The individual mandate: ineffective, overreaching, unsustainable, unconstitutional and unnecessary

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U.S. President Barack Obama is applauded after signing the Affordable Health Care for America Act during a ceremony with fellow Democrats in the East Room of the White House Mar. 23, 2010 in Washington, DC.

Article Highlights

  • Problems exist with PPACA individual mandate beyond its constitutionality.

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  • PPACA individual mandate is constitutionally improper, administratively challenging, politically implausible, and economically unnecessary.

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  • Actual cost shifting effects of PPACA individual mandate are limited.

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Executive Summary

The individual mandate: ineffective, overreaching, unsustainable, unconstitutional and unnecessary

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Whether or not the individual mandate in the Patient Protection and Affordable Care Act (PPACA) proves to be constitutionally valid, it is based on mistaken premises, faulty economic analysis, short-sighted politics, and seriously flawed health policy. The relationship between the mandate and the problems it purportedly could solve always has been tenuous and contradictory at best. Opponents find the mandate to be constitutionally improper, administratively challenging, politically implausible, and economically unnecessary.

The strongest constitutional law arguments against the PPACA’s individual mandate begin with the essential point that it is unprecedented and not bound by any limiting principle. It seriously threatens the concept that enumerated powers under the Constitution set some limits on the scope of permissible federal authority. The mandate also threatens to encroach on the traditional police powers reserved for state governments and may or may not be “necessary” to carry out and enforce other federal insurance regulation authorized under the new health law. But it is even less likely to be “proper” in accordance with ordinary means of execution and the letter and spirit of the Constitution’s structure that assigns powers among the federal government, the states, and the people.

 

But the mandate is troubling for other reasons. Defining and implementing a mandate entails many additional rules regarding exactly what it requires, how to carry it out, and who pays for it. Once we presume government is ultimately responsible for guaranteeing every American has purchased the required health insurance, we also guarantee a permanent and ever-more-intrusive role for politicians and their favored interest groups in translating that goal into practice.

Many politicians want to substitute “off-budget” mandated private funds in place of the far less popular taxes they would otherwise find hard to impose to meet their insurance coverage goals. Insurance mandates that conscript more individuals to pay for new, expanded coverage can act like a tax to help fund additional health spending. Why didn’t the drafters of the PPACA rely on a broader tax to finance expanded coverage? Because they knew that making the full costs of mandatory coverage more transparent would lack sufficient popular support.

"Other effective ways exist to ensure necessary health insurance coverage for more Americans that are less onerous, less unpopular, and less constitutionally questionable than an individual mandate."Not surprisingly, an individual mandate has the least support from those it is purported to help: people who currently do not enroll in public coverage or employer-sponsored insurance or purchase individual coverage. Trying to force people to buy insurance they cannot afford or coercing them into paying more for coverage than its perceived value remains politically difficult.

The most frequent argument to justify the individual mandate both on policy and legal grounds is that without it, uninsured individuals will continue to receive lots of uncompensated care as “free riders” and private premium payers will pay for it. However, this “cost-shifting” argument remains exaggerated, misdirected, and short of convincing evidence. The actual amount of potential cost shifting to private insurance premium payers from uninsured Americans is very small. The individual mandate would, at best, reduce only a fraction of it.

The related expansion of Medicaid coverage under the PPACA also would aggravate problems of undercompensated care and overuse of crowded hospital emergency rooms. Medicaid consistently reimburses health care providers substantially below their actual costs to deliver care. Medicaid beneficiaries also are about 70 percent more likely than the uninsured to use hospital emergency department care.

Other effective ways exist to ensure necessary health insurance coverage for more Americans that are less onerous, less unpopular, and less constitutionally questionable than an individual mandate. They include extending protection against new medical underwriting because of changes in health status to those in the individual market if they maintain qualified, continuous insurance coverage, redistributing and prioritizing current insurance coverage subsidies, maintaining a backup system of safety-net protections, and improving the cost, quality, and value of health care.

 

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Thomas P.
Miller

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