President Trump and House Republicans celebrate the passage of the AHCA. (Reuters photo: Carlos Barria)

Republicans are passing off massive government interventions as ‘free market’ reforms.

According to the Republican leadership — Speaker of the House Paul Ryan (R., Wis.) and President Donald Trump in particular — last week marked a celebratory moment for conservatism. In particular, the House’s passage of the American Health Care Act (AHCA) marked two pieces of great news. First, the free market in health care had been saved from the depredations of leftist governance! Second, the free market will certainly not be allowed to run roughshod over those with preexisting conditions — the government will help them!

For most of my adult life, the Republican party has proclaimed to its supporters that it stands for free markets. Then, when the legislative process begins, the Republican party abandons its supposed free-market principles in favor of Democrat-lite policy. To bridge the gap, Republicans simply pretend that the latter is the former — they pretend that the government measures they embrace are actually free-market measures. So, for example, when it comes to the American Health Care Act, Ryan told Hugh Hewitt last week:

Either you believe in your principles, or you don’t. And our principles are we should have a free market in health care, a patient-centered system run by consumers. That’s why we have risk pools, tax credits and health savings accounts.



Now, it should be noted that state-created and state-sponsored risk pools are not “free-market measures.” If they were, then so were Obamacare exchanges. People are capable of collectively bargaining over health care — employers do it with insurance companies every day, and cooperative health arrangements such as religious health-care co-ops do the same. But state-run programs in which the state bargains in behalf of consumers using taxpayer subsidies are not free markets. They are subsidies to insurance companies.

Tax credits are also not free-market solutions. Handing $2,000 to someone who doesn’t pay that amount in income tax amounts to a back-door entitlement. And tax credits designated for particular ends desired by government are not indicative of free-market principles, either. They, too, are corporatist in nature. Government-induced health savings accounts might be preferable to paying higher taxes, but they are clearly a government-run form of social engineering.

Herein lies the problem.

Republicans are afraid of actually standing for conservative principle when it comes to policy. Here is the conservative policy take on health insurance: A free market guarantees the highest-quality, lowest-price service in any market. Skewing that market with government-backed incentive schemes reduces efficiency, destroys competition, and undercuts quality. If we all truly want better health care, the only way to provide it is through measures that incentivize a higher supply of health care, not a rationing of the available care through redistributionist schemes. That means the first priority for Republicans should be removing damaging regulations on preexisting conditions and essential health benefits.


Yet those are precisely the two provisions about which Republicans are most skittish. Here, again, is Ryan — this time making his pitch to George Stephanopoulos:

We can achieve the goals we all want, which is getting the cost of coverage down and making sure that everyone has access to affordable health care, especially and including people with preexisting conditions. That is what our bill does.


But that is explicitly not what the bill does. It may bring down the cost of health care in states that opt out of Obamacare regulations, but it does not get rid of the federal mandate. And no system short of full-scale subsidization of those with preexisting conditions will bring down costs for them, particularly without an individual mandate forcing those who are young and healthy to sponsor those who are not.

The result of this political gobbledygook is that free markets take the hit. As always. Advocates of the free market aren’t consulted about whether the bill at issue actually reflects free-market principles. Instead, Republicans simply say that giant government subsidy schemes are “free market,” Democrats take them at their word for political purposes, the Republican subsidy scheme fails in the same general way that a Democratic scheme would have, and the public clamors for more government involvement — to which Republicans answer by stating that they’ll administer that government involvement more efficiently than Democrats would. You know, to save the free market, and all that.

The result of this political gobbledygook is that free markets take the hit. As always.

This is what happened in 2008, when President George W. Bush justified his series of bailouts of major financial institutions by appealing to the flaws of the free market: “I’ve abandoned free-market principles to save the free market.” It is quite possible that a government action might be necessary to provide a corrective to bad government policy as a transition toward free markets, but Bush’s line seemed to imply that he had spotted a flaw in the free-market system that required government intervention.


That, of course, is the entire premise of the neo-Keynesian Left. With regard to the financial crash of 2008, of course, that was claptrap: It was government interventions in the mortgage market, combined with government interventions in financial markets, that led to the moral hazard that culminated in the financial collapse. Nonetheless, Americans received one message loud and clear: 2008 represented a failure of capitalism.

The same is happening now on health care. When the Republican scheme fails to provide health-care utopia — which it will, since a heavily regulated system is the problem to begin with — the public will assume that those free-market Republicans were to blame, along with the laissez-faire principles they supposedly champion. Americans will call for more government. That’s Republicans’ fault. If they’re not going to buy free-market policies, they should stop pretending that they care about promoting free-market principles. Doing otherwise guts the case for free markets. And once that case has been gutted, only awful solutions remain.

READ MORE:


The Pre-Existing Condition Lie

Health Care: We Cannot Vote Away Scarcity

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