Tag: individual mandate

AP: Obama Misleads Voters about ObamaCare’s Effects on Premiums

The Associated Press reports:

Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print…

The [Congressional Budget Office] concluded that premiums for people buying their own coverage would go up by an average of 10 percent to 13 percent, compared with the levels they’d reach without the legislation…

“People are likely to not buy the same low-value policies they are buying now,” said health economist Len Nichols of George Mason University. “If they did buy the same value plans … the premium would be lower than it is now. This makes the White House statement true. But is it possibly misleading for some people? Sure.”

Nichols’ comments are also misleading – which makes the president’s statement not just misleading but untrue.

Under ObamaCare, people would not have the option to buy the same low-cost plans they do today.  That’s the whole problem: under an individual mandate, everybody must purchase the minimum level of coverage specified by the government.  That minimum benefits package would be more expensive than the coverage chosen by most people in the individual market.  Their premiums would rise because ObamaCare would take away their right to choose a more economical policy.

Note also that the CBO predicts premiums would rise by an average of 10-13 percent in the individual market.  Consumers who currently purchase the most economic policies would see larger premium increases.

Finally, the Obama plan would also force millions of uninsured Americans to purchase health insurance at premiums higher than current-law premium levels, which they have already rejected as being too high.  Their premium expenditures would rise from $0 to thousands of dollars.  Yet the CBO counts that implicit tax as reducing average premiums, because those consumers are generally healthier-than-average.  Only in Washington is a tax counted as a savings.

If the House Enacts the Senate Health Care Bill without Voting on It…

…are we under any obligation to obey it?  The answer may be no.

Democrats are considering a scheme that would “deem” the Senate health care bill to have passed the House if a separate event occurs (specifically: House passage of a budget reconciliation bill).  That strategy has been named after its contriver, House Rules Committee chair Louise Slaughter (D-NY).  House Speaker Nancy Pelosi (D-CA) says of this scheme: “I like it because people don’t have to vote on the Senate bill” (emphasis added).

Not so fast, says former federal circuit court judge Michael McConnell in The Wall Street Journal:

Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another.

The Slaughter solution attempts to allow the House to pass the Senate bill, plus a bill amending it, with a single vote. The senators would then vote only on the amendatory bill. But this means that no single bill will have passed both houses in the same form. As the Supreme Court wrote in Clinton v. City of New York (1998), a bill containing the “exact text” must be approved by one house; the other house must approve “precisely the same text.”

Democrats have already hidden 60 percent of the cost of the Senate bill, effected an obscenely partisan change in Massachusetts law to keep the bill moving, pledged more than a billion taxpayer dollars to buy votes for the bill, and packed the bill with an unconstitutional individual mandate and provisions that violate the First Amendment. It’s almost as if, to paraphrase comedian Lewis Black, Democrats spent a whole year, umm, desecrating the Constitution and at the last minute went, “Oh! Missed a spot!”

And these people want us to put our trust in government.

‘Father of HSAs’ John Goodman Plays Host to ‘Father of the Individual Mandate’ Mitt Romney

"Father of the Individual Mandate" Mitt Romney

The former nickname came from National Journal or The Wall Street Journal, I’m not sure which.  The latter nickname comes from Institute for Health Freedom president Sue Blevins.

See here for details on an upcoming event in Dallas where Goodman’s National Center for Policy Analysis will play host to Romney.

It should be an interesting event.  With all 40 Republican members of the U.S. Senate, including moderates like Sen. Olympia Snowe (R-ME), voting to declare an individual mandate unconstitutional…with 35 states moving legislation to block an individual mandate…with the Heritage Foundation rebuking an individual mandate…and with Virginia’s Democratically controlled Senate approving legislation to block an individual mandate…well, Romney may have a tough road to hoe with the conservatives who typically attend NPCA events.

Wednesday Links

  • Even though the government is running massive deficits, interest rates and inflation are low. So, what’s the problem?

Dear Poor People: Please Remain Poor. Sincerely, ObamaCare

In a new study titled, “Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums,” I show that the House and Senate health care bills would impose implicit tax rates on low-wage workers that exceed 100 percent.  Here’s the executive summary:

House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.

Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent— and even reach as high as 82 percent—over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent.

Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.

In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage “adverse selection”—an unstable situation that would drive insurance premiums, government spending, and taxes even higher.

