Tevi, the “Eleventh Commandment” is overrated, which may be why Reagan didn’t follow it himself.
There are two issues in this debate. First, and maybe most important, how should governors respond to Obamacare? I think Cannon wins this argument by citing Judge Vinson on his side.
Second, is Daniels’s health-care plan well-designed? Here I think Tevi’s advice not to let the perfect be the enemy of the good is misplaced, because Cannon’s argument is that the plan goes in the wrong direction. Cannon argues that it’s a mistake to make Medicaid benefits more attractive to potential beneficiaries and (relatedly) to enroll more people in the program. That’s certainly my prejudice as well, and I don’t see anything in your post that addresses it. More broadly, I disagree with your claim that “flexibility is a good thing.” States should have plenty of freedom to set their own health-care policies, sure: but not on the federal dime, which is what all of those Bush-era Medicaid waivers meant.
P.S. The debate is a little more heated than these two issues would warrant because of the possibility Daniels will run for president. For the record, agreeing with Cannon on both of these points does not make me think that Daniels is an unacceptable presidential nominee. It just makes me think that Daniels is wrong on these questions.