The Mandate

Notably absent from Erik’s defense of the Affordable Care Act is a discussion of the bill’s Constitutionality or the wisdom of compelling everyone to purchase private insurance plans. I find this mildly astonishing. Have we really become so inured to the expansion of government powers that folks who identify as civil libertarians – folks like Erik, or Andrew Sullivan – don’t bat an eye at the insurance mandate?

Maybe I’m deluding myself. Maybe I haven’t realized that libertarian concerns have become purely tactical – another stick to beat the ruling party with while you’re out of power. The Democrats did it while Bush was in the White House: After retaking the government,  they promptly entrenched their predecessor’s national security apparatus minus a few cosmetic changes. Meanwhile, the Republicans have eagerly seized on the language of liberty to attack a health care overhaul aimed at people who scare their donor base and don’t vote conservative anyway.

Besides, libertarian concerns are an elitist fixation. I’ve got bread on the table and haven’t been maimed in some horrific terrorist attack, so of course I have the luxury of whining about limits and liberty on the sidelines. Worrying about a health insurance mandate or warrantless wiretapping is the province of over-entitled dodos.

So yes, I understand the cynical case against taking the rhetoric of liberty seriously. But I tell you true: the insurance mandate freaks me out.  On some primordial level, I find the idea of being compelled by the government to purchase insurance deeply unsettling. And I’m baffled by how little concern this mechanism has raised in certain quarters. I read a story on Judge Vinson’s ruling that snidely identified his references to Madison and Jefferson as “Tea Party dog-whistles” (I’m paraphrasing from memory). You would think that the Framers’ insights would be essential to our understanding of the Constitution, but the perception of these issues has apparently become so jaded that invoking Madison or Jefferson invites comparisons to some crazy Beck-inspired rally.

To preempt the inevitable, I’m no tea partier, I don’t think we’re teetering on the brink of the totalitarian abyss, and I believe with all my heart that the ACA’s supporters think it’s the best pragmatic solution to a pressing social problem. But the mandate still scares me, and I’m shocked that a debate over something this significant elicits such dismissive responses from folks like Erik.

Please do be so kind as to share this post.
Share

159 thoughts on “The Mandate

      • I’m a civil libertarian with free market pragmatism built in, but I’m no card carrying libertarian, Mike.

        Will, a lot of things scare me a lot more than a fairly boilerplate healthcare mandate. Germany, the Netherlands, Switzerland…all countries with a mandate of some sort. Singapore has mandated savings. Actually Social Security is essentially mandated savings. We have plenty of precedence for mandates. I don’t like the corporatism but I don’t see it as unconstitutional.

          Quote  Link

        Report

    • “Libertarian grounds” may have been a poor choice of words. I think everyone who self-identifies as a liberal (to say nothing of conservatives) should be suspicious of sweeping new federal powers. Questions of constitutionality also transcend narrow libertarian concerns.

        Quote  Link

      Report

      • Absolutely Will. That’s been my position for quite awhile, and it’s why I’m dissappointed in liberals, moderates, Big Goverment Republicans, whatever — any American citizen who rolls over and takes this crap, even embracing the crap. Now, Prof. Fried says the government CAN force us to buy broccoli. Enough is enough, but, obviously not for some.

          Quote  Link

        Report

        • Mike, I see you are are of Prof. Fried’s testimony.

          Did you see the part where he discussed this exact argument and how it “proves too much.” It makes romneycare unconstitutional since states still have to abide by the 14th and 15th amendment.

          Unconstitutional is not a synonym for immoral, freedom destroying, or bad policy.

          Constitutional is not a synonym for moral, freedom enhancing, or good policy.

          The constitution isn’t magic. Really bad policy can be enacted including 100% tax rates with equal tax credits for all(i.e. communism) are constitutional. They wouldn’t be freedom enhancing in the least. They would be horribly oppressing. But they would be constitutional.

          Can you tell me why they wouldn’t be?

            Quote  Link

          Report

                • The Gov can force you raise your children up to a certain standard. You have to educate them, get them vaccinations, can’t beat or abuse them to much and are responsible for what they do for 18 years. If you don’t do those things the Gov will do it for you.

                    Quote  Link

                  Report

                  • Greg — you are comparing the protection of children’s rights as human beings to forcing us to buy brocolli? The education and vacination parts I understand, but beating and abusing? Hell, I can’t even beat and abuse my wife — something about violating her basic rights or some such nonsense. Seriously, though, are you sure about the brocolli thing being Constitutional? I draw the line at brocolli — I’m not even sure if I’m spelling it right.

                      Quote  Link

                    Report

                • Indeed they do via the same mechanism of the so-called mandate.

                  They charge me higher taxes for declining to raise children.

                  I.e. A non-child raising penalty.

                  I also get a non-church donating penalty, a non-corn grower penalty, I think you can see where this is going.

                  Indeed if the government were run by truly wicked men they could set the income tax at 100% for the 100k and below bracket and truly force me by offering a deduction of my 70% of my income for having children as the only possible deduction.

                  You tell me that isn’t forcing me to have children. Also tell me what in the constitution would prevent congress from enacting and the feds from enforcing it. It would still only be tax policy though.

