individual mandate


Reforming Health Care with “Defined Contributions”

Over at Kaiser Health News, AEI’s Tom Miller and I have an article describing how Congress enact a health-reform program that deals with the central issue of cost control while also achieving universal coverage without the need for a mandate:

Pro-competition, pro-consumer-choice advocates should press for reforms that would begin to convert existing, federally subsidized arrangements from open-ended benefit guarantees into "defined contribution" programs. The comprehensive and strategic approach we propose would apply defined contribution financing by taxpayers to all three major insurance coverage platforms — Medicare, Medicaid and private health insurance....

The prescription drug benefit, added to Medicare in 2003, provides one partial model for how to move toward a defined contribution approach. The government's payment for a beneficiary's Medicare drug coverage is fixed through competitive bidding each year, and it remains the same regardless of which plan the beneficiary selects. Seniors selecting more expensive plans than the average bid must pay the additional premium out of their own pockets. Those selecting less expensive plans get to keep the savings. Scores of insurers entered the program and competed aggressively with each other. The result is that costs were driven down, and federal spending came in 40 percent below initial expectations....

Read the full article here.

posted by James C. Capretta | 10:30 am
Tags: defined contributions, Medicare, individual mandate
File As: Health Care

Now It’s Unstable Legally as Well as Politically

The decision on the individual mandate handed down today by U.S. District Judge Henry Hudson in the Eastern District of Virginia makes it clear that Obamacare is on extremely shaky legal ground. That’s fitting, because it’s been on shaky political ground for well over a year now. Today’s decision — possibly joined by others in the weeks ahead — is going to strengthen the already strong perception that this law was ill-advised from the get-go and needs to be repealed to make way for a more sensible, consensus-driven program.

Specifically, the judge’s ruling today found that the new law’s requirement that all Americans must purchase government-approved health insurance or face a fine was not a permissible use of lawmaking authority granted to Congress under the Constitution. In other words, Congress doesn’t have unlimited authority to do anything it wants. Its powers are carefully enumerated. And among them is not the power to force Americans to buy something they would otherwise forgo.

Without the individual mandate, the whole Obamacare edifice crumbles. The judge did not rule that the entire law must be invalidated. But if the individual mandate goes, the insurance regulations — and most especially the requirement that insurers must take all comers without regard to their health status — will never work. Patients could simply wait to enroll in health coverage until they needed some kind of expensive treatment or procedure, and thus pocket the premiums they would have paid when they were not in need of much medical attention.

Still, it’s been clear for some time that repeal advocates should never bank on courts bailing the country out of Obamacare. This issue is far too important to leave to such an unpredictable process. Moreover, even if the mandate and related provisions are gutted by the courts, that would still leave many horribly damaging aspects of Obamacare in place, such as the massive entitlement expansions and the heavy reliance on government-imposed price controls.

Today was a good day. But it’s really just a small skirmish in a much wider war. By all means, every legal remedy should be pursued. But Congress has a responsibility to undo this mess as well, regardless of how the court cases turn out.

(I also discussed the decision in a brief interview this afternoon with Megan Hughes of Bloomberg, available here on YouTube.)

posted by James C. Capretta | 4:24 pm
Tags: individual mandate, constitutionality

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