Healthcare and the Supreme Court from MOJO 23MAR10

An interesting article, check out the piece by Ezra Klein from the American Prospect after the story from Mother Jones. He suggest instead of fining people for not having insurance they should be able to opt out of the HRC mandates, but they have to stay out for five years, so if catastrophic illness would hit in that five year period they would have to live, or die, with their decision. Click the header for the story from MOJO.

By Kevin Drum
| Tue Mar. 23, 2010 8:39 AM PDT

A reader writes:

Of all the potential legal challenges to HCR out there, Ken Cuccinelli's planned lawsuit seems to me to potentially be the most viable. Assuming this issue gets to the U.S. Supreme Court, I wouldn't be a bit surprised if the (Republican majority) Roberts Court agreed with Cuccinelli. If that happens, what, exactly, is the Democrats' back-up plan?

I'm not sure what the best response to this is. Cuccinelli's suit argues that the individual mandate in the healthcare bill is unconstitutional: “We contend that if a person decides not to buy health insurance, that person — by definition — is not engaging in commerce, and therefore, is not subject to a federal mandate.” The argument here is that if it's not commerce, then it's not interstate commerce. And if it's not interstate commerce, then Congress has no constitutional authority to regulate it.

I'm not a lawyer, but this seems like the ultimate Hail Mary to me. There's longstanding precedent — hated by conservatives, but only slightly rolled back even by the Rehnquist court — that the interstate commerce clause gives Congress extremely wide power to regulate activity that affects interstate commerce in almost any way, and there's simply no question that the individual mandate is inextricably tied up with interstate commerce. The insurance industry and the medical industry are practically textbook definitions of interstate enterprises, and allowing healthy people to opt out of healthcare coverage has a very direct effect on that business. Frankly, even for an activist conservative court, this seems like a pretty open-and-shut case.

What's more, the penalties for not buying insurance are tax penalties, and if anything, Congress has even wider scope in the tax area than in the commerce area. The Supreme Court has frequently ruled that Congress can pass tax laws that essentially force people to do things that Congress doesn't have the direct power to require.

Bottom line, then: I'm not sure Democrats need a Plan B. But here's the thing: if the Supreme Court decided to overturn decades of precedent and strike down the mandate even though Kevin Drum says they shouldn't (hard to imagine, I know), the insurance industry will go ballistic. If they're required to cover all comers, even those with expensive pre-existing conditions, then they have to have a mandate in order to get all the healthy people into the insurance pool too. So they would argue very persuasively that unless Congress figures out a fix, they'll drive private insurers out of business in short order. And that, in turn, will almost certainly be enough incentive for both Democrats and Republicans to find a way to enforce a mandate by other means. If necessary, there are ways to rewrite the rules so that people aren't literally required to get insurance, but are incentivized so strongly that nearly everyone will do it. As an example, Congress might pass a law making state Medicaid funding dependent on states passing laws requiring residents to buy insurance. Dependent funding is something Congress does routinely, and states don't have any constitutional issues when it comes to requiring residents to buy insurance. They all do it with auto insurance and Massachusetts does it with health insurance. Or, via Ezra Klein, Congress could do something like this. There are plenty of possibilities.

So I don't think this is a big problem. It's basically a campaign issue for Republicans, who want to demonstrate to their base that they're fighting like hell against healthcare reform. It helps keep the issue alive and it helps keep the tea partiers engaged. It's sort of in the same league as their eternal promises to support a constitutional amendment to ban abortion. It's a crowd pleaser, but there's really no chance of ever pulling it off.

Averting a Health-Care Backlash from the American Prospect 8DEZ09
Copy and paste this link for the article
http://www.prospect.org/cs/articles?article=averting_a_health_care_backlash

Create a political safety-valve: let people opt out of the mandate. Just don't let them opt back in at will.

No provision of the health-care reforms being debated in Congress is as likely to generate a popular backlash as is the individual mandate -- the requirement that individuals purchase health insurance if they are not otherwise covered. But there is an alternative to the mandate as it is currently structured that can accomplish the same purpose without raising as much opposition.

