Tag: individual mandate

‘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.

Health Care Mandate Is Unconstitutional — and Don’t Leave Home Without the Cato Constitution

Yesterday the Heritage Foundation released a new paper on the unconstitutionality of the proposed health care mandate.  Think tanks aren’t normally in the habit of promoting their peer institutions’ work, but this paper is incredibly timely and its lead author is Cato senior fellow Randy Barnett.  You really should go read it.

Interestingly, at the event unveiling the paper, Eugene Volokh (of UCLA Law School and the Volokh Conspiracy blog) at one point wanted to quote the Constitution and realized he wasn’t carrying one! Eugene asked if anyone had a Heritage Constitution.  Former Attorney General Ed Meese, now chairman of Heritage’s Center for Legal and Judicial Studies, saved the day by passing Eugene his… handy, dandy, Washington Post-bestselling Cato Constitution.  It seems that General Meese likes our version because it’s smaller and so fits easier into your pocket.  (I would add that it also features the Declaration of Independence – as does Heritage’s – as well as a preface by my boss, Roger Pilon.)

You can watch the entire health care event, which features Senator Orrin Hatch along with Randy and Eugene, here (the Constitution bit starts at about 40:15; I ask a question at 1:04:46).  The bottom line – beyond the health care abomination – is that you should always carry your Cato pocket Constitution wherever you go.  Like Josh Blackman, I keep one in every suit jacket (as well as backpacks, totebags, briefcases, and roll-aboards).  You never know when you – or someone else – may need it.

They also make great stocking stuffers and gifts for any night of Hanukkah (as does the latest Cato Supreme Court Review, though you may need a slightly larger stocking).

Health Care: Not Close to Over

The fat lady hasn’t even started to warm up yet.

The narrow 220-215 victory in the House on Saturday night was a step forward on the road to a government takeover of the health care system.  But as close and dramatic as that vote was, that was the easy part.  The Senate must still pass its version of reform—which will not be the bill that just passed the House.  Nancy Pelosi was, after all, able to lose the votes of 39 moderate Democrats.  Harry Reid cannot afford to lose even one.  A conference committee must reconcile the two vastly different versions.  And then, Pelosi must hold together her 3 vote margin of victory (if it gets that far).  Yet several House Democrats who voted for the bill on Saturday said they did so only to “advance the process.” Their vote is far from guaranteed on final passage.  And, House liberals are almost certain to be disappointed by the more moderate bill that may emerge from the conference.

Among the more contentious issues:

Individual Mandate: This should’ve been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured – forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed.  The House bill contains a strict mandate, with penalties of 2.5 percent of income backed up by up to five years in jail.  The Senate Finance Committee, on the other hand, watered down the mandate’s penalties and delayed the mandates implementation.

Employer Mandate: The House bill also contains an employer mandate, a requirement that all but the smallest employers provide insurance to their workers or pay a penalty tax of up to 8 percent of payroll.  The Senate,  looking at unemployment rates over 10 percent, seems unlikely to include an employer mandate.

The Public Option: The House included, if not a “robust” public option, at least a semi-robust one.  But moderate Democrats in the Senate are clearly not on board.  Joe Lieberman (I-CT) says that he will join a Republican filibuster if the public option is included.  Harry Reid is trying various permutations: a trigger, an opt-in, an opt-out.  But as of now there is not 60 votes for any variation.

The Sheer Cost: Fiscal hawks like Sen. Evan Bayh (D-IN) say they will not support a bill that adds to the deficit or spends too much.  But the house bill cost a minimum of $1.2 trillion.

Taxes: The House plan to add a surtax on incomes of $500,000 or more a year has no support in the Senate. At the same time, the Senate plan to slap a 40 percent excise tax on “Cadillac” insurance plans is unacceptable to key Democratic constituencies like labor unions.

Abortion: Conservative Democrats insisted on a strict prohibition on the use of government funds for abortion.  The bill could not have passed without the inclusion of that provision.  House liberal swallowed hard and voted for the bill, despite what they called “a poison pill” anyway with the expectation that it will be removed later.  If the final bill includes the prohibition at least a couple liberals could defect.  If it doesn’t, conservative Democrats won’t be on board.

Immigration: The Senate Finance Committee included a provision barring illegal immigrants from purchasing insurance through the government-run Exchange.  The House Hispanic Caucus says that if that provision is in the final bill, they will vote against it.

As if these disagreements among Democrats wasn’t bad enough, public opinion is now turning against the bill.

President Obama has called for a bill to be on his desk before Christmas—the latest in a series of deadline that are so far unmet.  It is hard to see how Congress can meet this one either.  The Senate has not yet received CBO scoring of its bill and is not prepared to even begin debate until next week at the earliest.  That debate will last 3-4 weeks minimum, assuming there are 60 votes for cloture.  That means, the bill cant’ go to conference committee until mid-December, even if everything breaks the way Harry Reid wants.  Privately, Democrats are now suggesting late January, before the State of the Union address, is the best they can do.

The fat lady can go back to sleep—this isn’t over yet.