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Renee Landers On The Individual Mandate: Towards A Single-Payer System Or Public Option?



March 29th, 2012

Tuesday’s oral arguments before the Supreme Court illustrated fundamental differences in attitudes about what Justice Kennedy described as “the relationship of the individual to the government”.  Tr. 11.  As Dahlia Lithwick points out, the arguments also are about the relationship between the individual and other people.

The Capacity Of The Constitution To Accommodate Communitarian Values

The provisions of the Affordable Care Act, mandating that individuals maintain insurance health insurance coverage in exchange for affordable access to coverage with no restrictions based on health conditions, recognize the interdependent nature of economic and social relationships.  Under this view, untreated infectious disease or late-diagnosed cancer is perceived as a danger to the health of us all and as raising health insurance premiums for everyone.

For example, in a colloquy with Solicitor General Verrilli, Justice Ginsburg stated:

And tell me if I’m wrong about this, but I thought a major, major point of your argument was that the people who don’t participate in this market are making it much more expensive for the people who do; . . . (Tr. 18)

Justice Breyer made a similar point in a question for Paul Clement, who argued for the state challengers:

We also know. . .that because  we are human beings we all suffer from the risk of getting sick.  And we also know that we can’t predict when.  And we also know that when we do, there will be our fellow taxpayers through the Federal Government who will pay for this.  If we do not buy insurance, we will pay nothing. (Tr. 70)

Lawyers arguing for the states and private interests challenging the Affordable Care Act presented a different view.  Michael Carvin, arguing for the National Federation of Independent Business and individual challengers, expressed the competing view in these terms:

Since the founding, whenever Congress has imposed [a] public responsibility on private actors, it has subsidized it from the Federal Treasury.  It has not conscripted a subset of citizenry and made them subsidize the actors who are being hurt, which is what they are doing here.

They’re making young healthy people subsidize insurance premiums for the cost that the nondiscrimination provisions have put on insurance premiums and insurance companies. (Tr. 99)

Later, Mr. Carvin noted in a response to a question from Justice Kennedy:

It would be perfectly fine if they allowed—you to do actuarial risk for young people on the basis of their risk for disease, just like you judge homeowner’s insurance on the homeowner’s risk of flood.  One of the issues here is not only are they compelling us to enter into the marketplace, they’re not  –they’re prohibiting us from buying the only economically sensible product that we would want.  Catastrophic insurance.

. . . Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance.  And the reason they do that is because they needed this massive subsidy. (Tr. 103-04)

Justice Alito also added to his point of view in an exchange with the Solicitor General:

Respondents—the economists have supported—the Respondents [sic] estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year.  So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the act wishes to serve, but isn’t—if those figures are right, isn’t it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume?  It is requiring them to subsidize services that will be received by somebody else. (Tr. 10)

Missing A Chance To Put The Individual Mandate Into Context

The missed opportunity in the government’s defense of the ACA in the oral argument was the failure to emphasize sufficiently that the minimum coverage provision is situated in the comprehensive context of concerns the statute seeks to address.  Solicitor General Donald Verrilli allowed his justification for the statute to focus on the problem of emergency and catastrophic care for the uninsured.

Really, the individual mandate is one piece of the puzzle to encourage people to take appropriate care of their health care needs throughout a lifetime, by making routine care opportunities available to prevent disease and to promote health; to address chronic, but not imminently emergent or catastrophic conditions; and to do these things at a cost the country and individuals and families are able to afford.  Catastrophic and emergency coverage are just parts of the picture.  The individual mandate not only operates to the benefit of the insurance pool, but also to serve the public interest in making quality health care available at an affordable cost.

The Cause of Uncompensated Care:  Blaming the Messenger and the Uninsured

Another line of argument that the lawyers for the challengers pursued was planting the notion that if any crisis in uncompensated emergency care existed, such a crisis was the creation of the federal government.  By requiring hospitals to provide care for people in emergency situations, presumably through EMTALA, (although that statute was not mentioned by name in the arguments), and by not assessing a tax to pay for that care, Congress had itself created the crises.

