Supreme Court and the Individual Health Insurance Mandate

[Sbane]

I posted this on the thread in 2012 elections but want to post it here as well because I think it's an interesting question. I don't know if it can legally work the way I am proposing here, but if it is legal, I think there's a decent chance of it happening. I would be very interested in knowing whether this is possible.

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[Sbane]

I posted this on the thread in 2012 elections but want to post it here as well because I think it's an interesting question. I don't know if it can legally work the way I am proposing here, but if it is legal, I think there's a decent chance of it happening. I would be very interested in knowing whether this is possible.

You must be logged in to read this quote.

That's exactly what the administration is arguing today, actually. The opponents of the bill are arguing that the entire thing should be thrown out; a friend of the court was appointed to argue that everything besides the mandate itself should stay.

I'm no expert, but I believe this is one issue where existing precedent favors the government; IIRC the Supreme Court generally holds that as little as functionally possible should be removed from a law when a section of it is found unconstitutional.   

Are they arguing for getting rid of the portion of the bill that deals with pre-existing conditions and community rating if the mandate is ruled unconstitutional? Or are they saying the mandate, and only the mandate, should be taken out of the bill?

[Sbane]

Beet is correct. The government hasn't randomly chosen a group to subsidize and one to take more from. They are making sure the risk pool is large enough, with those not posing high risk to the system paying enough in so that those in the high risk pool can afford to get coverage. And where this differs fro say car insurance, is that you can argue one may never pose high risk to the system since they may never get in an accident or get a ticket, but in healthcare you will get old and pose enormous risk to the system. Everyone is in that boat.

[Sbane]

The good in question isn't health care, per se. It's health insurance. Some form of cross subsidy is inevitable in insurance. That's the whole concept; some people will come out winners, others losers, but the value added is derived from the reduction in risk at a lower cost than if everyone simply saved on their own. The concept is inherently tied up in the nature of the good being offered. Hence it's fundamentally different from all other markets where the absence of cross subsidy does not prevent the market from operating.

Anyway, absent a clear limiting principle on the cross subsidy, I think the odds are almost certain that Kennedy will strike it down. There is no limiting principle, and he wants one. And the cross subsidy is not random. The program deliberately makes the young as an age group pay a lot more than they otherwise would, and the old less, so there is age discrimination. There may also be a subsidy for the uninsured or the insured who pay high premiums because they got insurance when they were sick which is paid by everyone less sick in some proportion. But it doesn't matter, the principle is the same.

And those who are sick should not pay significantly more. Should someone who has had seizures since they were a little child have to pay more than others in their age group? And speaking of age, yes there should be some cross subsidization from the young to the old. And one day we will get old and get subsidized by the young. That's how this works. Yes, you can charge the old more, but then it becomes hard for many to afford insurance.

[Sbane]

Well, young people are also disproportionately uninsured, so they would benefit from having insurance, and they're disproportionately low income, so they would receive a large share of the subsidies going out under the law.

This^^

Due to this bill many are able to have insurance, will be able to purchase insurance at cheaper rates than they would be able to on the market today (though maybe not as cheap as they theoretically should be able to) and will receive a large share of the subsidies.

[Sbane]

Mokbu, that is why the mandate is important. So that people will have to keep paying into the system even if they are healthy and that they won't show up to buy insurance just after being diagnosed with a disease. AFAIK, number 3 is what is required now.

[Sbane]

I was reading today that premiums for those aged 18-34 will rise the most, with modest increase for those from 35-55....didn't mention anything about those older though. There is certainly a cross subsidy from the young to the old but I think it is necessary to keep the system afloat. Also prices need to be reduced overall somehow....

[Sbane]

I was reading today that premiums for those aged 18-34 will rise the most, with modest increase for those from 35-55....didn't mention anything about those older though. There is certainly a cross subsidy from the young to the old but I think it is necessary to keep the system afloat. Also prices need to be reduced overall somehow....

So the community rating isn't modified for age?  In that case, there's no telling whether young people with pre-existing conditions will end up paying more or less than they are now. Well done, Congress.

Of course there is some adjustment. But the young pay more than they otherwise would and the old pay less.