Today marks the official one-year anniversary of enactment of the Affordable Care Act (ACA). Of course, the political honeymoon for the new health law's original marriage of expanded coverage, income redistribution, interest-group deals, budgetary smoke, and unpredictable regulatory mirrors ended well before its final signing ceremony.
Today, a clear plurality of the broader American public remains ready to return more than just a few of the defective or unwanted gifts it was offered. It does not seek further counseling. It wants a divorce from ObamaCare.
The individual mandate to purchase health insurance is at the heart of the irreconcilable differences. Instead of providing the glue that holds everything else in the new health care regime together, the mandate is a medical home wrecker that is tearing it apart. Opponents find the mandate to be constitutionally improper, politically implausible, and economically unnecessary.
The mandate does not even go into effect until 2014, yet it remains the most unpopular element of the new health law. It animates and unifies the broad coalition of Americans with a long list of additional grievances and lesser concerns about the sweeping legislation.
Even insured individuals are troubled by Congress imposing a legal mandate on other citizens to purchase something regardless of their wishes. They worry that this would actually operate as a gateway drug to even greater addiction to government control of health care.
Two federal district court judges already have ruled the ACA unconstitutional due to the unprecedented nature of the individual mandate. It threatens to eliminate any remaining limits on the federal government's power to regulate and force individuals to purchase whatever it chooses, under the Commerce Clause of the Constitution.
The Supreme Court ultimately will have to decide the constitutional future of Obamacare based on whether Congress can impose this mandate. At the least, the final decision remains in more doubt than most legal "experts" favoring the ACA originally thought was possible.
Politically, the individual mandate was driven by ideological impulses, deceptive mislabeling, and empty illusions. Those who wrote the new health law fundamentally believed that they knew better what was "good" for the rest of us.
They tried to persuade others that they would pay less for health care and health insurance if someone else could be made to pay more. A number of health industry groups initially thought an individual mandate would produce more paying customers, and make the other bitter pills in the ACA somewhat easier to swallow. Many politicians were eager to impose an off-budget requirement that private parties spend more of their own funds on insurance, rather than the unpopular taxes otherwise required to finance "universal" coverage dreams.
But one way or another, the real costs to carry out this scheme outweigh the gains, and the identifiable losers outnumber the mythical winners. Trying to force people to buy insurance is politically difficult when they cannot afford it. Hence, the ACA must recycle a large portion of any projected increase in premium "revenue" right back into taxpayer subsidies (or suppress it with price controls) to make the costly premiums seem somewhat less unaffordable (before driving those prices even higher!).
Unless a large number of new "customers" can be coerced into paying more for their health insurance than it actually appears to be worth to them, insurance purchasing mandates simply create a perpetual conflict among escalating costs, limited resources, and the empty guarantee of richer coverage.
Not surprisingly, the resulting penalties imposed under the ACA on those who fail to comply with this unpopular mandate are weak and unlikely to drive much of a permanent purchasing response. Moreover, the new health law's other requirements (guaranteed issue and adjusted community rating) will encourage more "just in time" enrollment by those who experience or anticipate costly illnesses, and longer periods of "going bare" without coverage by younger and healthier, but less affluent, individuals.
Facing serious constitutional challenges and persistent political opposition to an individual mandate, the Obama administration has tried to defend it by concocting a mix of half-baked economic arguments and exaggerated factoids. Its basic argument is that without such a mandate, uninsured individuals will continue to receive lots of uncompensated care. Private parties will pay for this free riding through cost shifting. Then, even more people cannot afford more costly insurance and become ... uninsured. (Cue the rinse and repeal cycle.)
In order to address those interrelated problems, Congress purportedly has to regulate private insurance even more tightly. It then must mandate the purchase of that insurance to carry out that overall regulatory scheme. This is supposed to be constitutional-either under its power to regulate interstate commerce or as a necessary and proper way to carry out its power to tax.
The above arguments are simply full of pre-fabricated holes.
Uncompensated care costs and cost shifting to private payers are relatively small problems when measured accurately. The uninsured actually receive much less care than the insured. Providing more to them will cost other paying parties more.
Emergency rooms are already crowded with Medicaid beneficiaries, whose numbers will grow even more under Obamacare. The Obama administration and Congress previously disavowed any claim that the insurance mandate was a "tax" instead of a "penalty." The Supreme Court has yet to rule that the commerce power extends to regulating the economic "inactivity" involved in merely thinking about whether to purchase something, but failing to do so.
We are one year into this Alice in Wonderland journey toward further implementation of Obamacare, in which plain words, established facts, and basic economic relationships have struggled to retain their normal meaning. We should put the individual mandate out of its misery. It eventually will be repealed, but it also needs to be replaced. There are less onerous but more effective ways to ensure necessary health insurance coverage for more Americans. They include:
- restructuring and targeting taxpayer subsidies
- extending pre-existing condition protection to anyone who maintains continuous insurance coverage,
- improving the value of health care,
- financing more robust safety net protections, and
- restoring more competitive and accountable private markets.