OP-ED

Health Care Jujitsu

Not surprisingly, yesterday’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.

Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an unconstitutional extension of federal authority, the entire law starts unraveling.

But with a bit of political jujitsu, the president could turn any such defeat into a victory for a single-payer healthcare system — Medicare for all.

Here’s how.

The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit or at least pay all their costs including marketing and advertising.

Yet the only way private insurers can afford to cover everyone with preexisting health problems, as the new law requires, is to have every American buy health insurance – including young and healthier people who are unlikely to rack up large healthcare costs.

This dilemma is the product of political compromise. You’ll remember the Administration couldn’t get the votes for a single-payer system such as Medicare for all. It hardly tried. Not a single Republican would even agree to a bill giving Americans the option of buying into it.

But don’t expect the Supreme Court to address this dilemma. It lies buried under an avalanche of constitutional argument.

Those who are defending the law in Court say the federal government has authority to compel Americans to buy health insurance under the Commerce Clause of the Constitution, which gives Washington the power to regulate interstate commerce. They argue our sprawling health insurance system surely extends beyond an individual state.

Those who are opposing the law say a requirement that individuals contract with private insurance companies isn’t regulation of interstate commerce. It’s coercion of individuals.

Unhappily for Obama and the Democrats, most Americans don’t seem to like the individual mandate very much anyway. Many on the political right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company.

The President and the Democrats could have avoided this dilemma in the first place if they’d insisted on Medicare for all, or at least a public option.

After all, Social Security and Medicare require every working American to “buy” them. The purchase happens automatically in the form of a deduction from everyone’s paychecks. But because Social Security and Medicare are government programs financed by payroll taxes they don’t feel like mandatory purchases.

Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout “don’t take away my Medicare!” at rallies opposed to the new health care law.

There’s no question payroll taxes are constitutional, because there’s no doubt that the federal government can tax people in order to finance particular public benefits. But requiring citizens to buy something from a private company is different because private companies aren’t directly accountable to the public. They’re accountable to their owners and their purpose is to maximize profits. What if they monopolize the market and charge humongous premiums? (Some already seem to be doing this.)

Even if private health insurers are organized as not-for-profits, there’s still a problem of public accountability. What’s to prevent top executives from being paid small fortunes? (In more than a few cases this is already happening.)

Moreover, compared to private insurance, Medicare is a great deal. Its administrative costs are only around 3 percent, while the administrative costs of private insurers eat up 30 to 40 percent of premiums. Medicare’s costs are even below the 5 percent to 10 percent administrative costs borne by large companies that self-insure, and under the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

So why not Medicare for all?

Because Republicans have mastered the art of political jujitsu. Their strategy has been to demonize government and seek to privatize everything that might otherwise be a public program financed by tax dollars (see Paul Ryan’s plan for turning Medicare into vouchers). Then they go to court and argue that any mandatory purchase is unconstitutional because it exceeds the government’s authority.

Obama and the Democrats should do the reverse. If the Supreme Court strikes down the individual mandate in the new health law, private insurers will swarm Capitol Hill demanding that the law be amended to remove the requirement that they cover people with pre-existing conditions.

When this happens, Obama and the Democrats should say they’re willing to remove that requirement – but only if Medicare is available to all, financed by payroll taxes.

If they did this the public will be behind them — as will the Supreme Court.

Robert Reich is the author of Aftershock: The Next Economy and America’s Future, now in bookstores. This post originally appeared at RobertReich.org.
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Aftershock: The Next Economy and America’s Future (Vintage)
by Robert B. Reich

Follow Robert Reich on Twitter: www.twitter.com/RBReich

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9 replies »

  1. I like the chicken little comment above. Except the Democrats are hell bent in fostering lies, deflections, and florid minimizing of legitimate concerns raised since the Nancy and Harry Show played out in 2010.

    The sky is not falling, but, expecting politicians ALONE to set health care policies is going to have consequences. And don’t expect Republicans to be adequate substitutes either!

  2. One more comment in regards to all this Medicare for All BS. I have to send CMS the SSN and data on everyone of my members over 55. Medicare uses this data to try and force members back onto my plans or at least make me pay primary. For active workers over 65 I have all sorts of rules on when I have to pay before Medicare will.

    How can you tout Medicare for All as a solution while Medicare is scrambling to dump as many people as possible back on me? If Medicare can’t even assume the risk on those over 65 how are they suppose to take on more risk?

    There is a major disconnect between those pushing Medicare for all and reality.

    How about a compromise, we start with Medical for All over 65 then we look at expanding it after that works.

  3. “If the mandate is struck down and the rest of the insurance market reform provisions stand, there will be panic in the health insurance industry, a run on their stocks, and a legit fear of a meltdown big enough to set Cap Hill back in motion.”

    Really? Then why are so many of us rooting for it?

    Chicken little thinks the world would come to an end. What would really happy is a whole lot of not much. First off 60% of the private market is self funded and would not be effected at all. At all, as in they wouldn’t even know why chicken little is running around. Next up at least 20-25% of the remaining market could go self funded on their own. The remaining private market would need to find a pool to join.

    Since we are already working on captives and RRGs to take these groups from the exchanges its not a problem to do so when they have no choice but to join.

    The only market that would be effected would be the individual market. HHS and Obama wiped out the individual market for child only policies so it wouldn’t be the fist time they did this.

    No run on stocks, no crisis. In fact you would actually see the market improve as groups would know have claims data and be more responsible for their cost.

