In “Bad Medicine” the Cato Institute white paper exploring “The Real Costs and Consequences of the New Health Care Law,” Cato senior fellow Michael Tanner declares the individual mandate "perhaps the single most important piece of health care legislation.” By insisting that citizens have insurance –or pay a penalty– Congress has taken an “unprecedented” step, says Tanner. Like many who object to the mandate, he argues that “The government has never required people to buy any good or service as a condition of lawful residence.”
In fact, that isn’t quite true.
But before getting to what the federal government has or hasn’t required of its citizens in the past, let me say that I agree with Tanner on his first point: the individual mandate is the lynchpin at the center of the Accountable Care Act (ACA).
Why the Individual Mandate Is Central to Reform
Without the mandate, we could not require that insurers sell coverage to everyone, regardless of pre-existing conditions. In the past, some insurers have refused to cover adults and children who are very sick. In other cases, they set the premiums so high that a middle-class person who had the bad luck to be struck down by a crippling disease could not afford the coverage. Sometimes insurers even canceled coverage if a customer became ill, arguing that he or she had concealed the disease when applying for the insurance.
Under the new law, insurers won’t be allowed to shun the sick. They are required to cover anyone who applies for a policy, charging all customers in a given community the same price for the same coverage. (The only exception: smokers and older customers will pay higher premiums.)
But what does this have to do with the mandate? If the law didn’t insist that everyone have "minimal coverage" (or pay a financial penalty), many young, healthy Americans might well wait until they were injured, or seriously ill , before signing up for a policy—safe in the knowledge that no insurer could refuse them, or charge an exorbitant premium. If that happened, insurers would find themselves covering a pool made up largely of the ielderly, the disabled, and the chronically ill.. Premiums would sky-rocket.
If we are going to try to provide health insurance for all citizens, the healthy must join the pool—or pay a penalty that will help defray the cost of covering everyone else. Recently, when I was speaking at a conference, a medical student asked me: “Why should a healthy person help pay for someone who is sick?” I replied, “There but for fortune. . . ” He nodded, and seemed satisfied.
The very idea of health insurance is predicated on the notion that none of us knows who will be laid low by accident or disease and when. The great advantage of insurance is that it spreads the risk over a large group of people exposed to the contingencies of fate. It is worth remembering that most disease and injuries can be traced to the accidents of one’s gene pool (accounting for 30% of premature deaths), social circumstances (15%), “environmental factors” (such as air quality where you happened to grow up) (5%) , or being in the wrong place at the wrong time, whether on the highway, playing a sport, riding a horse, or crossing a street.
By paying premiums, we also “pre-pay” for the routine care that we all need. This, too, serves a larger social good. If we ensure that everyone has access to preventive care, with no co-pays (something the new law guarantees), it is less likely that someone will need long-term acute care at some point in the future—treatment that the rest of us would wind up funding through taxes, higher insurance premiums or higher hospital fees.
But while Tanner and I agree that the mandate is central to the legislation, he does not share my view that it is essential because we hope to approach universal coverage. While discussing the individual mandate, Tanner never mentions that it is a prerequisite for covering everyone.. By his lights, universal coverage doesn’t appear to be a major goal. (Later in the report, Tanner explains that it just isn’t doable. Under reform, he contends, insurers will continue to “cherry-pick” healthy patients by "locat[ing] their offices on the top floor of a building with no elevator; or provid[ing] free health club memberships while failing to include any oncologists in their network.” (I will reply to this argument when I come to that section of Bad Medicine. But, here, I can’t resist asking just one question: “Elevator or no, just who visits their insurance company?”)
From Tanner’s point of view, the mandate lies at the heart of the legislation because it is one way that the new law “rewrites the relationship between the government and the people,” while raising “serious constitutional questions.”
This brings me to the argument that the attorneys general of some nineteen states are making, as they file challenges to the Patient Protection and Affordable Care Act, while making the constitutionality of the mandate a key issue in every case. Many agree with Tanner that the mandate is “unprecedented”: “The government has never required people to buy any good or service as a condition of lawful residence.”
In fact, that is precisely what Congress did, back in 1792.
The Original “Individual Mandate,” Signed by President George Washington
In a provocative piece of legal research titled: “The Original Individual Mandate, Circa 1792,” and published less than two weeks ago on Health Reform Watch, Seton Hall Law School’s Bradley Latino explains: “The Militia Acts of 1792, passed by the Second Congress and signed into law by President Washington, required every able-bodied white male citizen to enroll in his state’s militia and mandated that he ‘provide himself’ with various goods for the common weal:
“‘[E]ach and every free able-bodied white male citizen of the respective States . . . shall severally and respectively be enrolled in the militia . . . .provid[ing] himself with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein . . . and shall appear so armed, accoutred and provided, when called out to exercise or into service.’”
