Thursday, July 5, 2012

The Health Care Law

So, a couple weeks ago was the Supreme Court decision about whether the individual mandate to buy health insurance in PPACA (also known as Obamacare) was constitutional. It turns out, it is, but not for the reasons you might expect.

There were basically two main issues. One is where the "Commerce Clause" - the power given to the federal government by the Constitution to regulate "interstate commerce" - covers the health care law. The other was whether, even if the Commerce Clause doesn't apply, the individual mandate can also be considered constitutional because it is a tax, and thus falls under the government's power to levy taxes.

It was a close 5-4 decision in favor of the law, and the swing voter, Chief Justice John Roberts, wrote in his opinion that the Commerce Clause does not apply, because in order to "regulate interstate commerce" there first has to be commerce to regulate, and people who don't want to buy health insurance are those that are not engaging in any relevant commerce in the first place. One counter-argument to this is that people who aren't insured will still eventually need health care and end up "engaging in commerce" sticking others with the tab. Roberts rejects this argument, because the fact that someone might engage in commerce at some point in the future doesn't justify forcing him to now. For instance, all of us will buy food at some point in the future, and the government can regulate food sales, but the government can't force me to go to the grocery store right now and buy a specific food item.

However, Roberts does cast the deciding vote in favor of the law's constitutionality on the grounds of the Taxing Clause - that it can be viewed as a tax on not having health insurance, and the government has the power to levy taxes. PPACA states that anyone who does not have health insurance must pay money to the IRS along with their normal federal taxes. Although PPACA does not call it a "tax" - it calls it both a "penalty" and a "shared responsibility payment"*, legal precedent requires that "every reasonable construction must be resorted to in order to save a statute from unconstitutionality" - i.e. if you could make the statute constitutional by re-wording it a bit, then it's constitutional.

One issue that was not discussed in the opinions was the following. Let's say that instead of saying that you have to pay a penalty of $X if you don't buy insurance, the law just raised everyone's taxes by $X across the board, and additionally said that if you do buy insurance, you get a reduction in $X on your taxes. That certainly seems like another "reasonable construction" that is functionally equivalent to the existing law. And it is very clearly constitutional: The government obviously has the power to raise taxes, and the government gives tax breaks to encourage you to buy/do certain things all the time (buy a house, get married, etc.) and nobody claims those are unconstitutional. (I am not the only one to notice this.)

As far as the Commerce Clause part goes, a major argument against constitutionality was as follows. The idea of the individual mandate is that people not buying health insurance imposes increased health care costs on others, so the government can mandate that people buy health insurance. So by that logic, since people eating unhealthy foods also increases health care costs, that means the government can mandate that everyone buy fruits and vegetables. (One version of the argument specifically mentions broccoli, although that was not part of the final opinion.) And since the government mandating that everyone buy broccoli is clearly an unconstitutional government overreach, mandating that everyone buy health insurance is similarly unconstitutional.

Here's my response to that argument:

First of all, why is it so obvious that the government forcing us to buy broccoli is unconstitutional? Again, suppose the government were to raise our taxes, use the proceeds to buy broccoli, and then provide it to us for free. Clearly each step in this process is constitutional, and the result is economically equivalent to making us buy broccoli, except with extra overhead.

But a better way of analyzing this question might be to think about why we have constitutional limits on government power in the first place. The point of such limits isn't to prevent the government from doing anything that might be a bad idea. There are lots of things the government can do that are clearly bad ideas (say, raising everybody's tax rate to 100%) but that the government clearly has the power to do. The thing that protects against these kind of bad policies is that if politicians enact bad policies, their constituents can vote them out (of course, it's not clear how well that incentive works, but at least that's the theory.)

Rather, the purpose of constitutional limits is to stop the government from doing things that are politically popular (or are inclined to do anyway for other reasons) despite being bad ideas. In other words, things that we expect the government to be over-eager to do in comparison with the actual merits. For example, consider free speech. We know that governments can be particularly eager to restrict speech, both because such restrictions can be politically popular in the short term (especially since it can be hard politically to defend the right of people to engage in unpopular speech without appearing to endorse the content of the speech) and because it can be used to squelch criticism of government. That is why it is important to make sure that the government can't easily prohibit speech. Another example is the prohibition against unlawful searches and seizures (and other limits on police power.) We know that police would likely search more intrusively than is warranted in the absence of such protections (again, because most decisions about how to search are made by individual police officers, who are not as subject to political discipline, and because it can be difficult politically to advocate for less intrusive searches without being accused of helping criminals) so it makes sense to have those limits.

So, is the power to force people to buy things a power that government has the tendency to overuse? I don't think so (at least, not more so than other government powers that nobody claims are unconstitutional). The main argument that I tend to see for why the government would overuse the power to force people to buy things is that it could be used to give favors to special interest groups. For example, if Big Broccoli gives a lot of money in campaign contributions, it could "buy" a law that forces people to buy broccoli, irrespective of its actual merits. However, I think that the risk of this happening is significantly LESS than the risk of providing favors in other ways (e.g., subsidies to broccoli producers), because forced purchases are a significantly MORE transparent and publicly visible way of providing political favors than are other methods such as tax breaks and subsidies.

In other words, if the government is going to give away political favors to Big Broccoli, I would much rather that they do it by making everyone buy broccoli, because that way everyone will know what is happening, and we can have a political discussion and ensure accountability. In contrast, giving political favors the current way (like hidden tax breaks and subsidies) is much more problematic, because most people don't know who is being given what special favors, so there isn't as much political accountability.

But anyway, I am glad that the health care bill has passed and been ruled constitutional, so that we can find out what's in it.**


*I really have to find a clever way to use this wonderfully euphemistic name for a tax. Maybe in Dungeons and Dragons, when the evil king taxes his people to get money to raise an undead army to conquer the world, he could call the tax a "shared responsibility payment." I mean, raising corpses from the dead counts as health care, right?

**I think that Pelosi has a very good point here, even if she expressed it using a poor choice of words. Before the law is actually implemented, it is very easy to come up with all sorts of scare stories - like the whole "death panel" thing and stuff. But once it is actually implemented, after a few years we will be able to tell whether any of those scare stories came to pass. I believe that once we actually see how it works, people will like it. I mean, my understanding is that most people who are on Medicare like it, even if they don't realize it's a government program.

1 comment:

Dan Mont said...

I think your point:

Rather, the purpose of constitutional limits is to stop the government from doing things that are politically popular (or are inclined to do anyway for other reasons) despite being bad ideas. In other words, things that we expect the government to be over-eager to do in comparison with the actual merits

is a good one.