Tag: Individual mandate

Why Do You Care Whether I’m Insured?

Oct 5, 2011• 102

By JOHN GOODMAN

If you care a great deal, I’ll give you an account number you can use to make a deposit.

[Note to Self: Send this Alert to the folks at Commonwealth. Also to Nancy Pelosi and Harry Reid. CC Uwe Reinhardt as well. You never know what they might do. They certainly talk about this topic a lot.]

While you’re thinking about the initial question, here are a few follow-up questions:

Do you care whether I have life insurance?

What about disability insurance?

Homeowner’s insurance?

Auto casualty?

Auto liability?

What about retirement insurance? (A pension or savings plan.)

Do you care whether I keep my money at an FDIC-insured institution?

Or whether I bought an extended warranty on my car?

Or whether I bought travel insurance before taking my scuba diving trip to Palau? (It pays off if you get sick and can’t go.)

I’m sure there are busybodies who would like to run everyone else’s life. But society as a whole has taken a more rational approach. We basically don’t care whether people insure to protect their own assets (at least we don’t care enough to make them do so). But we do care about events that could create external costs for other people.

The Anti-Injunction Act Complications

Sep 13, 2011• 8

By BRAD JOONDEPH

The big news from [last Friday’s] two decisions was not that Virginia lacks standing; that was a problem lurking in that case from the beginning, a nettlesome issue going all the way back to Judge Hudson’s first opinion (in August 2010) rejecting the United States’s motion to dismiss on 12(b)(1) grounds. Virginia would have stood on much stronger ground had it also alleged an injury in fact from the effect of the minimum essential coverage provision’s necessarily pushing more Virginia residents onto the state’s Medicaid rolls, and thus imposing a significant financial cost on the state. But the Commonwealth failed to do this, instead resting on the claim that it had standing based on the alleged “conflict” between its Virginia Health Care Freedom Act and the individual mandate. This was a weak argument from the beginning, and the Fourth Circuit’s holding was entirely unsurprising.

What is surprising–perhaps not on the merits, but in relation to the attention the issue has received to date, from the courts and the parties–is the court’s holding in Liberty Universityv. Geithner that federal courts lack any subject matter jurisdiction over a suit seeking to enjoin enforcement of the individual mandate because such jurisdiction is precluded by the Anti-Injunction Act. In this respect, there are some important points worth noting:

* This is a potential problem in every lawsuit currently challenging the individual mandate. That is, if the Fourth Circuit’s analysis is correct, then the Supreme Court would lack jurisdiction to hear any private plaintiff’s claim that the minimum coverage provision exceeds Congress’s enumerated powers until after a taxpayer was assessed a penalty under ACA 1501, paid the penalty, and sued the federal government for a refund. The case thus would not reach the Supreme Court until somewhere in the neighborhood of 2015 or 2016.

And What Happens if the Individual Mandate is Struck Down?

Aug 23, 2011• 4

By ROGER COLLIER

An alarming article in Politico.com looks at what could happen if the Supreme Court determines that the Affordable Care Act’s individual mandate provision is unconstitutional—something that the current conservative leaning of the Court seems to indicate is somewhat more likely than not.

Assuming that such a possible decision by the Court follows that of the Eleventh Circuit Court of Appeals in ruling that the mandate is unconstitutional but the remainder of the ACA may stand, the Politico.com article anticipates some potentially disastrous consequences.

The provisions of the ACA—some of them already in force—include guaranteed issue, elimination of annual and lifetime limits, and a ban on basing premiums on health status, essentially decoupling coverage and premiums from insurance risk. Without the requirement for almost everyone to have coverage, there will be nothing to ensure that the risk pool contains a large percentage of individuals in good health as well as those with medical problems, and nothing to stop anyone from waiting until they’re sick or injured to demand coverage.

Why Bother With Government?

