory and logic are useful in conjunction with data, and based on that, the broad outlines of the policy lead to two problematic effects on employment:

- Demand side: By increasing the cost of hiring and maintaining workers, employers will hire some number fewer workers.

- Supply side: Approximately two million workers will drop out of the workforce because they no longer need to work to get health insurance or security.

Conservatives believe that work is useful for social cohesion, harmony, and individual thriving, and that dispensing with work, even if we can "afford it," is socially dangerous. But PPACA challenges "work" from both blades of the supply/demand scissors.

Casey Mulligan has done some excellent writing on the problems of the demand side, noting that the act was chock full of "taxes on employers" and "implicit taxes on employees," which together "amount to a five or six percentage point addition to the average marginal tax rate on labor income."

On the supply side, Ross Douthat wrote persuasively for several days on the problems of the labor impact of PPACA. In one post, he wrote:

... there also lots of people who emphatically do not benefit from being given an incentive to either detach from the workforce or (if they’re already unemployed or underemployed) remain detached rather than taking a lower-paying job. And given the current economic landscape, especially — in which persistently high unemployment coexists with a growing population of workers too discouraged to even look for work — the size and scope of a work-discouraging effect matters a great deal: The bigger the effect, the more likely that the people dropping out aren’t just, say, parents cutting hours to spend more time at home while the other spouse works full time, but people we should want to be attached to the workforce [emphasis added], for their own long-term good and the good of the economy as well.

His Sunday column is also worth quoting:

... in the Obamacare debate and elsewhere, it’s not always clear whether this larger welfare state is supposed to promote a link between work, security and mobility, or to substitute for work’s gradual decline. On the left, there’s a growing tendency toward both pessimism and utopianism — with doubts about the compatibility of capitalism and democracy, and skepticism about the possibility for true equality of opportunity, feeding a renewed interest in 1970s-era ideas like a universal basic income. 

On the conservative side, things are somewhat clearer. There are libertarians who like the basic income idea, but only as a substitute for the existing welfare state, not as a new expansion. Both “rugged individualist” right-wingers and more communitarian conservatives tend to see work as essential to dignity, mobility and social equality, and see its decline as something to be fiercely resisted.

Douthat has been the most consistently interesting critic of PPACA, and he absolutely nailed the supply side employment effects.

6. The story of the law's passage does not reflect well on the law itself.

It may be hard to remember, but PPACA was passed using a variation on the "ping-pong" method of passing laws. The How a Bill Becomes a Law process almost invariably requires a "conference committee." The conference committee takes people from both the House and the Senate, who hammer out differences in the specific legislation and correct drafting errors and inconsistencies. Under normal circumstances, a version of a bill must pass both the House and the Senate, and then must pass again after conference. But in the case of PPACA, there was a problem: a special election in Massachusetts replaced Ted Kennedy with Scott Brown, who vigorously campaigned as the "41st vote" against PPACA. So the House and Senate has passed versions of the bill, but Brown's election ensured that no conference bill would ever get through the Senate.

The Democrats had two options:

- Scale back their ambitions and look for something that moderate-leaning Republicans, like Olympia Snowe, Susan Collins, and Scott Brown, could support.
- Pass the Senate bill without any changes.

Crying, "Damn the torpedoes," the Democrats opted for the latter. The issues in the Senate bill are myriad and are the types of things that should have been cleared up in conference. One is the apparent drafting error that technically prevents purchasers of insurance on the federal exchange from receiving subsidies. Regardless of intent, the plain language of the statute dictates that a court must strike down those subsidies. Judges may disagree with my interpretation. But a major piece of the law is dependent on judges cutting careless drafters some slack. This is not how you pass wise public policy, and it is the type of error that would invariably be corrected in a good conference committee. Massive reform laws should not be plagued with obvious drafting errors. The conference never happened.

7. The Obama administration has shown utter disdain for the rule of law in implementing this legislation.

As bad as the process was in passing the law, the Obama administration's relentless array of waivers, extensions, and outright changes to the law as it exists are downright terrifying if you have . The precedents that Obama has set in terms of selective enforcement are incredibly dangerous. Worse, I expect a Republican president to take a similar tack when one is next in office. This is a terrible norm to set.

