Is Obamacare Unconstitutional?
There’s been some heated debate lately on whether the new healthcare law is unconstitutional. The controversy is focused on a single component of the law: the individual mandate (i.e. the requirement for everyone to buy health insurance).
This is controversial not because it is a mandate, per se. After all, plenty of uncontroversial legal mandates already exist. If you drive a car you have to buy auto insurance. All children must attend school to age 16. So, what’s the difference? The legal question that arises with the health reform law relates to whether or not the federal government can require “citizens to buy a commercial product,” in this case health insurance, “in the name of regulating an interstate economic market.”
Many argue that upholding the constitutionality of this provision would essentially permit unlimited federal control over economic activity. Judge Roger Vinson of the Florida District offered an extreme example: “If [the federal government] decided everybody needs to eat broccoli because broccoli makes us healthy, could they mandate that everybody has to eat broccoli each week?” It is on these grounds that 26 states are now challenging to repeal the new healthcare law. Evidently, even an artist from Iowa has joined in on the action.
Let’s take some time to properly address what’s been dubbed by some as the “Broccoli Objection.” Theoretically, would it be possible for the federal government to mandate that we eat our greens religiously? Yes. Would it be a realistic and rational possibility? No. Similarly, current power at the federal level gives the government the ability to tax citizens at 100%. Does it? No, because it would extremely irrational to do so (as it would be economic suicide). There’s no incentive.
Furthermore, this argument presumes that the purchase of insurance is comparable to that of a car, an iPhone, or, yes, broccoli. But it’s not the same at all. If I choose not to buy an iPhone, you’re under no obligation to buy one for me. By contrast, we all pay a hefty price for the uninsured. Uncompensated care is heavily and directly subsidized by taxpayers. It also causes healthcare costs to rise, resulting in higher insurance premiums for the rest of us. The Broccoli Objection only diverts attention from what’s really at stake here: the chance to fix our broken healthcare system as we now know it.
Conveniently enough, almost no one has a problem with requiring insurance companies to offer coverage to everyone without discrimination and regardless of any pre-existing conditions. Starting in 2014, insurance companies won’t be able to cherry pick only the healthy, while refusing to cover others based on health status. It’s not a surprise that this is the most popular provision of new healthcare law. Unfortunately, you can’t have this part of the law without the individual mandate. Why? Because without a mandate there is no incentive for healthy individuals to buy insurance before they need it.
We’ve already seen what this looks like in practice. A handful of states (NY, NJ, ME and VT) allow insurance to be sold on a guaranteed issue basis without an individual mandate. What’s been the outcome so far? Higher and higher premiums, year after year. In fact, record-breaking double-digit rate hikes have occurred in NY in so many consecutive years, they have become the norm.
This is what’s known as the insurance premium death spiral: healthier (and often younger) individuals take their chances and opt out because of the high cost of insurance. This leaves a pool of older or sicker individuals with greater healthcare needs, causing rates to go up. That, in turn, drives more young and healthy individuals to opt out, and the cycle repeats itself ad nauseum.
If the individual mandate is knocked out in court, regulations preventing discrimination based on pre-existing conditions would inevitably go with it. When the dust clears, we’d be left with the same old broken system we have now.
In order for any meaningful change to happen, the number one problem that must be addressed is affordability. The individual mandate attempts to answer that problem. For those of you with concerns about being required to purchase insurance in 2014, there will be other mechanisms in place to help you afford the cost. For instance:
- You don’t need to buy an expensive health insurance plan with all the bells and whistles. If you’re under 30, you will be able to buy a less expensive high-deductible plan.
- You can qualify for tax credits which subsidize the cost of health insurance, making premiums more affordable.
- If the least expensive health insurance option is more than 8% of your income, you are entirely exempt from the requirement to buy coverage.
When all the pieces come together, what we should be left with is a new sustainable healthcare system. We deserve a system that establishes a true competitive health insurance market, holds insurance companies accountable, and is affordable to everyone. Haven’t we earned that right?