Aug 19, 2011• 85

By EDWARD D. KLEINBARD

On Friday, a federal Court of Appeals held unconstitutional a central feature of the new healthcare law-its requirement that almost all Americans obtain healthcare insurance through private insurance markets. This ruling came only days after the debt-ceiling debacle — a “tempest in a tea party” — during which our country’s credibility for honoring its debts was held hostage to the conviction that tax revenues should regularly ratchet down, but never up. Both the subtext of the majority’s opinion in the healthcare case and the anti-tax fervor evident in the debt-ceiling debate share a common underlying philosophy: the belief that government activity is largely hostile to prosperity and the pursuit of happiness, and therefore the less of it, the better. But this view of government is incorrect.

Government, to paraphrase Congressman Barney Frank, is just the name we give for the things we the people decide to do together. And taxes in turn are just the amounts we chip into the collective pot to buy whatever package of goods and services that we have agreed to purchase collectively.

In ordinary commercial settings, the private sector is more efficient at allocating scarce resources than is the government, which is why the United States relies so heavily on private markets. So why should we bother to do things together through the mechanism of government? One answer is that only government can address an “incomplete” market, which occurs when the private sector cannot or does not provide a market solution to an economic problem. Healthcare insurance is a classic case of an incomplete market that results in real economic burdens.

Individual Mandate: Can PPACA Survive Without It?

Aug 17, 2011• 6

By DAVID E. WILLIAMS

Ever since the Patient Protection and Affordable Care Act (PPACA) was passed, opponents have looked for ways to overturn it in the court of law and the court of public opinion. They’ve had reasonable success in both arenas, using opposition to the individual mandate to buy health insurance as Exhibit A. Ironically, President Obama wasn’t a big fan of the individual mandate at the outset. In the primary election, Hillary Clinton favored an individual mandate while Obama opposed it. But somehow the mandate –at its core a Republican concept of personal responsibility– has become synonymous with so-called Obamacare.

With the recent court decision, it seems reasonably likely we will end up in a situation where the individual mandate is overturned but the rest of the law is upheld. Observers have some thoughts on what would happen:

Insurance companies will be unhappy. PPACA puts many restrictions on health plans, e.g., minimum medical loss ratio, no exclusions for pre-existing conditions but the upside is the mandate: lots of new customers, and a reduction in adverse selection, because everyone has to buy insurance and you can’t wait till your sick
Many fewer people will be enrolled in insurance. Jonathan Gruber’s objectivity may be suspect, but he persuasively argues that repeal of the mandate would lead to many fewer people in coverage and higher premiums due to adverse selection. And the cost of the law wouldn’t drop by much despite the lower impact
Some opponents think/hope that eliminating the mandate will cause the whole law to collapse. I really doubt it.

Why the 11th Circuit’s Opinion on Health Care Reform Self-Destructs

Aug 14, 2011• 85

By MARK HALL

Like a tragic literary figure, the 11^th Circuit’s opinion declaring the individual mandate unconstitutional is doomed to failure by its own internal contradictions. What follows is a series of quotes directly from the opinion, paired to show how desperately the majority twisted logic in order to find its path to a unsupportable conclusion:

1. On the key necessary and proper argument, the court obfuscated as follows:

The government’s argument derives from a Commerce Clause doctrine of recent [1995] vintage: . . . the “essential part of a larger regulation of economic activity” language in Lopez. . . . Raich [is the] the only instance in which a statute has been sustained by the larger regulatory scheme doctrine.

HOWEVER, the court was well aware that

The Supreme Court’s most definitive statement of the Necessary and Proper Clause’s function remains Chief Justice Marshall’s articulation in McCulloch v.Maryland: 17 U.S. (4 Wheat.) 316, 421 (1819).

In Obamacare Case, Constitution Is Victor

Aug 14, 2011• 12

By ILYA SHAPIRO

Today is a great day for liberty. By striking down the individual mandate, the Eleventh Circuit has reaffirmed that the Constitution places limits on the federal government’s power. Congress can do a great many things under modern constitutional jurisprudence, but, as the court concludes, “what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.” Indeed, just because Congress can regulate the health insurance industry does not mean it can also require people to buy that industry’s products.

One of the striking things about today’s ruling is that, for the first time in one of these cases, a Democrat-appointed judge, Frank Hull, has ruled against the government. Just as the Sixth Circuit Judge Jeffrey Sutton made waves by being the first Republican appointee to rule in the government’s favor, today’s 300-page ruling shows that the constitutional issues raised by the healthcare reform—and especially the individual mandate—are complex, serious, and non-ideological.

