Individual Mandate: A State or Federal Issue?

In a Tuesday op-ed piece, Harvard economics professor Edward Glaeser considers the implications of the Affordable Care Act’s individual mandate in the context of state and federal mandates.  Rather than addressing the legal intricacies of the debate, Glaeser considers the economics of alternatives to the ACA which could reconcile pieces of the nation’s healthcare problems without increasing federal power in the marketplace.

With regards to the question of how to solve the “free-rider” problem currently in place, of insured patients bearing the brunt of uninsured patients’ healthcare costs, Glaeser proposes a tax for the externality.  In his contention, by imposing a tax of roughly $170 annually on the 50 million uninsured Americans, the burden of cost would no longer be on the insured for their healthcare, and would serve as motivation for the uninsured to purchase coverage.  In this way, the government could incentivize the purchase of healthcare amongst the uninsured without directly mandating it.

Glaeser points out that he does not, in fact, oppose all forms of individual mandates, but believes that they should be legislated on the state level.  His argument follows two main points: first, with regards to costs, the balanced budget provision which all states, except VT, have in place, would ensure that healthcare costs would be a primary focus of legislators required to do so by law.  While lobbying dollars from healthcare and pharmaceutical companies may threaten to increase costs in Washington and further the federal deficit, such increases would be much less tolerable on the state level given the legal requirements imposed on the state legislatures.  Secondly, Glaeser contends that by allowing mandates and healthcare to be controlled on the state level, such as in Massachusetts, legislators will be better able to structure and adapt the system to the citizens of their state.  If a citizen is unhappy with the healthcare system in their state, they could hypothetically easily move to another.  By being legally bound to remain diligent about healthcare costs, and more directly accountable to the systemic results, state legislators would be able to offer patients better and cheaper healthcare than federal legislators could.

Healthcare Law Arguments Conclude in Supreme Court

Today marks the last day in which the constitutionality of the Affordable Care Act, or “Obamacare” as it has been colloquially titled, will argued before the Supreme Court.  The Act requires that , beginning in 2014, all individuals not covered by a private or government health insurance program to purchase a minimum health coverage plan or face a financial penalty.  This “individual mandate” is not required by those who experience financial hardship or religious practices which forbid such a practice, and represents the most controversial piece of the Act.  The bill itself hopes to expand the number of Americans covered by health insurance and expand the coverage of those who already possess a coverage program.  Opponents, however, point to increased funding costs and constitutional ramifications as reasons to oppose to the Act.

Over the first half of this week, the Affordable Care Act has been argued before the Supreme Court, challenging primarily the constitutionality of the “individual mandate.”  Wednesday morning’s arguments were focused mainly on the question of “severability,” namely, whether the entire Act would be null and void if the individual mandate is found unconstitutional, or whether other aspects of the bill could be maintained.  It remains highly uncertain as to which way the court will go in its ruling, which is likely to be delivered sometime in June, though many legal observers have “concluded the Obama administration’s solicitor general, Donald Verrilli Jr., did little to boost the individual mandate’s constitutionality in two hours of intense arguments Tuesday.”  Despite the White House’s subsequent statement affirming their support of Mr. Verilli, on such a divided bench this could play a major factor.  Currently Justices Sonia Sotomayor, Elena Kagan, Ruth Bader Ginsburg and Stephen Brayer are expected to uphold the mandate.  The remaining Justices Clarence Thomas, Antonin Scalia, Anthony Kennedy, Samuel Alito and Chief Justice John Roberts are less certain in terms of predictability, with Justice Kennedy seen as the most likely of these five conservative justices to swing his vote the other way.