  4. Once again, Secretary Reich nails the realpolitick.

    If the mandate is struck down and the rest of the insurance market reform provisions stand, there will be panic in the health insurance industry, a run on their stocks, and a legit fear of a meltdown big enough to set Cap Hill back in motion. Yes, the Rs will come to the health insurance industry’s rescue, and yes, the Admin will make them pay a steep political price. I don’t think the Ds will push as far as Medicare-for-all – but I’ll bet they get for their concession to the R’s insurers their hated public option. The federal version of the Health Insurance Exchange is positioning to administer exactly this as we speak – aided and abetted by more jiu jitsu: between 15 and 30 states appear to be defaulting to the Fed version with their own stonewalling on implementation. I write about this is RealClearMarkets at http://www.realclearmarkets.com/articles/2012/03/28/watchful_waiting_obamacares_day_in_court_99589.html

    This may not be Obama’s long game – the Secretary calls it jiu jitsu, but to me it looks simply like master chess or great battlefield execution – fake a feint and take manageable losses (the Supreme Court provides the firepower), pull the enemy closer while circling their rear, and then swarm.

    Regardless of the metaphor, this may very well be how it plays out.

    Bravo, Mister President!

  5. I am sorry, but this guy is so pathetic in his partisan preaching, it really makes you want to projectile vomit, preferably in his direction.

    Great plan in making Medicare the working model for Universal health care. Good luck with having 300 Million plus Americans accessing half the number of working physicians participating. Oh yeah, all those paraprofessionals who are so competent and well trained to replace physicians will just step in and improve the qualtity of care overnight, with their 9-5 attitude most have to begin with. And those hospitals being paid, what, 30% less and expected to provide even better services, they’ll all stay open and stocked with invested, motivated employees.

    The scary part is, the agenda of the Democrats is solely shout down the lies over and over until people just plug their ears to not be subjected further. You all want affordable and efficacious health care? Look to your left and right in the line and decide which 5th or 6th person will be denied or minimized care options. That is the reality of this country.

    Resources, including expenditures, are finite. The growth of our population is not respecting that boundary, eh?

  6. You really need to take some of that book money and hire an editor.

    “After all, Social Security and Medicare require every working American to “buy” them.”

    Except those million of public employees that don’t have SS. Self employed, 1099, etc also frequently don’t pay into SS or Medicare. Those working in illegal industries don’t. Your only off 10-20 million people, you were close.

    “Yet the only way private insurers can afford to cover everyone with preexisting health problems, as the new law requires, is to have every American buy health insurance”

    Not true for so many reasons but you would need to actually understand insurance to grasp most of them. I’ll give you a simple one even you should be able to grasp, small group reform has been guarantee issue for years, how is that possible Robert?

    “The President and the Democrats could have avoided this dilemma in the first place if they’d insisted on Medicare for all,”

    Medicare is 44 trillion in the red. Medicare loses more to fraud per member then the entire administrative cost of private insurance per member. America is not going to accept Medicare for all. What part of broke don’t you liberals get?

    “Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare.”

    Really, some people didn’t sue to get out of Medicare? 25% of tax payors don’t commit fraud to reduce their taxes? Why is it employers pay employees under the table, all they avoid is Medicare and SS taxes.

    “Medicare is a great deal. Its administrative costs are only around 3 percent, while the administrative costs of private insurers eat up 30 to 40 percent of premiums.”

    Now your just a despicable liar. Even your not stupid enough to believe those numbers. Really idiot? If only there was some federal law that would limit those to 15 or 20%….oh wait there is. Apparently Robert has discovered that every insurance company is running loss ratios twice the legal limit, why hasn’t HHS done something about this? You should be laughed and mocked off the internet.

  7. “Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare.”

    I am an American (and US citizen) that minds mandates in the form of payroll taxes. I know there are a lot of others. Tens of millions of Americans go to great lenghts to mitigate them, avoid them, and even others evade them. There are others that complain about them when they are virtually the only taxes they pay.

    So, I state that Americans do mind mandates in the form of payroll taxes and Mr Reich is wrong, ignorant, stupid, or a liar.

  8. One of the most pressing concerns with the individual mandate is that it shifts the costs of healthcare to the young, healthy population who are forced to buy government price set insurance.

    Also, on another note, the individual mandate essentially penalizes individuals who make healthy lifestyle decisions. As an American citizen who regularly exercises and follows a strict dietary regimen, I find it unjust and irrational to force myself (and others who choose a healthy lifestyle) to carry the costs of those who willingly choose unhealthy eating habits and a sedentary lifestyle.

    Check out the link below for a quick and thorough analysis of cost shifting:
    http://bitly.com/#/page/2

  9. I don’t get Reich’s point. If the Democrats create an optional Medicare for all without a mandate, then it will have the same problem as guaranteed-issue private insurance without a mandate: only sick people will join. If the Democrats create a mandatory Medicare for all financed by mandatory taxes, then that will be the end of private insurance companies. Why would insurance companies every agree to this?

    If the Supreme court strikes down the individual mandate, guaranteed-issue will go out the window as well. Either by the Supreme court itself or by a coalition of centrist Democrats and Republicans in Congress. The administration has already indicated that there can be no guaranteed issue without the mandate.

    In the long run, such an outcome will also hurt the ability to of future governments to provide public services via private companies and free market mechanisms. It will kill any attempt to privatize Social Security or Medicare and put us in a legal framework where all public benefits have to be administered by the government and financed via taxes.

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