                    Quote  Link

                  Report

  1. From Wikipedia:

    “Impose an annual penalty of $95, or up to 1% of income, whichever is greater, on individuals who do not secure insurance; this will rise to $695, or 2.5% of income, by 2016. This is an individual limit; families have a limit of $2,085.”

    I dunno. Is this really compulsion? It sounds more like a nudge. Either way, I still think it would have been less controversial to change the individual mandate into a timing requirement. That is, if you’re uninsured, you can only buy coverage at a certain time of the year (say, January and July) to prevent people from gaming the system. This seems like it would be consistent with Constitutional principles, and give less pause to people like you. I believe this is how they have constructed their healthcare system in Switzerland, so it’s not like this is a new idea. Why did the Democrats go with the individual mandate instead, even knowing about these issues? Probably has something to do with gaming the CBO score.

      Quote  Link

    Report

    • This seems like it would be consistent with Constitutional principles, and give less pause to people like you. I believe this is how they have constructed their healthcare system in Switzerland, so it’s not like this is a new idea.

      It’s what American insurance companies do now with regard to family members on group plans. I agree that this might be a better way to go. Somewhere I have a write-up on what I would have done in lieu of the mandate. I’ll see if I can find it.

        Quote  Link

      Report

        • Who pays for catastrophic coverage for those that decide to pay the penalty? There’s only so much you can do without automatic enrollment and taking it straight out of our paycheck. I agree that having universal catastrophic coverage would be a giant step forward.

          There is a logistical/political problem with it, though: when do you give up and deny treatment to a lost cause? People get upset when insurance companies do this, but when the government does it they are more likely to want laws passed guaranteeing more coverage. The Canadians have a degree of maturity that I think we often lack when it comes to these things. I’m not sure what the answer to this is.

            Quote  Link

          Report

    • The Trumwill Plan would go as follows:

      (1) In the event that you are uninsured and applying for insurance, PECs are not covered for the length of time that you were uninsured for a period not to exceed one year. (I am flexible on this. Six or nine months pay be better. If someone has been uninsured for 3/4/5 years or more, I could be convinced that 18 months may be more appropriate.)

      (2) There are no guaranteed rates except during or after coverage through a specified enrollment period. If you decide to insure yourself during non-OEPs, you can purchase stop-gap insurance according to your risk category. Time spent on stop-gap insurance counts towards the one year of no-PEC coverage.

      (3) Switching between insurance companies or plans must occur during the OEP, or else you are liable for higher rates according to your risk category until the next OEP.

      (4) Rescission is possible during the stop-gap phase, but only if (a) the missing information is immediately pertinent to claims filed and/or (b) outright fraud has occurred. After the OEP, rescission is not possible.

      This would (a) disincentivize foregoing insurance until you need it, (b) allow people to get insurance at any point during the year, (c) put an end to the practice of shutting out those with PECs. I’m flexible on the specifics. Maybe one year should be nine months or six, for example. Maybe PEC coverage should automatically begin after the OEP or there be some combination (six months minimum or the OEP, whichever occurs later – or something like that).

        Quote  Link

      Report

  2. With respect to the issue of general expansion of government and your “primordial” uncomfortably with the mandate why is it so important the level of government that implements it? Does the Massachusetts mandate make you similarly uncomfortable?
    Why is permitting individuals a choice of private companies worse than forcing everyone into a single government run program like Medicare?

      Quote  Link

    Report

    • I’m not really that offended by the Massachusetts plan, largely because states have traditionally been accorded far broader powers than the federal government. As a general rule, I also find expansive regulations at the local and state level more tolerable because I think state and local officials are more democratically accountable than their federal counterparts.

        Quote  Link

      Report

  3. Constitutionality aside, the mandate suggests a real failing in the policy development process. It’s like the policy developers just said “well if everyone bought insurance there’d be no problem, so let’s just make them”. This is precisely what Adam Smith was warning about when he criticised “the man of system”.

      Quote  Link

    Report

      • “it’s really just a way of giving insurance companies more business.”

        Um, no. Insurance companies simply pay for the cost of healthcare and add 3-4 points for administrative expenses and profit margin. Adding premium for someone who doesn’t use healthcare – while growing the pie – is meant to reduce the premium cost per insured by making the healthy assist in subsidizing the users.

        A good idea it might or might not be, but it’s not a strategy to feed insurers.

          Quote  Link

        Report

  4. Do I like the mandate? No, I do not. Here’s the thing, though – there is a real problem. Or rather, there are a number of closely interconnected real problems – high healthcare costs, medical bankruptcies, poor health outcomes – connected to uninsured and underinsured people. One solution to those problems is to force insurers to cover everyone for everything. The tradeoff you have to make if you pursue that solution is that everyone has to buy insurance. So is the mandate a price worth paying if that works? It would be, yes. Will it be in reality? Who knows – the ACA as it stands is badly compromised, but there is some chance of it working.

    I would have preferred a different solution. In fact I would prefer single payer, mandatory subsidised health savings accounts with catastrophic insurance or Wyden Bennet. But this is politics, and we got the most reasonable thing that could be passed.

      Quote  Link

    Report

    • “we got the most reasonable thing that could be passed.”

