Annulling Healthcare?

It seems unreal that the Supreme Court might kill the Affordable Care Act (ACA) on the grounds that requiring everyone who can afford health care insurance to have it by 2014 or pay a compensatory penalty is unconstitutional.  Although Congress can regulate health care and insurance under the Constitution’s grant of power to Congress “To regulate Commerce . . . among the several States,” a majority of five justices may decide that the individual mandate (as the requirement is called) isn’t included in that power.

ACA is complex, but its purpose is clear – and clearly tied up with the individual mandate.  In an e-book I recently published, Vote 99 Percent, which is about key issues that voters in 2012 need to understand, I undertook to explain the gist of each issue in 200-300 words.  Here’s what I wrote about ACA:

The purpose of the Affordable Care Act (ACA) of 2010, most of which doesn’t take effect until 2014, is to provide American citizens and legally resident aliens with access to affordable health care through affordable health care insurance.  People who can’t obtain affordable insurance through an employer and don’t qualify for Medicaid will be guaranteed access to insurance through new health benefit exchanges, with subsidies for those with low income.

Uninsured people who can’t afford health care when they have to have it are often treated at public cost in hospital emergency rooms.  Under ACA they will also be able to obtain insurance at normal rates since insurers will no longer be able to deny coverage or charge more because of current illness or preexisting medical conditions.  But letting people avoid buying insurance until they’re sick increases the insurance risk and its cost for everyone else.  To minimize these costs, ACA’s “individual mandate” requires almost everyone who can afford insurance to have it by 2014 or pay an annual penalty.

Since ACA defers to our current for-profit health insurance system rather than replacing it with a single government payer like Medicare, which insures seniors, ACA’s version of universal health care is less efficient and more expensive than in other industrialized countries like Canada.  But along with Medicare and safety-net programs like Medicaid, ACA will be as vital to the economic security of the 99% as Social Security.

Congress should not eliminate or privatize or cut back on any of these programs.

                                                                —

Insurance companies control their risks by excluding people with higher risks of illness either by denying them coverage in the first place or by capping the amount of their coverage or canceling their policies when they get sick.  ACA will eliminate these practices, thereby increasing the risk and consequently the cost of insurance.  But requiring healthy people to buy insurance will lower the risk and cost of insurance, offsetting in some measure the increased risk and cost of covering less healthy people.

That’s the essential scheme of ACA—finance the cost of extending health care to high-risk people who really need it but can’t get it without ACA by creating the individual mandate.  Universal health care means everyone’s in, and taxes on insurance and pharmaceutical companies and wealthier individuals will subsidize health care for poorer people who can’t afford to buy insurance.

For the Supreme Court to decide that buying health care insurance is part of interstate commerce that Congress can regulate but not buying insurance is not part of interstate commerce would be truly bizarre.  All the more so since universal health care could be achieved by expanding Medicare to cover everyone and financing the additional coverage through payroll taxes.  Doing so would rely on Congress’ Constitutional power to lay and collect taxes to provide for the general welfare, the power that Congress exercised when it created Social Security and Medicare in its present form.  Everyone is taxed, so wouldn’t need an individual mandate—or for that matter private health insurance.

During oral argument the most senior associate justice on the court suggested that if the power to regulate interstate commerce justified the individual mandate, it could justify anything, including making people buy broccoli.  “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.”

Well, maybe.  But since the price of commodities like broccoli is largely determined (in the absence of scarcity) by the costs of producing and distributing them, making everyone buy them isn’t likely to lower their price very much.  But the price of health insurance is determined by the health risks that determine when (if ever), how often and how much money the insurer will have to pay out.  Adding healthy people to the insured pool lowers its health risks and therefore its price.

Economists understand this, and indeed the leading expert on the individual mandate is MIT economist Jonathan Gruber.  He estimates that losing the individual mandate would reduce the number of currently insured people who will be covered by ACA from 32 million to 8 million and perpetuate “our unfair individual insurance markets in a world where employer-based insurance is rapidly disappearing.”

Economists understand the difference between health insurance and broccoli, but if five of the nine lawyers on the Supreme Court don’t, ACA will be gutted.  We’ll find out in June.