Two appellate judges in Atlanta -- one appointed by President Bill Clinton and one by George H.W. Bush -- have just decided the Constitution doesn't allow the federal government to require individuals to buy health insurance.
The decision is a major defeat for the White House. The so-called "individual mandate" is a cornerstone of the Affordable Care Act, President Obama's 2010 health care reform law, scheduled to go into effect in 2014.
The whole idea of the law is to pool heath risks. Only if everyone buys insurance can insurers afford to cover people with preexisting conditions, or pay the costs of catastrophic diseases.
The issue is now headed for the Supreme Court (another appellate court has upheld the law's constitutionality) where the prognosis isn't good. The Court's Republican-appointed majority has not exactly distinguished itself by its progressive views.
Chalk up another one for the GOP, outwitting and outflanking the president and the Democrats.
Remember the health-care debate? Congressional Republicans refused to consider a single-payer system that would automatically pool risks. They wouldn't even consider giving people the option of buying into it.
The president and the Democrats caved, as they have on almost everything. They came up with a compromise that kept health care in the hands of private insurance companies.
The only way to spread the risk in such a system is to require everyone buy insurance.
Which is exactly what the two appellate judges in Atlanta object to. The Constitution, in their view, doesn't allow the federal government to compel citizens to buy something. "Congress may regulate commercial actors," they write. "But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die."
Most Americans seem to agree. According to polls, 60 percent of the public opposes the individual mandate. Many on the right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company.
Had the president and the Democrats stuck to their guns during the health-care debate and insisted on Medicare for all, or at least a public option, they wouldn't now be facing the possible unraveling of the new health care law.
After all, Social Security and Medicare -- the nation's two most popular safety nets -- require every working American to "buy" them. The purchase happens automatically in the form of a deduction from everyone's paychecks.
But because Social Security and Medicare are government programs they don't feel like mandatory purchases. They're more like tax payments, which is what they are -- payroll taxes.
There's no question payroll taxes are constitutional, because there's no doubt that the federal government can tax people in order to finance particular public benefits.
Americans don't mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout "don't take away my Medicare!" at rallies opposed to the new health care law.
Requiring citizens to buy something from a private company is entirely different. If Congress can require citizens to buy health insurance from the private sector, reasoned the two appellate judges in Atlanta, what's to stop it from requiring citizens to buy anything else? If the law were to stand, "a future Congress similarly would be able to articulate a unique problem ... compelling Americans to purchase a certain product from a private company."
Other federal judges in district courts -- one in Virginia and another in Florida -- have struck down the law on similar grounds. They said the federal government has no more constitutional authority requiring citizens to buy insurance than requiring them to buy broccoli or asparagus. (The Florida judge referred to broccoli; the Virginia judge to asparagus.)
Social Security and Medicare aren't broccoli or asparagus. They're as American as hot dogs and apple pie.
The Republican strategy should now be clear: Privatize anything that might otherwise be a public program financed by tax dollars. Then argue in the courts that any mandatory purchase of it is unconstitutional because it exceeds the government's authority. And rally the public against the requirement.
Remember this next time you hear Republican candidates touting Paul Ryan's plan for turning Medicare into vouchers for seniors to buy private health insurance.
So what do Obama and the Democrats do if the individual mandate in the new health care law gets struck down by the Supreme Court?
Immediately propose what they should have proposed right from the start -- universal health care based on Medicare for all, financed by payroll taxes. The public will be behind them, as will the courts.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
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The Government is the only entity who can actually LOWER healthcare costs by negotiating drug prices, best practices for routine procedures, tests, etc.. We need to get the "shareholder value" insurance companies out of the picture. Until we do that, the costs of healthcare continue to skyrocket.
"The whole idea of the law is to pool heath risks. Only if everyone buys insurance can insurers afford to cover people with preexisting conditions, or pay the costs of catastrophic diseases."
Not quite....
