Health Insurance by Command

The trouble with the individual mandate

The nice thing about elections is that they give you a choice not only of people but of policies. In the 2008 primaries, for instance, Hillary Clinton offered a health care plan that required everyone to get insurance, while Barack Obama’s blueprint had no such mandate. That was about the only difference in their suggested solutions.

It was a big one, to hear Obama tell it. He aired a TV ad attacking Clinton because her scheme “forces everyone to buy insurance, even if you can’t afford it, and you pay a penalty if you don’t.”

He, by contrast, stressed that he would encourage more coverage by offering federal help in paying for it, while trusting in the ultimate wisdom of individual Americans to make their own decisions.

Voters had a clear choice, and they chose Obama and his voluntary plan over Clinton and her compulsory approach. That settled that.

Or so we thought. But something happened after Obama arrived in the Oval Office. His deep faith in the free decisions of ordinary people soon evaporated. Last summer, after the House included a mandate in its legislation, Obama suddenly had a change of heart.

Now, his new approach has a certain economic logic behind it. If you require insurers to take all comers, you create an incentive for people to go uninsured until they get sick. They get the benefits of coverage without the burden of having to pay for it even when they’re healthy. A mandate would compel them to accept the bitter along with the sweet.

But still: A mandate is a big intrusion into the personal autonomy that a free society is supposed to protect. You may be willing to do without medical care or treat your brain cancer with bee pollen. Too bad. You will have to buy insurance anyway.

Is that coercive? Certainly. Is it constitutional? If it passes, we will find out, since there will be a legal challenge. Some legal scholars and state attorneys general take seriously the notion that, as James Madison asserted, “The powers delegated by the proposed Constitution to the federal government are few and defined.” Making people buy health insurance is conspicuously not among them.

The Supreme Court has conceded many powers to the national government. But allowing it to force individuals to spend their own money to acquire a commodity they don’t want would go beyond its established boundaries.

“Never in the history of the United States has the federal government ever required someone to engage in an economic activity with a private party,” Georgetown University law professor Randy Barnett has said. If the Supreme Court goes along, he said, “there’s pretty much nothing Congress can’t do.”

Odds are the Supreme Court will accept this expansion of federal power, if only because accepting expansions of federal power is how most justices define their jobs. But just because it may be constitutionally permissible to lasso the uninsured and drag them into the health insurance corral doesn’t mean it is necessary or wise. Especially when there are alternatives that avoid such naked compulsion—and that might be politically more feasible now that Democrats lack a filibuster-proof majority in the Senate.

The simplest option is to generously subsidize insurance purchases by many or most people. As it happens, both the House and Senate bills do that, offering tax credits for individuals and households whose income is 400 percent or less of the poverty level (which works out to about $88,000 for a family of four).

Another is to let individuals without employer-provided coverage buy policies through a state-run insurance exchange, which would protect consumers against rejection on the basis of existing medical problems. Insurers that want to get this business would have to accept all applicants from the pool at uniform rates.

And what about the problem of people buying in only after they get sick? The feds could discourage free-riding with a waiting period or a substantial penalty—say, making the sponger responsible for the first $10,000 of his expenses.

You want the freedom to go uncovered? Then surely you will not mind shouldering the responsibilities that go with it. Otherwise, sign up now.

These basic changes would go a long way to expand access to health coverage. They are proof that it’s entirely possible to simultaneously respect personal freedom and greatly reduce the number of uninsured. But only if you want to.

COPYRIGHT 2010 CREATORS.COM

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  • Suki||

    Good Morning reason!

    In other news, the president signed an executive order keeping contractors who haven't paid income tax from doing business with the government.

    That ought to keep his cabinet out of the double-dipping zone!

  • Mad Elf||

    Does this mean Turbo Tax Timmeh is going to get fired?

  • Suki||

    Doubt it. Probably only counts for other people.

  • ||

    It's a sorry mess but if healthcare in this country isn't changed someway for the better we won't survive as a country. BUT if we allow people to opt out, which respects our belief in individual liberty, we're going to have people not covering themselves or their families. When there's a real illness they won't be covered and we're simply not going to allow a five year old kid to die because his Dad won't insure him. We're going to get stuck with the bill anyway.

    Personally don't see anything beyond universal coverage one way or another. Kind of admire the Mexican way, they pay about $250 a year and everything else is free. If we add the requirement that in the event medical care is needed by uninsured people we could make a $1000 deductable if they don't have insurance. We could probably collect that and it's far more expensive than buying insurance in the first place.

  • tarran||

    Well, Jack, if the government stopped restricting the supply of medical care while subsidizing demand, you'd see prices drop down pretty rapidly to affordable levels.

    This whole "reform" thing was nothing but an exercise in retn seeking and influence peddling.

