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What happens if the Supreme Court rules aganst the individual mandate?

By Ezra Klein

Megan McArdle wonders what would happen if the Supreme Court declared the individual mandate in health-care reform unconstitutional. My guess is it would get replaced with something like the modified individual mandate that Paul Starr has proposed:

The law could give people a right to opt out of the mandate if they signed a form agreeing that they could not opt in for the following five years. In other words, instead of paying a fine, they would forgo a potential benefit. For five years they would become ineligible for federal subsidies for health insurance and, if they did buy coverage, no insurer would have to cover a pre-existing condition of theirs.

The idea for this opt-out comes from an analogous provision in Germany, which has a small sector of private insurance in addition to a much larger state insurance system. Only some Germans are eligible to opt for private insurance, but if they make that choice, the law prevents them from getting back at will into the public system. That deters opportunistic switches in and out of the public funds, and it helps to prevent the private insurers from cherry-picking healthy people and driving up insurance costs in the public sector.

By Ezra Klein  |  May 25, 2010; 9:48 AM ET
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You're not even scratching the surface here. If the Sup Ct held the individual mandate unconstitutional, as Charles Fried pointed out the other day, it would be signaling its openness to unsettling all kinds of federal regulations. We would be talking about a major step forward to a constitutional revolution.

Posted by: Sophomore | May 25, 2010 10:00 AM | Report abuse

Given the way insurance costs were rising before the insurance reform, the Supreme Court overturning HCR would be the end of the health insurance industry. Given the rate of change in costs it wouldn't be too long before employers would stop providing coverage.

Posted by: wiredog | May 25, 2010 10:04 AM | Report abuse

This won't happen. If it was unconstitutional then it would have been overturned after MA instituted it years ago.

Interesting story below. I HOPE that insurers won't bend to the pressures like they have in the past. If costs are to be controlled this has to happen.

Posted by: visionbrkr | May 25, 2010 10:42 AM | Report abuse

This won't happen. If it was unconstitutional then it would have been overturned after MA instituted it years ago. I don't think it ever went to court. Plus it's a state vs fed thing. The state might be able to do X, but that doesn't mean the feds can do X also.

Posted by: obrier2 | May 25, 2010 11:07 AM | Report abuse

The best thing would be to do nothing, let the private insurers go bankrupt, and implement Medicare-for-all. Having private for profit companies acting as middle men between patients and care providers contributes nothing of value to the health care system.

Posted by: redwards95 | May 25, 2010 11:21 AM | Report abuse

Couple things to think about:

1) When did health insurers become health providers?

2) When the HMO staffer on the telephone denies the hospital's request for service, they are in effect practicing medicine. They've made a decision regarding treatment. In what state are they licensed? Are they reciprically licensed in the state being denied?

To Congress - answers to these questions will likely provide the logic necessary to solve healthcare issues.

Posted by: LieToMe | May 25, 2010 12:13 PM | Report abuse

I think the insurance industry is unconstitutional- we are guaranteed the right to LIFE, liberty, and the pursuit of happiness. As soon as people can dangle the ability to continue to LIVE over their fellow men's heads, we are no longer in a representative republic. I am sick to death of fatcat businessmen deciding what items of healthcare I deserve- as if they have the knowledge, or the right.

Dismantle insurance companies, and try them for treason for their sadistic manipulation of the American people.

Posted by: madamezora | May 25, 2010 12:21 PM | Report abuse


what a fitting name.

Please explain to me what health insurance company has a "staffer" that denies hospitals requests? Sorry, doesn't happen. Every single insurance company that I've ever worked with uses licensed MD's as Medical Directors so you're premise that some schlub off the street makes medical decisions is absolutely false.

Posted by: visionbrkr | May 25, 2010 12:39 PM | Report abuse

In the argument regarding the Constitutionality of the PPACA, the legal argument differs from both the moral and logical arguments. For example, in some courts, Obama lawyers are arguing that there is no right to health, rather only a right to pay taxes and to have the health care (and food, etc.) allowed by a central authority: this is counter both to the moral argument for a "right" to health (and a "freedom" to select food) and to the logical role of a federal, rather than national, government.

From my standpoint, bringing back the Buck v. Bell legal logic -- the argument that a central authority has an absolute power over each individual life, able to used or sacrificed any life or limb for the financial good of the majority of the moment -- is a frightening departure from the path of liberty. I can't argue, though, that liberty is efficient; that is, I'm forced to agree that treating fellow humans as tools of a central majoritarian authority is indeed more efficient than permitting individual choice.

