Thoughts on ACA’s individual mandate

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I have needed a fix for a while. Chris Cillizza at the Washington Post has a column he calls The Fix. I’ve sort of wondered what he means by that. He probably means something humorously ironic, like ‘the fix is in.’ He probably didn’t mean he’s addicted to his vocation, and needs a writing fix to keep functioning.

I can’t decide whether to write today about free speech at Williams College and elsewhere, or about the individual mandate. A friend of mine teases me, when I can’t decide between two options, that my default response is to ‘do both,’ even though I obviously don’t have time to do both. My reasoning is that if you act fast, with energy and determination, you do have time.

Another friend told me about a good podcast he heard not long ago, about the health care insurance market. A central premise or point of departure for people on the Democratic side of this discussion is that all people deserve access to health care. If so, you cannot exclude people with pre-existing conditions from treatment. After all, a condition is pre-existing only from an insurer’s point of view. For the patient and the doctor, it’s just a condition. You can’t exclude a person from care merely because it exists at the time you contract for insurance.

So you have insurers who say, we can cover people with pre-existing conditions only if we have a risk pool – another insurance term – that includes healthy people. Premiums from healthy people must cover costs to treat people who require care. If we have no healthy people in our risk pool, we do not have enough money to pay doctors and hospitals what they need to care for sick people. In fact we will go out of business if we collect premiums only from sick people, which is what happens if people opt out of an insurance contract – and excuse themselves from the risk pool – until they get sick.

Enter the individual mandate. It actually has a rationale. Jonathan Gruber explained all of these matters to us a decade ago, though one wonders why he thought he should waste his time with us. The MIT professor persuaded Mitt Romney, and other smart people in the Massachusetts state government that he had a great new health care system that would simultaneously solve two problems: (a) high costs and (b) too many uninsured people. Romney signed the law on April 12, 2006. It took effect in 2007. Three years later, the Patient Protection and Affordable Care Act – based on RomneyCare – passed both houses of Congress after debate that became even more partisan than many other conflicts we have witnessed in our national legislature.

Anger about ACA was obvious in four subsequent elections: 2010, 2012, 2014, and 2016. If you were to compare the number of Democratic and Republican office holders after 2008 with the same numbers after 2016, you would see dramatic differences at all levels, from state legislatures up through the White House. The Republican tide everywhere except the northeast and California results from more than opposition to ACA, but anger about enactment of ACA in 2010 impelled a long-lasting movement to replace Democratic legislators with Republican lawmakers. In that way, Obama gave up numerous states outside the northeast and California, for a long time to come.

I don’t think Obama and his allies in the House, Nancy Pelosi in particular, expected this degree of opposition. Opposition to the law focused on the individual mandate, the issue opponents brought before the Supreme Court in 2014. When Justice Roberts ruled the penalty the IRS levies on uninsured citizens is a tax, not a fine, he introduced a conceptual shift. If the IRS levies penalties for non-payment, insurance premiums become a tax you must pay, even though payments go to insurance companies, not to the public treasury. When Roberts placed the IRS’s administration of the individual mandate in the realm of tax enforcement, he undercut opponents’ argument that government cannot force you to buy something. It can always force you to pay taxes.

Citizens know a tax increase when they see one. That’s true whether you call ACA’s penalty for non-compliance a tax, or you regard required premiums as a kind of quasi-tax government compels you to pay to insurance companies. Required payments are required payments, no matter who collects them. For beleaguered tax payers, they all look the same. You don’t get to use the money the way you want, because government appropriates your funds for its own purposes.

Democrats appeared to think people would get used to the idea of required insurance payments, especially as they became accustomed to ACA’s benefits. To an extent, they were right. Roberts’ decision established ACA: constitutionally sanctioned, Republicans would not be able to reverse it as it took effect in subsequent years. Republicans’ failure to replace or even improve ACA in 2017 illustrates that benefits, once granted, can never be taken away.

Yet Hillary Clinton did not care to talk about ACA during her 2016 campaign. She did not claim it as a Democratic success that would make people want to vote for her. She and her advisors correctly judged that the issue still stirs raw feelings in too many quarters: why rile people up unnecessarily? Republicans’ inability to devise improvements that win support from from fifty-one senators tells you something as well. To me, it says they came into their 2017, post-election opportunity for legislative improvements unprepared. They needed good preparation because ACA has become established.

