Jack McHugh here -
Crier, your analysis is mostly sound, but you're misreading the Health Care Compact. This is less about health care than it is about restoring federalism.
On your larger point, that Repubs are going the wrong way on health care in general, that itself is part of a much larger problem: We need to change the climate of public opinion on this (and more) in order to get the kind of reforms necessary to save the country. Your criticisms mostly focus on "elites," but the real challenge is changing that climate of opinion. If successful, the politicians will dutifully follow where the public leads them.
On the compact, among other things it would allow member states to "opt out" of Obamacare. It also block-grants Medicaid and Medicare to member states, letting them manage those programs as they see fit. (For example, how about a Paul Ryan "premium support" plan for both programs in Michigan?)
Each state would get a pro-rated portion of annual appropriations for these programs, based on their share when entering the compact. It does not bind congress to spend any particular amount on those programs. Instead, that provision prohibts a future congress from "penalizing" member states when it hands out the loot.
It sounds like you want to eliminate those programs, and good free-market, limited government conservatives won't disagree that long term, that's where we want to go. We're won't get there overnight though: Replacing the welfare state with the voluntary institutions of civil society will take generations, and it's all dependent on changing that climate of opinion. In the short term, we probably can reform the programs in Paul Ryan-esque ways so they at least don't bankrupt the country.
But here's what the compact is really about: Who decides? The feds or the states?
For example, you don't like the feds holding a gun to states' heads on creating Obamacare exchanges? You should support the compact.
Everyone here agrees that the federal government has consistently violated the constitution by arrogating to itself massive powers the founders intended to be in state hands. The compact is about states pushing back. It's about picking a fight between state government establishments and the federal government, creating a "focused conflict" on federal over-reach that will engage the people as a political issue.
Hey, we can whine and moan about federal over-reach until the cows come home, and it won't do squat. This is about translating those complaints into a political issue that forces congress-critters and state lawmakers to declare: Which side are you on?
Put them on the spot like that, and a majority will go do the right thing - potentially leading to a very signifigant power shift from DC to the states.
Not just on health care, either - look for more compacts in the future on energy and other matters.
All those who would like to see that kind of "focused conflict" on federalism become a hot political issue raise your hands. If your hand is up, you'll like the compact.
Jack McHugh
Mackinac Center