Sheldon Richman
Campaign For Liberty
Wednesday, Nov 25th, 2009

With the introduction of Senate Majority Leader Harry Reid’s 2,074-page health insurance nationalization bill, we can be thankful for one thing at least. It will most likely be the last bill of its kind introduced this year. Who’d have time to wade through another?

This doesn’t mean there is anything in the bill to be thankful for. Like its Senate predecessors and House counterpart, it should offend any advocate of liberty and good economic sense.

First and foremost among its defects is the individual health insurance mandate: Every individual would be forced to buy government-defined comprehensive medical coverage (or to have it bought by one’s employer). A fine up to $750 awaits anyone who defies the mandate.

As Shikha Dalmia points out in Forbes this week, the individual insurance mandate is the major outrage in the whole “health care reform” scam. I would say it’s the keystone. Remove it and most of the rest crumbles to the ground.

Who do these politicians think they are? Our lives are not theirs to dispose of.

Politicians love to sugarcoat their threats of force. So the Reid bill calls the mandate “shared responsibility.” To those who wonder by what authority the government can make us buy insurance against our will, the bill alludes to the Constitution’s Commerce Clause, which gives Congress the power to “regulate. . . commerce among the several states.” (For a fuller story on the clause, see this.) The bill says, “The individual responsibility requirement provided for in his section . . . is commercial and economic in nature, and substantially affects interstate commerce.”

How would an insurance requirement affect interstate commerce? The bill says that since without the requirement people wouldn’t buy insurance until they are sick, it therefore “will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”

In other words, for the sake of making the insurance market work better, we must be forced to buy coverage. How’s that for a justification?

It’s amazing how many fallacies can be stuffed into one argument. To begin, medical insurance isn’t really interstate commerce. One of the few sensible things proposed during the public discussion on medical care is that the federal ban on interstate purchase of coverage be repealed. Residents of California are not free to buy less-fancy, less-expensive policies offered in Arizona. They are stuck with policies made more expensive by California’s overbearing regulatory regime. Interstate sales would increase competition and lower prices, but the ruling party shows no interest in that idea. So how can this be about interstate commerce?

There’s more that is wrong with the argument. Typically, the Commerce Clause has been invoked against barriers to the free flow of interstate commerce. The Supreme Court has occasionally upheld the prohibition of activities (such as growing wheat for one’s own use in violation of an acreage-allotment program or dispensing medical marijuana) that were said to adversely affect interstate commerce. But the insurance mandate would represent the first time that individuals were compelled to buy product or service in the name of making interstate commerce more effective. The Congressional Budget Office calls it “unprecedented”: “The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

Even under the most expansive reading of the Commerce Clause, how does compelling the purchase of insurance qualify as regulating interstate commerce?

The nub of the bill’s argument is that if healthy people are not forced to buy coverage, the insurance market won’t work properly. Why not? Because same bill would compel insurance companies to accept all applicants for coverage, sick or healthy, without price discrimination. That is, the bill creates the incentive for people to opt out of insurance until they are sick. Obviously, that would not be good for the insurance market.

Self-Caused Problem

The individual insurance mandate, then, is a solution to a problem the bill itself would create. The authors invoke the Commerce Clause to protect interstate commerce from a threat they themselves pose to it. They could avert the threat simply by not imposing guaranteed-issue on insurers.

But of course the advocates of nationalized medicine wouldn’t do that. Guaranteed issue is at the center of their scheme. They want to proclaim that they brought universal coverage to America. Freedom must take a back seat to their objective, which is to disguise a welfare program as insurance and put us on the road to government-administered rationing.

The “reformers” are quick to point out that people without insurance go to emergency rooms for medical care and sometimes don’t pay their bills, shifting the costs to the rest of us. But Shikha Dalmia notes that uncompensated care accounts for less than 3 percent of the country’s total medical bill. To save $40 billion a year, we should spend more than $100 billion a year and lose more liberty? No thanks.

One reason for uncompensated care is that emergency rooms are forbidden to turn away patients (even in non-emergencies) who have no means of payment. Who imposed that prohibition? The government, of course. That may sound humane, but one unintended consequence is a likely contraction of charitable care. Why set up facilities for the indigent if they can turn up at any emergency room?

Again we see Mises’s Law at work: Intervention begets intervention. Government action creates problems that politicians then use to justify more government action. Undoing the first intervention would help solve the problem, but politicians have little incentive to move in that direction.

Government has suppressed the free market in medical care both on the supply and demand sides. As a result, medical services and insurance are artificially expensive, pricing many people out of the market. Instead of removing the interventions and letting the free market — including mutual-aid associations and philanthropy — lower prices and create more widespread coverage, the politicians propose to pile on more market-suppressing measures. Freedom is the first casualty. But we can also anticipate an aggravation of the current system’s worst features.

Forcing individuals to buy insurance is an intolerable assault on our liberty — not to mention a massive subsidy to the insurance companies. (They’re mad the penalty is not greater.) How many more usurpations can we be expected to tolerate?



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