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Congress Passes Socialized Medicine and Mandates Health Insurance -In 1798

The ink was barely dry on the PPACA when the first of many lawsuits to block the mandated health insurance provisions of the law was filed in a Florida District Court.

The pleadings, in part, read –

The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage.

State of Florida, et al. vs. HHS

It turns out, the Founding Fathers would beg to disagree.

In July of 1798, Congress passed – and President John Adams signed – “An Act for the Relief of Sick and Disabled Seamen.” The law authorized the creation of a government operated marine hospital service and mandated that privately employed sailors be required to purchase health care insurance.

Keep in mind that the 5th Congress did not really need to struggle over the intentions of the drafters of the Constitutions in creating this Act as many of its members were the drafters of the Constitution.

And when the Bill came to the desk of President John Adams for signature, I think it’s safe to assume that the man in that chair had a pretty good grasp on what the framers had in mind.

Here’s how it happened.

During the early years of our union, the nation’s leaders realized that foreign trade would be essential to the young country’s ability to create a viable economy. To make it work, they relied on the nation’s private merchant ships – and the sailors that made them go – to be the instruments of this trade.

The problem was that a merchant mariner’s job was a difficult and dangerous undertaking in those days. Sailors were constantly hurting themselves, picking up weird tropical diseases, etc.

The troublesome reductions in manpower caused by back strains, twisted ankles and strange diseases often left a ship’s captain without enough sailors to get underway – a problem both bad for business and a strain on the nation’s economy.

But those were the days when members of Congress still used their collective heads to solve problems – not create them.

Realizing that a healthy maritime workforce was essential to the ability of our private merchant ships to engage in foreign trade, Congress and the President resolved to do something about it.

Enter “An Act for The Relief of Sick and Disabled Seamen”.

I encourage you to read the law as, in those days, legislation was short, to the point and fairly easy to understand.

The law did a number of fascinating things.

First, it created the Marine Hospital Service, a series of hospitals built and operated by the federal government to treat injured and ailing privately employed sailors. This government provided healthcare service was to be paid for by a mandatory tax on the maritime sailors (a little more than 1% of a sailor’s wages), the same to be withheld from a sailor’s pay and turned over to the government by the ship’s owner. The payment of this tax for health care was not optional. If a sailor wanted to work, he had to pay up.

This is pretty much how it works today in the European nations that conduct socialized medical programs for its citizens – although 1% of wages doesn’t quite cut it any longer.

The law was not only the first time the United States created a socialized medical program (The Marine Hospital Service) but was also the first to mandate that privately employed citizens be legally required to make payments to pay for health care services. Upon passage of the law, ships were no longer permitted to sail in and out of our ports if the health care tax had not been collected by the ship owners and paid over to the government – thus the creation of the first payroll tax in our nation’s history.

When a sick or injured sailor needed medical assistance, the government would confirm that his payments had been collected and turned over by his employer and would then give the sailor a voucher entitling him to admission to the hospital where he would be treated for whatever ailed him.

While a few of the healthcare facilities accepting the government voucher were privately operated, the majority of the treatment was given out at the federal maritime hospitals that were built and operated by the government in the nation’s largest ports.

As the nation grew and expanded, the system was also expanded to cover sailors working the private vessels sailing the Mississippi and Ohio rivers.

The program eventually became the Public Health Service, a government operated health service that exists to this day under the supervision of the Surgeon General.

So much for the claim that “The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty….”

 As for Congress’ understanding of the limits of the Constitution at the time the Act was passed, it is worth noting that Thomas Jefferson was the President of the Senate during the 5th Congress while Jonathan Dayton, the youngest man to sign the United States Constitution, was the Speaker of the House.

While I’m sure a number of readers are scratching their heads in the effort to find the distinction between the circumstances of 1798 and today, I think you’ll find it difficult.

Yes, the law at that time required only merchant sailors to purchase health care coverage. Thus, one could argue that nobody was forcing anyone to become a merchant sailor and, therefore, they were not required to purchase health care coverage unless they chose to pursue a career at sea.

However, this is no different than what we are looking at today.

Each of us has the option to turn down employment that would require us to purchase private health insurance under the health care reform law.

Would that be practical? Of course not – just as it would have been impractical for a man seeking employment as a merchant sailor in 1798 to turn down a job on a ship because he would be required by law to purchase health care coverage.

What’s more, a constitutional challenge to the legality of mandated health care cannot exist based on the number of people who are required to purchase the coverage – it must necessarily be based on whether any American can be so required.

Clearly,  the nation’s founders serving in the 5th Congress, and there were many of them, believed that mandated health insurance coverage was permitted within the limits established by our Constitution.

The moral to the story is that the political right-wing has to stop pretending they have the blessings of the Founding Fathers as their excuse to oppose whatever this president has to offer.