In an exchange with Justice Ginsburg on feasibility of a system whereby people seeking emergency care would have to enroll in insurance if they did not already have it, Michael Carvin, the lawyer for the National Federal of Independent Business, stated the situation as follows:

They seem to be saying look, we couldn’t just force people to buy insurance to lower health insurance premiums.  That would be no good.  But we can do it because we’ve created the problem.  We, Congress, have driven up the health insurance premiums, and since we’ve created that problem, this somehow gives us authority that we wouldn’t otherwise have.  That can’t possibly be right. (Tr. 97)

Mr. Carvin, a skillful advocate, seemed to be reinforcing points that Justice Scalia had made in questions posed to the Solicitor General.  Justice Scalia noted that the government could solve the problem created by the guarantee issue and nondiscrimination provisions of the statute as follows:

You could solve that problem by simply not requiring the insurance company to sell it to somebody who has a—condition that is going to require medical treatment, or at least not—not require them to sell it to him at—at a rate that he sells it to healthy people.

But you won’t want to do that.

The Solicitor General responded: “But that seems to me to say, Justice Scalia, that Congress—that’s the problem here.”  Justice Scalia replied, “That seems to me a self-created problem. When the Solicitor General noted that the problem was “an economic problem,” Justice Scalia responded:

–whatever problems Congress’s economic regulation produces, whatever they are, I think Congress can do something to counteract them.  (Tr. 37)

The Solicitor General gave the response that Congress had not made the problem, but was responding to a market failure.  He explained the “economic problem” of

40 million people who cannot get affordable insurance through the means that the rest of us get affordable insurance.  Congress, after a long study and careful deliberation, and viewing the experiences of the States and the way they tried to handle this problem, adopted a package of reforms.  Guaranteed-issue and community rating, and – and subsidies and the minimum coverage provision are a package of reforms that solve that problem. (Tr. 38)

Justice Sotomayor came back to the issue late in Mr. Carvin’s argument asking whether a large percentage of the American people would stand for the death of a child turned away at a hospital emergency room because the parent did not have insurance. (Tr. 97)  Mr. Carvin attacked as “pernicious” any suggestion by the government that the parties challenging the constitutionality of the Affordable Care Act “are somehow advocating” that people be turned away from emergency rooms.  He suggested, instead that access to health care be conditioned on buying health insurance and obtaining health care without insurance should result in a penalty. (Tr. 98)

Related to this effort to tar the government with the responsibility for the problem of uncompensated care was Mr. Carvin’s effort to convince the Court that the real “free riders” in the current system are “people who default on their health care payments”.  This group, he stated, is “an entirely different group of people, an entirely different activity than being uninsured.” (Tr. 83)  Under this view, the person who is falling down in upholding his or her part of the social contract is the sick person without health insurance who has the audacity to obtain health care, but is unable to pay the bill.

This argument is not unrelated to the arguments described in the preceding section in which the challengers envision a system that requires people to pay only for what they themselves directly consume.  The Affordable Care Act attempts to address the failure to take responsibility to insure against the risk of this situation — the inability to pay for needed care — occurring.

If The Individual Mandate Falls, How Can Congress Address The Problem of the Uninsured And Uncompensated Care?

Some of the Justices pressed Mr. Clement and Mr. Carvin to state what they viewed as Constitutional alternatives to requiring individuals to purchase insurance.  For example, Justice Ginsberg inquired of Mr. Clement:

So if Congress could see this as a problem when we need to have a group that will subsidize the ones who are going to get the benefits, it seems to me you are saying the only way that could be done is if the government does it itself; it can’t involve the private market, it can’t involve the private insurers.  If it wants to do this, Social Security is its model.  The government has to do –has to be government takeover.  . . .Is that your position? (Tr. 57-58)

Mr. Clement responded that he thought other options were available such as levying a tax on everyone to pay a subsidy to insurers necessary to pay for the cost of the guaranteed issue and community rating provisions of the statute, concluding, “That’s the way we pay for most subsidies.” (Tr. 58)

Early in the arguments, in an exchange with the Solicitor General, Justice Kennedy raised the idea that one alternative available to Congress may be to “use the tax power to raise revenue and to just have a national health service, single payer.”  (Tr. 24)  Justice Kennedy did not know whether that point argued in favor of overturning the Affordable Care Act to require Congress to solve the problem the right way, or whether, since Congress had the ability to solve the problem, the Court should “give a certain amount of latitude.”

