Liberal Democrats are, and will continue to be, committed to universal health care or something that closely approximates it. Conservative Republicans, on the other hand, are against anything that increases deficit spending or taxes on job creators.
The two sides met on the constitutional battlefield this week, fighting over the legality of the "individual mandate"; that is, can Congress force citizens to purchase health insurance?
To be fair to the conservative side, to require an individual to participate in a market seems like stretching the commerce clause of the Constitution to the breaking point. It is one thing to regulate how citizens participate in a market; it is another thing altogether to force a citizen to participate in the market against his or her will.
I'm not sure that the conservative party actually believes in the constitutional argument or is simply using it to defeat the health care reform law. I say that because a Republican, Richard Nixon, was the first to suggest the individual mandate, and as recently as two years ago, Republican candidate and Tea Party courtier Newt Gingrich also supported it.
The irony of the situation was not lost on Solicitor General Donald Verrilli, who argued on behalf of the government. As he pointed out, the Obama administration attempted to put forth a health care plan that would preserve at least some level of private market participation in the health care industry, yet the plan may very well be found unconstitutional, and the whole law may be thrown out. Judging by the questions and comments spoken by the conservative justices, Scalia most prominently, it seems likely that this is exactly what the outcome will be in June.
Which leaves Congress with a more drastic recourse if they really want to provide universal health coverage, which is unquestionably constitutional: Congress has the power to levy taxes – in this case, to fund a single-payer health care system. You can be sure that the most liberal members of Congress will begin floating this balloon if the Accountable Care Act is gutted in June.
If the Supreme Court finds the individual mandate unconstitutional, it will cause much of the law to unravel, even if the court doesn't throw out the whole law. The purpose of the individual mandate was to pull young, healthy people into the insurance risk pool, so that the risk could be spread around a larger population, pushing the per-episode cost of care down (or, actually, watering it down with a larger denominator).
But the real problem with striking the individual mandate is its effect on another part of the ACA: the prohibition against excluding persons with pre-existing conditions from insurance coverage. Without the individual mandate, insurance companies will all go bankrupt if forced to provide coverage to folks with pre-existing conditions. This is because of what is known as moral hazard. Another term for moral hazard is "freeloading." Insurance works because risk is spread among a large pool of insured people. Many folks already gamble and choose not to purchase health insurance in order to spend that money on other things. Sometimes that's a nicer car or a larger house. Sometimes it's food and the electric bill. For the latter, the ACA provides expanded Medicaid coverage (also being challenged by the 26 Republican Governors behind the Supreme Court case) and financial subsidies to purchase insurance coverage. For the former, the law uses a stick – a twig, really – of a fine of 1 percent of adjusted gross income, paid at tax season, for refusing to purchase insurance. This punishing penalty grows to 2.5 percent of AGI eventually.
Without the individual mandate, and knowing human nature, one can fully expect that the number of people who play the moral hazard game will increase dramatically under the ACA because they are no longer gambling. They can avoid purchasing insurance until they get sick. And then, since the pre-existing exclusion was banned in the law, they would simply purchase insurance, and no company could turn them away. Of course, that would bankrupt the insurance companies, because they would no longer be able to spread risk. Nearly 100 percent of their insured lives would be net debtors rather than creditors.
Without the individual mandate, the pre-existing condition safeguard falls. Without the safeguard, universal coverage fails, and the pre-existing condition insurance plans, currently scheduled to expire in 2014, will have to continue indefinitely.
So I am OK with ruling the individual mandate unconstitutional. Let's agree (at least, for argument's sake) that American citizens should have the freedom to refuse to purchase health insurance. But with freedom comes responsibility, or in this case, accountability for your decisions. The prohibition against pre-existing condition exclusions should also be eliminated; otherwise, we are effectively destroying the private health insurance market. Then when these very citizens present themselves to the local hospital emergency room – since they chose not to participate in the health care market – they should be completely responsible for financing their own treatment. They can use their credit cards. They can take out a home equity loan (if they have any equity). They can liquidate their IRAs.
Physicians and hospitals should be allowed to turn these non-participating citizens away if they cannot pay their bills up front.
I suspect, however, that the federal government will never allow hospitals to turn away persons suffering true emergencies. Fine. But then, when the hospitals put these patients into bankruptcy by seizing all of their personal assets to cover the cost of their care, don't cast the hospital in a harsh light, as if the hospital is doing something awful by expecting the customer to pay his or her bill. Remember that it was the patient who refused to participate in the health insurance market.
We can't have it both ways. Either we stand for individual liberty or we stand for community responsibility. Or we stop drawing lines in the sand and learn how to come together and compromise over practical solutions.