  • OMG||

    "Kind of admire the Mexican way, they pay about $250 a year and everything else is free"

    Oh, that's kinda cool. The doctors in Mexico work for nothing! (or nearly nothing, there is that $250 bucks). Or maybe the money to make up the rest of the expense just falls from the sky.

  • Warty||

    Los doctoros down there make ends meet by holding donkey shows. It are a fact.

  • ||

    Our country is one big "donkey show".

  • Chad||

    You found the problem, OMG. Our doctors are over-paid, both compared to their international peers and other professionals.

    The market has been kind enough to provide us with a wonderful free-market comparision group for doctors: scientists. The educational requirements are very similar, so the only difference is the debt load, which can easily be adjusted for. PhD scientists typically start around 80k and float around 110k mid-career. Family doctors need about 30k more to cover the loans, and another 10-15k for each year of specialization. Our family doctors are actually not too far off the mark. Our specialists, though, get bonus pay much more than can be justified by the foregone salary. It should be surprising to no one that every med student nowadays is trying to become a specialist.

    Only 40% of the students who apply to med school EVER get into one. We could increase the supply of physicians 25% simply by accepting half the people that want in. The AMA cartel needs a good thrashing.

  • Tim2||

    Exactly, that's one of the things government should do rather than trying to expand the broken system or impose top down price controls. Rather than sue successful companies with clear competitors and substitute goods antitrust lawyers could go after real cartels. I wonder though how Chad feels about unions, because after all the AMA is quite similar to a doctors union.

  • Chad||

    I largely dislike unions, and consider them a historical anachronism. Unions are a type of oligopoly, and were a necessary evil at the time when they rose to prominence precisely because *employers* were also local oligopolists. We have orders of magnitude better mobility and information now, so the latter is not a concern, and unions have out-lived their usefulness in that respect.

    That being said, unlike you, I do not believe that pay is determined in a fair manner that reflects a person's real contribution, neither in your vaunted and mythical "free market", and certainly not in the real world. The people in power and close to the money keep fair more than their fair share, and those who do not have the ability to manipulate the system get screwed despite their efforts. The very structure of our society creates winners and losers, and individuals matter rather little. Clearly, in the last fifty years, the structure of our economic system has shifted such that it creates fewer bigger winners, and a lot more losers. This is not a good thing, and is not a reflection in any way of the people who are winning and losing.

  • Tim2||

    Today's "losers" are much better off due to the innovation created by today's winners. The standard of living has risen for everyone, and even though some wage rates have remained stagnant benefits have risen and studies often focus on household income which is affect by increasing numbers of single parent households. However, you don't seem to consider non scientists who productively invest capital or invent new business processes or management models or just make minor new products you may consider useless like snuggies innovators; even though they do make many people's lives more enjoyable. Thus you can assume away their contribution and claim that the winners don't contribute enough to get their fair share. Or you just claim they don't deserve it because they were born smarter, thus even though their merit was rewarded it really wasn't their merit. One has to accept such arguments to buy into your idea that people aren't compensated fairly.

    However, I still have to hope you don't think I'm building up a strawman; because then you could have just made your entire argument up because you feel in such circumstances lying is ok as you admitted to doing on the green jobs post. That seems mighty childish.

  • The Libertarian Guy||

    Chad, to you everyone is overpaid.

    And yet, every man, woman, and child owes ten grand a year in taxes. Better tell the lazy little rugrats to get jobs.

  • Jamie||

    I disagree. Just increasing the amount of doctors does not make sense at all. Its throwing this at the problem and will not work. I think that it would hurt a lot in the long term.

  • Attorney||

    if healthcare in this country isn't changed someway for the better we won't survive as a country

    If left alone, it would eventually fix itself. Employers would continue requiring employees to pick up more and more of the tab. As employees need to pay more, providers will come up with ways to be more patient (rather than insurer) responsive.

    The government could help this process along with tax reforms and deregulation, but it would eventually happen anyway, to a large extent.

    In no way does it threaten the survival of the country.

  • ||

    I don't think it will fix it's self. It's a highly regulated industry as is.

    We need small fixes over time. I would start with opening all of the country to all health insurers.

    I don't think the current system is that broken, there is room for improvement. We shouldn't pretend that the whole thing is bad and a total redo is needed. It's not.

  • RCTL||

    Attorney,"If left alone, it would eventually fix itself." Is that what you tell your clients?

  • ReCTaL||

    What do you tell your clients RCTL? $50 an hour and condom mandatory?

  • anonymous||

    Not to say I am advocating this idea, but there are ways other than compulsion. You could, for example, allow setting premiums in the exchange based on time covered by an exchange policy.

    People who jump into the exchange would be viewed very suspiciously at first, and even if they weren't waiting until they got sick, would be paying for those who did. But, over the first several years, that penalty to their premium would die away.