      I don’t think we can go that far. We got the thing that they chose to pursue, largely because they could get insurers on board and not try to kill it (too hard). But we don’t know that something more reasonable couldn’t.

      What we do know is that this is something that could be passed, it is a fairly fundamental reform as compared to most alternatives on offer (other than Wyden-Bennett), and I agree with you that it has a fighting chance to address some of these issues. And what’s more we can change it if it sucks. But for now I think these facts about it recommend it pretty well on their own.

      We’ll never know what things could improve the status quo until we try to do some of them (I realize that is the perfect distillation of the dreaded liberal tinkerer, but it’s the case), and in an environment in which effecting change is extremely difficult once inertia has set in, any movement from a bad status quo has some inherent value to it, if only inasmuch as it brings about a less entrenched new status quo that people will have less vested interest in, be less adapted to, and therefore more willing to change yet again. This is why I have argued from the beginning that even if you hate this reform, unless you really don’t hate the status quo, you have some reason to support it (maybe not enough to get you all the way there, but some). It could be the first step toward an outcome that is much more acceptable to you, though that will depend much on your personal commitment to making that happen. There is a reason the president welcomes ideas about how to change the law, but not attempts to undo it entirely.

        Quote  Link

      Report

      • Okay, I don’t know for sure that this was the most reasonable thing that could have been passed. I’ll defer to people who understand the legislative process better than I do on that one – the alternatives certainly seemed to have higher obstacles to overcome.

          Quote  Link

        Report

    • > One solution to those problems is to force insurers to
      > cover everyone for everything. The tradeoff you have
      > to make if you pursue that solution is that everyone
      > has to buy insurance.

      This assumes facts not in evidence.

      Aside from the fact that we don’t have to partake of this particular solution, we could still force insurance companies to have a reasonable default policy that was available to everyone. It doesn’t need to cover everything.

      And we don’t, necessarily, need to force everyone to get it. We just need to make it so that if you don’t have insurance, and you do opt-in, you have to pay the vig.

      There’s lots of mechanisms to do that.

        Quote  Link

      Report

      • If you force insurers not to discriminate against people with pre-existing conditions, you are forcing them to take a loss. This is what the other components of Title I of the ACA do. So you have to do something, or health insurers will go out of business. You could, I suppose, subsidise them directly, but that’s going to be about as popular as bailing out AIG every year for the foreseeable future. Except AIG never killed your grandmother. What mechanism other than a mandate would work?

          Quote  Link

        Report

        • For all the reasons you pointed out in your good comment previously, people have been incentivized to buy insurance that they don;t strictly need, already. So there are a number of healthy people already apying in to the system. i don;t think we know to a certainty that ending PEC discrimination without a mandate puts insurance out of business. That’s why I agree with Boonton that it would be interesting to run the experiment, and why I regret the lack of a severability clause – it would make judges think twice about invalidating the mandate. But it seems Judge Vinson took it in his own hands to take that issue off the table (though obviously SCOTUS will have to wrestle with it one way or the other anyway).

          But you raise an interesting question about what happens if we do drive insurance companies into the red. Are we really so sure that subsidizing them would be so unpopular or unwise? After all that would essentially turn them into private non-profit regulated utilities, which is basically the system that I believe it’s Germany has that health insurance wonks tend to drool over. Not single-payer. Not even public. Just efficient.

            Quote  Link

          Report

          • You’re right that it would be an interesting experiment. The way American firms tend to respond to regulation doesn’t make me very optimistic about the consequences, but its true that one possible outcome is public subsidy to insurers – I just worry about what they’d then do. I see an ever-growing spiral of regulation as insurers tried to evade their responsibilites and take the money anyway and congress tried to get them under control.

            One precedent is Switzerland, which has essentially the system the ACA will eventually introduce in the US. Their insurers ultimately got together and turned themselves into non-profits, in spite of the mandate.

              Quote  Link

            Report

                    • It’s never really come up with Dr. Wife or any of her colleagues, so I don’t know. There has been a lot more consolidation among providers, though, with more and more (like my wife) working for a hospital on salary rather than as an independent business. If docs were the reason, maybe there will be a renaissance.

                      I figured that one reason it never caught on was that it cut into the all-important “choose your own doctor,” but I can’t say that I have any idea what restrictions Kaiser puts on seeing outside doctors.

                        Quote  Link

                      Report

                    • Its the same as any other HMO – you can go out of network or to a non-primary physician if its urgent. I’ve never really understood the “choose your doctor” thing, but then as I said elsewhere, I grew up in a very different healthcare system.

                      Its interesting that more doctors are on salaries. If anything that should be a good sign.

                        Quote  Link

                      Report

                    • Honestly, I’ve never been all that attached to any of my doctors, but I think it’s a perk that a whole lot of people are used to. I remember during the 90’s that was a real constant theme. Then HMOs started offering PPOs and it died down a little bit. I suspect it mostly comes down to what you’re used to.

                      Here’s an interesting tidbit from the WSJ:

                      Some 65% of doctors who changed jobs in 2009 moved into a hospital-owned practice, while 49% of doctors out of residency were hired by hospitals, according to the Medical Group Management Association. In its 2010 census, the American College of Cardiology reports that nearly 40% of private cardiology groups are currently integrating with hospitals or merging with other practices.