“This was the law of the land until the establishment of the National Guard in 1903,” Latino explains. "For many American families, compliance meant purchasing-and eventually re-purchasing-multiple muskets from a private party. Being required to purchase a musket was “no small thing,” Latino continues. “Although anywhere from 40 to 79% of American households owned a firearm of some kind, the Militia Act specifically required a military-grade musket. That particular kind of gun was useful for traditional, line-up-and-shoot 18th century warfare, but clumsy and inaccurate compared to the single-barrel shotguns and rifles Americans were using to hunt game. A new musket, alone, could cost anywhere from $250 to $500 in today’s money. Some congressmen estimated it would cost £20 to completely outfit a man for militia service—about $2,000 today.
“Perhaps the most surprising aspect of the militia mandate,” he adds, “is how uncontroversial it was. For instance, although the recently-ratified Bill of Rights was certainly fresh on Congress’ mind, not one of militia reform’s many opponents thought to argue the mandate was a government taking of property for public use. Nor did anyone argue it to be contrary to States’ rights under the Tenth Amendment. Rather, the mandate was criticized as an unfair burden upon the poor, who were asked to pay the same amount to arm themselves as the rich.” [Unlike the Health Reform law, the mandate did not offer subsidies. Nor did it allow citizens to pay a penalty in lieu of buying a musket.]
“Indeed,” Latino notes, “the Militia Acts did nothing to defray costs, although a few years later Congress did appropriate funds to pay militia members for the use of their time and goods—in effect subsidizing the purchases.” He adds: “In fact, in light of the Militia Acts, the individual mandate to purchase goods or services to protect oneself and one’s neighbors can readily be described as “deeply rooted in the history and traditions of the United States. . . . The debate needs to be altered to accommodate this history.” (After appearing on Health Reform Watch, Latino’s piece was cross-posted on The Health Care Blog (THCB), where I found it. Hat-tip to Matthew Holt and THCB staff. I also read Health Reform Watch, but not as regularly as I should.)
Latino then comes to the crux of his argument: “As I continue researching the Militia Acts and the militia system, what surprises me most, and what seems most relevant to the current populist arguments against healthcare reform in general, is how invested Americans once were in the idea of personal sacrifice. My favorite quotation comes from James ‘Left Eye’ Jackson, an anti-federalist-leaning congressmen who was no friend of the Washington Administration:
“‘Though it may prove burthensome to some individuals to be obliged to arm themselves, yet it would not be so considered when the advantages were justly estimated . . . . [A]s this nation is rising fast in manufactures, the arts and sciences, and from her fertile soil may expect great affluence, she ought to protect that and her liberties from within herself.’”
Unlike Latino, I am not a student of the law; nor am I a constitutional scholar. I have no idea whether the Militia Acts would hold up as a precedent in court. But I do think that this is a wonderfully relevant piece of our cultural history. It reminds us of the responsibility that President Washington and other founders believed that we as citizens have, to “protect oneself and one’s neighbors,” even if that means requiring us to purchase the thing that will defend us—be it a musket, or an insurance policy.
I would argue that leaving 32 million Americans uninsured “threatens” our economy and our society, just as surely as an attack from abroad. When many don’t receive the care they need, productivity drops, resentments between the haves and the have-not’s widen—and all of us are exposed to the risks associated with living in an unhealthy and divided population.
(To be continued: When I complete this post, I will briefly consider what constitutional experts say about the legal issues, then turn to Tanner’s objections to asking all Americans to secure insurance that meets what the law describes as “minimum essential coverage” and, finally, his argument that young, healthy Americans will opt to pay the penalty rather than joining the rest of us in the insurance pool).
Did the government also provide subsidies so that everyone could purchase the mandated products?
It’s one thing to mandate one buy liability auto insurance, which is obviously affordable if one drives a car.
It is entirely different to mandate people buy a product which for the majority is unaffordable without subsidies.
Government should not be subsidizing private products to make them more affordable.
It merely comtinues the premium increases.
Don Levit
Agree Don. And, the Administration has already admitted that it’s really a tax instead of a mandate. When the insurance industry has to issue guaranteed issue individual policies I assure you rates will be higher than they are today. Anyone who doesn’t think so needs to change their medication!
Henry–
I’m afraid you’re mistaken.
In some states (including New York) we already have what is in effect guaranteed issue, so rates are not likely to go up because of reform.
