RSS Feed MenuThe liveliest topic on the Sunday shows: George Stephanopoulos’ tussle with President Obama over the question whether a health insurance mandate counts as a tax. It’s a fascinating definitional issue. On the one hand, the mandate is compulsory and substantially costly, which is tax-like, but it is not paid to the government. Because President Obama pledged during the 2008 campaign not to raise taxes on families earning less than $250,000, the mandate-tax issue offers a gratifying opportunity to trip him up.
That would be good sport. But question – sport aside, should Republicans oppose an individual mandate as a policy matter? (Actually not all Republicans do – the Healthy Americans Act sponsored by Utah Sen. Robert Bennett contains such a mandate.) There are two grounds for opposition: (1) the libertarian principle that people should not be required to do what they do not wish to do, and (2) the pragmatic concern that any mandate will likely imply higher subsidies to those Americans who cannot afford to pay the cost the law imposes on them.
As to (1), that battle was lost back in the 1980s, when hospitals were required to treat all comers, insured or not. It’s not very libertarian to say that you have a right to eat all you want at the buffet, but no duty to pay the bill.
However, (2) is very concerning. The costs of subsidy were the main deterrent to a Republican healthcare reform in the years 2001-2007, when we held our majorities in Congress. Even Sen. Bennett’s plan, deficit neutral over 10 years, showed heavy costs to the Treasury in the early years. With budget deficits already gaping, Republicans preferred to avoid another big immediate expense. On the other hand, it’s not like we are not spending a lot of public money now. Medicare plus Medicaid plus veterans and Indian programs already cost more than $800 billion annually. Add the value of the exclusion from tax of employer-provided insurance, and healthcare costs the Treasury $1 trillion, not all of it spent in the most intelligent way. A mandate plus subsidies in the context of reforms aimed at cost control could well fulfill Sen Bennett’s hopes to save money in the long term. This is not the issue where Republicans should be fighting in the last ditch.
sinz54 // Sep 21, 2009 at 11:05 am
The libertarian issue is whether young people, who as a cohort are the healthiest in the nation, should be required to pay premiums to foot the bill for us older folks who are chronically sick.
This is a major philosophical issue of social contract.
To me, the answer is YES, for the same reason that Social Security is a pay-as-you-go system in which workers’ payroll taxes pay for the retirement of the seniors.
Namely, that this is how society has corrected a systemic wrong–that young Americans no longer feel any obligation to help pay for their parents’ and grandparents’ care.
In the 19th century, we had extended families where grandparents lived in the same home as the parents and the kids. And it was a given that when grandma got sick, the rest of the family helped care for grandma.
When that got replaced by the nuclear family, we needed Social Security to get young people to pay for their grandparents.
And the mandate that everyone must purchase insurance is similar. Today’s young people will pay for the health care of older folks like me. And in 40 years, when today’s young people have gotten old, the next generation will pay for them. And so on.
EscapeVelocity // Sep 21, 2009 at 11:17 am
The key is to have a social contract that doesnt bankrupt everyone or turn them into paupers of state servitude, or discourage entrepaneurship and hard work.
EscapeVelocity // Sep 21, 2009 at 11:19 am
To me if you are going to have IM, then you should ditch Medicare, Medicaid, and any other non Military healthcare service or funding and go all in on one system. No need for extra complications and expense.
Everybody is in, and the government subsidizes the poor.
joemarier // Sep 21, 2009 at 11:23 am
Well, it’s not like they don’t send you a bill if you show up at the emergency room without insurance…
cpanza // Sep 21, 2009 at 11:37 am
Unfortunately, I would assume that most people who get a bill for showing up to the ER without insurance can’t pay it, given that most of them can’t afford health insurance in the first place, and that’s why they are in the ER without insurance.
balconesfault // Sep 21, 2009 at 11:46 am
escapevelocity To me if you are going to have IM, then you should ditch Medicare, Medicaid, and any other non Military healthcare service or funding and go all in on one system. No need for extra complications and expense.
Everybody is in, and the government subsidizes the poor.
That is the most rational thing I’ve ever read from escapevelocity.
Wholeheartedly in agreement here.
joemarier Well, it’s not like they don’t send you a bill if you show up at the emergency room without insurance…
A major reason why medical bills prompt more than 60 percent of U.S. bankruptcies.
EscapeVelocity // Sep 21, 2009 at 12:13 pm
Well, before you go praising me too much, I dont mean a single payer government system.
I mean a well regulated market.
sinz54 // Sep 21, 2009 at 12:21 pm
cpanza: Unfortunately, I would assume that most people who get a bill for showing up to the ER without insurance can’t pay it, given that most of them can’t afford health insurance in the first place, and that’s why they are in the ER without insurance.
Most major hospitals have a charity-type fund to help pay the catastrophic health care costs of those patients who show up there without insurance. But that treats emergencies requiring a visit to the E.R. (like an asthma attack), not continuing care by private care physicians and the specialists they refer the patients to for regular screening tests.
What studies have shown is that those without insurance simply go to doctors less often, and try to live with health care complaints.
joemarier // Sep 21, 2009 at 12:32 pm
Sometimes the doctors will take the hit on the services provided, too. I thought this editorial from a EP trade magazine was somewhat interesting.
http://www.epmonthly.com/index.php?option=com_content&task=view&id=542&Itemid=91
balconesfault // Sep 21, 2009 at 12:35 pm
Well, before you go praising me too much, I dont mean a single payer government system.
