A second US District Court has now held the individual mandate unconstitutional. The Florida court's ruling, issued by Judge Vinson, went even further, however, holding that the mandate is not severable from the remainder of the health care bill and therefore the entire bill is invalid.
While I don't expect Judge Vinson's ruling to survive appeal, or ultimate Supreme Court scrutiny, it's worth asking, "If this bill doesn't survive judicial scrutiny, then what?"
Well, first, the government would have a mess on its hands dealing with the unwinding of a complex health care bill which includes not only health care provisions, but radical changes to the student loan infrastructure, Medicare rebate issuances for seniors, and more. The states attorneys general suing to overturn the health care law would find themselves shifting from popular ground to highly unpopular ground once it became known that the consequence of success could include collecting hundreds of millions which seniors suddenly owedbecause the Medicare rebate which existed under the health care bill had disappeared.
Most obviously, overturning the health care bill would return the health care regime to the status quo ante which most everyone agrees was both failing and unaffordable, a miserable combination. Democrats, having just adopted a centrist health care bill only to watch it attacked by those it was designed to appease, would have little interest in taking another shot at a centrist bill. Instead, the progressive base would almost certainly refuse any compromise which didn't include a public option, Medicare buy-in for all, single payer, or something similar. Ironically, the more progressive agenda, which Republicans presumably would find far more distasteful than the overturned health care bill and which would almost certainly allow for less individual choice and freedom in health care, would unquestionably pass constitutional muster. Whether such a progressive regime would be "better" than the health care bill signed into law by Obama is debatable. In terms of coverage, it would likely give health care to a few percent of Americans more than the 95% predicted to be covered under the Affordable Care Act, and perhaps even more. Democrats could push for coverage of illegal immigrants, for example, to draw closer to 100% coverage. The Democratic alternative would almost certainly be cheaper than the status quo ante, though its comparison to the Affordable Care Act would never be fully known. The Affordable Care Act included many innovative cost cutting provisions, but judicial overturn of the law would mean the impact of most of those provisions would never be measurable.
While it's challenging to compare a future progressive bill against an unimplemented Affordable Care Act, it's easier to compare a future progressive bill against a future Republican bill. In that comparison, the future progressive bill (and the existing Affordable Care Act) win decisively against the Republican alternative.
The Republican alternative, as articulated by Republican leaders over the past two years, consists heavily of two components: 1) allow consumers to purchase health insurance across state lines; and 2) implement tort reform. There's more to it than that, obviously, but speaking in broad strokes those are the high points on which most all Republican leaders agree.
Both of the main prongs of the Republican plan sound good in theory. They fall apart in practice.
On the first, Republicans argue that more competition needs to be introduced into the health care market. Right now, competition is "artificially" limited by a requirement that consumers may only purchase health insurance from an insurer located in their state. If consumers could purchase from any state in the US at will, the insurers in each state would suddenly be forced to contend with an increased number of competitors thereby driving insurance costs downward. Of course, such an idea isn't unique to health care. It's an idea already implemented in many other areas which makes the consequences of the idea fairly predictable.
Take credit cards, for example. In theory, Americans can obtain a credit card from any state in the nation. There is no restriction on consumer choice and all credit cards are free to compete against each other across state lines. In practice, the major credit card companies exist in only a handful of states, and they are always the states which provide limited or no consumer protections in key areas. Many states have adopted usury laws which limit the amount of interest a company can charge a consumer. A few states have no limitations on interest charges. Care to guess where the major credit card companies are located?
It's called the "race to the bottom." In order to attract the business of major companies (and their corresponding tax revenue), many states "compete" with each other to offer the least regulatory intrusion on such companies, often at the expense of consumers. The phenomenon is hardly unique to credit card companies. Delaware imposes the least requirements on corporate governance, and, unsurprisingly, most major corporations are headquartered in Delaware. The phenomenon is also not particular to the US. Consider shipping, for example. Each nation regulates shipping, and compliance with those regulations allows a ship to fly under the flag of a particular nation. If you think each ship simply flies under the flag of its home nation, you would be wrong. Instead, shipping companies seek out nations with the least regulatory requirements (including labor, tax and environmental) and fly under that nation's flag (which such nations encourage by allowing ships of any "nationality" to register in their name). Here's a table of the top flags flown by ships around the world (measured as a percentage of the dead weight tonnage of the world fleet):
Note that Panama, Liberia and the Marshall Islands account for almost 40% of all flag registrations worldwide and that they have almost no regulatory requirements.
