BUY INSURANCE OR ELSE? RESURRECTING THE INDIVIDUAL MANDATE AT THE STATE LEVEL.

Author:Williams, Brendan
 
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INTRODUCTION

The Affordable Care Act (ACA) has been subject to considerable volatility, with perhaps the greatest blow being the rescission, as part of the 2017 Tax Cuts and Jobs Act, of the penalty for its individual mandate to have health insurance coverage. (1)

As a New Republic article noted, "we will now find out whether or not an individual mandate really is essential to health reform. And that will settle an old intra-Democratic fight that has been dormant for a decade." (2) The author, Joel Dodge, noted that in the face of Republican efforts to repeal the ACA, "Obamacare defenders (myself included) rebutted these attacks by doubling down on the argument that the law's entire structure would collapse without a mandate." (3)

Yet, following the mandate's repeal, Dodge admitted:

The mandate was also never much of a mandate to begin with. The Obama administration gave numerous exemptions from the mandate for hardship and other life circumstances. And at just $695 or 2.5 percent of household income, the mandate's penalty for going without insurance costs far less than the cost of actually buying insurance. (4) In contrast, in Massachusetts, the state that pioneered health care reform, the penalty for going uninsured, when one is deemed to be able to afford coverage, is "50 per cent of the minimum insurance premium for creditable coverage available through the commonwealth health insurance connector for which the individual would have qualified during the previous year." (5)

As one national policy magazine noted, after the individual mandate was repealed, many Democratic legislators expressed support for enacting it in their states, but those efforts mostly faltered: "Health policy experts attribute the waning enthusiasm to the unpopularity of the individual mandate." (6)

This article traces the origin of the individual mandate, chronicles the efforts of some states to enact their own mandates, and concludes by questioning whether the mandate is either necessary or politic.

  1. THE INDIVIDUAL MANDATE

    Although his name is likely unknown by most today, Stuart Butler of the conservative Heritage Foundation can be viewed as the father of the individual mandate concept. (7) In a 1989 essay, Butler, then the director of domestic policy studies for Heritage, laid out Heritage's plan. (8) He noted:

    [W]e in the U.S. are very reluctant to require households to protect themselves against health care needs. Thus we find many individuals and families, particularly among the young, who decide to use their income for other objectives than health care insurance, even though they have the means to obtain insurance without cutting back on other necessities. Often these are individuals who are healthy. They are playing Russian roulette with their continued good health. (9) Heritage then felt that "[a] 11 citizens should be guaranteed universal access to affordable health care." (10) Toward that end, Heritage had a radical prescription:

    Many states now require passengers in automobiles to wear seatbelts for their own protection. Many others require anybody driving a car to have liability insurance. But neither the federal government nor any state require all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement. (11) Butler relied upon a colorful analogy in making his case:

    If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate but society feels no obligation to repair his car. But health care is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance. If we find that he has spent his money on other things rather than insurance, we may be angry but we will not deny him services--even if that means prudent citizens end up paying the tab. (12) As Butler stated, "[a] mandate on individuals recognizes this implicit contract." (13)

    The mandate was an integral part of then-Governor Mitt Romney's Massachusetts health care reform in 2006, and its Heritage Foundation antecedents were not completely forgotten in Republican circles. (14) In September 2013 the ACA-opposing Wall Street Journal editorialized that it did not "need any lectures about principle from the Heritage Foundation that promoted RomneyCare and the individual mandate that is part of ObamaCare. Or from cable TV pundits who sold Republicans on Mitt Romney despite RomneyCare." (15)

    Former House Speaker Newt Gingrich, an avid supporter of President Trump, (16) has tried to explain away "his past support of a mandate as an antidote to the health care overhaul proposed by Hillary Rodham Clinton during her husband's administration." (17) And it is true that "[t]o combat President Clinton's proposal, a large group of Republican senators, including the minority leader at the time, Bob Dole... proposed a bill that would have required individuals, and not employers, to buy insurance." (18) However, Gingrich still embraced the individual mandate six years after Clinton left office, in April 2006, as the Washington Post reported:

    "The most exciting development of the past few weeks is what has been happening up in Massachusetts," wrote Gingrich, or someone speaking for Gingrich, in his "Newt Notes" newsletter. "The health bill that Governor Romney signed into law this month has tremendous potential to effect major change in the American health system. We agree entirely with Governor Romney and Massachusetts legislators that our goal should be 100% insurance coverage for all Americans.... Individuals who can afford to purchase health insurance and simply choose not to place an unnecessary burden on a system that is on the verge of collapse; these free-riders undermine the entire health system by placing the onus of responsibility on taxpayers." (19) President Obama, during his 2008 presidential campaign, attacked Hillary Clinton for supporting an individual mandate: "One Obama TV ad drove the point home: 'Hillary Clinton's attacking, but what's she not telling you about her health care plan? It forces everyone to buy insurance, even if you can't afford it, and you pay a penalty if you don't.'" (20) Economist Paul Krugman used his New York Times column in 2007 to rebuke Obama for "attacking his rivals by echoing right-wing talking points." (21) Krugman stated that "[a]s a practical matter, letting people opt out if they don't feel like buying insurance would make insurance substantially more expensive for everyone else." (22)

    As president, Obama switched positions and publicly supported an individual mandate by July 2009. (23)

    The need for the mandate was articulated in a September 2009 speech by President Obama to a joint session of Congress. (24) Moving from previous generalities, the President prescribed some specifics, including an individual mandate to facilitate new protections like guaranteed issue of coverage: "[U]nless everybody does their part, many of the insurance reforms we seek--especially requiring insurance companies to cover pre-existing conditions--just can't be achieved." (25)

    Conservative state attorney generals brought suit challenging the ACA, and, on June 28, 2012, the U.S. Supreme Court upheld the law, even though Chief Justice John Roberts, in the 5-4 decision, agreed with a lower court that the ACA was unsustainable under the Commerce Clause: "Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority." (26)

    That determination was a vastly more coherent refinement of an incoherent question asked during oral argument by archconservative Justice Scalia: "Could you define the market--everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli." (27) Yet, it was also a mysterious opinion in many respects. Health care is not broccoli. As law professors Michael Graetz and Jerry Mashaw wrote in the Harvard Law and Policy Review, "[n]o one denies that health insurance is interstate commerce. And no one can deny that the cross-subsidies of paying customers to non-paying customers are very substantial." (28) The test should be "whether the thing that is being regulated substantially affects interstate commerce." (29)

    While rejecting the Obama Administration's argument that the ACA was proper interstate commerce regulation, Roberts nonetheless accepted the Administration's second argument that "even if Congress lacks the power to direct individuals to buy insurance, the only effect of the individual mandate is to raise taxes on those who do not do so, and thus the law may be upheld as a tax." (30) He found that "taxes that seek to influence conduct are nothing new." (31) Thus the individual mandate's "shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance." (32) The mandate was constitutional. (33) This reasoning was reminiscent of work under the administration of Franklin Roosevelt to clear the way for what became Social Security. (34) The administration sought the informal advice of a couple Supreme Court justices who might rule on the constitutionality of their efforts. (35) As Kirstin Downey, in her biography of Frances Perkins, Roosevelt's labor secretary, relates:

    Justice Harlan F. Stone had whispered some words of advice as well. At an afternoon party at Stone's home, Frances was drinking tea with the justice when he asked her how things were going. She told him they were wrestling with how to establish an economic security program. Stone looked around to see if anyone was listening, then leaned in toward Frances. "The taxing power, my dear, the taxing power," he said in quiet tones. (36) Mitt Romney's involvement with the 2006...

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