I mean a well regulated market.
Perhaps. But if we did what you said, ditching Medicare, it would be one of the fastest pathways to a single payer system. The fastest would have been McCain’s proposal – eliminating the corporate tax deduction for employer provided healthcare.
joemarier // Sep 21, 2009 at 12:48 pm
Would allowing cross-purchasing of health care policies across state lines get a single payer system, too? Would everyone eventually have one insurance company, based out of Delaware?
EscapeVelocity // Sep 21, 2009 at 2:05 pm
Eliminating the business tax deduction for health insurance bennies would do no such thing. Health insurance bennies are better than money at attracting good employees.
Its all pure conjecture because no one is going to touch Medicare….even the current proposals with Medigap subsidies being removed has the elder voters up in arms.
ottovbvs // Sep 21, 2009 at 2:13 pm
Is a mandate to purchase car insurance a tax hike?…..of course not…..and neither is a mandate to purchase health insurance from a health insurer…….there are no “definitional” issues involved…….there may be compulsion issues but that’s an entirely different matter
ottovbvs // Sep 21, 2009 at 2:18 pm
“And the mandate that everyone must purchase insurance is similar. Today’s young people will pay for the health care of older folks like me. And in 40 years, when today’s young people have gotten old, the next generation will pay for them. And so on.”
……..Rather in the same way I’m subsidizing the car crashes of teenage girls…….that’s how insurance works
balconesfault // Sep 21, 2009 at 2:27 pm
Its all pure conjecture because no one is going to touch Medicare….
Especially since Republicans have shown they will politic Medicare just as shamelessly has Democrats have in the past when it serves their purposes.
Why be serious about the long term impacts to our budget of Medicare, when you can mobilize tens of thousands of senior citizens to show up at rallies to scream against your opponent just by saying something cynical like “death panels”?
SpartacusIsNotDead // Sep 21, 2009 at 3:17 pm
Otto, it’s good to see you back.
sinz54 // Sep 21, 2009 at 3:46 pm
joemarier: Would allowing cross-purchasing of health care policies across state lines get a single payer system, too? Would everyone eventually have one insurance company, based out of Delaware?
We wouldn’t have just one, but we wouldn’t have many either.
It would be similar to credit cards, where there are a handful: MC, Visa, American Express, Discover.
The smaller regional HMOs couldn’t provide a national network of doctors and would go out of business.
But Blue Cross and Aetna and Kaiser would still be around.
balconesfault // Sep 21, 2009 at 5:51 pm
And good luck taking on massive entities like Blue Cross or Aetna or Kaiser over a denial of coverage issue after tort reform is passed, and they guarantee that any losing litigant will be presented with a multi-million dollar bill for the corporate defense attorneys who the insurance companies will bring to the table.
Jim // Sep 21, 2009 at 9:43 pm
ottobvs wrote:
“Is a mandate to purchase car insurance a tax hike?…..of course not…..”
Umm, yeah it is. If I get a bill next month that I didn’t get this month, its a tax hike. I don’t care about the semantics, I DONT HAVE THE MONEY, GET IT???
cpanza // Sep 21, 2009 at 10:02 pm
sinz54 :
I’m not sure in what way quoting me and then responding was meant to correct anything I’d said. I was suggesting that people who show up in the ER without insurance generally can’t pay the bill, so sending them the bill is somewhat futile. If hospitals have charity-funds set up for some of these cases, that’s great, but that doesn’t change the fact that the patient him/herself is unable to pay.
cpanza // Sep 21, 2009 at 10:06 pm
David Frum:
I’m not sure if you write your headlines for your posts, but are you saying that the mandate fee IS a tax? Your headline suggests that it is, but your text does not. You say:
“It’s a fascinating definitional issue. On the one hand, the mandate is compulsory and substantially costly, which is tax-like, but it is not paid to the government. Because President Obama pledged during the 2008 campaign not to raise taxes on families earning less than $250,000, the mandate-tax issue offers a gratifying opportunity to trip him up.”
Something being “tax-like” and “not paid to the government” doesn’t sound much like a tax to me.
Which is it, in your view?
balconesfault // Sep 21, 2009 at 10:14 pm
If I get a bill next month that I didn’t get this month, its a tax hike. I don’t care about the semantics, I DONT HAVE THE MONEY, GET IT???
Umm – no. You don’t pay taxes to an insurance company.
At least yet. A little more Bush Corporatism, and we might have been there. But not yet.
greg_barton // Sep 22, 2009 at 2:53 am
No, balconesfault, you just don’t get it. Paying your life savings to a corporation is GOOD. The market is GOOD, so throwing all of your money into it on a wing and a prayer is GOOD. Because, as we’ve seen for the past year, always trusting the market is GOOD.
oldgal // Sep 22, 2009 at 9:25 am
If one uses Webster’s definition of tax, then it could be inferred that insurance is a tax.
Kevin B // Sep 22, 2009 at 1:55 pm
The New Oxford American dictionary allows one to infer that insurance is not a tax. So using dictionary definitions will only help to convince those who already agree with you (on either side).
And stretching a definition so that it means what you want it to mean is … Clintonian.