March 30 2012
Secrets Of The Mandate: Was It Really Supposed To Save Us Money?
Supreme Court Justice Ruth Bader Ginsburg noted in this week’s oral arguments over the constitutionality of Obamacare that the so-called individual mandate is there to prevent “free riders,” or uninsured people, from costing the rest of us money.
But a health care expert is saying that the the “dirty secret” is that the mandate, if upheld, wouldn’t save taxpayers a dime. Government subsidies for people with health insurance, writes Christopher Conover, an adjunct fellow at AEI and a research scholar at Duke University’s Center for Health Policy and Inequalities Research, are bigger for people with health insurance:
I reported earlier that, on average, uninsured Americans in 2011 generated $1,078 apiece in uncompensated care losses. With 49.9 million uninsured, this amounted to $53.8 billion last year. Leave aside the fact that the mandate will not apply to everyone (e.g., those qualifying for Medicaid) and that careful analysis has shown that the actual amount of uncompensated care that would be averted through a mandate is more likely to be 30% of the total amount of uncompensated care attributable to the uninsured. As the following analysis shows, even if we generously assume that the mandate will eliminate all uncompensated care losses for the uninsured, it will not save taxpayers a single penny!
Conover says that the mandate, which could conceivably sink Obamacare, wasn’t even designed to save money. Conover writes:
So if the mandate was not about saving money, what was it about? It was about forcing predominantly young people, whose annual healthcare costs are about $850 a year, to purchase coverage costing many thousands of dollars. The mandate was about forcing these individuals to pay for the care of other people (older and sicker) rather than their own care, a point that Justice Alito seems to have grasped quite astutely. But if that’s true, then the individual mandate had nothing to do with a legitimate exercise of the Commerce Clause, but instead was an end-around Congress’s taxing powers. The mandate is a hidden tax cloaked in the guise of making people responsible for their own health bills.
This is the knotty question now facing the Supreme Court. The mandate was a way of avoiding Congress having to impose additional taxes of $360 billion on Americans. The designers of Obamacare were well aware that if the true costs of the bill were accurately identified and taxes transparently increased to cover them, the public never would have supported health reform.
In other words, the mandate is there to hide the real costs of Obamacare—oh, and to stick young people. Mike Carvin, representing the National Federation of Independent Business before the Supreme Court, also pointed out that not only does the mandate require young people to buy health insurance, it forbids them to buy the kind of policy (for catastrophic) that makes the most sense for them.
Making a point similar to Conover’s, Philip Klein writes in the Examiner:
Had the health care law really been about preventing people from showing up at emergency rooms without paying, Congress could have approached the problem in a more targeted way.
But the clear point of the mandate was to force individuals to participate in a market they wouldn't otherwise participate in. The purpose is to subsidize insurance companies so they can provide services to another set of individuals.
The exposure of this reality could be the final nail in the coffin for Obama's mandate.