“Pinhead Density Arguments”: There Was A Reason Conservatives Once Supported The Individual Mandate
Of all the arguments being waged over the Affordable Care Act — or, as the Obama campaign now likes to refer to it, “Obamacare” — the one dominating the Supreme Court this week is perhaps the most conceptually trivial.
The individual mandate requires consumers to purchase health insurance in order to eliminate the problem of free riders — people who don’t purchase insurance until they get sick or injured or those who never purchase insurance and end up passing on to the rest of us the costs of care they can’t afford. Detractors argue that the mandate unconstitutionally infringes on personal liberty by forcing Americans to purchase health insurance. But compare it to three ways of addressing the free- rider problem in health care that are clearly, indisputably, constitutional:
• Single payer: The federal government increases income taxes and, in return, guarantees everyone government-provided health-care insurance. There is no option to opt out of the taxes. This is how most of Medicare works, though the insurance kicks in only after you turn 65.
• Late-enrollment penalty: The single-payer approach only holds for “most of” Medicare because the Medicare Prescription Drug Benefit works a bit differently. For every month that you don’t enroll after becoming eligible at age 65, your premium rises by one percentage point.
• Tax credits: Under various health-care proposals — including the plan of Rep.Paul Ryan (R-Wis.) — the tax code is changed to give families a tax credit for purchasing private health insurance. Families that choose to go without insurance, or simply can’t afford it, would not receive the tax credit.
All of these plans share the same basic approach: They impose a financial penalty, either before or after the fact, on those who forgo health insurance. Single payer does it through taxes, Medicare Part D through premiums and Ryan’s plan through tax credits.
Now consider the individual mandate. Here’s how it works: Starting in 2016, those who don’t carry insurance will be annually assessed a fine of $695 or 2.5 percent of their income, whichever is higher.
Skeptics of government should clearly prefer the individual mandate to single payer. In fact, the individual mandate was developed by conservative economist Mark Pauly as an alternative to single payer. “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,” Pauly told me last year. In the 1990s, the individual mandate was also the Republican counterproposal to President Bill Clinton’s health-care bill, and in 2005, it was the centerpiece of Massachusetts Gov. Mitt Romney’s health-care reforms.
The Medicare Part D model doesn’t really work as an alternative to the individual mandate because it requires the federal government to set the cost of premiums. That’s possible with the over-65 set, because the government controls the market. To import that idea to the under-65 market, however, would require vastly more governmental intrusion into the health-care space.
The tax credit, meanwhile, is essentially indistinguishable from the mandate. Ryan’s plan offers a $2,300 refundable tax credit to individuals and a $5,700 credit to families who purchase private health insurance. Of course, tax credits aren’t free. In effect, what Ryan’s plan does is raise taxes and/or cut services by the cost of his credit and then rebate the difference to everyone who signs up for health insurance. It’s essentially a roundabout version of the individual mandate, which directly taxes people who don’t buy health insurance in the first place.
“It’s the same,” says William Gale, director of the Tax Policy Center. “The economics of saying you get a credit if you buy insurance and you don’t if you don’t are not different than the economics of saying you pay a penalty if you don’t buy insurance and you don’t if you do.”
Interestingly, Ryan’s plan imposes, if anything, a harsher penalty on those who don’t purchase health insurance. Ryan’s tax credit is far larger than the individual mandate’s penalty, and much easier to enforce. Under Ryan’s plan, if you don’t purchase insurance, you don’t get the credit. End of story. Conversely, the Affordable Care Act doesn’t include an actual enforcement mechanism for the individual mandate. If you refuse to pay it, the IRS can’t throw you in jail, dock your wages or really do anything at all.
This leads to one of the secrets of Obamacare: Perhaps the best deal in the bill is to pay the mandate penalty year after year and only purchase insurance once you get sick. To knowingly free ride, in other words. In that scenario, the mandate acts as an option for purchasing insurance at a low price when you need it. For that reason, when health-policy experts worry about the mandate, they don’t worry that it is too coercive. They worry that it isn’t coercive enough.
The mandate is considered more effective than tax credits because people seem more inclined to take action to avoid penalties than to receive benefits. That’s worked extremely well in Massachusetts, for instance, where there’s been almost no free-rider problem at all. So while it’s not different as a matter of economics, it’s a bit different as a matter of behavioral economics. In that way, the mandate does a little more to solve the free-rider problem with a little less action from the government.
