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Posted at 4:48 PM ET, 03/ 7/2011

When Republicans thought the individual mandate was a tax

By Ezra Klein

As part of my research for tomorrow’s column, I looked back at the constitutional point of order that Sen. John Ensign offered against the individual mandate. You might remember this — it was the moment when every Senate Republican endorsed the idea that the mandate was unconstitutional, even though a good number had either sponsored bills including an individual mandate in the past, or were sponsoring one at that moment.

So far, so cynical. But if you’ve been following the court cases against the individual mandate, you know that a major point of contention is whether the policy counts as a tax or not. The conservatives say it doesn’t, and thus it’s outside the government’s established power to levy taxes. The administration says it is, and points to the fact that the actual language is in the tax code. So far, district judges have sided with the conservatives on this one. But it’s worth noting that back in the early days of this argument, Senate Republicans sided with the administration. Here’s Ensign:

In this case, if you choose to not do something — in other words, if you do not choose health insurance — this bill will actually tax you. It will act as an onerous tax.

Max Baucus agrees with him that it’s a tax:

We also gave a lot of thought to the constitutionality of the provisions ... particularly under the commerce clause and the tax-and-spending powers of the Constitution. It is very strongly our considered judgment, and that of many constitutional scholars who have looked at these provisions — and many articles have been put in the Record — that clearly these provisions are constitutional. The commerce clause is constitutional, the tax-and spending clause, and the provisions are clearly constitutional.

Now, the fact that all the Senate Republicans and all the Senate Democrats appeared to agree that the individual mandate is a tax doesn’t make it a tax in the eyes of the courts. But it does shed some light on the conservative movement’s sudden certainty that it’s not a tax, never was a tax, and all of this was obvious from the beginning.

By Ezra Klein  | March 7, 2011; 4:48 PM ET
 
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Comments

I've been wondering why all those folks bemoaning the individual mandate as unconstitutional don't seem to mind the payroll taxes supporting Medicare/Medicaid.

Going the other way, if we're going to be required to buy insurance, why can't we opt to buy into Medicare/Medicaid? Why should those be reserved for the old and the poor? Jeez, if some of us younger-healthier types could do that, it might boost the Medicare finances.

Posted by: jshafham | March 7, 2011 5:44 PM | Report abuse

We've always been at war with Eastasia.

Posted by: will12 | March 7, 2011 5:47 PM | Report abuse

Republicans are so used to arguing that taxes are bad that the fact that their legal argument more or less rests on the idea that something isn't a tax has to be quite disorienting.

Posted by: usergoogol | March 7, 2011 5:50 PM | Report abuse

I'm curious about the context of Ensign's statement. There are plenty of times in a discussion when you made concede to follow a point in order to discuss it.

I do not care if it is a tax or not, the idea of the government compelling you to buy something should scare every person. Where does it stop? Government bureaucrats will expand and expand power.

The first person who pulls out the auto insurance comparison will prove him/herself to lack the intelligence to be in this discussion. I only have to buy auto insurance IF I operate a vehicle on the streets. That is a far cry from what this monstrosity does.

Repeal it now. Or join a union as it appears unions are getting plenty of waivers on the law!

Posted by: newsgroupssam | March 7, 2011 5:52 PM | Report abuse

PS: I do think social security could fall and should fall. What is the constitutional basis for it? A vote of the majority? That does not soothe me as the quality of those folks is in question.

Posted by: newsgroupssam | March 7, 2011 5:54 PM | Report abuse

At the risk of proving my lack of intelligence, my question is how a bureaucrat expands power. They don't pass laws.

Posted by: DDAWD | March 7, 2011 5:57 PM | Report abuse

" I only have to buy auto insurance IF I operate a vehicle on the streets."

So you only have to buy health insurance if you operate a body in the world.

Posted by: Lee_A_Arnold | March 7, 2011 6:00 PM | Report abuse

newsgroupssam - I think we can all acknowledge that the individual mandate is a pretty crappy substitute for doing what actually needs to be done. But doing nothing at all is an even crappier substitute.

Posted by: willows1 | March 7, 2011 6:19 PM | Report abuse

There's no federal requirement to buy auto insurance. States can do what the feds can't (see 10th Amendment).

My recollection is that during the debates, the Administration backed off calling it and making it an actual tax, because of the President's promise not to raise taxes on those making less than $250,000. The government is NOW arguing in the various courts that the individual mandate penalty IS a tax.

And even though the individual mandate penalty is in the tax code, in the tax world there is a legal difference between a "penalty" and a "tax," and this is not merely a semantic difference.

For example, if you fail to file a federal income tax, you are assessed a penalty (and not a tax). Penalties are subject to different means of collection, and the individual mandate penalty is also subject to those different collection means (see ACA Section 1501(b), adding Section 5000A of the Internal Revenue Code).

