Michaels Cannon objects to this letter sent to the Department of Health and Human Services by twenty governors - including conservative stalwarts like Rick Perry, Bobby Jindal and Scott Walker.  The letter requests that states should be able to offer market-oriented alternatives to Medicaid and be allowed to use the new exchanges to offer HSA/catastrophic coverage health insurance.  If states were granted this leeway it would go a long way toward undermining Obamacare's model of pushing virtually everyone into government mandated comprehensive prepayment of health care (whether through the government or through private "insurers.")  Cannon quotes John R. Graham to the effect that Mitch Daniels (and by extension the other conservative governors) are "extending the hand of peace . . . when Obamacare has been mortally wounded in the courts and the U.S. House of Representatives" I think this deeply mistaken for several reasons.

1.  I don't see how Obamacare has been mortally wounded in the courts.  There is a live controversy about whether the Supreme Court would find the individual insurance purchase mandate constitutional.  This part of the controversy is now in the heads of Anthony Kennedy and the other four Supreme Court Justices who might conceivably vote against the constitutionality of the mandate and the rest of the law.  They might strike down the whole law.  Fine.  They might leave the whole law in place or only strike down the individual mandate while leaving the insurance coverage mandates, the new government subsidies, guaranteed issue, and community rating in place.  We're going to need a plan in case Anthony Kennedy gets it wrong - because it wouldn't be the first time.

2  I think Cannon is mistaken about the political dynamics of reforming health care in a more market-oriented direction within the public opinion and institutional constraints of American politics.  Cannon argues that seeking the kind of significant but incremental reforms laid out in the governors' letter undermines public support for repealing Obamacare.  Pushing for incremental and substantive conservative health care reforms complements and strengthens the case for repealing Obamacare.  Obama's HHS now faces a choice.  They can refuse the twenty requesting states the leeway to implement more market-oriented reforms and be seen as rigid.  Or they can grant the requests and watch as Obamacare's model of comprehensive health care prepayment is undermined by more and more people going on consumer-driven health care plans.  Incremental conservative reform at the state-level is not the enemy of national-level reform. Incremental state-level reforms make alternative conservative policies real and showcase their benefits to the public.  The state-level welfare reforms of the early 1990s (which were only possible because of HHS waivers) made it easier to pass a federal welfare reform bill.  The state-level reforms showed that reformist policies could reduce welfare rolls and impose behavioral conditions without producing the horrible consequences predicted by many liberals. 

Cannon writes that if Obama's HHS okays the governors' requests, Obama will be able to say:

"Mitch, all your talk about repeal is just cynical politics. Your health-care plan is not that different from mine. You expanded Medicaid to people with higher incomes than my plan requires. You are implementing my plan in your state right now. I'm even willing to make some of the changes you want so it will work better for Indiana."

Well he could try that.  It wouldn't be the first untrue thing to come out of his mouth.  Of course Daniels could always respond:

"Well Mr. President,  the facts say your government-centered approach couldn't be more different from our patient-centered approach.  You are trying to legally force people to pay too much for health insurance and then you give some of them one year exemptions and say 'Look how reasonable we are.'  Well that's not reasonable.  That's crazy.  No one should have to beg a bureaucrat to get permission to buy better and cheaper health care coverage.

"Our patient-centered approach has increased satisfaction with health insurance, saved the government money, increased use of preventative care, decreased use of emergency rooms, increased worker take home pay, and maintained or improved access to high quality health care.  We can have those policies for the rest of the country too.  The first step to getting those benefits to more people is repealing your plan that says we have to get special temporary permission to do the things that will make people's lives better"