Several lawsuits have been filed challenging the constitutionality of the health reform law passed by Congress in 2010. This week, the first decision by a federal court of appeals was issued. In a 2-1 vote, the court rejected a challenge to the “individual mandate” provision of the law because it found the provision to be a proper exercise of Congressional authority under the Commerce Clause of the U. S. Constitution.
The politics surrounding the Affordable Care Act are intense, particularly concerning the “individual mandate,” which requires most people to obtain “minimum essential coverage” or pay a penalty based on household income. Those challenging the mandate contend it is an unconstitutional exercise of Congressional power and bad public policy. The rulings of five federal judges in Michigan, Florida, Virginia (two cases) and Washington, D.C. in challenges to the act are directly correlated with the partisan affiliation of the presidents who appointed them: the three judges who upheld the law were appointed by Democratic presidents and the two judges who struck down the law were appointed by Republican presidents. This has added an interesting twist to the discussion about what it means to be an “activist” judge!
In the most recent decision, the court departed from the partisan pattern. Judge Jeffrey Sutton, a George W. Bush appointee, is widely viewed as a conservative jurist. He agreed with Judge Boyce Martin, a Carter appointee, that the individual mandate is not prohibited by the Constitution and therefore voted to uphold the law. In a concurring opinion, Judge Sutton questioned the wisdom of the law as a matter of policy, but noted that “[t]ime assuredly will bring to light the policy strengths and weaknesses of using the individual mandate as part of this national legislation, allowing the peoples’ political representatives, rather than their judges, to have the primary say over its utility.”
So is the individual mandate good public policy? I think it is, but I didn’t always think so. Let me explain.
I spent 2004 through 2009 as Mayor Bill White’s director of Health Policy working on solutions to Houston’s increasing number of uninsured people, estimated to be about 30 percent of the population. I worked with health care providers, insurers, business, academic, government and civic leaders, all of whom wanted to reduce the number of uninsured people. We knew that the uninsured did not have sufficient access to health care and often wound up in hospital emergency rooms. This is bad for patients who forego care until they are very ill and expensive for hospitals who typically eat more than 90 percent of the costs of treating uninsured patients. We also knew that the hospitals were necessarily shifting the costs to their insured patients and to taxpayers.
The first time I heard an elected official propose an individual mandate was in 2004 at a Greater Houston Partnership meeting, and the proponent was a conservative Republican who advocated for an individual mandate as a mechanism for assuring personal responsibility. My initial reaction was negative; it sounded like blaming the victim. But I kept listening and as I explored possible solutions to the problem of the uninsured, over the years, I came around.
During my tenure at the city of Houston, we actually instituted a mandate for large contractors through a program known as “Pay or Play,” which is still in effect today. The program required large contractors to provide health benefits to their employees or to pay $1 per employee hour spent on city contracts. We did this because we understood that when we selected as low bidder a contractor that didn’t provide health benefits to its employees, we were punishing contractors whose cost structures were higher because they offered benefits, and we wanted a level playing field. And we knew the costs of the contractors’ uninsured employees health care did not disappear and that we, as a purchaser of $250 million of health insurance a year, were subsidizing those uninsured employees. Like most businesses, the majority of the city’s contractors offered health benefits. From those that did not, we collected payments of more than $1 million a year, which were used to reimburse providers for care to the uninsured and to subsidize premiums for previously uninsured employers and employees when they purchased health benefits. Viva la mandate!
The Greater Houston Partnership produced a white paper in early 2010 with a post-health reform law addendum that discuss the problems we face in Houston because of our large number of uninsured. GHP concludes that the individual mandate will help us in Houston. Both papers are worth a read.
Elena Marks is a Baker Institute scholar in health policy, and was the institute’s MD Anderson Foundation Visiting Scholar in 2010. She is also a lawyer and served as the director of health policy for the city of Houston from 2004-2009.