Will SCOTUS Also Look at the Real Data?
In August the 11th U.S. Circuit Court of Appeals ruled against the provision in President Obama’s health law requiring Americans to buy health insurance or face tax penalties. It was the first appellate decision to find the Patient Protection and Affordable Care Act’s (PPACA) individual mandate provision unconstitutional. Today, the Supreme Court announced it will be hear 5.5 hours of oral arguments on the case and will make a decision in this term, prior to June 30, 2012.
Central to this constitutional debate has been the Obama Administration’s claim that the voluntarily uninsured (The Young, Healthy, Uninsured) impose large uncompensated costs on society.
This claim was refuted by Douglas Holtz-Eakin and 105 amicus brief signers who evaluated the federal Medical Expenditure Survey Data. It turns out the moral hazard of the voluntarily uninsured (the only segment of the uninsured that the individual mandate would apply to, as the low-income and non-citizens would be covered or exempt) is grossly exaggerated.
Arriving at faulty conclusions is an inherent risk when using aggregate statistics. This was the case in the government’s mischaracterization of the voluntarily uninsured, which became the Obama Administration’s argument for the individual mandate. In fact the voluntarily uninsured population is younger, healthier, and less likely to utilize healthcare- therefore less likely to have high uncompensated costs. The true reason for forcing coverage upon a cohort that has made a rational decision to opt-out is to cross-subsidize the sickest individuals for whom, by new regulation, insurers cannot selectively price or deny.
The Amicus Brief spells the constitutional problems with this, saying, “Thus, those subject to the mandate have not contributed materially to the cost-shifting problem identified by the government. Instead, using the individual mandate as a subsidy, Congress was compensating for the market effects of its own actions. Whatever one might say about such a course as a policy matter, the constitutional implications of permitting such bootstrapping as a valid regulation of interstate commerce are sweeping and unprecedented.” [p 34]
“The individual mandate forces healthy and voluntarily uninsured individuals to purchase insurance from private insurers and pay premiums now in order to subsidize the private insurers’ costs in covering more unhealthy individuals under the Act’s reforms. Congress sought to mitigate its reforms’ regulatory costs on private insurers by compelling healthy Americans outside the insurance market to enter the private insurance market and buy the insurers’ products. This starkly evinces how the Act is forcing market entry by those outside the market.” [p 141]
While good court decisions must be based on constitutionality and law, economic realities and the use of twisted statistics by lawmakers (as the basis of a decision) should be examined as the Supreme Court looks at the case. When the data used to justify a new law is unreliable, the law does not stand on solid ground. It will be crucial for the Supreme Court to think critically about the Affordable Care Act and whether the justifications for certain provisions are backed by verifiable data.