The individual mandate still serves as the partisan wedge that ACA opponents cannot let go. After a long conversation with my friend about death spirals, risk pools, and other arguments that grow from Gruber’s initial proposals in Massachusetts, I remarked, “Well, we don’t need to overturn the entire ACA. Just get rid of the individual mandate, and then see what happens. We can make more improvements as we go.” My friend figuratively threw up his hands, as the lynchpin of the entire ACA system is the individual mandate. Without that, the academic argument goes, nothing else about the scheme works.

I appealed to the moral side of the question. The individual mandate does not suit the dignity of free people. You cannot force people to buy something complicated and expensive, like health insurance, and say they are still free. If you can make them buy that, you can make them do anything. In our current, post-9/11 surveillance state, blanketed with irritating rules, restrictions and imposts wherever you turn, that’s exactly how we feel. We have lost our dignity as free citizens of a republic. We feel like Wells’ herd-like Eloi, penned in to work for the Morlocks, and we don’t want to deal with any more degradation. If we felt remnants of freedom in our relationship to government and other sources of authority before ACA, the individual mandate seemed to dismiss one more previously protected area: a degree of individual choice about how to handle our families’ health care.

So now we have a tax bill that proposes to repeal the individual mandate. The first version of the bill, passed this week in the House, does not say anything about the mandate. The Senate version, still under discussion and not yet scheduled for a vote, proposes to end the mandate. Roberts’ opinion, along with IRS administration of the mandate’s penalty, makes the tax bill an appropriate place to address the issue. It also fits my remark that we should deal with this issue first, then see to the rest. Get rid of the provision that makes people mad. After their anger subsides, perhaps they can think more clearly about other ways to improve the way we pay for health care in the United States. I speak personally. I don’t even want to think about the rest while the mandate is in place.

Now to address one more argument that grows out of Gruber’s proposals, summarized in that podcast. I believe the podcast was an episode of Vox’s The Weeds – see the link below. Though the analysis on that program leans Democratic, they do good analysis there.

The argument we need to consider is whether concepts and vocabulary from insurance markets even applies to payments for health care. I would say that except for defined areas, such as costs for unanticipated hospitalization, concepts related to insurance markets do not apply, or apply only partially. I don’t want to analyze our health care system to show why that’s true, partly because it would take more space and time than I have, and partly because I have only high-level knowledge to go from. I’m not that familiar with health care markets here in Massachusetts, home of Gruber’s little experiment, let alone how they operate in the other forty-nine states. That knowledge definitely helps to devise improvements for the future. It also helps you develop concepts appropriate for analysis of where we stand now.

So I’ll just make one general statement: I do not believe elimination of the individual mandate would have negative effects we would be unable to address. Even if we accept Gruber’s analysis, which makes the individual mandate a lynchpin, I do not believe ACA has created a system of health care payments that would simply collapse across the country, were Congress to remove the individual mandate tomorrow. We would have an opportunity to work with what we have, to make incremental improvements.

To use a popular oceanic metaphor, removal of the individual mandate would not cause a tsunami of bad consequences that would overwhelm us. Defenders of established institutions too commonly use fear of the unknown to warn people about change. Certainly we have seen that in Democrats’ opposition to Republican efforts to overturn or replace ACA. Fear of the unknown does not figure into progressive arguments about transitions to a single-payer system, because Democrats generally favor change in that direction. You hear plenty of warnings, however, for changes that take us toward freer health care markets. I don’t like use of fear about prospective uncertainty in any kind of argument.

We want to see, then, what happens with the Senate tax bill. I’d like to have ready access to analysis of these questions, not tinged with the the partisan arguments we have come to expect on these matters. I actually don’t dislike partisanship per se. I do dislike a readiness on the internet to use unbalanced, ill-thought or shoddy arguments to make a case one way or the other. This debate affects families in important ways – family members deserve higher quality debate than we have seen. Gruber’s famous statement, that people are too stupid to know what he’s talking about, reflects the kind of environment that has developed for this discussion.


Related article

Patient Protection and Affordable Care Act (Wikipedia)

Related podcast

Why insurers are quitting Obamacare, explained