                        Quote  Link

                      Report

                    • Yeah, although people must be really attached to it. The out of pocket cost difference between a good HMO plan and the equivalently priced PPO plan is huge, even if the PPO user never actually goes out of network. We offer both, both at the same cost, and most of my colleagues take the PPO. In my view they must really love their doctors.

                        Quote  Link

                      Report

        • > If you force insurers not to discriminate against
          > people with pre-existing conditions, you are
          > forcing them to take a loss.

          No I’m not. There’s lots of ways to amortize that loss, including giving a lot of it back to the dummy who didn’t have insurance until they needed it. Again, there’s lots of ways around this.

          Look, insurance actuaries are some of the most mathematically dependable folk in the universe, all right? They make economic forecasters look like morons. Hell, they make *rocket scientists* look like “just decent” mathematicians.

          Taken across a large population, with a fairly predictable life expectancy, they do one hell of a bang-up job. Insurance companies can’t predict when *you’re* going to die, but they can predict within a remarkably accurate model what their costs are going to be, for their population of clients. They might not know when Joe is going to die, but they know that they’ll have X fatalities within their 33-35 year old male subscribers this year.

          So here’s just one alternative. Insurance companies are required to provide lifetime service options. Service packages can still vary, duration doesn’t.

          The cost of that option is variable based upon date of acceptance. So if I hook myself up with insurance at age 1, I’m going to pay $N a year, every year, for the rest of my life. If I hook up myself with insurance at age 25, I’m going to pay $N + $M a year, every year, for the rest of my life. If I hook myself up with insurance at age 60, I’m going to pay $N + $Q a year, every year, for the rest of my life.

          If I want to change my coverage from plan A (maybe only catastrophic coverage) to plan B (more comprehensive coverage), they can charge me the rate that I would normally pay, plus the pro-rated difference for the years I didn’t have that coverage. “Wait!”, you say, “That means I’m paying for service I didn’t get for the years I didn’t have plan B!”

          Yes, that’s right.

          Yes, if you never have to go to the hospital (not very likely), you will be paying for something you never use. That’s what insurance is all about.

          Yes, if you have *no* insurance and you get a catastrophic incident, the insurance company is going to take a substantial portion of your income for the rest of your life. Beats being a meat Popsicle, right?

          There are lots of other potential models. Most of the ones that work without a mandate involve highly rewarding people for getting good, comprehensive coverage very early and keeping it for their lifespan, and very heavily transferring free rider cost back onto the free rider population when they opt-in.

          For most non-free riding people, they will pay into such a system much more than they will ever take out, but their payments will be very small and almost cosmetic compared to what they pay now. Some of this goes to subsidize the free-riding population, but the burden of that is amortized across a very large population of active participants.

          For most free-riding people, they will wind up paying heavily to subsidize the remainder of the free-riding burden.

          Give it ten to fifteen years at most. Everybody will get insurance at birth, because everyone will know somebody who pays $15 a month for life and always has, and somebody else who pays $1000 a month for being a jackass and running around without insurance until they lost their leg in a motorcycle accident.

            Quote  Link

          Report

    • “One solution to those problems is to force insurers to cover everyone for everything. The tradeoff you have to make if you pursue that solution is that everyone has to buy insurance.”

      The first sentence is the problem here – you can’t insure for everything… hence the talks of “death panels.” If you are simply asking all to buy insurance to fund insuring everything, then ou haven’t fixed the underlying problems – you’ve only pushed back the clock for Daylight Savings. Initially price per insured will indeed go down, but at the rate of growth in cost we’ll be in the same situation we are now in a few years.

        Quote  Link

      Report

  5. K
    Given the fairly lengthy history of the mandate in both the US and Europe (see the Netherlands and Switzerland) I don’t see how you can characterize it as a “failing in the policy development process.” It’s a tried and tested policy.

      Quote  Link

    Report

    • Tried and tested doesn’t mean its good policy, it just means its not so bad that it causes the whole nation to collapse. Besides which I’m not suggesting mandates are necessarily a bad idea in all cases, merely that imposing one won’t sole the US’s health care problem.

      The problem the mandate is trying to solve is that without it community rating and guaranteed issue will make the insurance market unviable. Rather than take the hint that community rating and guaranteed issue are a really bad idea, they decided to paper over the cracks by forcing healthy 20-year olds to pay far more for health insurance than it is worth to them.

      The solution is to stop treating insurance like it was welfare. Insurance is a risk management tool, designed to accommodate risk-averse people who can afford the expected cost of a future event, but are worried about unlikely but highly adverse outcomes like your house burning down, or you getting cancer. If you can’t afford the expected cost of those events then your insurance will be too expensive to afford and that’s because insurance is not a subsidy.

      Freddie is entirely correct that markets won’t help produce certain distributional outcomes, that’s not what they’re for. But the solution is not to torture health insurance into the monstrosity that it has become in the US, but to use welfare. Because that’s what you do when people can’t afford somethign essential, you give them welfare. Or you don’t, that’s a political decision. But to try and turn insurance into a welfare system is the height of stupidity. And to try and paper over that stupidity with a mandate just piles one absurdity on top of another.

