Progressives Abandon Universal Coverage Forever

Understanding the Senate's plan to ban undocumented aliens from buying health coverage

No one can accuse the health care legislation currently in the works of being perfect. But whether the flaws in the final sausage after the House and Senate bills are reconciled are acceptable to self-respecting progressives ought to depend on this: Do they help—or hinder—the ultimate objective of universal coverage?

By this measure, if the provisions in the current Senate bill concerning undocumented aliens make it into the final bill, progressives, who put principle above politics, should bid adios to the whole effort. The bill would turn the undocumented into a permanent underclass of health care have-nots, making universal coverage unattainable.

Undocumented aliens, along with their children, constitute about 17 percent of the uninsured in America. But no one is arguing they should get taxpayer help to purchase coverage. The right has pretty much won the argument that people who break the law to enter this country don't deserve the assistance of law-abiding Americans. Both the Senate and House bills explicitly bar all direct subsidies for anyone unable to furnish proof of citizenship or legal residency—although some dispute whether the verification procedures in the House bill are stringent enough.

But the key difference between the two is that whereas the House bill would allow these aliens to use their own money to buy coverage from the new health care exchange, the Senate bill won't. The reason for the Senate ban is that this exchange—a sort-of clearinghouse where patients will be able to pool together to purchase discounted coverage from approved plans—will be established and run by the government. Letting immigrants participate would mean allowing them to get indirect taxpayer aid. People "who are here illegally cannot avail themselves of the infrastructure that we're creating," Rep. Gerald E. (D-Va.), said in November.

By this logic should we, then, post sentries on federal highways to shoo off undocumented workers? Position guards outside pharmacies to bar them from buying FDA-approved drugs? Dispatch marshals to stop electricity generated by public utilities from flowing into undocumented households? What's really driving the exchange ban is not concern for American taxpayers, since allowing people access on their own dime won't necessarily add to the nation's health care bill. Rather it is the cold "Know Nothing" calculation that making life miserable for undocumented aliens will drive them to the exit.

The bill may or may not succeed in chasing away these aliens, but it will certainly make them more miserable. Unless they get an exemption from the individual mandate, something the Senate is proposing but the House is not, it will be illegal for them to go without coverage. But with the exchange off-limits, their main option—outside of the emergency room—will be the nongroup or individual insurance market. Yet the Congressional Budget Office has calculated the premiums in these markets, already substantially higher than the one serving large employers, will rise another 13 percent—partly because the exchange will leave them with a smaller pool of customers. Many observers believe the exchange will eventually kill these markets altogether.

Undocumented aliens may therefore face the double bind of having to buy coverage but being priced out of the few legal avenues they have. This should trouble anyone not part of the Lou Dobbs fan club, but civil libertarians should find it particularly odious. At the same time the government tells Americans how they must spend their money, it will tell undocumented aliens where they can't spend theirs. Government intrusiveness combined with government discrimination is not a formula for social justice.

The Obama administration is putting tremendous pressure on the House Hispanic Caucus, which is fighting the Senate ban, to back off. It is evidently arguing that once the battle for universal coverage is won, it will make immigration reform and amnesty a top priority, eventually bringing undocumented workers into the insurance fold. But having expended so much political ammunition on health care, the White House will be in no position to pick another bruising fight. With a volatile midterm election coming up next year, there is a real risk that if this cruel policy goes forward, it will become impossible to undo.

Universal coverage advocates (a group to which I do not belong) have accepted many unpalatable compromises—including abandoning their beloved public option—because they feel that at least they will be extending coverage to two-thirds of the uninsured population. But what they have to confront is that if they accept the exchange ban, a sizable portion of the remaining one-third won't just remain unhelped, they'll be seriously harmed by being permanently locked out of the health care market.

The government hasn't claimed the authority to selectively withhold access to public facilities since the Jim Crow era. But at least then it wasn't using it for any high-minded purpose. This ban will institutionalize inequality in the name of greater equality. Is this a deal that progressives really want to cut?

Poor Dr. King. He must be spinning in his grave.

Shikha Dalmia is a senior analyst at Reason Foundation and a columnist at Forbes, where this column originally appeared. Harris Kenny, a student at Pepperdine University, provided valuable research assistance for this column.