Economists aren’t lawyers and should not speculate about any Supreme Court ruling on the constitutionality of imposing penalties on people who don’t buy health insurance. However, they do have insights for considering the issue more broadly.
Start by recognizing that the extent to which individuals should be coerced to contribute resources for the well-being of a larger group is an economic question dating to pre-history. Prosperous societies have always implemented some element of such compulsion. All societies recognize the right of government to tax and, in many, to compel individuals to military service.
Libertarians may long for government that impinges only minimally on individual autonomy, but history and anthropology show that compelling individuals to help defend the group and to perform tasks like producing food for common consumption has been ubiquitous. Individualists argue that there is a vast gulf between the social pressures within traditional tribes or villages and government mandates per se, but for those who study such societies, the distinction is not clear.
In U.S. history, George Washington’s administration secured legislation requiring all adult males to own guns. How much such laws were enforced is unclear, but the constitutionality of the requirement, with a clear public purpose of defense, was never challenged.
Nor was there ever any successful challenge to the Civil War laws that compelled military service but allowed those chosen the option of hiring a replacement.
Second, economic theory and psychological research show that in the absence of compulsion, some individuals always will opt to try to get a free ride on others’ efforts. The first English colony in Virginia instituted a rule of “he who does not work may not eat” to combat just such behavior. In the case of health care, if one allows enrollment in health insurance at any time and at “community rates,” regardless of health condition, many people will choose to not buy insurance until they need it.
Third, society already expends enormous resources on medical care for the uninsured. The annual cost of unpaid care is estimated to exceed $100 billion per year. This largely gets picked up by local governments or passed along to paying patients in the form of higher hospital bills. So there already is considerable free-riding and the issue is one of how the burden is spread across society.
Moreover, such free-riding will increase if the mandate provision is struck down but the ban on denying coverage to those with pre-existing conditions is allowed to stand. Some commentators now argue that there are alternative ways to motivate the existing uninsured to buy coverage. But this ignores the fact that the number of uninsured will burgeon if open access is guaranteed without any compulsion to pay before care is needed.
Fourth, it is clear that government already has the constitutional right to operate mandatory insurance programs itself under its taxing powers. We don’t allow workers to avoid unemployment taxes paid on their wages even when unemployment benefits are of little value to them. Nor, with limited exceptions, do we allow people to opt out of Old Age, Survivors and Disability Insurance.
Mandate opponents thus need to recognize that a government mandate to buy health insurance long was the preferred conservative alternative to a government-run “single-payer” system. It was championed by Senate Republicans as a better option than “Hillary-care” in 1993 and the conservative Heritage Foundation pumped it as an alternative to government-run medical insurance. The inclusion of a mandate in “Obamacare” was intended as a compromise to gain GOP support by forgoing the single-payer system most Democrats preferred. Throw out the mandate and many will see a government-run “Medicare for everyone” as the only alternative left.
Finally, conservatives need to consider how unconstitutionality of mandates might affect other entitlement reform.
Many have long championed some form of privatization of Social Security, usually through mandatory personal accounts as in Chile. But if you don’t want people to suffer indigence in their old age or disability or as surviving spouses and children, then either government must run some program or it must force individuals to save for retirement and buy insurance. If it is unconstitutional to force people to buy health insurance, it also is to compel retirement accounts and disability or life insurance.
One argument against the mandate is that it forces people in good health to pay the costs of those who aren’t. True, but for 77 years we have forced people who don’t have spouses or children to pay FICA taxes to support benefits for those who do.
The old advice to be careful of what you wish for certainly applies in this case.
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