        Quote  Link

      Report

      • But health insurance in the US isn’t insurance. Hasn’t been for at least 20 years. Its a kind of massively subsidized and scrupulously unfair redistributive savings plan. Like social security only privatized and even less fair. Thinking about is as insurance just confuses the issue. Guaranteed issue, community rating and the mandate just eliminate the final pseudo-insurance-like elements from the scheme and thereby make the redistribution at least somewhat fairer. Yes, it is possible to do better in theory. However, given the delusional fever dreams that pass for political ideology round here, possibly not in reality.

          Quote  Link

        Report

        • If I’m going to limit my policy advice to what I think politician would be willing to do, I might as well just shoot myself now :)

          My whole point is that this is a stupid policy, designed to correct for previous stupid policies. The fact that this is also true of most enacted policy is irrelevant. After all I’m trying to change the political reality, in what miniscule way I can.

            Quote  Link

          Report

  6. I have to wonder why the framers of the Constitution never wrote about a right to health care.

    For all the fixation on the Canadian system, I haven’t heard many people extolling the Mexican system. It works great.
    Pharmacists can write a prescription for many common maladies, so there’s a reduction in costs there. Yerberias all around like they were Walgreen’s or something. All dirt cheap.

      Quote  Link

    Report

  7. The Militia Act of 1792, signed by none other than George Washington, mandated that all able bodied men purchase a gun.

    That every citizen, so enrolled and notified, shall, within six months thereafter, provide himself with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein, to contain not less than twenty four cartridges, suited to the bore of his musket or firelock, each cartridge to contain a proper quantity of powder and ball; or with a good rifle, knapsack, shot-pouch, and powder-horn, twenty balls suited to the bore of his rifle, and a quarter of a pound of powder…

    Without any subsidy for those who couldn’t afford to buy one.

      Quote  Link

    Report

  8. Will, I suspect that, as you grow older, the government’s assumed power will freak you out more and more.

    Another thing to watch out for: you’ll say something like “the promises never delivered, the benefits never materialized” and people will respond with some variant of “YET!” or “that’s because it was sabotaged by the opposition” or “it wasn’t sufficiently funded”. Or, if they don’t consider you a friend, they’ll speculate about why you’re pointing such things out.

    Keep watching.

      Quote  Link

    Report

  9. I was just thinking… how is the insurance mandate any different from the mortgage interest deduction in the tax code? The mandate taxes people who do not purchase health insurance. The mortgage interest deduction taxes people who do not have a mortgage because they purchase homes with cash, rent, or have already paid their mortgage. Now, if you’re going to suggest that the mortgage interest deduction is unconstitutional for the same reasons, I’m all for it, because I don’t think subsidizing people making reckless decades-long bets on the local labor market is very wise.

      Quote  Link

    Report

    • For me personally, if the mandate had been expressed as a tax, I would be defending it wholeheartedly. In fact, prior to its boosters’ insistence that it was not a tax, I did defend it (for more, google: trumwill hitcoffee mandate). But in the law they called it something else and in public comments by those that made the bill into law, they vehemently objected to the notion that it was a tax.

      From my perspective, it ultimately doesn’t matter. It’s close enough to a tax that it should probably count. I think that is ultimately what will be determined. But it’s not a slam-dunk issue.

        Quote  Link

      Report

      • OK let’s say you’re free to rewrite the law to ‘express’ the mandate as a tax. What specifically do you change? Do you drop criminal penalties for not complying with the mandate? Nope, the law already specifically says the IRS can’t go after anyone criminally. What specifically makes the mandate not a tax except the shorthand pundits and analysts use in talking about the bill?

          Quote  Link

        Report

        • Put the words “tax” and “deduction” in the bill itself, perhaps, rather than using the word “penalty.” Functionally, it’s pretty close to a typical tax. I say “pretty close” because there are a few differences (a minimum and a deduction based on either the minimum or a percentage of your income rather than being a flat deduction or based on an expenditure) that make it a little unlike most taxes I am aware of.

          Ultimately, I don’t buy it. I think it is a tax. But, again, I don’t consider it to be a slam-dunk issue {shrug}.

          Incidentally, it’s interesting that when the Republicans talked about how they want every law to cite the Constitutional authority under which the law is passed, I thought they were grandstanding. Well, I still think they are. But it would have been helpful in this case.

            Quote  Link

          Report

          • I don’t think it would have been very helpful since courts are not limited to such citations. A law may be justified under serveral different clauses, just because Congress cites the wrong one doesn’t mean the law itself is unconstitutional or that Congress has to go back and ‘rewrite’ the laws authority like a kid who got his homework wrong and has a stern teacher who makes him redo it.

              Quote  Link

            Report

    • Aaron:

      The gov’t is free to give deductions bases on its power to raise revenues but not free to make you buy something. How easy is that? That mandate doesn’t tax, as it is not designed to raise revenue, it penalizes, just b/c the penalty is collected by the IRS doesn’t make it a tax.

        Quote  Link

      Report

      • 1. Not designed to raise revenue? The IRS collects it, it goes into the Treasury. That’s raising revenue.

