The individual mandate is not the worst part of ObamaCare, just the most unconstitutional

Brandon Kressin

With the Supreme Court weighing in on the constitutionality of the Affordable Care Act this summer, the focus of most criticism of the law has centered on the individual mandate. The case against ObamaCare alleges that the mandate exceeds Congress’ Commerce Clause powers because it does not regulate interstate activity. ObamaCare’s opponents argue that a person’s choice not to purchase health insurance is not an economic activity but inactivity, and therefore cannot be regulated through an exercise of the Commerce Clause power.

The focus on the individual mandate, however, has somewhat obscured the debate over the merits of the healthcare legislation more generally. Both sides have tended to act as if the individual mandate was the only objectionable aspect of the statute. This has led ObamaCare’s proponents to point out that the idea behind the individual mandate has conservative roots. Some liberal commentators, such as Ezra Klein, even like to write “gotcha” pieces proving the conservative genesis of the individual mandate as a way of discrediting ObamaCare’s detractors. Since it is a conservative idea, then conservative’s opposition to the mandate must not stem from legitimate disagreement but rather political gamesmanship, racism, or some other nefarious reason.

But this characterization of the right’s opposition to ObamaCare misconstrues the relationship between the legal and policy objections to the legislation. Although the crux of the legal case against ObamaCare centers on the individual mandate, conservative opposition to the law goes much deeper. The individual mandate merely happens to be unconstitutional, but it is hardly the only objectionable aspect of the statute. In fact, the individual mandate is eminently necessary to remedy problems created by other aspects of the statute, namely the prohibition on insurance providers price-discriminating against the sick or likely-to-become-sick. The real policy objection to ObamaCare centers more on this aspect of the law.

In his 2005 book on healthcare, Crisis of Abundance, economist Arnold Kling argues that the American approach to healthcare has tried to adhere to three principles:

· Unfettered Access. Consumers must be completely free to select any treatment that the health care provider and patient agree would be beneficial.

· Insulation. Consumers must be protected from the financial and emotional burden of paying for health care procedures. They should have the security of knowing that health care will be provided by private insurance and/or government.

· Affordability. The health care system must not absorb an inordinate amount of resources. Health care spending should not crowd out more valuable public- or private-sector need.

The problem is that these principles are mutually incompatible. It is impossible to satisfy all three simultaneously. Providing unfettered access to healthcare and insulating patients from the costs of their care would be exorbitantly expensive. Patients and doctors who do not have to worry about cost have no incentive to refrain from expensive procedures or tests that are likely to result in only negligible gains in quality of care. The answer then, from an economist’s perspective, is to sacrifice the ideal of insulation so that health insurance starts to more resemble insurance in every other market. Forcing patients and doctors to internalize the costs of care will lead to more responsible decisions about treatments and a more affordable system. This does mean that some patients will have to forego procedures or tests that they would rather undergo if somebody else was paying. But this form of market rationing of healthcare will ensure that precious health resources are not wasted on treatments whose marginal benefits are highly outweighed by their costs.

The problem with ObamaCare is that it further insulates patients from internalizing the costs of their own care. By forbidding insurers from denying coverage or demanding higher premiums from already sick or risky consumers, ObamaCare shifts the cost of care to society generally. If patients and doctors retain the ability to choose the proper course of treatment, they will largely be insulated from considering the costs of their care. On the other hand, costs could be controlled by allowing government regulators to step in to ration care, but this would destroy patient autonomy and is the concern that has led to (perhaps hyperbolic) warnings about “death panels” and the like.

The unavoidable truth is that we have limited resources to spend on healthcare considering our innumerable other desires for goods and services. Healthcare services must therefore be rationed. This rationing can take place through the market , where consumers are forced to internalize costs and weigh the expected benefits of their care, or it can be done through regulation. But regulation leads to clunky, one-size-fits-all rules and inefficiency. Whether or not the individual mandate is a conservative idea is therefore irrelevant. The right’s opposition to the statute runs much deeper, and the constitutionality of the individual mandate is merely a tool by which conservatives hope to undo what they see as a disastrous policy.