The fate of the federal health care law currently before the Supreme Court is likely in the hands of Justice Anthony Kennedy, who has already cast the swing vote in a number of contentious cases over the past decade. True to form, his questions during oral arguments gave both proponents and opponents of the federal law reason for hope.
Those who believe that it’s unconstitutional to force individuals to purchase health insurance and that the law should accordingly be struck down point to Kennedy’s statement that “the law changes the relationship of the federal government to the individual in a very fundamental way.”
Supporters of the law point to his comment that young people who forego insurance (“sitting home in his or her living room doing nothing”) may leave others facing higher premiums. In essence, Kennedy was asking: Don’t you need an individual mandate to eliminate “cost-shifting” from those the willfully uninsured to those paying for insurance?
An amicus brief signed by Pioneer Institute and dozens of leading economists (including two Nobel Laureates) directly answers Kennedy’s query, and the answer is: No.
The debate over this point is critical to the federal government’s argument that the law should be upheld under Congress’ power to regulate interstate commerce. The Obama Administration claims the uninsured cost the system $43 billion annually—and that addressing that number is critical to providing coverage to Americans.
However, the government’s numbers seem to be inflated as the authoritative Medical Expenditure Panel Survey calculates the uncompensated costs closer to $12.8 billion, or one-half of one percent of the $2.4 billion Americans spend annually on health care. In addition, under full implementation of the federal law, 30 million citizens will remain uninsured; and they account for the vast majority of the uncompensated care cost.
A closer consideration of the government’s claim demonstrates that the individual mandate has little to do with cost-shifting in healthcare markets. The fact is that the population principally targeted by the mandate (those who can afford health insurance but voluntarily choose not to purchase it) plays a minimal role in the cost shifting identified by the government.
As declared in the Affordable Care Act’s findings section, the mandate was included not to end cost-shifting, but to require millions of Americans to pay more for health insurance than they receive in benefits in order to subsidize both the voluntarily insured and the insurers, and thereby to moderate the sharp increase in insurance premiums that would otherwise be caused by the ACA itself. Claims of the uniqueness of the healthcare market don’t stand up to the realities of data. Instead, the real issues in the health care market primarily are local and therefore must be addressed accordingly.
The problems with the government’s argument in support of the law don’t end there. Much of its cost modeling is based upon supposed likenesses between the federal law and the 2006 Massachusetts health reform law. But Massachusetts accounts for just two percent of the nation’s population, and Bay Staters are wealthier and more likely to be insured than Americans as a whole.
Assuming that businesses and individuals in New Mexico and Massachusetts share similar characteristics—or are patients suffering from the same ailments—is policy malpractice. Even a quick review of differences in demographics, income levels, health infrastructure and employer commitment to offer insurance should dissuade any thinking person from such confusion.
If central parts of the health care law are struck down and President Obama and congressional leaders are forced back to the drawing board, they should take a close look at President Clinton’s handling of welfare reform during the 1990s. Clinton granted waivers that set goals for results, but provided states the flexibility to figure out how to achieve them.
The result was an abundance of innovation. By the time federal welfare reform was enacted in 1996, many states already had their own reforms, and Americans were largely comfortable with the concept. A similar direction with healthcare is needed to reach a political consensus.
It is troubling that years of partisan rancor have left us so sharply split that a decision that will determine the country’s path for generations to come is left to one judge – no matter how distinguished. Our system isn’t supposed to work this way.
If Justice Kennedy looks at the facts before him, his choice is clear. Reject the federal mandate, and give Congress and the president a second chance to get healthcare right. That would require that the federal government set goals and accountability for progress, all the while allowing states the flexibility and control to get there.
Josh Archambault is the director of health care policy at Pioneer Institute. He is the editor and a co-author of The Great Experiment: The States, The Feds, and Your Healthcare
Also seen in The Herald News and GloucesterTimes.com.