The bills in Congress would impose a fine on people who decline to buy coverage after the system is reformed, unless they have a religious objection to medical care or demonstrate that paying for insurance would be a financial hardship even with the new subsidies being provided. Under the Senate bill, the fines per person would begin at $95 in 2014, rising to $750 two years later. The House bill sets the penalty at 2.5 percent of adjusted income above the threshold for filing income taxes, up to the cost of the average national premium.

The trouble with the fines is that they communicate the wrong message about a program that is supposed to help people without insurance, not penalize them. Many people simply do not understand why the government should fine them for failing to purchase health coverage when it doesn't require people to buy other products.

The rationale for the mandate is that it is necessary to carry out the other reforms of insurance that the public overwhelmingly approves -- in particular, ending pre-existing-condition exclusions by insurance companies. If legislation banned those exclusions without a mandate, healthy people would rationally refuse to buy coverage until they got sick, and the entire insurance system would break down. The mandate is designed to deter people from opportunistically dipping into the insurance funds when they are sick and refusing to contribute when they are healthy.

But Congress could address this problem more directly. The law could give people a right to opt out of the mandate if they signed a form agreeing that they could not opt in for the following five years. In other words, instead of paying a fine, they would forgo a potential benefit. For five years they would become ineligible for federal subsidies for health insurance and, if they did buy coverage, no insurer would have to cover a pre-existing condition of theirs.

The idea for this opt-out comes from an analogous provision in Germany, which has a small sector of private insurance in addition to a much larger state insurance system. Only some Germans are eligible to opt for private insurance, but if they make that choice, the law prevents them from getting back at will into the public system. That deters opportunistic switches in and out of the public funds, and it helps to prevent the private insurers from cherry-picking healthy people and driving up insurance costs in the public sector.

In the United States, an opt-out would not apply to anyone whose income was close enough to the poverty level to qualify for Medicaid. It would be available on a new income-tax form on which people with incomes above that threshold could choose between paying a fine for failing to insure or taking the five-year opt-out. (Taking the opt-out would not affect eligibility for veterans' health care, Medicare, emergency care, or any program entirely funded by a state or out of charitable donations.)

What would happen if after opting out, people got sick and couldn't pay their bills? In that case, by their own choice, they'd be back in the world that exists today. They could still try to buy insurance without a subsidy; they just wouldn't be guaranteed any insurer would take them.

The law ought to treat children, however, differently from adults. Just as there is a public interest in assuring that children receive an education, so there is a public interest in seeing that children receive health care. Instead of providing a five-year opt-out for children or imposing a fine on their parents for failing to cover them, a default program should cover any child who isn't otherwise registered for private or public insurance. That default program could be the State Children's Health Insurance Program or Medicaid; whether the parents owe any money for that coverage should be dealt with as part of the income tax.

These two measures -- a conditional opt-out for adults and default coverage for children -- could move the legislation away from an emphasis on fines as a means of enforcement and help avert a backlash. Many liberals have thought that a backlash is avoidable if subsidies for coverage are generous enough so as to allay any fears among those affected by the mandate. But whatever subsidies the law calls for, it is unrealistic to suppose that in the years before the mandate kicks in, people will have accurate information about the costs they are going to bear. The calculations are too complex, and the opponents of reform will play on that uncertainty.

An opt-out would provide an escape valve for people who feel, rationally or not, that the mandate threatens them economically. So let them opt out. Just don't let them back in at will, and over time people will learn to make use of the benefits that government subsidies and other reforms provide them.

The bill in the Senate defers the individual mandate along with most of the extension of coverage until 2014; the House postpones implementation until 2013. Some of the motivation for the slow timetable may be anxiety among Democrats in Congress about popular opposition to the mandate. But postponing reform is an ineffectual way to address that problem. The better alternative would be to provide a conditional opt-out for adults and default enrollment of children and to move up the timetable for carrying out the whole program.