Health care and the American state

President Barack Obama talks on the phone with the US Solicitor-General after health care ruling Official White House phote Pete Souza

By Dr Dana Allin, Senior Fellow for US Foreign Policy and Transatlantic Affairs; Editor of Survival

Three months ago, CNN legal affairs analyst Jeffrey Toobin attended the Supreme Court’s oral arguments on the challenges to President Barack Obama’s health care reform, then walked outside and down the courthouse steps for a live broadcast. ‘This was a train wreck for the Obama administration,’ Toobin declaimed, waving his arms for emphasis. ‘This law looks like it’s going to be struck down. I’m telling you, all of the predictions, including mine, that the justices would not have a problem with this law were wrong.

Last Thursday, Chief Justice John Roberts led a 5–4 majority decision confounding Toobin’s ‘train wreck’ prediction. The court upheld the constitutionality of President Obama’s defining legislative accomplishment, including the ‘mandate’ – much maligned by conservative critics – that requires individuals to purchase health insurance. It did so even though Roberts found that the ‘Commerce Clause’ of the US constitution did not give the federal government authority to regulate ‘inactivity’ – that is to say, the inactivity of not purchasing health insurance. The federal government does, however, have more or less unlimited authority to tax, and Roberts deemed the mandatory penalty for not buying health insurance to be a tax by another name.

The mandate was important because among the crucial features of Obama’s Affordable Care Act (ACA) is the requirement that insurance companies offer health coverage to everyone at roughly similar rates (there are some exceptions, such as age, where differential rates can be set).

This requirement removes one of the great cruelties of the current system: the fact that many people with ‘pre-existing conditions’ could not find insurance at just about any price. Since ‘pre-existing’ applies to such common chronic illnesses as diabetes, the problem potentially affects a very large number of Americans under the age of 65. (The elderly are provided for by a socialised system of government health insurance.) Since most Americans are insured through their employer, losing one’s job could be a health catastrophe for the employee or a member of their family.

Needless to say, this situation did not enhance labour mobility or flexibility, so together with the cruelty came economic inefficiency. The ACA ban on discrimination on the basis of pre-existing conditions was, unsurprisingly, a popular part of the reform. Even Republicans such as Mitt Romney have said they are for it.

The problem, however, is that it probably would not have worked without the mandate. The ban on discrimination would have encouraged the young and healthy to game the system: waiting to buy insurance until they became sick. This would be akin to insuring your house after it burnt down: and if insurance companies were required to sell coverage under those conditions, they would most likely succumb to a ‘death spiral’ whereby they became financially unviable, charged astronomical rates or both. (In this sense, the mandate is an inherently conservative instrument. Indeed, it was first proposed by conservatives and in fact implemented by Massachusetts Governor Mitt Romney when he won approval of a very similar health care reform in that state.)

The ACA is a complicated piece of legislation with many moving parts. It turns insurance companies into something more like public utilities required to insure everyone. It provided subsides to make coverage affordable for some of the 30 million new people it brings into the system, and it expands Medicaid (government coverage for certain low-income families and individuals) to bring in the rest. And it introduces a long raft of measures to ‘bend the curve’ of rising American health costs downwards.

A consensus had formed that the Supreme Court would strike down at least the mandate, if not the whole Act, after conservative justices, including Roberts, asked harshly sceptical questions during oral arguments (Toobin’s ‘train wreck’). In the intervening months, some liberals started to argue that the overall reform could survive: other parts of the bill, including subsidies, might bring in enough healthy new subscribers to make the insurance system viable even without the mandate. But it was a risky proposition, and with such fierce Republican opposition to the whole package, it might have been easier after an adverse ruling for any new Republican president and congressional majority to dismantle it piece by piece.