Let's remember that few Congressmen and Senators are tax lawyers (in fact, are any?). The clear statutory language says "penalty," and not "tax."

Posted by: Policywonk14 | March 7, 2011 6:21 PM | Report abuse

Republican commandments past 10th Commandment:

11- Thou shalt not speak ill of any fellow Republican

12- Thou shall not be faithfull to its wife

13- Thou shall pledge to be at least once in lifetime; Homosexual or Pedophile

14- Thou shall contribute to make Obama one term president

15- Thou shall not refuse any money from lobbyists

16- Thou shall not ever vote against war

Posted by: DigestivePolitics | March 7, 2011 6:22 PM | Report abuse

This is pretty clearly a tax.

It walks like a tax, it talks like a tax, it even has a penalty like a tax (which is administered by the IRS)!

Without the mandate you'd have higher premiums requiring higher subsidies. The tax encourages people to get into the insurance pool reducing the necessary direct subsidies for the purchase of insurance.

What makes this a little different from a federal perspective is that it requires the purchase of a service from the private sector. Additionally, the penalty is likely to be lower than the purchase price of the insurance itself -- especially for those purchasers with higher levels of income (e.g. those who won't qualify for a subsidy to purchase). It would be much less complicated and easier to understand if this was simply levied as a direct tax along the lines of a single-payer system.

Alternatively, you could have a direct tax that provides people with a voucher to purchase private insurance (something that the GOP is trying to do to Medicaid and Medicare -- they always go with the most expensive approach). If the voucher covers 100 percent of the good or service, you wouldn't need a mandate. You might still have some people opting out, but the majority of people would probably use the voucher.

Either way, the GOP position on this is obviously hypocritical. Even for those who "philosophically" object to government provided insurance, or vouchers are hypocrites in the sense that they insist on having coverage as part of their own employment.

Posted by: JPRS | March 7, 2011 6:46 PM | Report abuse

It is a penalty and is stated as a penalty in the law whether or not a republican called it a tax is irrelevant. Just an FYI for all those saying the IRS is collecting the penalty so it must be a tax, well, the IRS is responsible for collecting money for the federal government wheter it is a penalty, i.e. not having health insurance or paying your taxes on time, or income taxes. Social security and medicare are constitutional because f you are not working you do not have to pay into it and it is labeled as a TAX not a penalty. States can force you to own certain things, i.e. auto insurance, the federal government cannot and this is a good thing. I am sorry, but a mandate is not a good thing. There is no such thing as free either so healthcare for all is a myth that does not exist. In Canada a Subway sub is not $5 it is $9 because of all the taxes because of their healthcare costs. If you all feel so strongly about subsidizing others health insurance send me a check now please. I have cancer and huge medical bills so pay my health insurance for me. Yeah, that's what I thought, you want something for nothing but it doesn't work that way.

Posted by: demsco | March 7, 2011 7:51 PM | Report abuse

demsco,

There is such a thing as universal health care. Obviously, there is no such thing as "free" universal health care.

If you are paying for every penny of your care and your insurance company is paying out only what it collects in your premiums, then your insurance company is ripping you off.

Otherwise, someone else -- a lot of someones in fact -- are already subsidizing the cost of your care. That is what insurance is. Cancer treatments are expensive. No one with any insurance that's actually insurance pays the full cost of those treatments. .

As far as the complaints about a "free lunch" go, a person with cancer is likely to be the biggest beneficiary of the insurance law. The issue isn't about getting a "free lunch". The issue is that a wealthy society has the ability to at least ensure that lunch sellers aren't cheating customers, using deceptive practices, and selling them a products that aren't as advertised. If people are getting uninsured coverage through one part of the system -- as happens right now through emergency departments -- under the new system, if you have the means, because of things like the mandate, you have to pay in advance. No free lunch there either.

Posted by: JPRS | March 7, 2011 9:38 PM | Report abuse

The argument doesn't work in either case. Congress certainly has the power to tax; however, even that power is limited. So, if the Obama/Pelosi PPACA is a tax -- which _THEY_ swore it was not -- it is a capitation and therefore must be apportioned.

The Courts [an on this one point, all Courts have agreed] are doing a _favor_ by refusing to allow the Obama/Pelosi Regime to "backtrack" on the tax issue: if any Court allows the Obama/Pelosi Regime to argue that the PPACA is a tax, it fails immediately and never makes it to the Supreme Court. Some remaining elements of the Regime, though, want to push the issue... which is tragically useful.

Posted by: rmgregory | March 7, 2011 10:59 PM | Report abuse

... having said that, it's rather humorous to see Democrats attempting to cover the fact that the HHS Secretary has now admitted to double-counting "savings" due to the Obama/Pelosi PPACA.

