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Health Care and the Majestic Equality of the Law

March 31, 2012

“The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread.”

Anatole France

The Supreme Court heard arguments this week on the constitutionality of the Patient Protection and Affordable Care Act, and it doesn’t look good for Obamacare.  The received wisdom is that the law has the votes of four liberal justices, with only two other justices in play, and both of them sounded pretty skeptical in court this week

The central issue is the constitutionality of the individual mandate – the provision of the law that requires most Americans who don’t otherwise have health insurance to buy it.  It has long been accepted that Congress has the constitutional authority to regulate interstate commerce, and it has long been accepted that Congress has the constitutional authority to regulate health care.

The only question is whether Congress has the right to require the purchase of health insurance.  The conservative argument is that requiring the purchase of health insurance is not the regulation of existing commerce, but is instead the creation of new commerce for the purpose of regulating it.  The liberal argument has been that people without health insurance are in fact participating in commerce – when they are injured or sick, they will get some measure of health care, it just won’t be covered by insurance.

Before addressing this issue head-on, I have two side observations.  First, the constitutional issue is a question of federal power specifically, not a question of government power generally.  No one seriously questions the power of a state to mandate the purchase of health insurance – as, in fact, Massachusetts did under Governor Mitt Romney.

Second, conservatives have rallied their faithful to the anti-mandate cause by an appeal to “liberty,” but this is a truly peculiar liberty.  The “liberty” in question is highly theoretical precisely because there is no question that states can mandate insurance coverage.  A right to be free of a federal mandate yet subject to an identical state mandate is a pretty useless right.  And the “liberty” in question is dubious because, as between those who can afford health care and those who can’t, it is mostly those who can’t afford it who will exercise their liberty not to buy it.  In other words, to paraphrase Anatole France, if the conservatives have their way, the law in its majestic equality will allow the rich and poor alike to make do without health insurance.

I’m not prepared to argue that there is no difference at all between regulating commerce that already exists and requiring everyone to engage in a specific mode of commerce – here, health insurance.  But I am prepared to argue that the analogies offered up by the anti-Obamacare lawyers and justices are inapt to the point of farce.  There is no similarity at all, for instance, between requiring someone to buy health insurance and requiring her to buy broccoli.

Broccoli is a finite good, and therefore works on the law of supply and demand.  If more people buy broccoli, the price goes up; if people buy less broccoli, the price goes down.

The insurance market is fundamentally different.  Insurance is not a finite good, so it doesn’t respond the same way to the law of supply and demand.  On the contrary, insurance is priced according to the spread of the risk – broader insurance coverage spreads the risk and lowers the price of coverage; less coverage concentrates the risk and increases the price of coverage.

Insurance for health care costs less than health care itself because not everyone needs health care at any given time, or in any given amount.  If only one person bought health insurance, the premiums would be pretty much the same as the cost of health care itself.  But when a whole bunch of people buy health insurance, as long as all of them don’t get sick at the same time, each one pays less than each would pay if that person became sick.  Health insurance costs the least if everyone buys it.

Paul Krugman characteristically cut through the obfuscation this week:  “When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it. But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain.”

Krugman also characteristically pointed out the hypocrisy of conservatives on this issue.  There are two ways to get to universal health care:  government-provided, tax-funded health insurance, like Medicare and Medicaid; or government-mandated purchase of private health insurance.  The former has traditionally been favored by liberals; the latter by conservatives.  Following the post-2008 pattern, however, if President Obama adopts a conservative policy preference, conservatives are against it.  To that effect, Krugman quoted the estimable conservative Charles Fried, solicitor general in the Reagan Administration:  “I’ve never understood why regulating by making people go buy something is somehow more intrusive than regulating by making them pay taxes and then giving it to them.”

There is room for some hope.  Many Supreme Court observers felt that Justices Kennedy and Roberts were genuinely looking for some articulable principle that would allow the federal government to mandate the purchase of health insurance without allowing the federal government to mandate the purchase of any old thing, like broccoli.  The Krugman Distinction amply does the trick.  The four liberal justices, and their law clerks, are very smart, and can be counted on to make the argument.  The question is whether the observers who think that Kennedy and Roberts will listen are right.

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