Obamacare: Repeal is Not Impossible

By Dom Armentano

Obamacare was sold to the American people as a humanitarian attempt to provide health insurance to the poor and to individuals with a pre-existing medical condition who had been denied coverage. If you were not poor, did not have a pre-existing condition, and already had health insurance and were satisfied with its coverage and rates, you were repeatedly assured that you could keep your plan and doctors. Right.

We now know that the selling of Obamacare was a giant con job. After all, if its proponents had really been sincere, they would have argued that the alleged poor simply be provided vouchers (similar to food stamps) to help purchase insurance; further, a simple one-sentence piece of legislation could have required that insurance companies not automatically exclude potential customers based on some pre-existing medical condition. Done deal. Instead, what we all got smacked with was a 906 page regulatory and tax monstrosity that amounts to a federal makeover and takeover of the entire health care industry.

Can we repeal Obamacare? Defenders of the law, and even some moderate critics from both political parties, assert that repeal is impossible at this point. After all, Obamacare was passed by both houses of Congress, signed by the President, and parts of the law were declared constitutional by the Supreme Court. Moreover, billions of federal tax dollars have already been spent on the bungled website and countless bureaucrats (including those in the IRS) to administer the new regulations and taxes. Thus, defenders assert, there is simply no precedent for repealing a federal law that’s this important and complex.

Nonsense to that. There is in fact major precedent for repealing important and complex federal law that destroys personal freedom and raises costs and prices to consumers: The Supreme Court’s de facto “repeal” of the National Industrial Recovery Act (NRA) in 1935.

It is difficult now, looking back, to appreciate the full scope and complexity of the NRA (1933). Yet the NRA was the legislative centerpiece of the Roosevelt Administration’s attempt to end the Great Depression and return the country to prosperity. Its major objective was to end “ruinous” price competition (deflation) throughout the economy by the creation and enforcement of so-called “codes of fair competition.”

These codes–created by industrial trade associations and enforced by the federal government–allowed business competitors in any given industry to collude legally and raise prices…with the antitrust laws conveniently suspended. Industrial firms, wholesalers and retailers that wanted to price their own products in defiance of the legal code were forbidden from doing so by law. To encourage labor to go along with this unprecedented government support for economy-wide monopoly, separate NRA codes also encouraged the formation of labor unions and mandatory collective bargaining. There were also separate provisions in the NRA for command and control regulation of the petroleum industry.

The NRA and its distinctive symbol (the “Blue Eagle”) struggled to fly for two years until it unceremoniously crashed to earth in 1935, declared unconstitutional by the High Court. (Roosevelt was so incensed by the decision that he threatened to “pack” the Court by appointing additional judges). The entire gargantuan enterprise, much like Obamacare, floundered badly under the weight of an inefficient NRA bureaucracy, labor union strife and strikes for recognition, endlessly confusing and changing “code” regulations and the eventual loss of political support from working-class households. Besides, there was no evidence that the NRA promoted recovery; indeed, its restrictions on commercial liberty made economic growth far more difficult.

If the NRA could be dismantled and tossed in the legislative scrap-heap, so can Obamacare. The alternative to Obamacare (when Congress repeals it) is the creation of a competitive market for both health insurance and health care. Insurance companies must be free to compete across state lines, free to offer a diverse menu of coverage’s and deductibles and free to price their product based on estimated risk. And health care providers must be free to treat patients absent government licensing and regulation. If we’ve learned anything from the NRA experience, or the “glitch” over the Obamacare website, it’s that government regulation makes almost every economic problem infinitely worse.

Dr. Armentano is professor emeritus in economics at the University of Hartford and the author of Antitrust and Monopoly(Independent Institute, 1998) and Antitrust: The Case for Repeal (Mises Institute, 1999). His first workplace experience was picking strawberries at a commercial farm for 6 cents a basket in the 1950s.

Copyright © 2014 Dom Armentano. Reprinted with permission.