Randy Barnett, a conservative law professor at Georgetown University, agrees that there’s some similarity between the two approaches. But he warns that that doesn’t make them legally equivalent. “Just because the government does have the power to do X, doesn’t mean they have the power to do Y, even if Y has the same effect as X,” he says. “There’s no constitutional principle like that.”
Although that’s true, it also leaves us in a peculiar spot. The constitutional argument over Obamacare is a dispute over a technicality. We agree that it’s constitutional for the government to intervene far more aggressively in the market. We agree that it’s constitutional for it to intervene in an almost identical, albeit slightly more roundabout, manner. We’re just not sure if the government needs to call the individual mandate a “tax” rather than “a penalty,” or perhaps structure it as a tax credit. As Pauly puts it, “This seems to me to be angelic pinhead density arguments about whether it’s a payment to do something or not to do something.”
Of course, this battle isn’t really about the constitutionality of the individual mandate. Members of the Republican Party didn’t express concerns that the individual mandate might be an unconstitutional assault on liberty when they devised the idea in the late 1980s, or when they wielded it against the Clinton White House in the 1990s, or when it was passed into law in Massachusetts in the mid-2000s. Indeed, Sen. Jim DeMint (S.C.), arguably the most conservative Republican in the Senate, touted Romney’s reforms as a model for the nation. Only after the mandate became the centerpiece of the Democrats’ health-care bill did its constitutionality suddenly become an issue.
The real fight is over whether the Affordable Care Act should exist at all. Republicans lost that battle in Congress, where they lacked a majority in 2010. Now they hope to win it in the Supreme Court, where they hold a one-vote advantage. The argument against the individual mandate is a pretext for overturning Obamacare. But it’s a pretext that could set a very peculiar precedent.
If the mandate falls, future politicians, who will still need to fix the health-care system and address the free-rider problem, will be left with the option of either moving toward a single-payer system or offering incredibly large, expensive tax credits in order to persuade people to do things they don’t otherwise want to do. That is to say, in the name of liberty, Republicans and their allies on the Supreme Court will have guaranteed a future with much more government intrusion in the health-care marketplace.
By: Ezra Klein, The Washington Post, March 31, 2012
An “Inevitable Overhaul”: A Stronger Prescription For What Ails Health Care
In arguments before the Supreme Court this week, the Obama administration might have done just enough to keep the Affordable Care Act from being ruled unconstitutional. Those who believe in limited government had better hope so, at least.
If Obamacare is struck down, the short-term implications are uncertain. Conservatives may be buoyed by an election-year victory; progressives may be energized by a ruling that looks more political than substantive. The long-term consequences, however, are obvious: Sooner or later, a much more far-reaching overhaul of the health-care system will be inevitable.
To say the least, the three days of oral argument before the high court did not unfold the way many experts had expected. Confident predictions that the administration would prevail by a lopsided margin became inoperative as soon as the justices began pummeling Solicitor General Donald Verrilli with pointed questions.
At one point Wednesday, as the barrage was winding down, Chief Justice John Roberts told Verrilli he could have an extra 15 minutes to argue a point. Verrilli replied, “Lucky me.”
In the end, however, Verrilli gave the skeptical justices what they were looking for: a limiting principle that allows them, should they choose, to defer to Congress and uphold the law.
At the heart of the legislation is the requirement that individuals purchase health insurance or pay a fine. It became clear by their questioning that the court’s five conservatives — including Justice Anthony Kennedy, the swing vote who sometimes crosses the ideological divide and votes with the liberals — see this mandate as a significant expansion of the federal government’s reach and authority.
Verrilli argued that the mandate is permissible under the clause of the Constitution giving the government the power to regulate interstate commerce. Justices demanded a limiting principle: Where does this authority end? If the government can compel a citizen to buy health insurance, why can’t it compel the purchase of other things?
Justice Antonin Scalia raised the specter of an all-powerful government that could even “make people buy broccoli” if it wished. Scalia’s mind seemed to be made up, but Kennedy seemed to be genuinely looking for a principle that permitted a health insurance mandate but not a broccoli mandate.
And Verrilli gave him one. The market for health insurance is inseparable from the market for health care, he argued, and every citizen is a consumer of health care. Those who choose not to buy health insurance require health care anyway — often expensive care at hospital emergency rooms — and these costs are borne by the rest of us in the form of higher premiums.
