As Avik Roy of Forbes has reported, Democratic governor Mike Beebe has worked out a deal with Washington in which the state will expand coverage to the poor, but not through Medicaid. Instead, it will do so via an expansion of the new insurance exchanges. The driver behind this arrangement was the Republican-controlled state legislature, which pushed for a deal with the Obama administration.
Herein lies a path for reform. Even if the expansion of coverage is permanent, Obamacare is creating an infrastructure through which conservatives may be able to realize their reform goal of a freer marketplace that drives down costs and provides consumers with greater flexibility. As Arkansas has shown, the exchanges are a potential mechanism for such outcomes, and the Obama administration’s desire for full implementation has created an opening for renegotiation.
It is not hard to envision future reforms that peel back the onerous regulations of Obamacare, lowering the costs to the government, while keeping the 30 million or so new beneficiaries under the federal umbrella. From a Madisonian perspective, if the central political problem of Obamacare was that it created too many losers alongside its winners, then a successful conservative alternative would be a free-market approach that makes these losers whole again without depriving the winners of their new gains.
This is a real possibility. Indeed, as Avik Roy and Douglas Holtz-Eakin, former director of the Congressional Budget Office, argued recently at Reuters, “The great irony of Obama’s triumph . . . is that it can pave the way for Republicans to adopt a comprehensive, market-oriented health care agenda.”