James Madison was one of the first to notice this possibility. He and Thomas Jefferson were intense critics of the Alexander Hamilton’s Bank of the United States. The problem with the Bank, as Madison wrote to Jefferson, was that it “gives a moral certainty of gain to the Subscribers with scarce a physical possibility of loss.” Jefferson had reported to George Washington (on reasonably good authority) that the Bank was actually buying off members of Congress in order to rope them into the scheme.

Madison took all this together to predict that the shareholders of the Bank would “become the pretorian band of the Government, at once its tool and its tyrant; bribed by its largesses & overawing it by its clamours and combinations.”

Madison’s insights were quite keen. There is a consistent theme that runs through American political corruption: The government, in hopes of producing some public benefit, ropes in private interests to do the work for Uncle Sam; this can only happen if the private interests make a profit from the transaction; the private interests respond by plowing money and resources into the government to make sure that the end result works for those private purposes. In some instances, like the First Bank, the public-spirited purpose is still accomplished, more or less. But, in others, like the Second Bank — or Fannie Mae and Freddie Mac, for that matter — it is not. There are multiple cases where gross inefficiencies (Medicare) or stark inequities (farm subsidies) undermine the entire project at hand.

In fact, I’ve recently discovered a new “pretorian band of government,” if you will: the health care insurers working hard to protect their Obamacare subsidies.

Now, to be fair, insurers were already hand-in-glove with the government, thanks in no small part to Medicare Advantage and Medicare Part D. Still, Obamacare has further cemented this relationship. Compare and contrast two headlines.

The first, from United Press International, dated October 9, 2009: “Health insurers report slams Baucus bill.” The opening sentence: “The day before a U.S. Senate panel votes on healthcare reform, an insurance industry report said a family premium in 2019 could cost $4,000 more than thought.”

The insurers did not like the weak individual mandate in the “Baucus bill,” which was the version of reform worked out by the Senate Finance Committee — and more or less adopted by the entire Congress. And so it seemed as if the insurers were actually opposed to reform.

Now let us jump ahead to the present day, for our second headline, from National Journal, dated January 29, 2015: “Can The Health Care Industry Save Obamacare? / Hospitals and insurance companies are coming to the law’s defense before the Supreme Court.” The opening sentence: “Health insurance companies and hospitals mounted an aggressive defense of Obamacare’s insurance subsidies Wednesday, warning the Supreme Court that eliminating the payments would be ‘grossly inequitable’ to millions of Americans.”

Quelle surprise! Former enemies are now friends. How can this be?

As with so much else about American politics, it just goes to show that if James Madison predicted something, the smart money is on it coming true.

Whether or not the insurers actually opposed Obamacare back in 2009, the fact remains that it is enormously valuable to them. Think of it this way. Obamacare provides millions of people with health insurance through the individual exchanges. We the citizenry are compelled to participate, but the insurers’ entrance into the marketplaces is entirely voluntary. This means, in turn, that the insurers have leverage over the government. They can always threaten to bail if they aren’t turning a profit. Thus, the government is effectively acting as a backstop for the insurance companies’ bottom lines.

There is “a moral certainty of gain to the Subscribers with scarce a physical possibility of loss,” as Madison put it. No wonder they are defending it, despite their earlier protestations against it. Back then, they were just trying to negotiate for themselves the best deal they could. Now, they are endeavoring to defend the (very nice) deal they ended up getting.

This is a specific example of a general problem at the heart of American government. Our government subcontracts its jobs quite a lot. It relies on doctors and hospitals for Medicare, and on insurers for Obamacare. It relies on private businesses for economic growth. It relied on the ratings agencies for regulatory oversight in the run-up to the financial crisis — and so on and so forth.

In every instance where it does that, the relationship is almost always voluntary. Nobody is coerced into contracting with the government, which means they only do it if they are made better off. And this gives them every incentive to lobby the government to ensure their revenue streams persist, regardless of whether they are in the public interest. That is, perhaps, the principal pathway of modern corruption. It is the massive, unbelievable, shocking conflict of interest at the heart of America’s body politic. It is why our government never seems to do much of anything very well.

And it is on full display with Obamacare and the insurers.

Jay Cost is a staff writer for at the Weekly Standard. His A Republic No More: Big Government and the Rise of American Political Corruption, will be published by Encounter Books on February 10.