Rates could go up if
drugmakers, doctors, hospitals etc. keep raising their prices while doctors and Hospitals “do more” but I think NYS regulators are going to insist on proof that insurers really need to raise rates, causing insurers to push back against hospitals that are overcharging.
Other states (such as Minnesota) have already achieved close to universal coverage, so reform won’t have much affect on prices.
You’ll see reform pushing prices higher in states that have failed to cover a large number of their citizens– particularly Florida and Texas. Though with the expansion of Medicaid (which the Federal govt will be paying for) the poorest Texans and Floridians will not be joining the Exchange pool.
Finally, it doesn’t matter whether you call it a tax or a mandate to buy insurance, everyone is required to contribute to an insurance pool (or pay a penalty). This is what the citizens of every other developed country in this world do.
The alternative is to leave milloins of Americans without access to care.
Henry:
Now that we know it’s a tax, it will go into the Treasury’s general fund, just like all other taxes, includung FICA and SECA, to be used for whatever the federal government decides to spend on.
There is no such entity as “dedicated taxes.”
It is an oxymoron.
Don Levit
I confess that at this point I can no longer tell principled opposition to universal healthcare from disingenuous posturing. This smells like the latter to me.
Whatever else has happened over the past year, it does appear to me that it is no longer politically possible to oppose healthcare reform. One can say “not this kind of reform,” but the cadre of those who say nothing needs to change because we have the (sic) “best heathcare in the world” is now very small.
Now, the strategy of those who oppose reform appears to be one of a thousand cuts. If the GOP wins a House majority, the strategy will be to prevent funding of the things needed to implement the reform bill.
Chris–
It’s hard to tell. Many people feel that:
a) in an ideal world, universal coverage would be great but it’s just not practical
b)we dont’ live in an ideal world, we live in a “second-best world “and
c) in the end, Americans who are really sick do get healthcare. Is it the best? Probably not. But they also don’t drive the best cars, eat in the best restaurants, live in the best homes.
“There will always be differences between rich and poor” many libertarians and conservatives say. “It is up to each of us to take care of ourselves, and our immediate family. I am not my brother’s keeper.”
I have known a number of libertarians (particuarly on Wall Street, and this is what they truly believe. They are not bothered by living in a society where the gaps between the “have’s” and the “havenot’s” are huge.
They believe that they deserve what they have, and that if the havenot’s tried harder, most of them could have more.
If you poll Americans, most will say that everyone should have care.
But if you ask if they are willing to help pay for it, the responses change.
I think that if Republicans have the votes they might well be able to gut Medicaid reform.
Most Americans dont’ identify with the poor, and the poor don’t have a lobby.
Most Americans would also be willing to cut subsidies for working-class Americans, and cut the insurance packages that working class and lower-middle class receive to very “basic” benefits. (No drug or alcohol counseling; limited rehab following surgery; limited or no mental health care; no IVF; no joint replacement unless the condition requires hospitalization, etc.
I agree that the cadre who believe that we have the best healthcare in the world is now very small. (Though a fair number of affluent Americans feel that they themslves have access to the best health care in the world.)
Conservatives will try to undermine the legislation in a thousand ways. They will no doubt try to undo the tax hikes–though I doubt the Senate would go along, and I’m quite sure the President would veto a repeal of tax increases. (We need the money, just to keep Medicare going.)
Conservatives won’t be able to touch the savings that should come from reforming Medicare– CMS doesn’t have to go through Congress to expand successful pilot projects.
Conservatives would have a very hard time blocking the savings that will come from paying Medicare Advantage less. At this point, insurers are not popular, and many seniors have watched their Medicare Advantage co-pays rise.
But the Health care battle will continue for the next 2 1/2 years. It could turn out to be a stand-off between the House and the Senate&Administration, with legislation frozen.
Finally, if we’re in the midst of a double-dip recession that will only get worse (which I think is likely) the economy and jobs will overshadow everything else.
I have to say that dredging up a mandate to buy guns from 200 years ago is a bit desperate – hope it works.
Here is the problem. The penalty for opting out is far too low. I am a young healthy male, too old to be on my parent’s plan, and earning too much to qualify for subsidies. I have two choices. A) Buy insurance at a radically inflated cost and become a low cost cash cow for the insurance companies. (High cost due to Community Rating, Gender Rating, and Minimum Coverage Requirements). B) Pay a small fine and purchase insurance if and when I need it. After all, pre-existing conditions must now be covered.
One may argue for a penalty increase. If that happens, it would force more healthy individuals like me in. But then there would be a strong incentive to over-utilize the system because I do not want to over-subidize others. Yes, genetics plays a part in overall health, but I’m talking about those who pop out 6 kids on a low income, those who don’t exercise and eat McDonald’s 4 times a week, smoke/drink a lot, etc.
