Log in

No account? Create an account

Previous Entry | Next Entry

Is mandatory insurance constitutional?

A lot of people, including possible some state lawsuits, think there's something wrong in being forced to buy something, especially from private companies. At least by the feds; states and cities have mandated auto insurance (and in Mass., health insurance) or garbage collection services for quite a while. Let's work this through:

We have this Medicare system; taxes are collected, medical payments provided. It's been around for a while, the courts are cool with it, even Republicans were defending it strongly just now. So everyone likes it, at least for old people. There would surely be nothing unconstitutional in raising taxes and enrolling everyone in Medicare -- if we can do it for everyone over 65, we can do it for everyone, period.

Medicare pays doctors directly, but it doesn't have to; the gov't could collect taxes, then pay private insurers to do the decision making. In fact, we partially have this, with "Medicare Advantage"; seniors get to sign up with some private plan and the government pays the plan. I see nothing unconstitutional in the gov't using tax money to contract private businesses to provide a public service. Inefficient (why pay for someone's profits and advertising?) but not unconstitutional.

That means tax money is going to the IRS, then back out through HHS to an insurer. A mandate just cuts the government out of the loop, with people paying the insurer directly. Of course, taxes are (usually) progressive while a straight mandate would be highly regressive... but we've got a fix for that: there'll be income-adjusted subsidies (I think paid directly to the insurer, in fact, so the customer directly spends less), those subsidies being funded by progressive income tax and a new Medicare payroll tax.

Another difference would be that taxes have to be raised by Congress, while insurers seem like they can raise premiums at will. That is a big difference. It's also not entirely true, because long before the mandate happens, regulations on medical loss ratios and reviews of premium hikes will kick in. And again, the subsidies are keyed to premium-as-percentage-of-income, and one can evade the mandate without penalty if there are no plans available which cost less than a certain percentage of income, and that cap would have to be raised by Congress.

So it'll be a weird hybrid system, as in Massachusetts, basically a tax-funded private-provided service, but with some of the tax being levied as a mandatory premium sent directly to the private insurer, and partially raisable by a dance of insurer and regulator rather than by the legislature, but only up to a legislated cap. One could see it as a stealth weird income tax increase of up to around 9%, where you pay less tax if you can get qualified insurance for less, or if your income is small enough, and no tax at all if the tax won't be enough to purchase insurance.

Plus, of course, if you defy the mandate, the fine is only about 2% of income. Which I suspect is unsustainable, but at the moment the real tax increase is just that. If you choose to pay more, it's because you're getting insurance out of the deal.

Ironically, the most constitutionally dubious part of it is the most market oriented part; if Congress set the premiums, that'd be more government control of the industry, but less concern about having excessively delegated the power of taxation. And Medicare for All, a true government domination and displacement (not takeover: companies would get competed away, not taken over) of the health insurance market, would be unimpeachable.


Damien Sullivan

Latest Month

January 2019


Powered by LiveJournal.com
Designed by Lilia Ahner