The Constitution Is Not a Turkey

I think the world of Jon Gruber, the MIT economist who helped design both the Massachusetts Health Plan and the Health Insurance Exchange provisions of President Obama’s Affordable Care Act. So I was more than a bit dismayed to read this quote from Jon: “I’m frustrated that the future of the American health care system rests in the hands of one or two of these unelected people who might make the decision based on political grounds.” The “unelected people” that Jon is referring to are justices of the Supreme Court. Jon almost seems surprised that the Supreme Court has a say in the matter.

The Health Insurance Exchange is an idea that economists have floated for more than three decades and thanks to his hard work, that idea has become a reality in Massachusetts and perhaps the rest of the nation, provided that the Supreme Court doesn’t block this fine bit of economics. Unfortunately for supporters of the exchange (including myself) the health insurance purchase mandate – an essential element of any economically viable exchange – might be unconstitutional. God forbid that the U.S. Constitution might interfere with beautiful economic theories.

There is a solution. I am almost too modest to say it but I proposed this idea in my book Code Red long before Barack Obama put his hand on the bible to be sworn in as Regulator-in-Chief. The beauty of the solution is that it respects, nay, was inspired by Jon’s work in Massachusetts, and is constitutional to boot! The solution is in its own way conservative, because it does not mandate a single approach to health reform. Congress should have given each state a block grant conditional on expanding health insurance coverage. The states could have chosen how to proceed. The U.S. Constitution might prohibit a federal mandate to purchase insurance, but it says nothing about what the states may do.

Some states might have chosen to adopt their own versions of the Massachusetts Health Plan. A few states may have centralized insurance, creating their own versions of single payer systems. Others may have given individuals vouchers and encouraged the growth of private insurance exchanges. This would be the closest to a free market solution, keeping the government out of it, except as a vehicle for transferring wealth. Perhaps all of these ideas would have been better than the status quo. Perhaps states could have learned from each other. Even Jon Gruber might have learned something new! Through this experimentation, we could have rapidly expanded health insurance coverage and also put lots of theories to the test. I still think this is a terrific idea. But in 2009 when politicians and economists huddled together to write the Affordable Care Act, no one invited me to the party. Alas.

When it comes to research, the best economists are rather conservative. We put our own findings under the microscope, trying every which way to prove ourselves wrong. We cannot publish unless several peers have given our work the same scrutiny. But when we are given the opportunity to make policy, we often abandon this conservatism. Perhaps this is because we are so rarely given the chance to make policy. Economists like Jon Gruber were privileged to have substantial input into the future of the health care system, and may have thought that their work was done when Congress embraced their models. But that was never the end of their work. The Constitutional challenge to the insurance purchase mandate is part of a process that should have been anticipated from day one. There are no surprises here.

P.S. Jon Gruber has stated that he cannot understand why Mitt Romney is disowning the Affordable Care Act when it is modeled on the Massachusetts Health Plan. Perhaps Romney believes that the Massachusetts Health Plan is good for Massachusetts, but might not be so good for other states. I know I believe it.

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