Republican Assault on Health Care Could Backfire

gop healthcareWhen it comes to health care, Republicans should be careful what they wish for.

Their upcoming vote to repeal the health-care law will be largely symbolic — they don’t have the votes to override President Obama’s certain veto. The real thing happens later, when they try to strip the Department of Health and Human Services of money needed to implement the law’s requirement that all Americans buy health insurance. This could easily precipitate a showdown with the White House—and a government shutdown later this year.

On  its face it’s a smart strategy for the GOP. The individual mandate is the lynchpin of the heath-care law because it spreads the risks. Without the participation of younger or healthier people, private insurers won’t be able to take on older or sicker customers with pre-existing medical conditions, or maintain coverage indefinitely for people who become seriously ill. The result would be to unravel the health-care law, which presumably is what many Republicans seek.

At the same time, the mandate is the least popular aspect of the law. According to a December 9-12 ABC/Washington Post survey, 60% of the public opposes the individual mandate. While they want help with their health-care bills, and over 60% want to prevent insurers from dropping coverage when customers become seriously ill, most Americans simply don’t like the idea of government requiring them to buy something. It not only offends libertarian sensibilities, but it also worries some moderates and liberals who fear private insurers will charge too much because of insufficient competition in the industry.

The individual mandate is also most susceptible to legal challenge. Twenty states, led by Florida, have joined together in a lawsuit to argue that the mandate oversteps federal authority. Virginia and some interest groups are also challenging the mandate’s constitutionality in federal court. In the first major ruling, on December 13, Judge Henry E. Hudson of the federal district court in Richmond called the mandate an “unbridled exercise of federal police powers” and an overreach of the Constitution’s Commerce Clause. The U.S. government is now appealing that decision.

You might argue government mandates to buy insurance aren’t unusual. After all, most states require people to purchase auto insurance in order to drive a car, and most lenders (including those underwritten by Fannie May or Freddie Mac)  require potential homeowners to buy home insurance. But the analogy doesn’t quite hold. These requirements come from states or from banks—not directly from the federal government. More importantly, they rest on basic act of volition. No one has to buy a car or a house. Not so with health insurance under the new law.

Nonetheless, there’s a great irony in the Republican assault — and a hidden danger for Republicans.

The federal government wouldn’t be nearly as vulnerable to these political and legal obstacles had the health-care law been built upon the framework of Social Security or Medicare—public insurance financed by payroll taxes—as many Democrats had initially urged. Not only are these programs enormously popular (“Don’t take away my Medicare!” was a rallying cry among some conservative populists during the debates over the health-care law) but they also rest on a more widely accepted relationship between the individual, the government and the market.

Americans are accustomed to paying for public insurance through their payroll taxes. Such payments aren’t viewed as federal mandates that encroach upon individual freedoms, or as payoffs to private companies likely to make even more money from mandatory purchases of their products, but as well-deserved entitlements. Indeed, the biggest problem with Social Security and Medicare is they’re so popular that politicians have had a hard time trimming their benefits to match payroll tax revenues. Had health care been added as another public insurance program financed by payroll taxes, the challenge might be even greater — which may help explain the fierce resistance of Republicans to using Social Security and Medicare as templates for the new health-care law.

For 60 years, the battle over health-care reform has been waged over these two ways of spreading costs and risks: either through payroll taxes and public insurance, or mandated purchases from private insurers. For most of those six decades, Democrats advocated the former. Harry Truman’s initial plan for adding health insurance to Social Security was defeated, but Lyndon Johnson’s Medicare succeeded.

Apart from George W. Bush’s drug benefit, which was also based on this Democratic framework, Republicans have been on the side of mandated purchases from private insurers. In 1974, Richard Nixon’s proposed Comprehensive Health Insurance Plan would have required private employers to provide their employees with comprehensive health insurance coverage purchased from private insurers. (An employer mandate is tantamount to an individual mandate in that employees are forced to pay it indirectly, via lower wages.) Ted Kennedy simultaneously proposed universal coverage financed through Social Security taxes, essentially copying Medicare. Neither plan succeeded, but Nixon’s framework redefined idea of national health insurance from then onward.

President Obama and a majority of Democrats in the last Congress opted for the Republican model even though many Democrats would have preferred Medicare for all, or at the very least a public option. Most polls showed that the public favored such an option. But the White House hoped for Republican support and wanted to ward off opposition from health insurers and pharmaceutical companies by promising them some 30 million additional customers.

Robert ReichSet against this background, the current Republican attack on mandatory coverage is curious because it begs the essential question of how society would otherwise spread health-care risks. If successful—either in Congress or in the courts—a Republican victory could turn into a Phyrric one by opening the way to the alternative model, based on the system Americans seem to prefer: payroll taxes and public insurance.

Robert Reich
Robert Reich’s Blog

Published by the LA Progressive on January 8, 2011
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About Robert Reich

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.

Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

Comments

  1. Spearmann says:

    How does leaving health care between doctors and their customers equal an “Assult” on healthcare?

    And isn’t this the kind of language “Assault” that has caused everyone to blame Sara Palin for the choice of a crazy gunman to shoot innocent people?

    If someone beats up a doctor, or a member of the GOP… will we all go blaming Robert Reich?

    • pigdog67 says:

      If it was ‘between doctors and their patients’ then there would be no health insurance companies. If you objectively and honestly examine health insurance companies you would find that if they did not have the employer based tax deduction they would not exist. Try buying it yourself outside of your employer. I have chosen to go without health insurance. I do not want to pay 18K per year to a ‘health insurance’ company to do essentially nothing. It is much simpler to pay my bills with cash. And 18K a year goes a long way.
      I find it odd that Americans cannot understand that health insurance companies add no value. Save some money, and invest it. Grow it every year. Use it to cover your medical bills. Eventually you die anyway. Our fancy modern day expensive healthcare has not raised life expectancies. And eat a good diet and exercise regularly. At the end I would rather have the 250K that would go to a useless intervention (yes that is the average cost of those) be passed on to my children.

  2. Reich is correct: it would be actual justice for us ordinary folk and poetic justice for Gops if at the end of the day we get what Obama should have gone for from the beginning: med insurance financed by a constitutionally OK tax rather than by an unconstitutional mandate that you must buy private med insurance.

    For the prime intended clientele (of both Obama and the Gops) – namely the private insurance industry – there is a big irony here. Namely, the benefits for them of the mandate could in fact have been openly achieved instead by imposing the TAX (WITHOUT a public option).

    All that would have been needed was to have imposed the tax in combination with a fully refundable income tax credit that could be taken for standard med insurance premiums paid to private insurers. (Such a credit would merely somewhat liberalize the already long-existent Schedule A medical expense deduction.)

    A minor mystery does remain – but only for those who still imagine that Obama is a regular Dem rather than a Dino wannabee Gop: just why did he so readily cave into the unconstitutional individual mandate idea in place of the constitutional tax?

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