War on Reform May Backfire

August 6, 2010 |
[T]he Missouri proposition violates the “supremacy clause” of the Constitution and hence can have no practical effect. The Republicans’ larger effort to undermine the mandate is likely to be, at best, a Pyrrhic victory, because it upsets the balance that secures the functioning of the private market.

Tuesday, Missouri voters overwhelmingly passed a measure giving their state the power to ignore the federal law requiring people to have health coverage. These voters are clearly worried about government control of health care. But they’re playing a dangerous game that could spark a real government takeover.

The United States already has large, government-financed health care systems. Consider Medicare.

But the new federal health care reform effort actually did everything possible to secure a continuing role for private insurers. True, lawmakers made sure that insurance companies could no longer deny coverage to people with pre-existing conditions. In return, though, everyone is required to have health insurance. 

With the Missouri vote, it looks likely that the Supreme Court will be ruling on the constitutionality of the “individual mandate,” a central plank of health care reform.

It would be a bizarre outcome indeed, however, if the justices ruled that the Constitution of a country founded on free-market principles did not allow a regulation necessary for the private market to function. For the individual mandate is necessary to preserve a private market for health insurance.

During the health care debate, Republicans agreed with Democrats that health insurers should not be allowed to deny people coverage because of pre-existing conditions. But without “guaranteed issue,” these companies have a perverse incentive to insure only the healthy. This would increase the number of uninsured, shifting costs onto a shrinking number of people with coverage. 

It is extremely unlikely that the Republicans, if they win control of either house of Congress this fall, would even propose repealing “guaranteed issue.” Instead, they are likely to continue to focus on repealing the mandate. 

Republican attorneys general across the nation have filed suit against the requirement to have health coverage, claiming it is unconstitutional. And the measure that Missouri voters overwhelmingly supported Tuesday is part of this effort.

But the Missouri proposition violates the “supremacy clause” of the Constitution and hence can have no practical effect. The Republicans’ larger effort to undermine the mandate is likely to be, at best, a Pyrrhic victory, because it upsets the balance that secures the functioning of the private market. Guaranteed issue without an individual mandate, it turns out, is even more certain to fail. This leaves people free to wait until they fall ill before they buy coverage, creating an insurance pool with more sick people — and sending rates through the roof.

For example, in the 1990s, when Washington state instituted health reform without a mandate, individual-market insurance premiums spiked as much as 10 times the rate of medical inflation.

Contiue Reading

We’ve seen these horror movies before. This is one reason we passed this health care reform bill in the first place.

If we do not make the bill work, the chances are exceedingly slim that we’ll put a plan in place that relies even more heavily on the private insurance market. It’s more probable that we’ll adopt a system with greater government control, similar to those in many other countries, that builds on our own popular single-payer system, Medicare.

The Medicare program supports outcomes on a par with those of the private system, has a better record of controlling costs and is more popular. The tea partiers themselves know this. Hence, the signs at the rallies last summer, “Keep government out of my Medicare!”

We owe it to ourselves — for all the time we put into passing health care reform — and to our country — for its traditional reliance on market capitalism — to give the old college try to making the market work to finance health care, because the individual mandate is the linchpin of a functioning private market.

Thus, the struggle against “socialized medicine” is just beginning. But the tea partiers and conservative Republicans, who carry the banner of market capitalism, are now storming the wrong barricades. Their assault on health care reform might make sense as a short-term political strategy.

But there is more to life than politics.

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