Opponents of ObamaCare were elated on Tuesday as early questions by U.S. Supreme Court justices revealed skepticism about the constitutionality of the controversial individual mandate.
But as the arguments drew to a close, it also was clear that serious questions still remained in the mind of at least one key justice — Anthony Kennedy — who is expected to cast the deciding vote on the question.
Justice Kennedy asked early during the argument: “And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the Federal Government to the individual in a very fundamental way.”
Those key words – “changes the relationship of the Federal Government to the individual” – indicates Kennedy has serious concerns about the impact of the sweeping health overhaul law. But it’s important to listen to the whole two-hour session and, toward the end, Kennedy suggests that he could also be convinced that “the insurance market is unique.”
Kennedy asked about “the young person who is uninsured.” He said that his being uninsured is “very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries. That’s my concern in the case.”
So he isn’t so sure after all. Those who were cheering on Tuesday could find themselves shocked if Kennedy actually votes to uphold the mandate. And that is crucial because several justices indicated during Wednesday’s argument that they believe a decision against the individual mandate would mean the whole statute should fall.
So the question of the constitutionality of the individual mandate takes on huge importance.
And the key issue raised repeatedly during Tuesday’s session was the question of “uncompensated care” – that is, the concern that people who don’t have health insurance will shift their costs of inevitable care to those who do have health coverage.
Justices repeatedly cited the $1,000 that every privately insured family pays to compensate for the care received by uninsured people – in aggregate, $43 billion a year, according to Congress’ “findings” justifying its passage of the law. The individual mandate is designed, as the health law’s defenders argue, to eliminate the problem of these “free riders.”
The question that Justice Kennedy still seemed to be wrestling with is whether or not in health care, these costs are shifted to someone else “in a way that is not true in other industries.”
The Galen Institute and several of our sister organizations submitted an amici curiae brief to the Supreme Court addressing precisely this issue and showing that the law actually exacerbates the problem of uncompensated care.
In our brief, submitted to the court in February, we pointed out that the Congressional Budget Office and independent scholars have found that only a small amount of uncompensated care is shifted to private insurance. So the mandate will have only a small effect on cost shifting and will actually exacerbate the problem!
Instead of eliminating the $43 billion a year in “uncompensated care,” the actual impact of the law will be to increase the cost shifting by $3 billion a year.
In our brief, we explain that the government has estimated that the individual mandate will pressure 16 million people who are currently uninsured into obtaining private or employer-based coverage.
Those 16 million account for only $9.6 billion in uncompensated care. That is far less than the $43 billion figure petitioners start with.
Rather than play any meaningful role in addressing the claimed $43 billion in uncompensated care consumed by 50 million uninsured, the mandate only changes the behavior of 16 million uninsured persons who consume at most only $9.5 billion in uncompensated care.
But because a sizeable number of those currently uninsured will be enrolled in Medicaid, their costs will be shifted to the privately insured because Medicaid pays doctors and hospitals only about half of as much as private payers do:
Furthermore, because 6.5 million of those 16 million uninsured persons will enroll in Medicaid, rather than obtain private insurance, they will actually consume more uncompensated care than the entire 16 million persons did without insurance, for a net increase in uncompensated care of between $0.5 and $3 billion.
That perverse result occurs because their average consumption of healthcare will double and because doctors and hospitals receive a significantly lower rate of compensation for Medicaid patients than they do for the uninsured.
The numbers cited repeatedly by the Justices during the argument significantly overstate the problem. We conclude:
The net consequence of the mandate on the 16 million uninsured as a whole, therefore, has no substantial effect on the claimed commerce problem of cost-shifting other than to make it worse.
Given the disconnect between the alleged problem affecting interstate commerce and the proposed solution, the mandate has no tangible link or rational relationship to the Commerce Clause and is not necessary and proper to deal with the alleged problem of cost shifting.
Our brief is sitting in the justices’ offices. Hopefully Justice Kennedy will take a look so he can see that the law does not solve the problem of uncompensated care being shifted to those with private insurance. Then he can vote to declare the individual mandate unconstitutional, strike the law, and restore our freedom so we can begin anew with sensible market-based reform.
Our brief was jointly submitted by Docs4PatientCare, the Benjamin Rush Society, the Pacific Research Institute, the Galen Institute, and Angel Raich(party to an important and relevant Commerce Clause case). The attorneys preparing our brief were Erik Jaffe, Dean McGrath, Jr., and John S. Hoff.
Tom Miller of the American Enterprise Institute also challenges the Families USA study which was used as the basis for Congress’ finding of facts about the cost of uncompensated care. Miller writes that a more accurate study was done by a group of Urban Institute researchers who “estimated that the amount of uncompensated care potentially available for private cost-shifting is most likely even lower, at about $8 billion in 2008, which was less than 1 percent of private health insurance costs.”
Posted on Forbes: Health Matters, March 28, 2012.