Mark D. White

As you may have heard, U.S. District Judge Henry E. Hudson ruled Monday that the part of the Affordable Care Act (the health care reform bill passed earlier this year) dependant on the individual mandate to purchase health insurance is unconstitutional. From his ruling (as reported by The Wall Street Journal): "At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate."

I'm no constitutional law scholar, so I won't try to comment on the technicalities of the decision, but as I've said here before, I don't believe the principles inherent in the Constitution allow the federal government to require someone to purchase something solely as a condition of citizenship, regardless of the rationale or purpose. As Judge Hudson said, the Constitution does not provide for the "regulation of a person's decision not to purchase a product, notwithstanding its effect on interstate commerce or role in a global regulatory scheme."

What I will comment on is the adminstration's argument for the individual mandate, which comes to the simple economics of adverse selection, but without the necessary ethical subtext. Quoting the WSJ, "The Obama administration says that without the individual mandate, it could no longer require insurers to provide coverage to people with pre-existing conditions because that would create an unhealthy pool of consumers and drive up insurance prices for everyone."

There are two problems with this, one conceptual and the other ethical. The conceptual problem is with providing health insurance for pre-existing conditions. Insurance covers against risk; we buy insurance (if we choose) to protect us from the financial impact of disasterous events, such as auto accidents, fire, or illness. But with pre-existing conditions, the risk has been realized, and "insurance" collapes to financial coverage. If someone has a pre-existing conditions that costs $10,000 a year to treat, there is no insuring against that: someone will have to pay that $10,000 a year. That person can buy insurance against other conditions that he or she is at risk for, but that $10,000 cost cannot be insured for–it is a certainty, and someone has to pay for it.

So mandating coverage of pre-existing conditions amounts to shifting the burden of their cost, partially or in whole, from the person who has them to someone else, and this provides the administration's justification for the individual mandate: it will bring healthier-than-average people into the insurance pool and use their premiums to help offset the costs of pre-existing conditions. This raises the ethical aspect of the situation, which involves several contentious assumptions: 1) that the persons with the pre-existing conditions should not be held primarily responsible for the costs of them, and 2) that other persons should be. And the individual mandate brings in yet another problem: 3) that of coercing some persons into involuntary purchases in order to pay for the mandate coverage of pre-existing conditions. I'm not comfortable with any of these three assumptions, especially the last two.

So in addition to opposing the individual mandate on grounds of economic freedom, I also disagree with the reason the administration wants it: to shift the costs of pre-existing conditions from those who are likely responsible for them to those who are definitely not. Supporters of this law are using governmental denial of individual responsibility to justify coercion, which is simply adding insult to injury.

Let's start over, shall we?