Thursday, March 29, 2012

Obamacare, the U.S. Supreme Court Oral Arguments and the Difference between the Individual Mandate and Buying Broccoli

The Supreme Court should definitely uphold the Affordable Care Act as being Constitutional, but they can only do so if they can also thereby limit the exercise of the interstate commerce power of Congress.

One sees from the oral arguments that the Court is looking for a way to limit the interstate commerece power so that it is not open-ended.

In oral arguments the question came up to differentiate regulation of the market in health care from the market in buying broccoli -- and the lawyers for the government could have done a better job of making that difference clear.

HEALTH is not a free choice whereas the purchase of broccoli is a free choice.

Actuaries in the insurance business calculate the incidence of diseases and illnesses in advance in setting insurance premiums. The incidence of disease and illness is more-or-less fixed in terms of the population. For example, 200,000 women yearly in the United States are diagnosed for breast cancer. That is NOT a free choice by those so diagnosed.

Opponents of Obamacare argue that requiring mandatory health insurance is an unconstitutional "individual mandate" to purchase commercial wares and liken it to requring people to buy broccoli because it is allegedly good for you.

But that comparison is greatly flawed logically from the start.

If you buy broccoli, you have broccoli. If you do not buy broccoli, you do not have broccoli. You may still have good health. It depends on what else you eat.

If you buy health insurance, you can still get breast cancer. If you do not buy health insurance, you can still get breast cancer. The purchase of health insurance is unrelated to the incidence of disease or illness. The one has NOTHING to do with the other. That is a critical difference.

The confusion on all sides comes because talking about the "health insurance market" is merely a smoke screen. The real market is "health care", which is required by the inevitability of disease and illness, as actuarially determined. There is no real "market" for "health insurance" -- it is totally artificial. Everyone who is not privately able to fund his or her medical bills needs some kind of coverage viz. someone has to help them to pay their bills.

Obamacare is about how we pay for that health care. Since America is a capitalist system you permit insurance companies to share in the product offer. That commercial element here is NOT constitutionally significant. You could just as well require everyone to buy a government insurance policy -- it need not be commercial. Frankly, the latter would be the preferable alternative, and if Obamacare were overturned, that is what we would recommend, leaving the commercial insurance companies out entirely. It would serve them right, operating as they do as highly exploitative vastly overpaid businesses that merely exploit an actuarial inevitability rather than providing a real, necessary service.

The "market" for broccoli and the market for "health care" are two completely different markets, as different as night and day. This situation exists only for health, and in no other market.

Therefore, one can not compare breast cancer and broccoli.

Every other civilized country in the world has recognized this difference, only not the USA, thus far.

P.S. Justice Alito's argument about burial costs -- a similar FIXED health issue -- was answered stupidly by the government. Of course there should be mandatory insurance for that. Why should anyone have the Constitutional RIGHT, if he or she or relatives are unable to pay for the costs of burial, to pass those costs on to third parties? No. That is not what the Constitution would mean by the freedom of choice in commercial markets.

P.S.S. One argument seen as important by some Justices in defining HEALTH as a different market than other commercial markets is summarized by Solicotor General Verrilli as follows:
"[O]ne of the economic effects Congress is addressing is that ... the many billions of dollars of uncompensated costs are transferred directly to other market participants.  It's transferred directly to other market participants because health care providers charge higher rates in order to cover the cost of uncompensated care, and insurance companies reflect those higher rates in higher premiums, which Congress found translates to a thousand dollars per family in additional health insurance costs."
That may or may not be true, but this is a fact of life and a product of supply and demand similarly found in all commercial markets. When a new product is rolled out, for example, prices are exorbitantly high for early adopters, who buy such products anyway, whereas the mass of the market waits to see how the new product is received. As more and more people enter the market, prices go down. People NOT buying something influence all other markets too.

We do not see how that argument assists in deciding the Constitutional question.

The critical point is that health insurance is a unique market where prices are as good as totally irrelevant to the incidence of disease and illness (one could get ulcers, for example, because one does not have price-prohibitive health care, so this statement is "technically" not 100%).

Conclusion: The requirement that citizens purchase health insurance is not an imposition on their Constitutional rights but is rather a recognition by the government of the predictable and quantifiable inevitability of the need for health care for ALL citizens, seen as a whole, and the Affordable Care Act is thus a sensible, more equitable distribution of both health care and health care costs than previously existed. It has almost nothing to do with Constitutionally protected choice in interstate commerce.

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