Taking Aim at Obamacare’s Coercive Core

Obamacare by from The Weekly Standard, September 28, 2013

In the climactic scene of Star Wars (spoiler alert for those few who haven’t yet seen it), Luke Skywalker flies his Rebel X-wing fighter along a trench of the Imperial Death Star and, with one perfectly placed shot, hits a small exhaust port leading directly to the fortress’s main reactor—causing the Death Star to burst into a supernova. When thinking about delaying Obamacare’s individual mandate, that image is worth keeping in mind.

For it’s not just that delaying the individual mandate is popular (a recent Rasmussen poll finds that Americans favor such a delay by a 30-point margin), an easy sell (President Obama lawlessly delayed the employer mandate, so why not lawfully delay the individual one?), a quick way to cut the deficit by more than $20 billion in 2014 alone (according to the Congressional Budget Office), and a “very reasonable and sensible” thing to do (to quote Democratic senator Joe Manchin, one of 23 Democratic members of Congress who’ve already publicly expressed support for the delay). Indeed, it’s all of those things. But, in two key veins—one psychological, the other functional—it’s also a way to pave the path to full repeal.

Psychologically (as well as rhetorically), the individual mandate is very important to the left.  Obamacare is all about coercion—about forcing people to do things they don’t freely choose to do—and the individual mandate serves as its coercive core. It’s what allows Obama to grasp onto the thinnest reed of legitimacy when describing Obamacare as offering “universal coverage,” despite the CBO’s estimate that, even after ten years and $1.8 trillion, Obamacare would cover less than 45 percent of the uninsured (at the whopping 10-year cost of $72,000 per newly insured person).  That’s a far cry from “universal coverage.” But one can think of it—and describe it—as “universal,” so long as one is forcing every American, as a matter of federal law, to do the government’s bidding.  Without the individual mandate, Obamacare would cease to be “universal coverage,” even in the sense of being universally coercive, and would simply become “45 percent coverage.”  That would be demoralizing to the left.

In reality, however, even hitting that 45-percent mark would likely prove impossible, for that’s the figure the CBO gives when assuming the mandate will be in effect. As things now stand, if a young person, say a 30-year-old single man, making, let’s say, $40,000 dollars a year, decides not to buy government-mandated health insurance, he’ll be fined $400 next year, and $800 the year after, and $1,000 in 2016—not a fortune, but not exactly chump change, either.

If the mandate were delayed for a year, however, the same 30-year-old man wouldn’t be fined anything in 2014 (and would subsequently be fined only $400, rather than $800, in 2015, etc.), meaning that the only motivation he’d have to buy government-approved insurance next year would be if he were actually attracted to the product or to the taxpayer-funded incentives to buy it. Well, according to a recent report from the National Center for Public Policy Research, the young man in question almost surely wouldn’t get a dime’s worth of Obamacare subsidies, even though a 60-year-old with the same income would get a huge subsidy, at taxpayer expense.  So the 30-year-old could either buy government-approved insurance at artificially inflated prices (courtesy of Obamacare), without a subsidy, or he could simply forgo that overpriced insurance, knowing that, if he ever gets sick or injured, Obamacare will let him sign up later—since it’s only “fair,” as Obama continually tells us, to mandate that those with preexisting conditions be able to sign up for “insurance” after the fact.

The CBO estimates that, in 2014, the combination of Obamacare’s taxpayer-subsidized exchanges (7 million additional insured) and changes in sales through the non-group market (2 million fewer insured) would result in 5 million additional people buying insurance. But the CBO has also estimated that, without the individual mandate, about 40 percent of those people (2 million of 5 million) would take a pass.  In other words, an estimated 40 percent of the newly sold insurance would be attributable to federal coercion.

Indeed, the Obama administration has consistently argued that, without the individual mandate, Obamacare’s “comprehensive” architecture would collapse. Obama loves the “guaranteed issue” and “community ratings” parts of Obamacare, which together force insurers to cover all comers at essentially the same price (subject only to limited variations), regardless of their health status and hence how much it will actually cost to cover them. Yet he nevertheless had his administration argue before the Supreme Court that, should the Court strike down the individual mandate as unconstitutional (as four justices thought the Constitution required), it should also strike down these other two provisions. If the administration had really thought Obamacare would work without the individual mandate, it wouldn’t have been willing to sacrifice these other two provisions that Obama holds dear.

In truth, the administration is deeply concerned about getting people to buy insurance through Obamacare’s government marketplaces even with the mandate in effect. At an Obamacare event a few days ago, both Obama and Bill Clinton kept pleading with people to sign up to buy their mandatory insurance. Clinton said that Obamacare “only works, for example, if young people show up.”  Obama said that we need to have “those of us who are healthy subsidize somebody who is sick.”  (Quite a sales pitch, eh?  You can see why they need the mandate.) Clinton’s very last words at the event were, “[W]e’ve got to get everybody to sign up.” Aside from “Thank you very much,” Obama’s were, “Everybody, sign up.  Go to healthcare.gov.”

But all the presidential pleading isn’t likely to do much good without the mandate. Here’s what Stephanie Cutter wrote on the White House blog about a year after the Democrats passed Obamacare into law:

“The Affordable Care Act . . . bans insurance companies from discriminating against people with pre-existing conditions. However, unless every American is required to have insurance, it would be cost prohibitive to cover people with pre-existing conditions.

“Here’s why: If insurance companies can no longer deny coverage to anyone who applies for insurance—especially those who have health problems and are potentially more expensive to cover – then there is nothing stopping someone from waiting until they’re sick or injured to apply for coverage since insurance companies can’t say no. That would lead to double digit premiums increases—up to 20%—for everyone with insurance, and would significantly increase the cost [of] health care spending nationwide. We don’t let people wait until after they’ve been in a car accident to apply for auto insurance and get reimbursed, and we don’t want to do that with healthcare. If we’re going to outlaw discrimination based on pre-existing conditions, the only way to keep people from gaming the system and raising costs on everyone else is to ensure that everyone takes responsibility for their own health insurance.”

So, in Cutter’s own words, without the individual mandate, Obamacare would be “cost prohibitive,” “would lead to double digit premiums increases,” and “would significantly increase the cost [of] health care spending nationwide.” In fact, “the only way” to make it all work is to enforce the individual mandate. That is to say, without its requirement that private American citizens, for the first time in United States history, must buy a product or service of the federal government’s choosing, Obamacare would be much more of a disaster than it’s already poised to be.

As Republicans debate the best strategy going forward, it’s worth considering that, defunding Obamacare—were it remotely possible—would simply put the Death Star out of commission for a year. Delaying the individual mandate—which is quite achievable—could well make it implode.

© 2013 by The Weekly Standard. Reprinted with permission.

Photo credit: Lars Lindberg Christensen / European Southern Observatory