The PPACA -- Obama's Albatross -- continues to be useful: the longer the PPACA remains hung around the necks of the Center For American Progress and all of its cronies, the more foolish CFPAC's "scientists," "economists," and "scholars" appear. Heck, I'd vote for Obama in 2012 just so that the full implementation of the PPACA falls [literally] on his watch.

Posted by: rmgregory | March 7, 2011 11:06 PM | Report abuse

John Ensign retires from the U.S. Senate after attacking Bill Clinton over Monica.

Read the book that helped people learn about John Ensign's scandal in Las Vegas, Nevada. The title is;

John Ensign's Extramarital Mistress in Sin City
by Nevada Taxpayer

Posted by: ThomasChi | March 8, 2011 12:06 AM | Report abuse

Mr. Klein: When will you admit the Democrats grossly underestimated the cost of ObamaCare to "sell" it to the American people?

Kathleen Sibelius finally admitted last week she double-counted the phony $500 billion in Medicare "cuts," very few of which will actually happen anyway. But you already knew that, so why did it take a politician less time than you to fess up?

Posted by: ElmerStoup | March 8, 2011 12:56 AM | Report abuse

"But doing nothing at all is an even crappier substitute." willows1

Sorry, but I'm going to scream the next time I hear a liberal claim we have to "do something," when the proposed cure is worse than the problem. Think, people!

Posted by: ElmerStoup | March 8, 2011 1:00 AM | Report abuse

I would recommend this health insurance plan i found through "wise health insurance" to anyone with a growing family who is looking to minimize their medical expenses.

Posted by: aprylhaynes | March 8, 2011 1:02 AM | Report abuse

rmgregory,

How exactly is the mandate a "capitation" tax?

The cost imposed by the mandate is not a set fee. The amount is variable depending on income level, level of coverage, and eligibility for subsidies. You can't claim that the tax is "blind to income," because the only people who are subject to it are those who have an income in excess of 134 percent of the poverty level. Even in those cases, there is an income sensitive component.

Additionally, the courts have long recognized the authority of the federal government to levy taxes on interstate commercial activity (medical services and insurance fall under that category).

To the extent that anything is funny, it's the fact that a couple conservative activist judges have ignored 180 years of Constitutional law and invented an entirely new legal doctrine of "economic inactivity". It's as if these judges don't understand how an insurance pool works; they appear to be equally ignorant of the fact that there are costs imposed on taxpayers generally when the uninsured use emergency departments.

Posted by: JPRS | March 8, 2011 1:03 AM | Report abuse

@ElmerStoup

"Sorry, but I'm going to scream the next time I hear a liberal claim we have to "do something," when the proposed cure is worse than the problem. Think, people!"

How exactly is the proposed cure "worse than the problem"? You'll need to spell that out.

The context:

1. We have a system of medical coverage right now which is the #1 driver of personal bankruptcy claims in this country and which is estimated to kill anywhere from 20-30K people a year due to their inability to receive timely and affordable medical care.

2. Right now, we have an effective system of coverage for the elderly. A semi-effective system for the poor. A generally workable system for large employers. However, in the individual and small group market there have been massive increases in costs in recent years and declining quality of coverage. This is a big issue.

3. The system that's been put into place isn't my personal ideal -- especially without a public insurance component imposing market discipline -- but it should make significant inroads in improving the cost and quality of insurance in the individual and small group insurance market. On top of this the bill eliminates wasteful programs like Medicare Advantage, and it does more to reduce deficits over the long-term than any measure that's been passed in years.

So please clarify: How does the bill make things "worse"?

Posted by: JPRS | March 8, 2011 1:14 AM | Report abuse

Sept 21 2009 "Mr. Obama: "No. That's not true, George. The—for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore . . ." In other words, like parents talking to their children, this levy—don't call it a tax—is for your own good. "http://online.wsj.com/article/SB10001424052970204488304574425294029138738.html


"In order to protect the new national health care law from legal challenges, the Obama administration has been forced to argue that the individual mandate represents a tax -- even though Obama himself argued the exact opposite while campaigning to pass the legislation." http://spectator.org/blog/2010/06/17/obama-admin-argues-in-court-th

And there are a zillion other articles out there on the internet that shows that the "spin" regarding the mandate and in fact all of the health care reform debate came from both sides......

Its just a little bit harder for you "opinion" writers to just spout off anything you want in today's world....

Posted by: LMW6 | March 8, 2011 6:56 AM | Report abuse

I have supported Obamacare until recently. Now I am so sick and tired of listening to conservatives repeatedly bellyache about the individual mandate, which is an idea they themselves developed to ensure the privatization of health care, that I have had it. Politics is an amazingly idiotic profession. Take Mitt Romney, the leading conservative presidential candidate, who himself created an individual mandate but is now arguing against it. We live in bizzaro world. Who does deriding health care benefit anyway? Go ahead conservatives and repeal Obamacare and let premiums skyrocket because you refuse to control costs: you deserve what you get.

