Friday, November 21, 2008

Blocking Obama's Health Plan is Key to GOP's Survival?

You've got to hand it to James Pethokoukis. He's got a canny ability to get a grip on the hot issues of the day like few others.

So it is with his new piece, "
How Tom Daschle Might Kill Conservatism," which includes this provocative passage:

Recently, I stumbled across this analysis of how nationalized healthcare in Great Britain affected the political environment there. As Norman Markowitz in Political Affairs, a journal of "Marxist thought," puts it: "After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments."

Passing Obamacare would be like performing exactly the opposite function of turning people into investors. Whereas the Investor Class is more conservative than the rest of America, creating the Obamacare Class would
pull America to the left. Michael Cannon of the Cato Institute, who first found that wonderful Markowitz quote, puts it succinctly in a recent blog post: "Blocking Obama's health plan is key to the GOP's survival."
You know, while I'd need to read the research Pethokoukis cites, given our current economic predicament, I could see huge numbers of voters finding attraction with a statist/redistributionist policy agenda of the Democratic Party for years to come, especially if Barack Obama proves to be smart in office, and actually passes some landmark legislation. Indeed, such an outcome, bolstered by some electoral endurance for Obama's demographic coalition, would confirm that we've indeed had a genuine realignment.

If there's any good news in this it's that Margaret Thatcher came to power in Britain in 1979. So, using this same timeline offered by Pethokoukis, the GOP will be the country's minority party for just 35 years.



Anonymous said...


if you're going to continue to attempt to take on fundamentally economic topics, you're going to need to know something about the subject. Well, I suppose you don't need to be informed to hold an opinion but it would make your "analysis" more credible.

In the recently complete election both sides were in agreement that the current health care insurance structure is unsustainable. Of course, they differed on the solution. Both platforms were half right and half wrong. A well chosen hybrid of the two platforms seems feasible, if politically improbable.

I'm curious what in your opinion would be a feasible solution given the classic Rothschild-Stiglitz issues and considering the recent work on the effects of uncertain public safety nets by Schlesinger and company?

The economics suggests that there are multiple feasible policy packages, but I don't grasp the partisan political dogma well enough to figure out what feasible policy package would be politically viable under any given ideological regime.

Norm said...

There is already a large number of voters who vote Democratic in hope of redistribution. The key to Republican success is to convince the middle and upper middle classes who are still voting Democratic that it would be to their advantage to vote
Republican !

There is no doubt that if universal health care was instituted for everyone we would end up rationing health care for lack of funds. Just like NYC will is threatening to cut back on subway service unless it gets more money; and the Long Island RR which lately been raising its fares every six months is again threatening to cut back on service unless it gets more money.

I think we must convince the middle classes that letting the insurance companies compete for business on a national level combined with tax credits and help for the poor would be a better solution than government run health care.

The advantage we have is that we can see the problems caused by the English model...and do better.

Gayle said...

Norm: And the Canadian model. National health care is terrible up there!

"Man Waits 34 Hours, Dies In ER Waiting Room"

Anyone who actually wants universal health care obviously hasn't been doing there homework!

AmPowerBlog said...


You're an ass, frankly.

I don't make any economic arguments here.

This post is about politics, and particularly how a universal health program could leave the GOP in minority status for decades.

Don't visit my blog if you're just going to insult me. I will delete your comments, and that's a guarantee.

JR said...

Well anybody would knows even a little bit about economics would understand that the Obama plan of "keeping your own insurance" will never work

Look at Hawaii for example ... when the Big G offered health insurance for all children with the option of keeping your already existing plan ... the folks all ran to the government subsidized insurance ... well no shit sherlock

How can a private insurance company that has to take in mind things like profits and cost control compete with a government funded monstrosity that can run deficits year after year?

Well ...... they can't!

Thats why democrats say things like, "you can keep your own plan!" ... because they know that that plan won't exist in about 4 months after the government run insurance program is introduced

Hell ... look at Medicaid and Medicare ... we already HAVE health coverage for the poor and old ... and IT SUCKS

because the BIG G is running it

Will people ever ever learn?

repsac3 said...

Phillipe: I just went through the Amero thing with one of my friends... Here's the text of the e-mail I sent her:
Have you been to this page on the link you sent?: coins for sale HERE !!! It seems Hal Turner is either mental--or just a lying, Nazi, fascist wingnut.

The coins Hal's on about are collectable medallions, not legal currency. They're like the coinage one buys from the Franklin mint; nice to look at, expensive, and "guaranteed to go up in value," but unable to buy a loaf of bread anywhere in the world.