The alternative Klein presents isn't viable for the reasons discussed back when the PPACA was first proposed. So, asking what happens when the PPACA is deemed unconstitutional is a very good question. A companion question asks what happens when the cost of the PPACA rises at a rate greater than that of the existing (unexpanded) Medicaid program: with the existing system dismantled as a result of the PPACA and millions demanding "entitlement" benefits, who pays the bill and who actually gets care?

Posted by: rmgregory | May 25, 2010 1:11 PM | Report abuse

visionbrkr and rmgregory make interesting points that are somewhat divorced from reality. Having worked in the insurance industry for the last 4 years I know for a fact that there are in fact executives whose decisions inform those MDs and nurses decision making process. Executives have no medical training and are typically hired to make and save money.

This is the case at the moment and includes such illogical processes as preexisting condition clauses and recision clauses. The recent law has corrected this at least and any question of the legality of requiring people to purchase a product will have unintended consequences so vast it makes a narrow ruling difficult.

Last time I checked we were required to purchase car insurance if we own a vehicle (with few exceptions). Since vehicle traffic is central to our current economy using the logic that cars are optional is foolish even if it is correct. Eliminate that insurance requirement and simple fender-benders will all go to litigation further taxing the resources of our society and increasing the size of government and government spending (on the courts).

Further, the individual mandate is written as a tax on risk. Since health care is a necessary aspect of living in a modern world, an aspect that we all own a part of, a tax on the part of that risk pool that we individually own is well within the confines of the Tax Powers granted to Congress by the Constitution.

Since I saw nothing in Health Reform mentioning a central authority when I read the bill such arguments amount to blatant fearmongering. Those who have to lead by fear have no leadership skills. And those who follow and reason by fear have nothing useful to say.

Posted by: Enlightened_Independence | May 25, 2010 1:36 PM | Report abuse

I am astounded by the number of people who think it is permissible or even laudable to require someone else to pay for their medical care. Why not require your neighbor to pay your rent and landlord to buy your food? You need them as much as you need medical care. It really is a nice thought. But, the problem is, it’s an idea that is doomed to failure. Yeah, yeah, I know, it works for a while. But then, like all “Nanny State Programs,” pretty soon you run out of other peoples' money. Everywhere it’s been tried, it’s failed. Nations implode under the “Nanny State System.” Greece, Spain, Portugal can’t afford their liberal social welfare programs and are at risk of default and bringing down the EU with them. Germany is re-examining it's medical care system because it has become too expensive and burdensome. Why? Population decline. According to the World Bank, at the end of 2004, Germany, with a population of approximately 82.5 million faces a decline of 2.5 million within the next five years. With fewer people to pay into the system, there is less money for care and something has to give. Ultimately, the timeliness and quality of medical care suffer in an ever downward spiral. Likewise France is now talking about austerity measures including increasing the age at which people can retire. You can bet the cost of medical care won't be far behind.

Likewise, Massachusetts, with a population of about 6.5 million, is drowning in medical care red ink with medical costs increasing at an annual rate of 7 percent. Indeed, recent studies have shown that most Massachusetts residents have seen little or no increase in the quality of their medical care but have seen sharp increases in their premiums. Someone has to pay. California, with a population of 37 million, has a budget of $87 billion dollars and doesn’t have a state program like Massachusetts, but still spends $18 billion on Medicaid. Most other states are facing similar problems.

That is not to say that there aren’t things that can and should be done to curtail medical care costs, there are. But the so-called health reform bill passed by the Congress is a mess that should and ought to be repealed in favor of less draconian and more common sense legislation.

Posted by: WriterDude | May 25, 2010 1:50 PM | Report abuse

There are only 2 ways to close the gap because a large number of healthy young people would opt out of having to pay several thousand dollars for health insurance. 1. Increased Taxes. 2. Increased Health Insurance Premious (only the people who were sick would not opt out). As premious increased, more people will opt out of having health insurance. The insurance companies would have to keep increasing premiums, which would lead to what the Obama administration really wanted. Government run signle payor system.

Posted by: acahorvath | May 25, 2010 2:28 PM | Report abuse

If 80% of the people were ALREADY successfully paying for their health insurance, why did we need to "reform" it?

The short answer is, we didn't need to reform it. Adding 30 million people to Medicare doesn't take thousands of pages of legislation, that could have been done with a one-line change to existing law.

I sincerely hope that people will starting asking such basic questions as these of their representatives. When Congress says it needs to "reform" something, hold on to your wallets and look for the hidden agenda.

Posted by: dmarney | May 25, 2010 5:40 PM | Report abuse

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