        2. Game over, once you say the gov’t is free to give deductions you can’t specify a real difference between this ‘mandate’ and tax deductions. How do I get a tax deduction for solar panels without buying them? How do I get a mortgage interest or first time homebuyer deduction without buying a home? Or a credit for a super-efficient car without buying one? If you read this bill as an impermissable mandate to buy insurance then how do you not read the tax code as an impermissable mandate to have children, buy homes, buy solar panels, electric cars, donate to churches and charities etc.? The only difference you have is perception. Pundits talk about the ‘individual mandate’ in the health care bill but don’t talk about a ‘have babies’ mandate in the tax code…even though the cost imposed on the childless in the tax code is a lot more than the health bill.

          Quote  Link

        Report

        • My understanding is that the language of the bill is what is important. If the ‘mandate’ had been written down as an across-the-board tax hike with a deduction or credit for those who carry private insurance, this would be a non-issue. It’s because the language of the bill (AFAIK) dictates that people buy a product from a private company or pay a penalty that makes it bad.

            Quote  Link

          Report

          • You might be surprised that ‘mandate’ is not actually in the language of the bill (at least in the section regarding what we call the ‘individual mandate’).

            An across the board tax hike wouldn’t resolve the issue that the anti-mandatites are expressing here. Look imagine Congress grants a $2,000 tax credit for having a kid. The fact is you can argue that could have been a $1500 tax cut for everyone rather than a $2K cut for those who have kids. By the reasoning here, that would still be a ‘mandate to have kids’. Except it’s not and no one seriously thinks it is.

            Suppose you already had a $2K tax cut for having a kid and congress expanded that to a $2500 tax cut. Again same thing, I don’t have a kid and you do but otherwise we are exactly the same. I pay $500 for not having a kid therefore I’m a victim of a ‘have a kid mandate’.

            Either way you work it, you can’t consistently claim that the ‘individual mandate’ isn’t a tax and must be struck down without also striking down almost every piece of ‘social engineering’ in the tax code.

              Quote  Link

            Report

  10. Not a big fan of the mandate myself, mostly because I’m not sure it will work, but if I don’t find the constitutional arguments borderline ridiculous, I find them outright, obviously ridiculous.

      Quote  Link

    Report

  11. Doesn’t it all come down to how we define “mandate” and “tax” and “penalty”? For instance, I could argue that my inability to deduct any portion of my rent payment from my tax bills is a “penalty” for not owning a home (where a percentage of the mortgage is tax deductible). I could then argue that home ownership is mandated and I am being fined for not participating. It is not the best argument in the world, but I think it points out how the government gives all kinds of financial incentives or disincentives for behaviors or activities it finds either good or bad. This is problematic for a variety of reasons, but there is no denying that it is how things are done. I think the law put forth was poor in how it framed this whole situation… if I was them, I would have simply raised everyone’s taxes by whatever the “penalty” is and then offered a tax deduction equal to that for everyone with insurance. You accomplish the same thing, but without a mandate.

    And that gets to the heart of the matter… are we objecting to the government using financial incentives? Or the language and methodology around this current incentive (or, really, disincentive)? If it is the former, than we should probably attack much larger situations than the health care mandate; from what I understand, the penalty or whatever it is will be quite minute. If it is the latter, than we must examine why we are so acutely bothered when this is already going on, just under a different name. And where we will be left if the government does what I just suggested and do the same thing the way they always have.

    FWIW, I am in favor (as I’ve stated elsewhere) of major health care reform, but never once supported a mandate. And I oppose most of the tax deductions that are given for supposedly “desired” behavior.

      Quote  Link

    Report

    • And that gets to the heart of the matter… are we objecting to the government using financial incentives? Or the language and methodology around this current incentive (or, really, disincentive)?

      The heart of the matter is that the people pushing this do not feel liberty is at stake. IMO they compare unfavorably to Birthers. Bithers, who don’t believe Obama is a ‘natural born citizen’ are wrong in fact but right in principle. The Constitution does seem to restrict the office to ‘natural born citizens’, their problem is not reading the Constitution honestly but evaluating facts honestly. The argument here though is a lot more like those people who get a candidate kicked off the ballot because his petition was supposed to be submitted on double sided paper instead of single sided. Even if they technically have the law on their side it’s hard to feel like they are doing a great service for democracy.

      At the end of the day the fact remains that even if everything said here by the anti-mandatites is 100% true the fact remains that a refundable tax credit for buying your own insurance would effectively be the same policy. A major law that was built on debate and real compromise is trying to be repealed not by the results of an election but by playing what are essentially laywer games.

        Quote  Link

      Report

      • Boonton-

        I agree with you. I suppose when I said what the Democrats SHOULD have done, what I meant was what they should have done if they indeed wanted to promote the having of health care (or penalize the lack of healthcare) without running afoul of the law. I am against the mandate for a variety of reasons. And am against promoting so called “desired behaviors” through the tax code. My larger point was that I don’t know if the mandate is really doing anything that isn’t already being done, just dressed up in different clothing. If we really are upset about the government giving or taking money to the people that act the way it wants, there are probably bigger fish to fry than this current matter.

          Quote  Link

        Report

      • TVD-

        I’m not arguing that its right, only that their isn’t any real difference between the mandate penalty and other forms of taxes and tax breaks. So, the government, with some better wording and management, could accomplish the exact same thing.

