Defeating Obamacare: The Curse of Success

Today is Tuesday, June 19th, 2012.  Intrade now holds that the chance that US Supreme Court will find the individual health insurance mandate unconstitutional as 74.7%.  Let’s leave aside the merits of the constitutional argument, for clearly I am not qualified to render a prejudgment on the august luminaries who have given us Bush v. Gore and Citizens United vs. Federal Election Commission. Purely as a political consideration, I think the hypothetical invalidation of the mandate provides an interesting case on John Kenneth Galbraith’s notion of “countervailing power” in the regulatory process.

While Galbraith’s notion focused on the power of free citizen’s associations and trade unions in serving as a countervailing power, the conflict in the mandate case is really between “big business” and one particular industry, the insurance industry.  The business community has shown an impressive degree of solidarity in fighting against the individual mandate, and the insurance industry has more or less not lifted a finger to stop them.  I think this is perhaps a wise (or at least realistic) decision on the part of the insurance industry, as theirs is not exactly a sympathetic cause.

However, in the event that the mandate is actually invalidated I would anticipate that all sorts of political chaos would break out behind closed doors.  While the business community has banded together in general opposition to an expansion of the American welfare state, I think their massive campaign against Obamacare could easily curse them with their success.  Rousing some gullible fools to don tricorner hats and elect Republicans in 2010 was all fun and games – but it’s all fun and games until somebody loses an eye.

The insurance industry losing the mandate, without Congressional Republicans swooping in to replace it, is more than just losing an eye.  Losing the mandate is a giant sucking flesh wound, as adverse selection and guaranteed issue will destroy the individual health insurance market in relatively short order.  And the insurance industry is one of the largest and most influential businesses in America.  If I were the CEO of a major bank, and I just saw the Republicans actually succeed in kneecapping the health insurance giants, I’d start to get really antsy.  “Maybe these people I elected are really crazy enough that they actually would let me fail”, I think.  “Sure, health insurers aren’t a sympathetic target, but am I?”

The political implications for the political solidarity of big business are impossible to foresee, but I have a hard time imagining that things would simply continue as they have since 2009.

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