Health insurance companies want to insure people with low risk. They don't want people that are high risks. If society were filled with old, sick people, insuring "everyone" would still be a bad business decision.
Lets call it for what it is which is a tax on young, healthy people with low risk, to subsidize care for older people ( many with the financial means to take care of themselves ).
I have saved quite a bit since I don't pay monthly insurance premiums.
It is true that family wealth increases for most families as they age, but this is because prudent families accumulate wealth that they then draw down after retirement. In 2007, the latest year for which the Census Bureau has published figures, the mean wealth of families headed by an individual between 65 and 74 years old was $1.0152 million compared to $935.8 thousand for those 55 to 64, but only $638.2 for those 75 and older. Applying the statistics for the number of households headed by a person in each age group to the full table yields a result for the percentage of wealth owned by families headed by an individual age 65 and older of about 31%. The majority of wealth, more than 53%, is owned by families headed by individuals between 45 and 64. Families headed by individuals under 45 own the remaining 16%.
1. With cost on the vertical (Y) axis and amount on the horizontal (X) axis, the Demand curve is downsloping and the Supply curve is up sloping.
2. Normally when the cost goes up , less is demanded, but more is willing to be supplied.
3. Where the two curves cross determined the price.
4. The law of supply and demand makes the market economy far more efficient than the central planning of the old USSR
EVERYONE WITH ME SO FAR?
B.
1. Healthcare demand is INELASTIC .
2. The demand curve is horizontal, which means increasing price does not decrease the amount demanded and the law of supply and demand cannot work its magic in health care as it does in the market of other goods and services.
3. To make matters worse, the profit motive gives the private for profit health care insurance carriers strong financial incentive to deny coverage and thus supply LESS quality.
C. The rule is that private enterprise is the most efficient type of economic SYSTEM ever dervised by man.
D. THE HEALTH CARE MARKET IS THE EXCEPTION WHICH PROVES THE RULE.
Although the demand is inelastic, it is not 100% inelastic. 99% or 98% or maybe 90%.
There are optional medical treatments which are determined by various things including cash on hand. Plastic surgery is influenced by cost ,as well as experimental cancer treatment.
End of life medical treatments are a major cost for the system. The need for medical treatment may not be unlimited when a patient is 90 yrs old and suffering from cancer.
A lot of medical costs are due to testing. Testing is a method to reduce risk. Without a cost barrier to risk reduction, an unlimited amount of testing would be conducted which is wasteful.
Health care is a buffet system in America. People with coverage go to the doctor and get whatever they want. If they want an unnecessary test because they saw it on Dr. Oz, then they toss that on their plate as well. The doctor may not want to do it (or might; especially if they are paid fees for services), but they will probably do it anywise. It makes people feel better. It prevents lawsuits. It generates money.
Now this buffet system is even more problematic because the people are not actually paying. There is a middle man paying the bill. The user is basically just leaving the tip. Practitioners are over-prescribing medications too. Pharmaceutical companies are taking advantage of this (through coupon schemes and reformulations of generics to raise revenue).
Until changes are made to the system there is no way costs can go down. As it is now everyone is unawares of costs (practitioners and patients) and there are incentives to over treat. So what happens? People want more care than necessary and they do not care about the costs. Why should they? They pay next to nothing for treatment and assume that the actual cost is insignificant. If I paid nothing for a test, then it had no cost. Even if I did not need it, I am out nothing.
Perhaps YOU see health care as a buffet, but I do not. On what basis do you think that price elasticity of demand oh healthcare or the way it is purchased does not matter ?
Tests are necessary in order to determine what is wrong. If you need 1 blood test or 3 to followup, then you need those tests. If there is a persistent problem, then different strategies are tried in order to determine a cause and then either a cure or a protocol to deal with an ongoing condition.