See also my Kaiser Health News oped, “Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers.”

And be sure to pre-register for our January 28 policy forum, “ObamaCare’s High Implicit Tax Rates for Low-Wage Workers,” where the Urban Institute’s Gene Steuerle and I will discuss these obnoxious implicit tax rates.

(Cross-posted at Politico’s Health Care Arena.)

The Individual Mandate: Not a Tax, Except for When It Is

Along the lines of my oped with Bob Levy in today’s Philadelphia Inquirer explaining why an individual mandate is unconstitutional, here’s a poor, unsuccessful letter I submitted to the editor of the Washington Post:

To the Editor:

In one column, Ruth Marcus [“Health scare tactics,” Nov. 11] says it is “not true” that the House-passed health care overhaul “raises taxes for just about everyone.”  The same column, however, explains that anyone who doesn’t comply with the bill’s mandate that everyone purchase health insurance, or the associated fines, “could, in theory, be prosecuted — just like others who cheat on their taxes” (emphasis added).

A subsequent column [“An ‘Illegal’ Mandate? No,” Nov. 26] notes, “The individual mandate is to be administered through the tax code,” and finds constitutional authorization for it in Congress’ power to tax.

Let me see if I have this straight.  The Constitution’s taxing power authorizes it.  The IRS would enforce it.  If I don’t fork over what it demands, I face fines and jail time.  But somehow, the individual mandate is not a tax.

Fortunately, there are much better ways to reform health care.

The Reid Individual Mandate: An Affront to the Constitution

Cato chairman Bob Levy and I have an oped in today’s Philadelphia Inquirer explaining why the individual mandate in Majority Leader Harry Reid’s (D-NV) health care bill is unconstitutional.  (Our colleague Ilya Shapiro blogs about a similar piece by our colleague Randy Barnett.)

In sum, supporters of an individual mandate claim that two powers granted to Congress by the states in the Constitution — the Commerce Clause and the taxing power — give Congress the legal authority to force Americans to purchase health insurance.  We reject both theories.

First, the behavior that Congress seeks to regulate — the non-purchase of health insurance — is neither interstate, nor is it commerce.  Unfortunately, under the Supreme Court’s tortured interpretation of the Commerce Clause, that isn’t dispositive, so we explain why even the Court’s Commerce Clause jurisprudence doesn’t allow for an individual mandate.

Second, the individual mandate cannot be justified by pointing to Congress’s taxing power, because the tax it would impose is neither an excise tax, nor an income tax, nor a direct tax apportioned according to population.

Game over.  All your base are belong to us.

We’ve already received many responses to the oped, some of them intelligent.  One reader asks how we can describe the non-purchase of health insurance as “a non-act that harms no one”:

We all know that when folks without insurance go to the emergency room, those of us with insurance are harmed in the form of higher premiums.

Originally, we had included a section expanding on our “harms no one” claim that would have addressed this point, but we dropped it for brevity.  Here it is:

Most uninsured people don’t end up in an emergency room.  As for those who do, research shows that the uninsured as a group more than pay their own way. Many simply pay their bills without imposing costs on anyone. And because they typically pay premium prices for medical care — far more than is ordinarily reimbursed by public or private insurance — they more than offset the cost of uncompensated care to the uninsured overall, according to MIT economist Jonathan Gruber and others.

Even if we ignore that evidence, uncompensated care to the uninsured accounts for about 2.2 percent of national health expenditures.  The left-leaning Urban Institute writes, “Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges.”  That’s hardly a crisis.

And think about it: an uninsured person is wheeled into an emergency room, unconscious and bleeding.  Is this person able to harm anyone?  Is this person in a position to impose costs on you?  Of course not.

What imposes costs on you are the laws that require the doctors and hospitals to treat those patients without regard to ability to pay — and the ethical codes that would impel doctors to treat them even if there were no such laws.  If you have a problem with those laws/codes, make them the focus of your ire.  If you support them, surely you can’t be upset that they increase your premiums by 1.7 percent.  Isn’t that a small price to pay to live in a compassionate society?

But if you’re still angry about that 1.7 percent, bear in mind that the Reid individual mandate — which is essentially a bailout for private health insurance companies — would increase the cost of insurance for some people by 30 percent and would require additional taxes on top of that.

Fortunately, there are much better ways to reform health care.