Anyway, I am now coming around to the idea that Medicare and Social Security both need to be fused into a single, lower cost social safety net that covers primarily medical care for the elderly. Entitlement costs are killing our budget and we need to invest more in our future, not our past. But, we cannot completely abandon med care for old people. If Social Security is drastically cut, which I suspect it will need to be, we will have no choice but to put more of our elderly, who cannot afford retirement, in low-cost convalescent homes. Better that than living in the streets I suppose. The other idea I have seen that may catch is the granny pod concept, where parents live out their lives with their children in small, detached housing units. We are going to have to find very cheap and innovative ways for the elderly to live without Social Security.

I think we can fix our entitlement problems, but we need to move forward instead of in circles. Politics has become so convoluted and unfriendly and confusing.

Posted by: gfoster56 | March 8, 2011 7:23 AM | Report abuse

Klein remains laughably partisan. The most blatant example of dishonest hypocrisy in the entire health care reform debacle is the President's oft-stated claim that the mandate is not a tax followed by his Justice Department's anchoring of the law's legal defense on claims that it really is a tax after all. Oh, and everybody will get to keep his/her plan, premiums won't go up, cost curves will be bent, etc.......

Posted by: hankmatt3 | March 8, 2011 7:58 AM | Report abuse

Ezra,

I continue to appreciate your efforts to investigate a topic before opining. It is interesting to see how often readers take umbrage at facts you unearth. For me, it validates the degree to which ideology prevails even when information challenges its premises. I am increasingly fascinated by the anti-tax mantras which seem at best ill informed and at worst reflexive rather than reflective. I wish you well in your continued efforts to be a responsible journalist. It is rare enough now that hoping you flourish is in my self-interest.

Posted by: pbkritek | March 8, 2011 9:11 AM | Report abuse

" I only have to buy auto insurance IF I operate a vehicle on the streets."

So you only have to buy health insurance if you operate a body in the world.

Posted by: Lee_A_Arnold | March 7, 2011 6:00 PM | Report abuse
/////////////////////////////////////////

10th Amendment restricts the federal government, not the states. The states could mandate health insurance, for example. D.C. cannot.

Posted by: RealTexan1 | March 8, 2011 9:32 AM | Report abuse

Try actually READING the law.

"IN GENERAL.—The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection (b)(1) shall be equal to the lesser of..."

Nowhere does it refer to a tax, it is always called a penalty on the taxpayer. That is even what the judges found when they read the law.

Posted by: kitchendragon50 | March 8, 2011 10:01 AM | Report abuse

Ezra it doe not matter what the Republicans thought. What matters is that the people who passed Obamacare (Obama and the Democrats in Congress) have repeadetly stated that the financial penalties associated with the individual mandate was NOT a tax. They were going to argue ram this unconstitutional law through based on and expansive view of the Commerce Clause. Now that they are realizing that the Commerce Clause argument may not fly in the courts, they want to switch back to the right of Congress to tax argument. They can talk out of both sides of their mouth but they cannot have it both ways. The courts and the American people will not stand for it.

Posted by: acahorvath | March 8, 2011 11:24 AM | Report abuse

"10th Amendment restricts the federal government, not the states. The states could mandate health insurance, for example. D.C. cannot."

The 10th amendment does not say: "the states can mandate health insurance, but the federal government can not".

The Constitution does state that the federal government has the authority to tax, regulate interstate commerce, and provide for the general welfare. If the health care law gets challenged in court, perhaps the next go-around the legislators re-write the word "mandate" so that it reads "tax" in a way that even an idiot can understand it.

Or perhaps we just move to single payer and have a Medicare for All System.

As far as the commentator who criticized Obama's inconsistent double-speak on this issue (e.g. it's a tax, it's not a tax"), I agree that like a lot of politicians he was concerned more with how his words would play and be received than with what was actually true. For anyone actually subject to the mandate that's money that comes out of your income. The law provides a benefit, but it doesn't provide it free of charge. Those who benefit most directly, also pay the most under the new law.

Posted by: JPRS | March 8, 2011 1:31 PM | Report abuse

Mr. Klein has evidently forgotten Obama's comment that "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax."

To suggest that Democrats have always claimed the mandate to be a tax is not only wrong, it's intentionally misleading. And that is why this argument has been rejected by every Federal judge who has reviewed the issue, including those who have upheld the law as constitutional.

Posted by: MikeG1832 | March 9, 2011 8:48 AM | Report abuse

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