        If you ask me, most of these tax breaks are wrongheaded and should be eliminated.

          Quote  Link

        Report

        • I hear you, BSK—tax laws as an instrument of social policy should make libertarians especially nauseous.

          My best understanding is that the Dems, in forcing the health care thing through, couldn’t get the “whole loaf” that would have made the bill less vulnerable to legal challenge.

          One problem in making it a “tax” was that all revenue-raising bills must originate in the House, per the Constitution. But it was the Senate bill that passed and was signed by the president. [As you recall, the maneuvering in Congress was a very close thing, and would not have survived a proper restart.]

          But the point I’m making here is that nobody’s required by law to buy a house, or take the deduction for that matter. This goes back to Jason’s original point about action and inaction.

          That said, I’m not too involved with all this. Seems like Anthony Kennedy will decide; some say he is at root a libertarian, and might surprise.

          There’s also the other scenario where it’s Vinson’s decision that they take up, and Elena Kagan will have to recuse; a 4-4 vote will leave the Vinson decision standing.

          But on the whole, I admit skepticism that in the end, principle will have much to do with the outcome. The case is more interesting to me as a limning of the issues, and perhaps a reexamination of Founding principles re enumerated powers vs. limitless ones.

            Quote  Link

          Report

          • One problem in making it a “tax” was that all revenue-raising bills must originate in the House, per the Constitution. But it was the Senate bill that passed and was signed by the president.

            Problem: The bill also raises the tax cap on earnings subject to Medicare’s payroll tax and I haven’t heard anyone argue against it on the grounds that it didn’t originate in the House. If killing the bill in the courts was that easy you’d think it would have been raised by now.

            But the point I’m making here is that nobody’s required by law to buy a house, or take the deduction for that matter. This goes back to Jason’s original point about action and inaction.

            But here’s the problem. There’s nothing in the law that says you have to buy health insurance. If you don’t buy health insurance you pay a penalty just as there’s a penalty for not having a kid, not buying a house, not making various donations to charity etc. etc. If you want to reimagine Constitutional law to void all social engineering aspects of the tax code then go ahead and advocate that. If you aren’t, though, you’re just changing the rules to kill on particular bill. In other words what is being advocated is 100% pure judicial activism.

            The only reason we are talking about the Constitutionality of an ‘individual mandate’ is because pundits refer to the tax penalty in the bill as a mandate. Technically, though, there’s no reason why you couldn’t refer to the tax codes benefits for having kids as a ‘mandate to have babies’. Now it’s not that pundits are being dishonest, it’s that when you are talking about whether or no something is a good policy you care about substance. But law cares a lot about form. A true mandate to, say, ‘have babies’ would be a very scary thing for a gov’t to enact. But in terms of policy discussion people tend to gloss over the fact that there’s a difference between a ‘mandate’ to have babies and a policy that increases the costs of not having babes. In form they are not the same thing at all.

              Quote  Link

            Report

            • Thx, Bob.

              Mr. Boonton: A de facto “penalty” is not the same as a de jure penalty. “Tantamount” isn’t the same thing as “is.” Neither is your failure to qualify for the Earned Income Credit because you make too much money a penalty, although we might call it a “penalty.”

              As far as the “originating in the House” bit, I’m just passing on an argument I’ve read elsewhere but not here. It may or may not turn out to be significant.

                Quote  Link

              Report

  12. I believe the actual text of the ‘individual mandate’ can be found here around page 325 http://docs.house.gov/rules/hr4872/111_hr3590_engrossed.pdf

    Several quick observations:

    1. A longish preamble/discussion in the bill talks justifies it based on the interestate commerce clause. How important that is I’m not really sure.

    2. The term mandate does not seem to be present, it’s in a section called ‘individual responsibility’.

    In terms of it being a tax, the following strike me on a fast reading:

    1. The term used is ‘penalty’ rather than fine. As I’ve pointed out the word ‘penalty’ often appears in terms of taxes (i.e. a ‘penalty’ for filing late, for taking money out of your IRA too soon etc.) As has also been pointed out the IRS & gov’t is specifically prohibited form using it’s law enforcement powers to collect this thing if it is really a fine rather than a tax.

    2. The individual reports this on their Income Tax Return. An odd place to report something that isn’t really a tax.

    3. Perhaps most damming of all (see page 329), individuals are exempt from the penalty if they ‘cannot afford coverage’. How do you know if you ‘cannot afford coverage’? It’s based on whether the cost of coverage would exceed 8% of your adjusted gross income. In other words this penalty impacts you if your income goes higher but doesn’t if your income goes lower or disappears. In other words it’s a damm INCOME TAX. Note that most actual criminal penalties are not income dependent. When we hear of the fine for passing a bad check or speeding we don’t think the fine depends upon our income but this penalty does. Now granted it’s unlike the regular income tax in that it’s a flat amount as opposed to a % of our income, but nothing in the Constitution says income taxes must be based on a percentage of income rather than being flat amounts.

    So now the problem with this thread is that there’s no real mandate. We can talk about a mandate but legally there’s no real mandate there. You are perfectly free to decline coverage and pay the tax (aka penalty). Doing so is not illegal. Without a mandate you’re back to an income tax and when you go back to the income tax you’re kinda stuck here when it comes to this court nonsense. You are either advocating a very radical reading of the Constitution which would have to undo all ‘social policy’ based tax deductions and credits or you’re advocating pure judicial activism.