    Basically, what it means is that if you wait until you're sick to buy insurance, you're going to be paying roughly as much as you would out of pocket. To the extent that government does provide subsidies, it could ensure that they were (after the exchange had been operating a few years), capped at the average 10-year premium or something along those lines.

  • ||

    """Basically, what it means is that if you wait until you're sick to buy insurance, you're going to be paying roughly as much as you would out of pocket.""

    Then why buy it at all?

  • arbiter elegantiarum||

    Oh, the ever familiar "WHAT ABOUT TEH CHILDREN!!" argument. Solid stuff Jack.

  • ||

    Kind of admire the Mexican way, they pay about $250 a year and everything else is free paid for by someone else.

    I'm sure you do admire that, Jack.

  • ||

    Everybody wants someone else to pay for their health care.

    The concept that it is you killing me if you don't pay for the procedure to save my life, gained some popularity with the right.

  • RCTL||

    I agree completely about universal coverage but a $1000 deductable will not encourage pricing competition/responsibility. A 10k would instigate competition and a 20k+ time penalties would make the consumer think twice about skipping coverage.

  • ReCTaL||

    Shoving a cattle prod up your ass would do the same thing and cost far less.

  • Hank||

    Another is to let individuals without employer-provided coverage buy policies through a state-run insurance exchange...

    I am pretty hip to this "exchange" idea. We should dismantle the employer-based insurance and government models, repeal Mccarran Ferguson, and create an exchange for all 300+ million to buy their insurance (custom - to fit their needs). We could even give it a name like The Fucking Free Market Medical Insurance Exchange. Alright, we could leave out the gratuitous profanity.

  • ||

    Fuck, I like it better with the gratuitous profanity.

  • ||

    Oh, and I agree completely that the first order of business is to decouple insurance from employment. Then get government the rest of the way out of the way. Costs will go down, availability will go up.

  • ||

    The problem is that congress will set the parameters for what is allowed in the exchange, and we all know that means a political free-for-all that will exclude the plans that provide for less coverage (catastrophic). Thats going the wrong way. Don't want crystal therapy in your plan? Too bad, you can't buy on the exchange.

  • ||

    Like I said yesterday, the healthcare bill will be written by Scott Brown and it won't be very good.

  • ||

    Romneycare for all!

  • ed||

    Brown was elected--according to Obama and Gibbs--because Americans are "angry and frustrated"...at George Bush. When does spin become denial? And at what point does it become a psychosis?

  • Barry Obama||

    ed, you are by far the most intelligent commenter on this site. I see where you are coming from. It's pretty simple, buddy: either you are with the Fatcats on Wall Street and the insurance companies, or you are with me and the people. Btw, you do know American Idol is back on and the creator of Grey's Anatomy has a new show. It's far more interesting than what's going on in Washington. I'm just sayin'.

    And, I'll try communicating a little better with regard to my health care plan - just as soon as they tell me what's in it.

  • Rich||

    And at what point does it become a psychosis?

    This might give you some idea.

    (Props to Warty.)

  • Nancy Pelosi||

    Like a circle...LIKE A CIRCLE BABY!

  • smartass sob||

    Go be invisible, Bay Bay. ;-)

  • JD||

    When you're a Democrat? Snarky, but living in a very liberal city, believe me, I see it. For eight years, liberals got to hate on Bush every chance they got (not without a lot of good reason). Now he's gone, but their anger still needs an acceptable focus, so...the cold hand of George Bush from beyond the grave election it is! Look up "displacement as a defense mechanism"; it explains things pretty well. I shouldn't be surprised, though, since I know people who still go off on Reagan, who has at this point not been president for about 22 years.

  • ||

    If Bush is that powerful and supercompetent, maybe we should make him king.

  • Rich||

    “Never in the history of the United States has the federal government ever required someone to engage in an economic activity with a private party"

    "A private party"?

    Well, sorta.

  • Attorney||

    Odds are the Supreme Court will accept this expansion of federal power, if only because accepting expansions of federal power is how most justices define their jobs.

    I think the odds run slightly in the other direction.

  • ||

    I dunno, Attorney. Under existing Commerce Clause precedent, the refusal to engage in interstate commerce has an indirect effect on interstate commerce, and is thus interstate commerce subject to federal control.

    I honestly think SCOTUS would approve a health insurance mandate, since striking it would have to be done in an opinion setting forth real restrictions on the Commerce Clause. I can't see five votes for that.

  • ||

    It's not impossible, though. This healthcare crap shocks my conscience.

  • ||

    . . .and they just overruled their own prior decisions in gutting McCain-Feingold.

  • ||

    I'm pretty sure that's the reality- but I am clueless how they will argue this doesn't make the commerce clause infinite. Silence?

