Public Citizen’s Eagan Kemp joins us as we dive into the history of the individual mandate (spoiler: it’s a conservative idea), why it disproportionately punishes low-income people, and how progressive taxation under a single payer plan would be much more equitable than our current flat premium system. We look back at how such a regressive idea came to be championed by Democrats, and then forward at the continuing legal challenges to the ACA that center around the controversial mandate. If the ACA survives this latest attack, will a Biden administration try to reinstate the tax?
Why are we talking about the “individual mandate” in healthcare? Two reason! 1) The mandate is at the center of a lawsuit challenging the Affordable Care Act, which many are worried may succeed after Amy Coney Barrett tilts the Supreme Court to the right; and 2) Republicans essentially eliminated the mandate back in 2017, and if Democrats retake Congress and the Presidency in 2021, this raises the question of whether Dems will – or should – reinstate the mandate.
We start off by asking Eagan the hard questions: like what the hell is an individual mandate?? It is a requirement that you obtain health insurance, or you face a fine (usually when you do your taxes).
At this moment in our country’s political history, the individual mandate is generally supported by Democrats (as personal responsibility and a way to get healthy people to pay into the healthcare system) and opposed by Republicans (as an infringement on personal liberty and the right to choose whether you buy insurance or not). But it was not always so! The individual mandate was originally a conservative proposal – championed by the Heritage Foundation and offered by Senate Republicans as an alternative to Hillary Clinton’s health reform plan, which was based on an employer mandate.
How on earth did this conservative alternative to “Hillary Care” become a central plank of the Affordable Care Act (ACA)? First, as Eagan points out, the mandate is beloved by the health insurance industry – it’s basically a law that compels people to buy their products, and it’s great for profits. The insurers give a lot to both parties, so it’s not a shock that both have championed the idea at different times.
The shift from a Republican to a Democratic policy really began in the Massachusetts Health Reform law of 2006 – which became the model for the ACA – and included an individual mandate as a compromise between a Democratic state legislature and Republican Governor Mitt Romney.
Ironically, in the election that followed, Hillary Clinton and John Edwards both supported the individual mandate during the 2007 Democratic Presidential primaries, while Barack Obama opposed a mandate. But it was included in the Affordable Care Act anyway – probably to placate the health insurance industry – at which point Republicans decided it was the devil’s work.
It’s also important to understand that the individual mandate is a regressive way to pay for expanding health insurance coverage, when compared to creating a new tax and then expanding public insurance coverage. When you pay your Medicare payroll tax, for example, you pay 2.9% of your wages – which will be a high amount for really rich people, and a low number for someone being paid a minimum wage. The individual mandate requires everyone to pay a flat premium, regardless of whether you’re a billionaire or just scraping by on a lower income. This is why studies find that Medicare for All would create huge savings for working class and middle class people.
Beyond being a regressive way to pay for healthcare coverage, the mandate is also different from using taxes because what you pay – a health insurance premium – is decided by a private corporation, whereas the healthcare taxes like the Medicare payroll tax is set by Congress. This is why the Medicare payroll tax has barely been changed at all in 20+ years, while your private health insurance premium rises rapidly every year – sometimes by double digits. Corporations are not accountable to anyone for their premiums, so they charge as much as they think they can get away with. Ben describes the individual mandate as the government outsourcing the power of taxation to for-profit corporations.
The individual mandate is also at the center of legal challenges to the Affordable Care Act (ACA). Back in 2012, the Supreme Court ruled that the individual mandate was legal because it fell under Congress’s powers of taxation. Then in 2017 Republicans passed their “Tax Cuts and Jobs Act” – which Eagan lovingly refers to as the “Tax Scam Act” – which technically left the individual mandate in place, but zeroed out the fine for not having health insurance. Effectively the mandate was gutted, which opened the door for a new round of lawsuits claiming that the ACA is now unconstitutional because it lacks the mandate. Some lower courts have ruled against the ACA, and some have upheld it, and the newly right-leaning Supreme Court will now hear the case (California v. Texas) starting November 10 – immediately after the elections! The case revolves around the concept of “severability” – don’t research this more, you will die of boredom.
Stephanie notes that the individual mandate represents the ultimate, tortured attempt to move towards universal coverage without embracing Medicare for All, in which we forcibly push people into a marketplace instead of offering them a right – which can only be provided publicly, by a government.
Eagan reminds us that the individual mandate along with other attempts to expand coverage using private health insurance, are pretty much all subject to legal challenge – which public Medicare has not been. And neither would Medicare for All.
In the meantime, we’ve had 2 years of the ACA without an individual mandate being enforced, the very thing that Democrats for years have claimed would lead to a “death spiral” of rising premiums and people opting out of the marketplace. What has the actual impact been of eliminating the mandate? Pretty much nothing has changed! One thing that has changed is that the millions of uninsured people who previously had to apply for a “hardship exemption” – proving that they can’t afford health insurance, asking not to be fined – no longer have to do that. But the predicted catastrophic impacts on the health insurance market have not materialized.
Eagan pauses to remind us that the individual mandate was essentially the last Republican healthcare plan – which was stolen by Democrats – and that they are now running on nothing, aside from repealing the ACA.
If the elections result in Democrats retaking Congress and the Presidency, this also raises the question of whether Dems are likely to reinstate the mandate in 2021. Eagan thinks it’s unlikely on its own, but it will likely be considered as part of a proposed “ACA 2.0” package, which would include other tweaks and expansions to Obamacare.
To close with an international perspective, what about the claim that the individual mandate is one pathway to universal healthcare, and that some European countries like Switzerland and the Netherlands have achieved universal coverage by pairing private insurance with a mandate? Stephanie calls bullshit. Switzerland does have a fairly privatized system and a mandate, but they do not have universal healthcare coverage. Send your money to Switzerland, but not your body! The Netherlands does have universal healthcare, as well as an individual mandate, but you are only paying a very small portion of your healthcare costs through the mandate – the rest is paid for through taxes… much like Medicare!
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