Supporters of limited constitutional government need to temper their celebrations—just as they wisely tempered their sorrows after the last ruling—because we must all now realize that this will not end until the Supreme Court rules. Nevertheless, today’s decision gives hope to those who believe that there are some things beyond the government’s reach and that the judiciary cannot abdicate its duty to hold Congress’s feet to the constitutional fire.

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.

This post first appeared at Cato@Liberty – Cato Institute Blog.

The Individual Mandate: Another Look at the Penalty Trade-Off

Feb 18, 2011• 2

By ROGER COLLIER

Most of the recent attention on the 2010 health care reform legislation has focused on the individual mandate. After two federal court rulings upholding the mandate, a third federal judge—in Virginia—ruled that the Constitution does not allow the government to require the purchase of insurance as part of regulating an interstate commerce market. Simultaneously, Congressional Republicans have reiterated their intention of preventing the individual mandate from being implemented, regardless of the constitutionality of the provision.

One interesting response to the resulting media coverage came in the form of a Kaiser Health News article [http://www.kaiserhealthnews.org/Columns/2010/December/121410laszewski.aspx] suggesting that the issue might be overblown since, even if the mandate were implemented, it would be relatively unsuccessful in leading the uninsured to purchase coverage. Unfortunately, the article misinterprets some of the legislative language, not entirely surprisingly given the complexity of the mandate provision. Following are clarifications of the mandate and associated requirements, and a somewhat more careful look at the mandate’s possible impact.

A Brief Summary of the Mandate

The individual mandate requires almost all legal residents of the United States to have at least a defined level of health care coverage. Those lacking such coverage will be subject to a penalty to be paid as part of tax filing. Exclusions are made for members of certain religious groups, Indian tribes, incarcerated individuals, and those whose income is below the tax filing threshold or inadequate to pay for coverage. To assist those with lower incomes but not eligible for Medicaid or SCHIP, the legislation provides for both premium credits and cost-sharing subsidies.Continue reading…

Commerce Clause Challenges to Health Care Reform

Jan 27, 2011• 29

By MARK HALL, JD

The following article, forthcoming in U. Penn. L. Rev., pinpoints the strongest arguments for and against federal power under the Commerce Clause to mandate the purchase of health insurance: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1747189

Among the key points I make in defense of this federal law are:

1. The “commerce” in question is simply health insurance, and not the non-purchase of insurance as challengers have framed it. Because “regulate” clearly allows both prohibitions and mandates of behavior, mandating purchase is lexically just as valid an application of the clause as is prohibiting purchase or mandating the sale of insurance.

2. Although existing precedent might allow a line to be drawn between economic activity and inactivity, there is no reason in principle or theory why such a line should be drawn in order to preserve state sovereignty. Purchase mandates, after all, are as rare under state law as under federal law.

How the Republican Assault on Health Care Could Backfire On Them

Jan 7, 2011• 6

By ROBERT REICH

When it comes to health care, Republicans should be careful what they wish for.

Their upcoming vote to repeal the health-care law will be largely symbolic — they don’t have the votes to override President Obama’s certain veto. The real thing happens later, when they try to strip the Department of Health and Human Services of money needed to implement the law’s requirement that all Americans buy health insurance. This could easily precipitate a showdown with the White House—and a government shutdown later this year.

On its face it’s a smart strategy for the GOP. The individual mandate is the lynchpin of the heath-care law because it spreads the risks. Without the participation of younger or healthier people, private insurers won’t be able to take on older or sicker customers with pre-existing medical conditions, or maintain coverage indefinitely for people who become seriously ill. The result would be to unravel the health-care law, which presumably is what many Republicans seek.

At the same time, the mandate is the least popular aspect of the law. According to a December 9-12 ABC/Washington Post survey, 60% of the public opposes the individual mandate. While they want help with their health-care bills, and over 60% want to prevent insurers from dropping coverage when customers become seriously ill, most Americans simply don’t like the idea of government requiring them to buy something. It not only offends libertarian sensibilities, but it also worries some moderates and liberals who fear private insurers will charge too much because of insufficient competition in the industry.