One of the most confounding and frustrating elements of the Patient Protection and Affordable Care Act, also known as “Obamacare,” is the “individual mandate” to acquire health care coverage from a private insurer of choice. No one wants to be required to purchase health care coverage, especially in light of the cost of coverage and the annual increases that continue to skyrocket. Why is this requirement necessary?
We all know that you cannot purchase home insurance when your house is on fire. Without having been paid insurance premiums, no insurance company would have the funds to provide coverage once a house was blazing away. The health insurance situation is analogous. No insurance company can provide health care coverage to individuals without having been funded by at least some premiums and being able to charge premiums sufficient to cover the health care costs of those individuals.
However, the insurance companies did agree to the new law which included that they would no longer be allowed to deny coverage or to charge higher rates to applicants with pre-existing conditions. In so doing, they demanded that almost every American would be required to purchase coverage—i.e. to fund the pool. They anticipated offsetting the increased costs of immediately covering everyone with the substantial increase in revenue from the number of people paying premiums.
Currently, about 80 percent of Americans have health insurance; about 59 million do not. The law stipulates that Americans who do not purchase coverage will be subject to withholding of tax refunds and penalties amounting to as much as $695 per adult and up to 2.5 percent of household income.
Since the act was signed into law, more than 20 states have joined efforts challenging the constitutionality of the requirement to purchase insurance or the “individual mandate.” It is likely the issue will be hotly debated in many forums before being ultimately decided by the U.S. Supreme Court.
Supporters hold that the mandate falls under the “Necessary and Proper Clause” of the Commerce Clause and/or under Congress’ power to tax. Opponents declare that the mandate is nothing less than a “commandeering” of the people and so is an unconstitutional attempt to force Americans to buy a product heavily regulated by government. Other scholars speak to the long history of Americans participating in social insurance, including income tax and Social Security and its pension and retirement features.
Interestingly, in July 1798, Congress (including many of our founding fathers at the time) passed, and President John Adams signed into law, “An Act for the Relief of Sick and Disabled Seamen,” authorizing the creation of a government-operated hospital service, and mandating privately employed sailors to purchase health care insurance.
The legislation also created America’s first payroll tax, as a ship’s owner was required to deduct 20 cents from each sailor’s monthly pay and forward those receipts to the service, which in turn provided injured sailors hospital care. As America grew, this system was expanded, eventually becoming our Public Health Service (the main division of HHS), led by the Surgeon General.
That was coverage provided by the government out of funds collected by the government. The current individual mandate interjects private enterprise in the provision of coverage, forcing people to buy private health care insurance. It is an interesting piece of history to consider. It was prompted by our founders’ realization that a healthy maritime work force was essential to the nation’s economic health and growth.
Perhaps in light of our increasingly competitive global economy, we should view today’s health insurance issue through the same lens. A healthy work force is more productive. We have enough disadvantages as we compete in the global economy without having to bear the costly burden of a health care system that is itself unhealthy. We’re draining resources and attention from other more productive areas of our economy.
We need to determine what is fair and appropriate within the basket of reforms that encompass health care insurance and coverage. We cannot undo one without undoing the other.
Democracy is not a stagnant condition, but an experience over time shaped by people and laws that change. Hopefully, we learn and choose to improve our experience from the lessons of our past. We need to get this right.