      Quote  Link

    Report

      • A penalty is assessed for failing to comply with the legal obligation to buy health insurance [from a private party, mind you]. The word “mandate” is not necessary for the concept to hold. Neither is the euphemism “personal responsibility” separable from the concept of “legal obligation.” Words, words, words.

        Had they been able to write the law without the penalty, that everyone except the non-complier gets a tax break, no prob. But that would have defeated the whole purpose, to compel the young and presumably healthy to subsidize the private risk pool.

        Had it been a public risk pool like Medicare, SS, etc., smoother sailing. But the lack of a “public option” was precisely why the bill managed to squeak through in the first place.

          Quote  Link

        Report

        • Whether it is phrased as a penalty for not getting health insurance or a break for for not getting it is not particularly relevant, as far as I am concerned. The key component to me was whether it was meant to be an alteration of the tax code or merely a fine collected by the IRS. The language in the law pretty clearly reads to me as the former.

          Now, if critics want to sue on the basis that it did not originate in the House, they might have a point. But, at the moment, that is not what they are arguing. If they raise that argument, I’ll take a look.

            Quote  Link

          Report

        • tom

          A penalty is assessed for failing to comply with the legal obligation to buy health insurance [from a private party, mind you]. The word “mandate” is not necessary for the concept to hold.

          OK previously I had someone say to me that “individual mandate” was the operative phrase that made the bill illegal. For the record, that phrase exists only in the minds of pundits who talk about the bill, not the bill itself.

          Next, is there a ‘legal obligation’ to buy insurance in this bill? As I pointed out when you usually hear the world penalty is relates to taxes but is usually something you can legally do. For example, there’s a penalty for early withdrawl of your 401K but it’s something you can legally do. In this bill if I went to a lawyer or CPA and told him I didn’t want to buy insurance but had plenty of money could he tell me “ok just pay the penalty”? If so it’s not really a mandate because such professionals are ethically obligated not to advise their clients to break the law.

          Had they been able to write the law without the penalty, that everyone except the non-complier gets a tax break, no prob. But that would have defeated the whole purpose, to compel the young and presumably healthy to subsidize the private risk pool.

          So this isn’t about any principle really here but a rather semantic argument over form. You’re saying Congress can pass a $750 penalty on all taxpayers coupled with a $750 credit for all who have coverage or who have a certain level of low income….but Congress can’t save some paper and just put a $750 penalty on taxpayers who don’t have coverage? Even if you’re right this is analgous to those politicians who get candidates kicked off the ballot because the margins on their petitions are a quarter inch off from that specified by law.

          Had it been a public risk pool like Medicare, SS, etc., smoother sailing. But the lack of a “public option” was precisely why the bill managed to squeak through in the first place.

          Possibly but I don’t see why this is important. If a public risk pool is very important then champion it as an addition to the bill. I don’t see how it is relevant to the Constitutional question.

            Quote  Link

          Report

        • > But that would have defeated the whole purpose,
          > to compel the young and presumably healthy to
          > subsidize the private risk pool.

          This is not the correct way to look at this, by the way. In fact, it’s utter garbage.

          This whole idea that the “young and healthy” are subsidizing the risk pool is utterly meaningless if everyone always has coverage. It’s only a data point of value when people *don’t* have coverage.

          If the *actual* *amortized cost* of insurance is properly assessed, then the way the whole thing works is like this:

          Total Amount Contributed by Population = (Total Amount Withdrawn By Population) + (Expenses For Management).

          If “Population” == “Everybody”, then you’re not subsidizing anybody *except your future self.* Your rate is assessed by your lifetime projected expenses, spread across your lifetime payments.

          Yes, it does mean that *some* individuals will pay more into the system than they take out, just like *some* individuals will pay less into the system than they put in. But that’s not in any way “subsidizing”. That’s just risk amortization – which is what insurance is supposed to be in the first place. That’s the whole effin’ point.

            Quote  Link

          Report

    • You people are just determined to be controlled. The only thing I can figure is that you think you’re going to get free healthcare. So the government can tax/penalize us if we don’t buy what they want us to buy? I’m confused. If the government says everyone has to buy a water filter, and those who don’t buy one have to pay a fine, then this is just a tax, not a mandate to buy water filters?

        Quote  Link

      Report

  13. Will-

    I also wanted to thank you for your continued awareness of how your personal situation in life informs your opinion. One of my major complaints of most libertarians is how they fret over issues of liberty that are seem major to them but often pale in comparison to far greater issues faced by far more persecuted or marginalized groups. All of these issues are deserving of attention, but I think, as a function of privilege (be it race, SES, religion, gender, etc.) many libertarians often lose the forest for the trees.

    You should have seen the debate I got into with a bunch of folks over on Radley’s site who claimed that Native American groups who had signed, legal contracts violated by the US Government had no rights to reclaim the land stolen from them.

    Anyway, no need to respond, but I do appreciate your self-awareness on these issues.

      Quote  Link

    Report

Leave a Reply

Your email address will not be published. Required fields are marked *