This idea that "people want more care than necessary" is all in the eye of the insurance company who determines that THEY don't want to pay for procedures, tests, medications, operations, etc. unless they are forced to. Unless you are a hypochondriac, most people do not want to spend either their time or their money on something that is "unnecessary".
http://healthcarereform.procon.org/view.resource.php?resourceID=004182
Medicare for all, merging healthy young people with seniors, is the only way to go. How it will be paid for can be up for discussion.
Use the medicare business model but charge premiumd to those less than 65.
the reality is that the "window" to get meaningful healthcare reform passed was the Presidents first two years.
yes....he SHOULD have fought tooth and nail to get at least an option for every america citizen to "buy in" to medicare in any plan passed. But he didn't.
Just like the failed stimulus plan , that was nothing but a give away to states (to keep their state workers employed) and hand outs to various projects that the congressional democrats have been wanting to do for years..instead of a REAL stimulus, that is atx refuedn check to each and every american so they can choose what to do with it (hopefully SPEND IT in this new american economy that is 70% CONSUMER SPENDING)
onto the many failed Mortgage plans, to help distressed homeowners and the dropping property values across America....how about using the TARP money still there ($200 BILLION)to create an American HOME BANK, to BUY up underwater homes (at current values, which would be more money for banksters than forclosing) and refinance them at current (lower) rates.
Yes Prof Reich..the Presidnet Blew it with healthcare reform and many other chances he had to bring real "change"..we are all the worst for it, especially those of us who are liberals (yes I still us that dirty word).
http://www.huffingtonpost.com/2010/11/28/health-care-tax-break-deficit_n_788852.html
Job-Based Health Care Threatened
"WASHINGTOÂN — Job-based health care benefits could wind up on the chopping block if President Barack Obama and congressioÂnal RepublicanÂs get serious about cutting the deficit.
Budget proposals from leaders in both parties have urged shrinking or eliminatinÂg tax breaks that help make employer health insurance the leading source of coverage in the nation and a middle-claÂss mainstay.
The idea isn't to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions.
[snip]
Repealing the tax break would raise several hundred billion dollars a year, depending on how it's done. Many economists believe employers would boost pay if they didn't provide health care..."
Anyone who thinks employers would boost pay to compensate is delusionalÂ.
Single-payer will NOT happen as long as the two-party duopoly is in power.
The costs of covering old people are going to increase health care costs tremendously as the population ages. For instance, old people jump onto medicaid (after finangling assets) to cover long term care. Does this save money as it is paid by the government? Not really.
No matter what happens the costs are going to increase. Populations are aging and old people are a huge burden on the system.
To deal with costs, cost have to be addressed. That is just how it is. Pushing the bill on to someone else does not eliminate cost. Your solution is akin to claiming that walking out of a restaurant without paying or charging your meal to another table reduces the cost of the meal.
This is a no brainer; also political nightmare. Government has a major role in health care. What we should be questioning is the role of unregulated private sector enterprises.
The animus of Capitalism derives from the concept of the 'survival of the fittest'.......it's uncivilized nature in the 'raw'! Yet, capitalism cannot exist without Government; and Democracy cannot survive under capitalism without Government regulation. The simplistic paradigms of pure Keynesian, pure free markets, pure monetarism are all wrong. We need a bag full of economic and political tools to balance the market bubbles and other excesses that are inherent in capitalism......and to interleave the humanity inherent in Democracy. Those tools include all of the above and the best way to administer their use is through Democratic Government regulation and intervention; challenge is even greater in a global economy. The alternative is to allow unfettered capitalism to cannibalize both humanity and the planet; winner takes all for as long as all can survive without an underlying civilization to prop it up :-)
You also blame an economic system instead of looking at the factors that drive cost (old people, fees for services, over-treatment, etc).
I get it that you think it should all be about feel-good-ism and emotion, but that is not reality. Health care is going to be expensive no matter who pays for it. Populations are aging and people are consuming more health care (necessary or unnecessary). Costs of treatments are increasing (naturally and artificially). People are living less healthy lifestyles.
Changing who pays will do nothing. It is an ignorant view propagated by people who do not want to actually examine anything.