The rule of law is one of those elements of the constitution (small-c) that helps ensure a functional political and legal culture. There is a longstanding norm in American governance for sticking to the rule of law, which protects Americans from arbitrary executive action and from unequal treatment by the government. (Let's accept that many non-whites in American history have not always benefited from a fair implementation of the rule of law. This is not a reason to dispense with the concept.) From the perspective of "rule of law," PPACA has been farcical. The Galen Institute identifies 22 separate unilateral executive modifications to the law. These range from a delay of the employer mandate to an expansion of a provision of the law that allowed for "grandfathering" of older plans to an exemption to unions from required reinsurance fees. The logic appears to be "if it is convenient, change the bill." Even outlets friendlier to the president's agenda, like Politico and the New York Times, have seized on the "modifications" story.

At the same time, however, Obama has made it clear that he would veto legislation from the Congress that accomplished the exact same objectives. He has not had to because Harry Reid has prevented all of the House's "fixes" from ever seeing the light of a floor vote in the Senate. But he is essentially flouting standard process and taking an incredibly broad view of his administration's rights to implement legislation as he sees fit. Essentially, Obama has acted as a one-man conference committee.

Perhaps the most galling change, though, was the perfectly-timed Census change of its formula for computing the number of uninsured. Megan McArdle nailed this on Friday:

For several months now, whenever the topic of enrollment in the Affordable Care Act came up, I’ve been saying that it was too soon to tell its ultimate effects. We don’t know how many people have paid for their new insurance policies, or how many of those who bought policies were previously uninsured. For that, I said, we will have to wait for Census Bureau data, which offer the best assessment of the insurance status of the whole population. Other surveys are available, but the samples are smaller, so they’re not as good; the census is the gold standard. Unfortunately, as I invariably noted, these data won’t be available until 2015. 

I stand corrected: These data won’t be available at all. Ever. 

No, I’m not kidding. I wish I was. The New York Times reports that the Barack Obama administration has changed the survey so that we cannot directly compare the numbers on the uninsured over time. 

[snip] 

Sarah Kliff of Vox says we shouldn’t freak out, because these are the numbers that the census collects for 2013, so the change is actually giving us a good baseline. But I’m afraid I’m not so sanguine. As Aaron Carroll says: “It’s actually helpful to have a trend to measure, not a pre-post 2013/2014. This still sucks.”

Of course the formula change will result in a smaller number of uninsured than in the formula's older iteration (which was the source of the numbers that were "shoved down our throats" in the passage of PPACA in the first place). The Obama Administration will disavow any connection to this change, but considering the history of near-total rejection of the rule of law when it is convenient, I just don't believe them.

Ramesh Ponnuru notes that the rule of law "tends not to have a built-in constituency for it" and believes that a "healthy political culture" would take the rule of law more seriously. Indeed. Like many elements of political and social culture, the rule of law will only be missed when it is largely gone. The PPACA implementation has certainly pushed us more in that direction.

8. Even the "conservative" ideas in PPACA--like its use of High Deductible Health Plans (HDHPs)--are distorted and perverse.

I said I'd rather not engage with Ezra Klein's Vox.com piece on Obamacare Derangement Syndrome, but I can't help myself on one point: Klein writes, "High-deductible health plans are a longtime conservative solution for health costs — and Obamacare is spreading them far and wide."

It is true that PPACA has resulted in something like HDHPs gaining some traction on the exchanges (in the form of the lower-tiered "bronze" plans.) But in reality, PPACA has dramatically increased the number of things that an HDHP is required to cover (defeating the purpose). In conservative circles, HDHPs are good in conjuction with robust, tax-exempt Health Savings Accounts (HSAs). These HSAs would offer people money to shop, and would serve to create something closer to a thriving market for health care services, with the advantage of price discovery as the major benefit to everyone else. But if anything, PPACA weakens HSAs by limiting the amount of non-prescription drugs that people can buy with them. It certainly has no place for a growing HSA market.

True conservative health care reform with HDHPs would actually resemble insurance, or protection from unexpected, catastrophic expenses, rather than prepayment for expected expenses. Seeing the appearance of something resembling HDHPs in PPACA and saying that it's a conservative success is like calling my beloved blueberry Eggo Waffles a fruit dish.

You can argue that my eight reasons are not enough to override the moral imperative for health care. But I am convinced that a better law that solved most of the problem that PPACA attempts to solve would have had far less downside. Instead, we got the disaster that is PPACA. I expect stories of the winners to dominate a fair bit of the mainstream narrative, and certainly the Obama campaign narrative. But these drawbacks remain and are important, and we should have had better policy in the end.