Tuesday, November 3, 2009

For Once, the Poor Will Be Above the Law

Forcing every American to buy health insurance is a key component of all five bills currently being considered in Congress. The logic behind the individual mandate is rather simple: to eliminate the problem of health insurance companies denying applicants based on pre-existing conditions, ban them from doing so. And, to make sure that people do not wait until they are sick to purchase insurance, force everyone to do that now.

Aside from the obvious problem many Americans may have with banning private companies from behaving in their own self-interest while forcing people to purchase a product they do not want, the individual mandate actually goes one step further. It tells a significant share of the population that they, and only they, do not even have to comply with this law at all.

The Senate Finance bill states that anyone who does not purchase health insurance that meets the minimum health benefits requirements must pay a fine of $750 to $1,500. The implication is clear: failure to purchase adequate coverage is a crime that is punishable by an annual fee. It is the act of forgoing health insurance that (apparently) constitutes a danger to fellow citizens and is consequently worthy of reprimand.

And that is all well and good, for failure to do a lot of things – like stopping at a stop sign – also endangers others and likewise is punishable by a fine. The problem is that the Finance Committee’s legislation only applies to people making over 100% of the federal poverty line ($10,830 for an individual), as if anyone making less than that arbitrary figure does not pose the same potential threat to her fellow Americans. Also exempt are those earning between 100-400% of the federal poverty line but who cannot find insurance for less than a given percentage of their income (between 3-12%). None of these people need to abide by the same laws that everyone else is forced to follow. The result is socio-economic discrimination, pure and simple.

However, there is an important distinction regarding how the legislation has been drafted and how it could avoid this problem. Currently, if the cost of health coverage forces people to spend more than a pre-determined percentage of their income, they are granted a hardship waiver and exempt from acquiring coverage. In principle, this is a very different policy than providing subsidies to poorer families and then forcing them to use that money to purchase coverage just like everyone else. The laws that would go into effect if the Senate Finance Committee’s bill were put in place today would be the equivalent of a law stating that anyone earning below, say, $10,830 does not need to pay traffic tickets and therefore will not be held accountable for their reckless driving habits.

Some may argue that driving is optional and therefore cannot be used as a fair comparison, but the analogy can be simplified further. An individual has committed an action, or in this case failed to complete an action, which the government feels is worthy of punishment by fine, but only for those earning above an arbitrary threshold. Surely when looked at in this light, the individual mandate appears highly questionable at best and unconstitutional at worst.

This is not to say that providing hundreds of billions of dollars in subsidies to lower-income Americans and then enacting an individual mandate would be the solution, either. Rather, the example should highlight the hypocrisy inherent in what lawmakers are trying to force on hard-working and higher-earning Americans. We should instead be working to free the health care market of government regulations that drive up the cost of health insurance, thereby allowing responsible citizens to purchase the highest quality health coverage available to them with the least government assistance possible.


James' Muse November 3, 2009 at 2:21 PM  

I agree with most of your post, but for the last part. Getting rid of all regulations on health insurances would be the opposite of what we need.

We need more, in fact. For example: Make it illegal for the health insurance companies to deny coverage for "preexisting conditions."

Also: If you pay your insurance bill, they cannot deny you coverage for any reason.

We need more, but better, regulations. Getting rid of insurance companies and trusting them to treat their customers ethically would be like removing the speed limits and trusting citizens to drive safely. We wouldn't. We'd have more fatalities. We'd have maximum personal freedom at the expense of everyone around us.

The regulations on big companies should be focused on providing maximum freedom to the consumer, not to the company. Freedom was guaranteed in the constitution to individuals, not to conglomerate companies.

Bob Qat November 3, 2009 at 4:11 PM  

"Freedom was guaranteed in the constitution to individuals...." Which is precisely why we must recognize the rights of those individuals when they form companies, conglomerates and corporations.

Its easy to sneer at a company. James presents the viewpoint that persons have rights until they want to make a productive effort, such as furnishing health insurance.

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