Allowing consumers to purchase health insurance across state lines would result in precisely the same race to the bottom. Major health insurance companies would relocate to states with almost no regulatory requirements and consumers would be left unprotected in one of the most important areas of their life.
There is, of course, a way to increase competition without the race to the bottom- standardize the regulations for health insurance on a nationwide basis and then allow consumers to purchase across state lines. The Democrats proposed precisely this with a national health insurance exchange. All non-employer insurance, with few exceptions, would have to be sold in the exchange, and companies could only sell in the exchange if they satisfied certain regulatory requirements. Democrats, unfortunately, scaled that proposal back to a "regional exchange" concept where states could establish an exchange with other states in their region on the same regulatory footing. While the regional exchange is clearly inferior to the national exchange concept, it is also clearly superior to the Republican "buy across state lines" concept.
The second Republican idea, tort reform, also sounds better than it is. Medical malpractice costs are estimated to be less between 1% and 1.5% of the total health care costs in the US. That's still a lot of money, but it hardly makes tort reform worthy of the attention it receives for cutting health care costs. Furthermore, tort reform has already been implemented in more than half of the states in some form. Implementing tort reform on a nationwide basis, then, would be largely redundant for half of the nation. In the states where nationwide tort reform is redundant, one would expect literally no impact on health care costs. In the states where tort reform has been implemented, it has largely been disappointing in results.
Texas implemented tort reform in 2003, capping damages for medical malpractice at $250,000, a very low amount. Since that time, costs of health care in Texas have grown at a rate outpacing the national average, and Texas leads the nation in uninsured. In McAllen, Texas, Medicare spent $15,000 per enrollee, more than twice the national average. So, in addition to not doing anything to control costs, tort reform has also left many injured patients with little remedy for the harm inflicted by medical mistakes.
Reducing costs associated directly with tort costs is only part of the Republican argument, however. Republicans also argue that because of high liabilities associated with torts, doctors engage in "defensive medicine," ordering expensive and unnecessary procedures to protect themselves from litigation risk. This argument suffers from several flaws. First, "tort reform" does not mean "zero litigation risk." Even in states with low liability caps, doctors remain at risk of liability up to that cap. Risk averse doctors may order fewer "defensive" tests, but they won't eliminate defensive testing as long as there is any risk of litigation, and there will always be risk of litigation. Second, even assuming no risk of litigation, there isn't any evidence to suggest that defensive medicine practices would go away. To the contrary, defensive medicine is often profitable for doctors and evidence suggests that the profit motive would continue to drive defensive medicine practices.
This isn't to argue that tort reform has had no positive impact. In states which have implemented tort reform, it has tended to lower malpractice premiums for doctors to a more manageable level. Those cost savings, however, have not been passed on to consumers in any meaningful amount. It may be possible to fashion tort reform to lower malpractice costs, reduce needless defensive medicine, and lower health care costs on the margins, but such a regime would be very difficult to identify, let alone implement, and frankly it's low on the priority list. Certainly not number 2 on the priority list.
Republicans have had many good ideas on health care reform over the decades. Mitt Romney implemented some in Massachusetts. Bob Dole and others proposed several workable solutions in the 1990s in opposition to "Hillarycare." Of course, most of those ideas were incorporated into the Affordable Care Act which Republicans now reject.
It's not the responsibility of the courts to question the alternatives to the Affordable Care Act- it's their responsibility to determine the constitutionality of the statute as written. But before Republicans get too giddy about the prospect of a court overturning health care reform, they should seriously consider the alternatives. There are some good options available, but almost none of them are being advocated by the Republican Party at the moment.
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