  • Attorney||

    They do have a couple relatively recent "this is just too far" precedents -- Lopez and the other case, I forget the name and am too lazy to google.

  • ||

    Well, in the 90s, we were trending towards a limited re-recognition of the Commerce Clause.

  • ||

    Justices in general are for federal expansion, but I think we currently have five that are going to be rightfully skeptical of the mandate.

  • Josef||

    There's already a precedent for an individual government mandate. It's called Social Security. Unlike health care, Social Security is a lottery. What's the difference between giving your money to guys who want to make a buck or the girls who are just going to sit with the money?

    Note: I am against both.

  • Attorney||

    SS is more analogous to the Obamacare mandate than the car-insurance example most people bring up. However, even SS is not imposed on everyone simply by reason of being alive in the USA. If you have enough to live on without working for pay, for example, you don't have to contribute to SS. But you would still have to buy health insurance.

    (I don't think SS is constitutional either, but that's another matter.)

  • ||

    What about Medicare part D?

    When you hit a certain age you are required by law to have a prescription drug plan.

    And that was from a republican President.

  • Josef||

    Or if you don't work.

    It's a trade off in terrible services. One you might get if you live long enough. The other will kill you :)

  • monkeys||

    Also, if I 'member correctly Railroad Retirement exempts one.

  • ||

    They've laid out SS and medicare to get around that. You aren't buying SS, you are paying a tax and later you will receive a benefit. You can't go withdraw from 'your' SS account, it doesn't exist.

  • Tim2||

    SS is a tax, not a mandate to buy something from another company. They could likely get away with single payer as constitutional under the current misreading of the constitution. However, the entire point of the mandate is that it hides the higher costs of effectively socialized medicine that an outright tax would make explicit and therefore reform harder to pass. The politicians want to promise people something for nothing and pay for it by demonizing young uninsured "free riders" as if all the mandate would do would be to cover their E.R. fees and not shift the costs of treating the less healthy onto them.

  • ||

    It's a sorry mess but if healthcare in this country isn't changed someway for the better we won't survive as a country.

    Yeah.

    That, and the fifty foot rise in sea level.

    We're doomed.

  • ||

    I'm so sick of hyperbole and unreality being used to sell these stupid bills. Anyone with half a brain knows that government has done a lousy job in healthcare, top to bottom. That goes for the state governments' regulation of insurance in particular. Play the HMO game sometime to get a small taste of how bad things could be in a government-controlled environment. What, you need anti-biotics? But that's not the treatment noted in the regulation. Sorry. Here, have some moldy bread.

  • Attorney||

    That's the very attitude that's destroying this country!

  • ||

    Moldy bread?

  • ||

    If Bush is that powerful and supercompetent, maybe we should make him king.

    Hope and Change are no match for Wizardry!

  • ||

    Hey! No fair bringing up what Obama said in the heat of the campaign! Everybody knows that doesn't mean anything!

    No kidding, Obamanistas actually do say that to me. On top of that, if I say "okay, then during a campaign I shouldn't believe anything a politician says, since it doesn't mean anything as you say", they go completely bananas.

    Apparently, I should take everything Obama says as gospel, but forget said gospel after 3 minutes.

  • Mr. FIFY||

    No Chad, no Tony, and crayon is still MIA.

    Nice, peaceful thread.

  • The Libertarian Guy||

    Nope, just late. Chad showed up to spoil the solace.

  • John B. Chilton||

    Yes, Obama's plan during the campaign was the same as Hillary's except without the mandate. The trouble is that between the two the better is Hillary's -- because without it no one participates until they need insurance [because you could not be turned or there'd be no preexisting condition clause], meaning in turn that private insurance becomes prohibitively expensive.

    More libertarian ideas are the way to go. Why should you get the benefit of the tax system bias for employer provided insurance? Simply the code by removing the benefit while reducing tax rates across the board.

  • Mike M.||

    I think Nancy Pelosi might have just officially conceded that the Senate health care bill is dead.

  • ||

    Caption Contest:

    "Let me be perfectly clear.....smell my finger and your prostate!"

  • ||

    "Georgetown University law professor Randy Barnett has said. If the Supreme Court goes along, he said, “there’s pretty much nothing Congress can’t do.”
    Thank God - maybe they will finally pass a law requiring a bevy of hotties to screw me senseless!

  • The Libertarian Guy||

    Only if said hotties do it voluntarily, dan. But you're on to something here...

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  • Steven||

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  • Insurance For Holiday Homes||

    I think Obama had the very best intentions at heart, but sadly as all politicians find when they get into office, what you want to do and what you can do are two entirely different things.

    I do find it amazing that the greatest country in the world has still not managed to live up to the aspiration of free health care for all, as they don in England and other countries around the world.

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