Tuesday, December 28, 2010

Has Obama Set a Trap? The Coming Revival of The Single-Payer Option

The government shouldn't be involved in healthcare, or healthcare insurance at all. However, Larry Elkin takes a look at current court challenges to the Affordable Care Act and finds they may lead smack dab into a Single-Payer Option-RW 

By Larry M. Elkin, CPA, CFP®

If the government wants me to pay for a service – let’s use health care as an example – it can tax me, and then decide how and when I can use the service. I pay a lot of tax money for Medicare and Medicaid, though I do not qualify for those benefits.

Maybe this is fine with me; maybe it isn’t. I can express my feelings here or at the ballot box. It would do me no good to attack the system in court, because the courts long ago decided that the government can tax me to provide services, even services that are used only by other people.

If the government wants to expand Medicare to cover everyone in the country, it could do that, too. It would undoubtedly cost more, so I would undoubtedly pay more. That’s the so-called single-payer option that many Democrats hoped would be part of the recent health care overhaul. This idea did not get off the ground, in large measure because American doctors do not wish to work solely for the U.S. government, and private health insurers do not wish to be put out of business.

So Congress required, instead, that beginning in 2014 virtually all Americans who are not otherwise covered must purchase private insurance. Backers of the health care reform did not see this as a problem. Congress could have forced all of us into a single, nationalized health insurance program; instead, it gave us a bit more freedom to choose, by allowing us to select among what are supposed to be multiple plans meeting certain minimum standards. We’ll see soon enough – maybe – how well this works in the real world.

But the insurance requirement has emerged as the loose thread that could unravel the entire health care deal. This delights a lot of people who opposed the overhaul in the first place. Some want to keep the system we have had until now; others want a new reform package that concentrates more on controlling costs and less on universal coverage.

Virtually none of them want the other possible outcome of a successful challenge, which would be a revival of the single-payer idea.

Earlier this month, a Virginia federal judge became the first to rule part of the Affordable Care Act unconstitutional: specifically, the mandate that all citizens purchase insurance or face penalties. Citing the Commerce Clause of the U.S. Constitution, Judge Henry E. Hudson ensured that higher courts will have dissenting opinions to consider. And it is virtually certain that, sooner rather than later, the new health care reform law will make it to the Supreme Court.

Two issues are at play here: the constitutionality of the law, and its wider economic implications. The former is a close enough question that the courts could go either way, and have so far; in addition to this decision, there have been two federal court decisions upholding the law’s constitutionality, and 12 more cases thrown out altogether. Another challenge to the law, backed by 20 states’ attorneys general, is making its way through a federal court in Pensacola, Fla.

It will be interesting to see how the Supreme Court decides. There are other situations in which government mandates the purchase of private services. In Manhattan, restaurants and office buildings are required to hire private haulers to remove their trash. The system produced a lot of mob-dominated corruption years ago, and a lot of court action that followed, but, as far as I know, nobody has challenged its constitutionality.

Opponents of the insurance mandate claim it oversteps the government’s power by forcing Americans to buy a product just by dint of existing. This distinguishes the law from, say, requirements for auto insurance, as citizens have the choice not to own a car. But the naysayers may be missing the bigger picture.

It boils down to the way insurance works. Collectively, we can’t have insurance if people only buy it after they know they need it. Either everyone shares the risk (and the expense) or premiums become unaffordable. If the Affordable Care Act is ultimately found unconstitutional, we will be left with only the public option to address the policy goal of universal coverage.

The irony, then, is that those who are challenging the Affordable Care Act as it stands are the very people who could drive us to a public option in the end. Those who supported the public option may just need to sit back and wait until the challengers’ court victories suddenly seem a lot less victorious. What remains to be seen is how close they get to the top of this uphill legal climb before they realize what’s waiting for them at the summit.

For more articles on financial, business, and other topics by Larry Elkin, view the Palisades Hudson newsletter, Sentinel, or subscribe to my daily opinion column, Current Commentary.

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