The middle class is shrinking. Those in power have run up enormous debts on public credit while shoveling most of the money into private pockets. The corporations that have benefitted from this borrowing binge, meanwhile, leverage the global trade system to transfer their profits beyond the reach of national governments.

Meanwhile, we have been told lies by Democrats and by Republicans, divided into artificial camps and led into debates that are either irrelevant or so dramatically scripted that we fail to realize every choice leads to the same result: the dismantling of the social framework that defined and sustained the opportunity of the last century. National mobilization of resources has given way to radical individualism under a narrative that, in the wealthiest nation in the world, we must always expect less.

In this tumultuous time, we search for a way forward - a new Square Deal for the American people.

Wednesday, June 15, 2011

Fighting over "ObamaCare"

For more than a year year -- certainly ever since the Patient Protection and Affordable Care Act was passed and signed into law in March 2010, and actually for many of the months that came before its passage -- conservatives have been up in arms over the individual mandate. This provision, which lies at the core of so-called "ObamaCare," is what it claims to be: a requirement that virtually every American obtain health insurance.

Right now, Americans (with the exception of seniors, who if eligible may not opt out of Medicare) are not obligated to have health insurance. To conservatives, this is perhaps a measure of individual liberty. That interpretation, however, requires a great deal of imagination, because while there doubtless are people who would prefer not to have health insurance -- just as there are people who eat expired foods or gamble away their paychecks -- the vast majority of people who do not have coverage lack it for one of two reasons:
  1. They cannot afford it; or 
  2. Because of pre-existing conditions, they cannot obtain it at any price.
The Affordable Care Act aims to remove both of these barriers so that anyone who wants to obtain health insurance can do so. The first barrier is straightforward if not necessarily easy, and the Act addresses it through a combination of competition (through state-based exchanges) and government subsidies for low-income citizens. The second is trickier.

First, a little about insurance. Insurance relies on a broad population paying a recurring amount, a premium, into a common pool. Whenever a claim is filed, the money is taken from the common pool to settle the bill. People pay in without any guarantee that they will get back what they put in. That works to their advantage, however, because the basis for payment is not current need but rather potential future need. Participants in an insurance system are buying the right to get back more than they paid in if the circumstances warrant, and in the case of health insurance, the cost of care not only far outstrips what any one beneficiary is likely to have paid in but also far outstrips what he or she possibly could pay.

Understand that, by definition, insurance is socialism. The word has been co-opted by conservatives as a synonym for Communism (the two are not synonyms, Communism being a radical application of socialism to all aspects of a society while socialism is usually a limited-scope phenomenon), but that changes nothing. Whether public or private, for-profit or nonprofit, an insurance plan is a socialist construct.

Socialism works if and only if the people participating do so on the basis of potential future need rather than immediate return on investment. If someone can wait until he or she needs help to buy into a plan that provides help to its members, he or she paid nothing before starting to receive benefits and therefore has only weakened the system. To allow people to buy insurance even when they have pre-existing conditions that make their need for care either immediate or uncharacteristically likely, it is therefore necessary to simultaneously require that everyone participate regardless of their perceived health. Otherwise, people will wait until they actually get sick to file for benefits, immediately start collecting them, collect until they are well, and then drop their coverage. No system, for-profit or non-profit, can work under these circumstances.

Thus, the Affordable Care Act includes an individual mandate because it forbids denying coverage on the basis of pre-existing conditions; it denies people the right to opt out because it guarantees them the right to opt in. The two are inseperably linked, and one cannot be removed without the other.

That brings us back to conservative opposition to so-called "ObamaCare." Among Tea Party activists, the individual mandate is cited as an infringement on individual liberty because it mandates that every citizen purchase something. When people who make this argument are challenged on the basis of the need for the mandate to offset acceptance of pre-existing conditions, they usually become agitated and insist that these are separate issues.

In the courts, however, conservative lawyers have made arguments that very much acknowledge the inseperability of the provisions -- and used these as the basis for calling on courts to declare the law unconstitutional. The logic goes like this:
  • By requiring every American to obtain insurance coverage, the government is forcing citizens to make private purchases simply as a condition of being alive (which differs from, say, auto insurance, because driving a car is not mandatory for life);
  • The Federal government may not fine someone for failing to make an unavoidable purchase from a private business (because doing so infringes on freedom of choice with regards to economic activity in a private market); and
  • Because the individual mandate is fundamental to all other aspects of the law, the unconstitutionality of the mandate must result in the entire law being unconstitutional.
I find nothing in this logic that is necessarily flawed. The Federal government has defended the individual mandate by saying that the fine for failing to comply is a de facto tax. Frankly, that does not make sense, because it would be a tax levied solely as a means of punishment. But where does that leave us?

To see the answer to that, we need only look at a program already in place whose validity has survived court challenges for decades: Medicare. Everyone pays into Medicare from every paycheck; Medicare contributions, along with contributions to Social Security, are part of the Federal Insurance Contributions Act (FICA) payroll tax. Americans become eligible for Medicare benefits when they turn 65, and as I mentioned previously (and as few Americans may realize), they may not opt out of Medicare.

Medicare is thus as much an individual mandate as one can imagine, but it is entirely valid under the U.S. Constitution. Why? There are two differences:
  1. Medicare is financed by an explicit tax rather than having participation enforced through a punitive measure; and
  2. While there are private plans permissible as substitutes (the so-called Medicare Advantage plans), traditional Medicare is a public insurance program, so the standard form of participation is not a government endorsement of private business.
Ironically, the Affordable Care Act is therefore vulnerable in part because it did not do something that progressives who lobbied for and supported it had originally intended it to do: have a public option. Because there is no public option, I think that when it comes down to it, the Affordable Care Act will likely be found unconstitutional.

But conservatives who are championing this effort are only shooting themselves in the foot, because the problem is not going to go away. It may be one, five, or twenty years, but we will be having this conversation again, and next time, the message will be clear:

It may not be constitutional to force people to buy private insurance, but it is absolutely permissible to enroll everyone in a tax-financed national health insurance program.

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