President Obama handily defeated congressional Republicans in the political fight over his health care law. But the law will now face a much tougher opponent — the creativity of Americans determined to gain more control over their own health care decisions. The end result will be a system much different than the president hopes for — and his opponents fear.
To understand why, consider how the nation’s 50 million 401(k) retirement accounts came into existence. It was not what Congress intended when it passed the Tax Revenue Act of 1978. Congressional summaries of the legislation listed dozens of its “major provisions” without mentioning what would become its most lasting legacy. At the time, even reducing the top tax rate from 48 percent to 46 percent was considered more important.
Two years later, though, a benefits consultant named Ted Benna discovered that section 401(k) of the law could be used in a way its authors had never intended. While Benna’s clients were initially wary of the idea and fearful of government retaliation, his entrepreneurial insight eventually reshaped America’s retirement landscape.
It worked because the 401(k) programs as envisioned by Benna met a real-world need that legislators could never have imagined.
It is likely that the same thing will happen to the president’s health care law. As has been noted by many critics, the law has more than 2,000 pages of provisions. You can be sure that benefits consultants and entrepreneurs are scouring every page for similar tools that can be used in ways the president never intended.
Large companies will remain fearful of government retaliation but will also be looking for ways to recruit and retain the best employees. This will provide financial incentives for entrepreneurs who can figure out how the law can create better options for workers.
We know this is happening because stories have begun popping up about regulators trying to shut down such activity. For example, firms that self-insure are exempt from many provisions in the president’s law. That had previously been an option only for large companies, but for a variety of reasons, smaller firms are now exploring the possibilities. Naturally, regulators want to stop this trend.
The bureaucrats will have a hard time because the public mood remains receptive to reform, particularly when it gives consumers more control. The most basic reform would give workers the chance to choose how much coverage they want. So if their employer pays for a comprehensive medical insurance plan, employees would have the right to reject some of the coverage and keep the savings. That would take the power of the purse away from insurance companies, employers and the government. Three out of four voters (76 percent) think this makes sense.
Creative entrepreneurs will find provisions in the health care law to meet this consumer demand. It is easy to envision workers being offered a choice between the comprehensive insurance mandated by the president’s law and a number of less expensive options that increase their take-home pay. It’s even easier to envision many workers choosing less costly insurance and more cash in their pocket.
It’s too early to say specifically what these entrepreneurial options will look like, but they will succeed by offering consumers a better choice. That’s something congressional Republicans never did. It’s also something the president’s regulators won’t be able to stop.