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Kudlow: Sell the individual-mandate delay

House Speaker John Boehner and President Barack Obama.
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House Speaker John Boehner and President Barack Obama.

The defeat of Sen. Ted Cruz's defunding strategy may not be the end of the fight to overturn Obamacare. In some sense, for free-market conservatives who want consumer choice and private-sector competition, this whole debate is about good versus evil.

It's a point that the brave and courageous Cruz grasps all too well. If Obamacare becomes permanent, it will crowd out the private health-care sector, including insurers and providers, and over time will create a single-payer, government-statist health-care sector.

Stopping this will be hard. But Sen. Joe Manchin, Democrat from West Virginia, has given conservatives a ray of hope. Manchin is prepared to vote for a one-year delay of the individual mandate, the very heart of Obamacare.

That means the GOP would need only four more votes to get that delay. Maybe red-state Democratic senators like Mary Landrieu (Louisiana), Mark Begich (Alaska), Kay Hagan (North Carolina) and Mark Pryor (Arkansas) will join 46 Republicans and vote for delay.

Here's a key point. Sources tell me that Speaker John Boehner will come up with a counteroffer to the clean continuing resolution (CR) that will be sent to the House by Harry Reid. He'll do so even if that requires a short-term CR. The House leadership is not sure what that counteroffer will be. But I am urging them to use the one-year delay for the individual mandate.

(Read more: What you need to know if DC's fiscal follies deepen)

A delay would take us through the 2014 election, which largely will be about Obamacare. Should it be scrapped altogether? Can it be amended to work better? And what about damage to the economy—lost jobs, lower hours worked and falling wages?

But the best way to sell the one-year-delay strategy is to point out the unbelievable number of glitches in the Affordable Care Act that will not be easily repaired.

There are the glitches in the online health exchanges for small businesses. There's the lack of choice for small-business employees. There's the family glitch affecting spouses and children—up to 500,000 children according to some estimates.

All these are key selling points for delay. And these are facts, not politics. The actual systemic breakdowns of Obamacare are huge.

(Read more: Senate passes funding bill, preserves Obamacare)

Dr. Scott Gottlieb of the American Enterprise Institute points out that the worst glitch may be the collapse of data-hub security. As yet there is no protection for sensitive personal-health information, and no firewalls to protect against computer hackers. This NSA lack-of-privacy stuff will repel people from signing up for Obamacare.

Other glitches surround data-transfer software that would coordinate with Medicaid. Computer systems are mispricing insurance plans, with a high error rate for tax credits and subsidies. Then there's the breakdown of income verification for subsidy eligibility. We're going on the honor system, and that's not good enough. And there's more. John Merline of Investor's Business Daily has chronicled numerous additional Obamacare glitches surrounding computer systems and software.

And over at the Manhattan Institute, Avik Roy points out the strong cost disincentives for young people to sign up for Obamacare. A 27-year-old nonsmoker living in Philadelphia now pays $75 a month for the insurance package with the fewest benefits. But that will jump to $195 with Obamacare's cheapest bronze-level plan. In Nashville, the numbers jump from $41 a month for the private-sector option to $114 for the bronze plan

Young and healthy men and women are not going to sign up for Obamacare. They don't need the expensive, one-size-fits-all bells and whistles being offered by the government.

There are other issues here. North Carolina Rep. Renee Ellmers correctly complains that Obamacare is essentially endowing Blue Cross/Blue Shield with monopoly status throughout her state. In other words, there's no real choice and competition for individuals and small businesses.

Think of this: Walgreen would come up with a new plan, providing payments to its 160,000 employees that will allow them to shop for coverage in the private health-insurance marketplace. Walgreen has listed up to 25 insurance options from private exchanges that can be listed on online marketplaces. But that will be blown away by Obamacare.

(Read more: Walgreen shifting employees to private health-care exchanges

Of course, the administration says the glitches will be fixed in a month or two. But experts don't believe that. The business mandate, which had fewer glitches, was delayed for a year. And it will take at least a year to address the problems and costs of the individual mandate.

The individual mandate is the heart of Obamacare. And a year's delay would give the GOP its last chance to stop this statist, government-controlled model of health care and replace it with a private-sector, pro-competition, patient-power alternative. But in the next couple of days, the GOP has to make the sale.

It starts with glitches. But it ends with a market-based economy. That is, if Republicans can be persuasive.

—By CNBC's Larry Kudlow. Follow him on Twitter @larry_kudlow

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