I think Verrilli made his case. The court is supposed to begin with the assumption that laws passed by Congress are constitutional. Justices don’t have to like the Affordable Care Act in order to decide that it should remain in effect. If some members of the court think they could do better, maybe they should quit and run for legislative office.
But it’s going to be a close call. What if they strike down the law?
The immediate impact will be the human toll. More than 30 million uninsured Americans who would have obtained coverage under Obamacare will be bereft. Other provisions of the law, such as forbidding insurance companies to deny coverage based on preexisting conditions and allowing young adults to remain on their parents’ policies, presumably would also be invalidated; if not, they would have to be modified to keep insurance rates from climbing sharply. The United States would remain the only wealthy industrialized country where getting sick can mean going bankrupt.
Eventually, however, our health-care system will be restructured. It has to be. The current fee-for-service paradigm, with doctors and hospitals being paid through for-profit insurance companies, is needlessly inefficient and ruinously expensive.
When people talk about out-of-control government spending, they’re really talking about rising medical costs that far outpace any conceivable rate of economic growth. The conservative solution — shift those costs to the consumer — is no solution at all.
Our only choice is to try to hold the costs down. President Obama tried to make a start with a modest approach that works through the current system. If this doesn’t pass constitutional muster, the obvious alternative is to emulate other industrialized nations that deliver equal or better health-care outcomes for half the cost.
I’m talking about a single-payer health-care system. If the Supreme Court strikes down Obamacare, a single-payer system will go from being politically impossible to being, in the long run, fiscally inevitable.
By: Eugene Robinson, Opinion Writer, The Washington Post, March 29, 20122
Justice Kennedy’s “Nuanced View”: A Bad Beginning And A Better Ending
The Constitution’s words enabling Congress to “regulate commerce…among the several states” gives the United States broad authority over economic matters — although non-economic regulation is far more suspect. Early in today’s argument, however, several of the justices appeared poised to impose an entirely novel limit on Congress’ authority — suggesting that laws which require, in Justice Kennedy’s words, an “affirmative duty to act to go into commerce” is somehow constitutionally suspect. So there were no shortages of pointed questions about the Affordable Care Act’s requirement that everyone either carry health insurance or pay slightly more income taxes.
There are two reasons why this requirement is necessary. The first is that, because the law prohibits insurers from denying coverage to patients with preexisting conditions, it must also ensure that healthy people enter the insurance market before they become sick. If patients can wait until they get sick to buy insurance, they will drain all the money out of an insurance plan that they have not previously paid into, leaving nothing left for the rest of the plan’s consumers. The second reason relates to a problem with our health system that long predates the Affordable Care Act. Because emergency rooms must provide at least some degree of care free of charge to people who cannot afford it, these costs wind up being transferred to persons with insurance — driving up annual premiums as much as $1,100 on the average patient.
Initially, the Court’s conservatives appeared highly credulous of the plaintiffs’ false claim that upholding the health reform would necessarily enable the federal government to do absolutely anything. Solicitor General Don Verrilli addressed this question by explaining that the health care market is unique in that it is the only market that everyone inevitably participates in — we all get sick at some point — and that, because of health care’s sudden and unexpected costs, people typically pay their health bills through insurance. Thus, he explained, because everyone is already caught up in the health care market, the Affordable Care Act does not impose any kind of “duty…to go into commerce” — it merely tells people who are already in the health care market to make sure they pay for their health costs through insurance.
While Verrilli was still at the podium, the Court’s conservatives did not seem to buy this claim. A ray of hope emerged at the end of the oral argument, however, when Justice Kennedy expressed a somewhat nuanced view:
[T]he government tells us that’s because the insurance market is unique. And in the next case, it’ll say the next market is unique. But I think it is true that if most questions in life are matters of degree, in the insurance and health care world, both markets — stipulate two markets — the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries. That’s my concern in the case.
There’s a lot going on in this statement. On the one hand, Kennedy is clearly skeptical that, if the Court says this market is unique, the government won’t simply argue that the next market is also unique in the next case. On the other hand, Kennedy also appears sympathetic to the second reason why the mandate is essential — that the problem of uninsurance leads to billions in health care costs being transferred to other health care consumers. A young person who forgoes health insurance is “uniquely proximately very close” to affecting the health care costs of others, and that may be enough to get Kennedy’s vote to uphold the law.
