The reporting from today’s oral arguments was predictably focused on Justice Kennedy. (Best Kennedy post – Brad’s Reading the Kennedy Tea Leaves) Justice Kennedy asked:
Is the government’s argument this–and maybe I won’t state it accurately. It is true that the noninsured young adult is, in fact, an actuarial reality insofar as our allocation of health services, insofar as the way health insurance companies figure risks. That person who is sitting at home in his or her living room doing nothing is an actuarial reality that can and must be measured for health service purposes; is that their argument? (p.56 of the Tuesday transcript)
If a healthy person doesn’t buy insurance, the average cost of the risk pool goes up.* This is unique to insurance markets. If a healthy person doesn’t buy broccoli, the average price goes down.
The Prescription Policy Choices brief from our BU health law class makes two important supporting arguments:
- The individual mandate closes a national marketplace, namely the market for self-insurance in health care. Congress clearly has the power to block markets (think: foreign prescription drugs, unpasteurized milk).
- This decision is rational, since the individual market for self-insurance is inefficient due to behavioral biases such as optimism bias and hyperbolic discounting.
This brief is a must-read for Justice Kennedy and his clerks. Professor Abigail Moncrieff of BU is the primary author; I’m the counsel of record.
* This is quite distinct from the free rider argument when uninsured people seek uncompensated care (see the Health Care For All brief); the health insurance impact is automatic and actuarial, whether or not the uninsured person ever seeks care.