Allowing consumers to choose whether to buy health insurance is a solution, not a problem.
Senator John McCain’s (R-AZ) cancer stricken return to the Senate floor on Tuesday – just as the GOP’s health care vote climaxed – left Americans, both liberal and conservative, to reflect upon the achievements of Sen. McCain. Although Sen. McCain’s emotional call for a bipartisan step forward on health care was met with overwhelming support, the previous weeks’ vicious banter regarding the lingering effects of the bill were temporarily left in the shadows. Unfortunately, the ambiance associated with the negative press of the bill let a unifying moment fall on countless deaf ears while the waters of the Senator’s inspirational speech were blurred.
Today, one of the most repeated criticism of the bill remains the Congressional Budget Office (CBO) supported claim that passing the Senate health care bill would cause 22 million people to lose their insurance. However, the CBO report actually posits that “The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law.” While it is true that 22 million people would no longer own health insurance, the estimated total of health care participants losing coverage remains a half-truth – at best. While healthy insurance markets are essential for many to retain affordable coverage, the controversial 22 million people figure largely revolves around the multi-decade old concept of individual mandates; more simplistically, would people – and the insurance markets themselves – be better off if the government mandated that everyone purchase insurance?
To fully understand the legislative gravitas embodied by the individual mandate, it is pertinent to first point to its history. Conservatives characterize individual mandates as an overreach of federal power and a blatant disregard of federalism while liberals contend that its roots are distinctively conservative and necessary for many people to keep their insurance. The spirit of the original individual mandate was pieced together by conservative organizations in opposition to President Bill Clinton’s Health Care Bill in 1993 (Clinton Care) to correct for the negative economic ramification of “Adverse Selection.”
Essentially, without baseline regulation, healthy people would not buy insurance and insurance companies would only sell to sick clientele at abnormally high rates. The idea is to offset insurance company profitability losses when taking on the unhealthy by insuring other people that are not as likely to use the health insurance. The silver lining remains that everybody is covered, regardless of health status, if a traumatic event were to occur. The idea was designed to induce competition in health care markets, similar to that of school voucher programs, so people would willingly purchase the insurance instead of being forced into buying the insurance. More importantly, this form was less of a mandate – to be followed by legal repercussions – and more of economic incentivization proposed as an alternative to Clinton Care.
“The problem with mandating that consumers purchase a product is that the government prioritizes consumer spending habits rather than allowing individual circumstances to dictate the proper course of action.”
Moving past the bill’s origins and into its constitutional framework, the Supreme Court of the United States (SCOTUS) was afforded the opportunity to rule on the constitutionality of the health care individual mandate in the case National Federation of Independent Business V. Sebelius. While the court blocked some of the Patient Protection and Affordable Care Act’s (Obamacare) Medicaid expansion, it simultaneously ruled that the bill itself was within the constitutional tax jurisdiction of Congress. More plainly, the individual mandate requiring people to purchase insurance was ruled a tax, and will significantly impact future health care constitutionality rulings. With the ruling in mind, the historical debate underwent a paradigm shift moving from a constitutional debate toward the effectiveness of the bill and further implementation methods. However, the fear of federal government overreach never dwindled for conservatives as their platform for debate abruptly dissipated.
While continuing to climb out of the mandate’s murky, divisive history, one must analyze the effect repeal of the mandate would have upon the electorate today. Would 22 million people lose their insurance? Simply answered: no. However, as mentioned previously, there would be 22 million people that would not own insurance. The problem with mandating that consumers purchase a product is that the government prioritizes consumer spending habits rather than allowing individual circumstances to dictate the proper course of action.
Buying health insurance may be the difference in an individual buying gas to get to work, buying food to put on their family’s table, or even defaulting on their mortgage. Government purchase mandates mitigate the free enterprise system’s most important quality: efficiently allocating scarce resources. Conversely, when trying to correct for the aforementioned “Adverse Selection” problem, the mandate could potentially keep the market in equilibrium. The difficult task is coercing individuals to buy the product with a staff rather than a rod, so that prices remain affordable and do not require a purchasing mandate.
The economics behind the individual mandate is a discussion for a later time (and perhaps a later article), but it is essential that we abandon the rhetoric that paints the Senate bill as a death wish. Yes, it is true that if the mandate is repealed, and proportional subsidies aren’t applied, that some may be unable to purchase affordable care. However, this number is trivial when compared to the number of people who would simply choose not to purchase the service. If conservatives wish to be successful, the debate must undergo another paradigm shift. This time away from the amount of people that hold health care and toward the quality and affordability of care.
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