AdamChi wrote:
If that happens, it would force more healthy individuals like me in. But then there would be a strong incentive to over-utilize the system because I do not want to over-subidize others
————-
Two points I wish to make here:
–First is that any use or overuse of the healthcare system comes at fairly large risk to the user. Between outright iatrogenic issues and the propaganda issue of what works or not, there are real risks involved in using the system, so maybe purposely overusing it does not make sense!
–There are easy and efficient ways to accomplish things, and then there are the tortuous overly expensive ways to do the same thing. Tax supported, single payer social healthcare coverage for all is the legal, efficient way to get this done, but since we are Americans with a powerful insurance propaganda lobby, we just can’t do that right off the bat. However, if the courts rule that forcing everyone to buy PRIVATE health insurance is ILLEGAL, it will be the biggest positive step to getting single payer social coverage THAT COULD EVER Happen! That is precisely why the powers to be will not allow this private mandate to be declared illegal. Too much money to still be made by a few powerful groups!
My thoughts exactly Marc. Our founding fathers literally fighting for their lives and the lives of their loved ones is pretty silly to compare to a mandate to pay for someone else’s fertility treatments or narcotic addiction. This line of thought must have been all of the rage on the new Journolist.
Tomorrow, Maggie will inform us all how the people of Missouri really support federal health care reform.
Marc, NG
Marc– I agree. But a great many of the precedents that our body of law is founded on are more than a bit desperate. (I have some reservations about our legal system, but that’s a different subject.)
NG–
You are entirely right: overusing the health care system so that your money is not used to cover others is hardly a shrewd move.
Overtreatiment exposes the patient to risk without benefit–it’s a dangerous strategy.
On single payer: we couldn’t move to single-payer because taxpyers could not afford the subsidies that millions of Americans who now have employer-based insurance would need.
Employers now subsidize 70% to 100% of those premiums.
Anyone who believes that if we had single-payer,employers would hike wages by the amount that they now lay out for insurance just isn’t familiar with the history of wages & benfits in this country.
Also, if we had single-payer, and Jed Bush became president in 2012 or 2016, (bringing a bevy of conservatives into Congress on his coat-tails) do you think you or I would be happy with the single- payer system as amended by Jed and his colleauges?
Think of what Margaret Thatcher did to the UK’s NHS. (She trashed it. They are still reocvering. )
Keep in mind that single-payer would be the only game in town: you wouldn’t have Kaiser or Geisinger or Intermountain as an alternative.
This is one reason why no country in Western Europe has a single-payer system.
They know that you cannot count on democracies to elect good governments all of the time . . (or even most of the time.)
Jegna–
Please re-read the post.
The Militia Acts was not about “fighting for our lives and hte lives of our loved ones” it was about “portecting oneself and one’s neighbors.”
That’s the huge difference.
Today, too many Americans think only about protecting themselves and their families.
Back then, the founding fathers expected that Americans would be willing to sacrifice to protect “oneself and one’s neighbors.” And at that point in time, “one’s neighbors” might live miles away and might well be strangers.
But thought collectively, all “all citiizens,” not just “me and my family.”
If they hadn’t thought collecitvely, we never could have achieved independence.
Alex–
As various news report point out, the vote came in a primary where REpublican voters greatly outnumbered Democrats (because their were some hotly-contested Republican races) and in general turn-out was low.
So this wasn’t a representative vote.
What it tells us is what we already know: Republicans object to health care reform. This is in part because they do not see universal coverage as a priority, in part becuase they want to “break Obama.” And finally, at this point in time, Republicans have become a small minority party. (Based on the number of Americans who identify themselvs as Republicans.)
The number of independents and Democrats who support reform is growing.
Maggie: I’m a bit late here, but I wanted to mention that one of the best arguments I’ve read recently in favor of the individual mandate is in Health Affairs, Spring 1994–a piece titled “Personal Freedom, Responsibility, And Mandates” by Robert Moffit, at the time the deputy director of domestic
policy studies at The Heritage Foundation.
Actually, I don’t know whether to laugh or cry when I read this piece but I would love to hear Mr Tanner’s views on how universal coverage could go from sound conservative policy to creeping socialism in 16 short years.
Rich–
Thanks much for your comment– I’ll take a look at the Health Affairs piece.
Back in 1994 many conservatives and libertarians tended to be much less extreme than the majority are today.
You can see the difference in Congress; back then quite a few conservatives were willing to work with liberals toward rational policy. Today, that just isn’t the case.
This is in part because, for some, their agenda has less to do with the issues and more to do with “Break Obama.”
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