History makes it abundantly clear that they do not.

By: Rick Ungar, The Policy Page, Forbes-Originally Posted January 17, 2011

February 2, 2011 Posted by | Individual Mandate | , , , , , , , , , , | Leave a comment

Mark Pauly, Father of the Individual Mandate: “Either We Have To Have A Mandate Or Make Insurance Free For Everyone”

In 1991, economist Mark Pauly was the lead author of a Health Affairs paper attempting to persuade President George H.W. Bush and his administration to adopt a universal health-care proposal that would keep the government from eventually taking over the sector. “Our view is that excessive government intervention will make matters worse,” wrote Pauly and his co-authors. “Our strategy, therefore, is to design a scheme that limits governmental rules and incentives to the extent necessary to achieve the objectives.”At the heart of that strategy was the individual mandate, which would go on to be promoted by congressional Republicans, the Heritage Foundation, and Massachusetts Gov. Mitt Romney before being adopted by Democrats and becoming a bete noire of conservatives. I spoke to Pauly earlier this afternoon, and an edited transcript of our conversation follows.

Tell me about your involvement in the development of the individual mandate.

I was involved in developing a plan for the George H.W. Bush administration. I wasn’t a member of the administration, but part of a team of academics who believe the administration needed good proposals to look at. We did it because we were concerned about the specter of single payer insurance, which isn’t market-oriented, and we didn’t think was a good idea. One feature was the individual mandate. The purpose of it was to round up the stragglers who wouldn’t be brought in by subsidies. We weren’t focused on bringing in high risks, which is what they’re focused on now. We published the plan in Health Affairs in 1991. The Heritage Foundation was working on something similar at the time.

What was the reaction like after you released it?

There was some interest from Republicans. I don’t recall whether they formally wrote a bill or just floated it as an idea [It did make it into a bill — Ezra], but Democrats in Congress said it was “dead on arrival.” So that was the end of my 15 minutes.

Was the constitutionality of the provision a question, either in your deliberations or after it was released?

I don’t remember that being raised at all. The way it was viewed by the Congressional Budget Office in 1994 was, effectively, as a tax. You either paid the tax and got insurance that way or went and got it another way. So I’ve been surprised at that argument. But I’m not an expert on the Constitution. My fix would be to simply say raise everyone’s taxes by what a health insurance policy would cost — Congress definitely has the power to do that — and then tell people that if they obtain insurance, they’ll get a tax break of the same amount. So instead of a penalty, it’s a perfectly legal tax break. But this seems to me to angelic pinhead density arguments about whether it’s a payment to do something or not to do something.

That gets to one of the central questions in this argument, which is whether the individual mandate is a penalty for economic inactivity or whether it’s part of a broader system of regulations affecting a market for health care that we’re all participating in, whether we’re buying insurance that day or not.

I see it in the latter way. We thought it was a good idea to do everything possible to encourage people to get insurance. Subsidies will probably pick up the great bulk of the population. But the point of the mandate was that there are a few Evil Knievals who won’t buy it and this would bring them into the system. In our version, the penalty was effectively equal to the premium of a policy. You paid the penalty and you got the insurance. That’s one of my puzzlements here: In the new law, the actual level of the penalty is quite small compared to the price of a policy. It’s only about 20 percent of the cost of a policy.

Do you think the mandate is severable from the larger bill?

I think you could do that. I’d want to take some other things out of the bill, too. But the main part I favor and the part that deals with the uninsured are these subsidies for lower-middle-income people. The great bulk of them would take insurance with those breaks. That won’t go away. The mandate props up community rating, which I’m not a fan of. So I’d throw overboard both the mandate and the community rating. Then I’d add high-risk pools.

You say the mandate was developed as a way to avoid single-payer health care. As I see the evolution of this issue, Richard Nixon countered single-payer with an employer mandate, then Clinton co-opted the employer mandate and Republicans moved to an individual mandate, and then Obama co-opted the individual mandate. But there’s nowhere else to go, as far as I can tell. If the individual mandate dies, it seems to me that the eventual universal coverage solution will rely heavily on government programs — we’ll have single payer in fact even if we don’t have it in name.

I think there’s a slippery slope in that direction. I have mixed feelings about the mechanics of the current bill. Our idea was to have tax credits and very little additional government control over insurance markets, and the legislation has an awful lot of that. I believe you could achieve almost the same reduction of the uninsured with the subsidies and without the mandate. But CBO says that you leave about 40 percent of the uninsured population without coverage in that scenario. If we want to close that gap, then either we have to have a mandate or make insurance free for everyone and run by the government.

Interview By: Ezra Klein and posted in The Washington Post, February 1, 2011

February 2, 2011 Posted by | Affordable Care Act, Individual Mandate | , , , , , , , , , , , | Leave a comment

   

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