The big loser in all of this debate, however, is the Constitution itself. The Constitution says nothing about unique markets. Or about the need to impose artificial Congress authority to regulate the nation’s economy. It simply says that Congress can “regulate commerce.” The idea that a law which regulates 1/6 of the nation’s economy is not regulating commerce is, frankly, absurd. Nor was there ever any risk that a decision upholding health reform would lead to all things being permissible. There are many things that are not commercial — federal murder laws, assault laws, child neglect laws or sexual morality laws, for example. A law regulating our entire national health care market, however, is clearly and obviously constitutional.
Justice Kennedy may inevitably vote to uphold the law — he may even bring Chief Justice Roberts along with him — but, whatever the Court does this term, it appears increasingly likely that we live under the constitution of Anthony Kennedy, and that we no longer live under the Constitution of the United States.
By: Ian Millhiser, Think Progress, March 27, 2012
“In Text And History”: Founding Fathers Would Approve Of National Healthcare Policy
Our Constitution’s text and history demonstrate that the national healthcare crisis—in which tens of millions of Americans lack access to quality, affordable care—is the sort of national problem that the framers of our founding charter wanted the federal government to have the power to solve.
Our Constitution was drafted in 1787 “in Order to form a more perfect Union”—both more perfect than the British tyranny against which the Founding generation had revolted and more perfect than the flawed Articles of Confederation under which Americans had lived for a decade since declaring independence. George Washington and the other delegates to the Constitutional Convention shared a conviction that the Constitution must establish a national government of substantial power, in contrast to the extremely weak central government of the Articles, which was so dysfunctional that Washington thought it nearly cost us victory in the Revolutionary War. (George Washington was also apparently fine with government mandates—he signed into law the 1792 Militia Act, which required young men to outfit themselves with a musket, knapsack, and, in some cases, a serviceable horse.)
Under our enduring Constitution, Congress has the express constitutional authority to regulate interstate commerce—the healthcare industry comprises nearly 20 percent of our nation’s economy—and tax and spend for the general welfare, as well as the broad power to pass laws that help execute these specific grants of authority.
Given the Constitution’s grant of significant authority to the federal government to act in the interests of the country as a whole, it is no surprise that a majority of the lower court judges who have ruled on the healthcare law have upheld it, including prominent conservative judges. Reagan-appointee Judge Laurence Silberman on the D.C. federal appeals court explained that the attacks on the law have no support “in either the text of the Constitution or Supreme Court precedent.” Another conservative appeals court judge, Jeffrey S. Sutton—who clerked for Supreme Court Justice Antonin Scalia—explained that whether you think the law is good policy or not, it clearly passes constitutional muster.
If the Supreme Court Justices are faithful to the Constitution’s text and history, principles of federalism, and precedent—including decisions authored or joined by some of the current conservative Justices—the Court should conclude the healthcare law is constitutional.
By: Elizabeth Wydra, U. S. News and World Report, March 26, 2012
“The Power To Regulate Commerce”: Constitution, Court’s Precedent On Affordable Care Act’s Side
In the words of Judge Laurence Silberman, a leading conservative who received the Presidential Medal of Freedom from President George W. Bush, the lawsuits challenging the Affordable Care Act have no basis “in either the text of the Constitution or Supreme Court precedent.” And Silberman is right. The Constitution gives the United States power to “regulate commerce … among the several states,” and there is simply no question that a law which regulates one sixth of the nation’s economy regulates the nation’s commerce.
This not a particularly new idea. As Chief Justice John Marshall put it nearly two centuries ago, there is “no sort of trade” that the words “regulate Commerce” do not apply to, and these words give the United States “full power over the thing to be regulated.” The Affordable Care Act regulates trade in healthcare services, and thus America has the full power to regulate this important market.
In challenging the Affordable Care Act, the law’s opponents seek an unprecedented expansion of judicial power that would eradicate all limits on what the nine unelected judges on the Supreme Court can do. Because their entire legal argument has no basis in the Constitution itself, it eliminates any bounds on what judges can do to impose their will on the American people. If judges are free to ignore the Constitution just this once, they can do it whenever they want, and there will no longer be any limits whatsoever on judicial discretion.
In other words, if judges have the power to strike down the individual mandate, there is nothing preventing the Supreme Court from forcing you to eat broccoli.
By: Ian Millhiser, U. S. News and World Report, March 26, 2012
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