• How to Teach the Individual Mandate

    I am teaching Public Policy 111 (Intro to the U.S. Health System)  for the ninth time this fall at Duke University. I love teaching this class of Freshman and Sophomores, and it is why I am a college professor. However, it has been hard to prepare for it this Summer because so much has changed since I last taught it in the Fall of 2008.  I didn’t even have a blog then!

    However, the hardest part of preparing has been figuring out what to say about the individual mandate. I have always taught it in this course, and it was prominent in the “Republican health reform alternatives” section.  Some years I have had students read Responsible National Health Insurance by Mark Pauly, Patricia Danzon, Paul Feldstein, and John Hoff, the intellectual background behind why the mandate was the preferred Conservative approach. We talk about the Chaffee bill which was the Republican alternative to the Clinton plan in 1993-94 that contained an individual mandate to purchase coverage and set up state based insurance markets in which individuals could buy policies with income based subsidies. Wait…

    Even as late as June 14, 2009, Senator Charles Grassley (R-IA) the ranking Republican on the Senate finance committee and member of the “gang of six” was saying on Fox News that the individual mandate was a bipartisan way to achieve health reform and he talked about the themes of responsibility and reducing cost shifting that have typically been the hallmark of Republican support. By the fall of 2009 he and most other Republicans had decided that an individual mandate was unconstitutional. I find the argument that “we were for it the past 18 years we just didn’t realize its passage would violate the Constitution” to be absurd. However, I don’t want to just get up and vent my spleen to the kids about this. So, I have decided to ask them. Each semester we have one long paper due at the end, and this year the topic will be as follows:

    • Trace the history of the individual mandate as a means of expanding health insurance coverage in the U.S. When did this idea emerge? Who/what groups were the intellectual drivers of the arguments behind the individual mandate?  What were the arguments in favor? In opposition? Why was the individual mandate often supported by Republicans and Conservatives in the past? Why do you think the individual mandate became a central part of the Affordable Care Act? When did the opposition to the individual mandate arise and why? From your research on the topic, are you persuaded that a federally-enforced individual mandate to purchase health insurance is acceptable under the Constitution or not? Why or why not?

    I will write about their answers in December.

     

     

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    • Pertinent portions of the history of the individual mandate can be found in my latest book “The Managed Healthcare Industry–A Market Failure; how healthcare was turned into wealthcare for big insurers and managed-care companies,” (Create Space, Amazon.com, etc., 495 pp, July, 2011).

      The Obama administration’s “mandatory” position in the ACA was not
      new. In United States v. Lee, a unanimous 1982 Supreme Court gave judicial notice to the legislative history of our Social Security system at the time Medicare benefits were made available to participants in the system. In deciding that Old Order Amish employers and employees must participate in Social Security, the High Court quoted from Senate Report Number 404 of the 1965, 89th Congress, which stated that “a comprehensive national social security system providing for voluntary participation would be almost
      a contradiction in terms, and difficult, if not impossible, to administer.

      . . ‘[W]idespread individual voluntary coverage under social security . . . would undermine the soundness of the social security program.’ . . . [and in footnote 12]: We note that here the statute compels contributions to the system by way of taxes; it does not compel anyone to accept benefits.””

      The ACA has built in exceptions that are consistent with the federal
      taxing authority and the decision in United States v. Lee. The ACA allows that American Indians do not have to buy such insurance,
      and those with religious objections or a financial hardship can also
      avoid the requirement. In addition, if a person would pay more than 8 percent of his or her income for the cheapest available plan, that person would not be penalized for failing to buy coverage. Thus, the Supreme Court’s precedential view of “choice” and “conscience” in Lee in relation to a “comprehensive national program” runs counter to the “inactivity” concept put forth by Judge Vinson as irrelevant to a constitutional issue.

      The challenges to the ACA’s individual mandate, and the Virginia federal court decision that the government cannot regulate “inactivity,” are also contrary to the holding by the 1988 Supreme Court ERISA decision on federal preemption in Fort Halifax Packing Company v. P. Daniel Coyne, Bureau of Labor Standards of Maine, et al.:

      “A patchwork scheme of regulation would introduce considerable
      inefficiencies in benefit program operation, which might lead those employers with existing plans to reduce benefits, and those
      without such plans to refrain from adopting them.” The Fort Halifax Court then cited legislative history from the Congressional
      Record:

      “[A] fiduciary standard embodied in Federal legislation is considered
      desirable because it will bring a measure of uniformity in an area where decisions under the same set of facts may differ from
      state to state.”

      Some complimentary review copies of the book are available to TIE contributors. JCS

    • I’m going to make your teaching job easy for you, Don.
      There is nothing that a mandate accomplishes that cannot be done better with a rational system of public subsidies for private health insurance. The federal government offers every family $X for the purchase of health insurance. Those who accept the offer are insured. For those who reject it, the government sends the $X to a local safety net institution in the area where the family lives – to pay medical bills if the family incurs costs it cannot pay from its own resources. Voila. Problem solved.
      Oh, and people who turn down the offer and are willfully uninsured do not get to sign up for insurance and pay a healthy person’s premium after they get sick.
      All this is covered in my publication, Ten Characteristics of an Ideal Health Care System.

    • @John Goodman
      I will check out the report. I agree there are many ways to crack the nut if a bunch of policy wonks were going to cook up a system.The problem is the politics. Your report came out in 2001 and when the Rs had House, Senate and WH from 2001-06 they did nothing (or I suspect you think worse than nothing with Part D). The ind mandate was the political route for Rs to talk about reform. Now that is gone, I am not sure they have anywhere to go. It will be interesting to see if any sort of replace plan is offered in next election by R Pres candidate.

    • Don: It takes people on the Hill a long time to accept my ideas even when they are little more than common sense. It took 15 years for them to come around on HSAs, for example.

    • Along with the political history of the individual mandate, I would look at how other countries handle the problem. For example, in South Korea, you are not required to purchase health insurance, but if you don’t and get sick, you pay a penalty equal to several year’s premiums (I believe 2 or 3, but I don’t have my source handy at the moment.) By looking at how other countries handle the problem, it is easy to see that there are not that many different policy options, and all of them hurt in some way.

    • Your course should be quite a shock to many of your students. I look forward to your December posts. I second the idea about how it is handled in other countries, but it may take too long.

      Steve

    • @Kevin Hart
      I teach a class in comparative health systems as well in which we go in depth. I have never taught South Korea though and don’t know much about South Korean system but this is an interesting approach. will look for some info on S Korea

    • Could you post the reading assignments for the class? I’d be interested in reading them as well as knowing what the expected knowledge base for the assignment will be.

      @Jack- Your book sounds interesting, but the hefty price is a deterrent (and it’s not in my local libraries.)

    • @ Beth’s request: Yes, the book has been found interesting by many. See reviews on Amazon. com. The price is “hefty,” since the book is 495 pp and took quite a few years to put together. It’s marked down to the high $50s by Amazon and B & N (from $82.95) and some sites are selling it for more than that. It’s too early to be in libraries, since it came out last month, but it’s in the Baker & Taylor and Ingram catalogs, which go to libraries and academic institutions. Please send me your snail address and I’ll send you (and at least several other TIEers who request it) a complimentary review copy. — JCS