Here are 2 pages from the guy who designed the coins, Daniel Carr. (The real reason Hal's coin had a "D" on it). The coins: Catalog of Minted Items by Daniel Carr and what the artist has to say about the controversy: UNA Amero Pattern Coins: "NOTE:
I have received numerous inquiries as to my personal stand on the North American Union (NAU) issue.

My goal with these coins is not to endorse a Union of North America or a common "Amero" currency. I fully support the United States Constitution, and I would not welcome (in any form) a diminishment of its provisions. I expect that these coins will help make more people aware of the issue and the possible ramifications. I leave it up to others to decide if they are in favor of, or against a North American Union. And I encourage citizens to voice their approval or disapproval of government plans that impact them."

And while you're there, check out his parody State quarters series. Very funny: Parody State Quarters (Daniel Carr also designed the real NY & RI state quarters.)

Finally, here is the Snopes debunking: Amero Coin

The AmeroCurrancy site does discuss the possibility of a North American Union, and the Security and Prosperity Partnership of North America, a free trade & mutual security pact, both of which are threats to American sovereignty, and are more real. While Hal's Amero isn't real, there is the possibility that one day it will be, as a result of such deals & partnerships. (I'm a bilateralist, myself... I am opposed to NAFTA, CAFTA, the WTO, and all the rest of these multilateral trade pacts & organizations that force the US to subsume our law to anyone else as regards which safety & security laws we can & cannot not put into trade deals. I'd much rather that we make deals on a case by case basis, like we used to. While the guy was generally a nut, Ross Perot was dead right about the problems these deals would cause...)
Hope that helps...
(Though my friend--a smart & successful woman, in many ways--replied to this e-mail by essentially saying "That's what they WANT you to think," which is a tinfoil hat kinda argument for which I have no response... If that is your reply as well, at least I tried...)

Anonymous said...


I won't dispute your personal assessment. There are any number of people whom I greatly respect and admire who would agree with you.

Nonetheless, health care plans are inherently economic. As social scientists, we're all trying to explain the same thing. That is, why do (groups of) people act as they do? So a political economic question is, if socialized medicine is so obviously terrible, why is it that the two major economies without socialized health care are the US and the PRC? Is it that other developed countries, such as Switzerland, are just overrun with socialists or are their electorates stupid? For that matter, are Americans stupid for not requiring it from our elected officials?

The relevance of the economic modeling is that when equilibria do exist in competitive insurance markets (under the most general conditions, there is no equilibrium outcome) they are often quite surprising in form and far from the Pareto optimal equilibrium that Econ 101 students are taught to expect from free competitive markets.

Thus, we never observe free markets in insurance. One might argue that the CDS market was a free (i.e. unregulated) competitive insurance market, but it has, of course, recently and spectacularly ceased to exist.

In the presence of a screening system under the control of the sellers, there will always be an incentive to create a mechanism to separate the buyers. However, insurance relies on pooling. Consequently, insurance markets are an economic special case. Health insurance is a hybrid product of prepaid, or installment paid, routine health services and some amount of true insurance. Worse, the probability of need for the latter is influenced by the quantity consumed of the former.

Large employer provided health care coverage works because the mechanism for pooling is not too strongly correlated with the risk factors. Ironically, its economic form is probably closest to the nearly dismantled DanWei system of the PRC during the later part of the last century. However, outside of large firms and public institutions, there is no mechanism for creating pools that are not formed on the basis of risk. (adverse selection)

Also, all care must be paid for by someone. Currently the cost of the care provided to the uninsured is split between the government and the insured, which ultimately are the same group of individuals.

The institutional frictions that tended to maintain this "equilibrium" are eroding at an increasing pace. As we witnessed comparatively recently with the switch from defined benefit retirement plans to defined contribution plans, when the transition does finally occur between one "equilibrium" and another, it occurs very rapidly.

I predict that the reorganization of a major industry, autos and airlines seem like likely candidates, will deinstitutionalize employer provided health care in that industry. One major player will go first and competitors will claim that they must follow to remain competitive. Major players in closely related industries will use the changes in the first industry to rationalize their own decision to drop health care. The rest of the dominoes will follow in quick succession. Selling health insurance will no longer be a viable business and none will be offered at any price. We will default to the "system" currently in place in the PRC or something much like it.

So I agree that the Obama plan is not feasible. The McCain plan would not have worked either. So the question is, what pooling mechanism would conservatives support?

The approach being introduced in TN is interesting. Note that it effectively rations catastrophic care based on the ability to pay. Obviously, no good will be supplied in unlimited quantities, so "rationing" will be imposed by the market if by no other means.