Toward the end of the day’s arguments, Justice Sotomayor pressed Mr. Carvin on the same point:  “I want to understand the choices you’re saying Congress has.  Congress can tax everybody and set up a public health care system.” (Tr. 98)  He acknowledged that a tax credit system to create incentives to encourage people to buy insurance would be permissible, noting that “Congress incentivizes all kinds of activities.”  (Tr. 99)

These discussions leave the Court, conservatives, and the public with a curious dilemma.  Through the Affordable Care Act, Congress has tried to regulate private insurance markets to solve the market problem of making health insurance affordable for the uninsured, whatever their individual health status.  If that market-based approach does not survive a Commerce Clause challenge, what alternatives are left to Congress?  One alternative is to do nothing, which does not seem to be economically responsible given accelerating health care costs and certainly leaves tens of millions of Americans in a precarious and untenable situation.

The other option would be for the government, as the last resort, to create the “public option” that was so controversial during the debates over the Affordable Care Act, or to move entirely to a single-payer system, eschewing markets.  I am reminded of the adage:  be careful what you wish for.  On the other hand, perhaps the opponents of the Affordable Care Act are counting on the political process to block the enactment of such alternatives.

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1 Trackback for “Renee Landers On The Individual Mandate: Towards A Single-Payer System Or Public Option?”

  1. On Predictions, the Supreme Court and the Health Law «
    April 5th, 2012 at 9:49 am

1 Response to “Renee Landers On The Individual Mandate: Towards A Single-Payer System Or Public Option?”

  1. no_mandate Says:

    It seems to me that the Single Payer solution to our health care woes should have been pursued from the start, but for whatever reason, Obama decided not to pursue it. At the onset of the reform effort, he and others bluntly stated that the Single Payer idea is flat out “off the table.” No reason was given. Further, the public option idea was not given serious consideration either. It seems odd to me, (perhaps even fishy) that Obama would not seriously pursue these avenues when at the time, the house AND the senate were stacked with democrats, which ostensibly would SUPPORT such ideas.

    In the end, we of course know that Obama signed the Affordable Care Act, which includes the controversial mandate to carry insurance, even though he vowed he would never sign such legislation before he was elected. Few of his supporters seem to recall this.

    The mandate to carry health insurance would indeed spread the cost of coverage to most segments of the US population. The problem is, all indications are that health care costs will continue to climb beyond the rate of inflation with such a system. In other words, ACA does not address the underlying reasons for the explosive growth in health care costs… It merely ensures that everyone shares the burden of those costs, by force essentially.

    It seems to me a very dangerous precedent when the government begins to force people INTO a market contract with a private corporation, for several reasons. First, unlike with taxation, (where the spending of tax dollars are managed by publicly accountable representatives) the mandate channels an individual’s hard earned dollars directly to corporations, which are NOT accountable to the public,. They are instead accountable only to their shareholders, who are only concerned with maximizing profit. The potential for abuse in such a system is great. When everyone MUST buy insurance, I see little reason why costs should stay low. On the contrary, any company (or small group of large companies, such as we have) with a guaranteed customer base has every incentive to RAISE prices. Because of the mandate, consumers will be forced to pay whatever these companies demand.

    The reality is that a very large percentage of total health care costs in this country are directly attributable to the insurance industry itself, about 30% from what I have read. Essentially, that 30% goes into insurance industry profits, and “administrative fees”. Let me give you an example. I recently had an emergency surgery. Thankfully, I have insurance which clearly covers this. However, despite this, my insurance company initially denied my claim, which I understand is common practice with MOST claims of any sort. The hospital had to pay someone to prove to the insurance company that the claim was legitimate. These fees get tacked onto my final bill. At the same time, the insurance company was paying someone to do just the opposite. Who pays for all this? Those of us who are insured! Getting the insurance industry out of the way via a Single Payer system would instantly make this nonsense evaporate.

    Further, with a Single Payer plan, the government would gain the power to collectively bargain with the health care and pharmaceutical industries. Recently I had to pay $120 dollars for a small spray bottle of allergy medicine. I understand that these drugs are costly to develop and test, but come on… $120? I have to wonder what the same drug would cost if the government negotiated the price. I am sure it would be far less.

    The supreme court should rightly reject the mandate as unprecedented and dangerous. The need for health care reform in this country is not reason enough to give the government the power to force its citizens to enter private contracts.

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