Thursday, March 29, 2012

Ted Kennedy's Legacy

The Economist sums up the arguments being presented before the Supreme Court this week for and against the individual mandate, the centerpiece of the Obama administration's health care reform:

The challengers have simplicity on their side. They argue that Congress cannot compel individuals to buy something. Its powers are only those enumerated in the constitution. Let Congress regulate inactivity, challengers say, and there will be no limit to its meddling.

Mr Obama’s lawyers must rely on a more complex chain of reasoning. America’s huge health sector, they point out, is dysfunctional. People with pre-existing health conditions pay extortionate rates for their insurance, if they can get it at all. In part because of this, some 50m people have no insurance cover; yet many of them receive emergency care they cannot pay for. This raises the cost to everyone else; by an average of about $1,000 each year per family, the government argues.

The health law attempts to remedy these failings by requiring insurers to cover the sick without raising their fees. The mandate, by insuring more healthy people, would help offset these costs and fix the problem of uncompensated care. The mandate is constitutional for two reasons, says the government. The penalty falls within Congress’s power to tax (though Mr Obama has denied the mandate is any such thing). And the constitution’s “commerce clause” authorizes Congress to regulate interstate activity. Not buying insurance is a decision to pay for your own care, the reasoning goes. This has a big effect on interstate commerce, though arguably by similar logic one might oblige people to buy gym memberships or broccoli....

The Supreme Court is expected to issue its decision by the end of June. By then the Republicans will probably have chosen a presidential nominee, Mitt Romney, who signed a mandate of his own in Massachusetts (he says it is fine for states to do this but not Washington). However the court rules, the political consequences will be huge. Even more important, for the long term, will be the court’s articulation of congressional power. Washington subsists on hyperbole. But this time it is all true.

If the mandate is overturned, and especially if the court junks the rest of the bill, too, health care reform could end up being radioactive for a generation. The tragedy would be that near-universal health insurance coverage, and the resulting more rational distribution of costs, could have been achieved without a federal individual mandate. Richard Nixon proposed requiring employers to share or pay employees' premiums for private insurance. Credits and subsidies would have enabled coverage for the self-employed and unemployed. The relative few who would have opted out and used the ER when they got sick wouldn't have caused anything like that $1,000-per-family distortion and the resulting spike in premiums and pricing anomalies such as $1,500 blood panels.

Ted Kennedy, who crusaded for health reform throughout his Senate career, blocked the Nixon plan because it relied on private insurance instead of a single-payer system. Nixon wanted the same outcome for people as Kennedy did but without creating vast new federal powers. If Barack Obama's bill dies because he overreached as well (in his case by failing to anticipate the intervention of the most conservative Supreme Court since the 1930s), he could end up sharing Kennedy's legacy of 50 million semi-permanent uninsured. In politics, having your heart in the right place doesn't excuse poor tactics.

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