Friday, February 12, 2010

What happens if the states try to nullify an individual insurance mandate?

One issue that divides liberals and conservatives is their views on the respective roles of federal and state governments. Conservatives prefer that the states run things, liberals, the federal government. A growing number of conservatives, including columnist George Will argue that Obama's health care proposals - and in particular, a mandate that individuals buy coverage - would unconstitutionally usurp powers reserved to the states and the people by the constitution's 10th amendment.

The Commonwealth of Virginia, reports the New York Time's Katharine Seelye, is on the verge of enacting a law that would exempt state's residents from complying with an individual insurance mandate. She reports that almost two-thirds of the states have similar legislation in the works. Law professor Timothy Jost argues in the New England Journal of Medicine that such state laws are "constitutionally impossible" and that the "purpose of these laws ... is not legal but rather political" and are "part of a larger campaign to mischaracterize federal legislative efforts and stir up opposition to any federal health care reform."

It is beyond my expertise to predict how federal courts would rule on this issue. From a political standpoint, though, the individual mandate is one of the least popular features of health care reform, according to Kaiser Family Foundation's most recent tracking poll. Conservatives don't like it because they consider it a usurpation of constitutional liberties; and many liberals don't like it because it compels them to buy private health insurance, when they really would like Medicare-for-all.

The logic behind the individual mandate, though, is that if insurance companies are going to be required to accept all comers, without regard to pre-existing conditions, and would be limited in how much more they can charge them, then people need to be compelled to buy coverage when healthy. Otherwise, some would stay out of the insurance pool until they get sick - resulting in higher premiums for everyone else. This then could lead to an insurance pool "death spiral". Faced with higher premiums caused by those who didn't get coverage until they got ill, more insured people would drop coverage, since they too could just "go bare" until they get sick. Rates would go up for the remaining insured population, leading more of them to drop coverage. And so and so on until the entire system collapsed.

One way to get around this problem is to eliminate the insurance mandate altogether, and instead just enroll everyone in a government-run plan like Medicare. I doubt that this is what conservatives want, but it could end up being the simplest way of getting everyone covered, should the present approach of providing subsidies to buy coverage, combined with a ban on pre-existing condition exclusions and a requirement that individuals buy coverage, fail on either constitutional or political grounds.

Today's questions: What do you think about state laws designed to nullify a federal requirement that individuals buy coverage? And about the individual insurance mandate itself?


Steve Lucas said...

This will all end up in a very, very, very, long litigation process. We are talking years and no matter how it goes, the whole process will come to a screeching halt.

Steve Lucas

Robert J. Sobel, M.D. said...

Writing from Illinois, where our judiciary has said a cap on intangibles is unconstitutional, it is hard to feel confident about where to enforce the federalism. I have stated before the guideline role of the fed, the need to not allow safe shelters from prosecution (the whole private-ERISA landscape), and the model that exists with Medicare.

Americans don't have a right to private insurance, I suppose. But, we can protect against the cherry-picking only if it is ALL IN. We pay taxes or bills for police and fire and water and electricity. We can handle an individual mandate here. People will accept it if we get our money's worth. Let's work on reforming the insurance industry excesses (interventionalism, marketing, the incessant squeeze of Wall Street). Urgently consult primary care on how to save Medicare.

Arvind said...

Why can't we consider options other than the two mentioned. We can offer tax incentives to individuals and families to purchase health coverage (encourage HSAs) and penalties for those that decide to go bare until they get sick, such as exempting such knowingly irresponsible folks from all types of bankruptcy protection, i.e. they will be forced to pay all their bills for their treatment or will be forced to serve in some capacity to repay the community debt. Once people realize that they cannot hide behind fake walls, most of them will voluntarily pick some sort of coverage. For this to succeed, the govt must enforce a level playing field in the health insurance industry - allow inter-state competition, remove the protection that insurers currently have, allow market-based processes to decide on the value of health care services, provide for quick resolution of disputes (similar to BBB) and encourage the population to be educated, involved and vigilant. The only way we can achieve greater access to higher quality care possibly at reasonable costs is having an educated, empowered and involved consumer. Let's not look for either Federal or State governments to provide answers - keep politicians out of this issue if you want real workable answers.

Rich Neubauer MD said...

The "battle" over State vs. Federal rights dates back to the founding fathers. Jefferson and Adams jousted over this and it came between their friendship which was forged in heady days of the American Revolution.

As you well outline, without an individual mandate, it is virtually impossible to expand coverage in a pluralistic system. And, we as a country seem to be wedded to a pluralistic system of coverage as the only possible solution to achieving universality having dismissed single payer out of hand.

My understanding is that there is sufficient legal precedent to give state challenges to the individual mandate a low likelihood of success. This is not to say that these attempts will not be made.

A bit, this is reminding me of Jared Diamond's book collapse where he outlines the reasons why highly successful civilizations have collapsed. His thesis is that this happens when, for one reason or another, cultures falter when they fail to adapt to changing conditions. In the current scenario, at least some of us seem stuck on basic ideology that is counterproductive and would rather allow collapse than accept change.

Our nation was founded on very important basic principles and preserving those principles is extremely important. However, for our nation to survive in the current era we also need to adapt. In the delivery of health care, our position as a world leader is threatened and if we do not adapt it will be to our detriment.

Tom Bledsoe MD FACP said...

Rhode Island, (I believe still one of just two states with a Health Insurance Commissioner) poised to put forward legislation that would require an individual mandate at the state level with penalties that match those at the federal level. We know that we will provide care for those who become ill even if they do not have insurance. Plan at this point is to a) promote use of the exchange, b) use the penalties locally to fund secondary insurance and c) specifically target those who pay the penalty for recruitment into the health insurance pool in the following year. What do you think?