It turned out that liberals had been somewhat carried away in their pessimism. Conservatives were correspondingly overconfident. In joining the more liberal justices to form a majority, Chief Justice Roberts looked clearly concerned about preserving the reputation and legitimacy of the court. A series of 5–4 decisions, including the 2000 Bush v. Gore decision that stopped the Florida vote recount and put George W. Bush into the White House, were starting to make the Supreme Court look like a political animal riven by exactly the same left–right divisions as the rest of the country. Thus Roberts strained to find a solution that would reconcile his evident aversion to the law with a desire to avoid thrusting the Supreme Court into the ongoing battle royal between the American right and centre left.

Roberts apparently understood the perils of, and sought to avoid, a deepening rejection of the court’s legitimacy on the left side of the political spectrum. He relied on the presumption that laws enacted by Congress and signed by the president should be considered constitutional unless the case against was overwhelming. And so, while rejecting the commerce argument, he found another reason to uphold the law in Congress’s designated authority to tax.

It was still a 5–4 decision of course, but one that crossed the court’s ideological dividing lines ‘The statute reads more naturally as a command to buy insurance than as a tax,’ Roberts wrote. But he added, in a key statement of restraint: ‘We have a duty to construe a statute to save it, if fairly possible.’ Since it was ‘fairly possible’ to view the mandate penalty, to be collected by the IRS, as a tax, that is what he did.

This effort at balance has led to some fairly amazing praise. Charles Lane of the Washington Post wrote that ‘the ruling is historic because it is a Compromise – a crisis-averting pact across lines of ideology, party and region, the likes of which we have not seen since pre-Civil War days.’ Lane was referring to the ‘Compromise of 1850’ that reaffirmed the north–south line between slave states and free states, and so his words may sound like rhetorical over-reach. They may also seem less than reassuring, since a decade after the Compromise of 1850 the United States was riven by the great civil war that it was meant to avert. It is true, however, that Obama’s health care bill constitutes one of the great pieces of social legislation of the past century, ranking with the landmark bills of FDR’s New Deal and LBJ’s Great Society. It fills what had been a gaping hole in the American welfare state, and removes the United States from the exceptional status of being the only rich democracy not to guarantee universal health care.

How then was the court decision a compromise? The expansion of the Medicaid programme is another key element of the ACA, and the court did set limits on the federal government’s ability to use a threat to withhold ongoing Medicaid funding in order to coerce states into participating in that expansion.

And some conservative opponents are taking comfort from the rejection of the Commerce Clause as a basis for upholding the law. Time will tell if this is the beginning of a series of decisions that could undermine the constitutional basis of federal power as embodied in the New Deal welfare state. For the moment that seems unlikely; health care really is sui generis insofar as the failure to do something – getting yourself insured – has a major deleterious effect on others. This is because, even though the uninsured could be deprived of basic and even life-saving treatment, it is not the case that they were left to die on the streets.

There was already a law requiring hospital emergency rooms to treat emergency cases regardless of the ability to pay. This was not the American version of universal health care: it only applied to emergency care. Moreover, hospital emergency rooms would still present a bill, and indeed for many years health emergency has been the leading cause of personal bankruptcy. Still, the fact that they would treat you whether you could pay or not meant that the millions of uninsured constituted a vast army of free-riders on the health system, whose emergency treatment, however inadequate, was also expensive for American taxpayers.

It is hard, for me anyway, to imagine many other areas where the federal government will find it necessary to ‘regulate inactivity’. A military draft, perhaps, but if conscription were reinstated it would not be conservatives leading the charge against it. The conservatives’ case, argued seriously in the Supreme Court challenges, was that if government could force you to buy insurance, there was no reason that it could not force you to eat broccoli in the common interest of a healthy population. (This reductio ad absurdem was called the case of ‘the broccoli horrible’ by liberal justice Ruth Bader Ginsburg.)

But then I, as an American liberal, have to admit that I don’t really understand conservatives’ objection to universal health care or, indeed, their definition of a state of freedom that is fundamentally threatened by liberal governance of the kind that establishes health care as a right rather than a privilege – with commensurate taxation to fund that right. I even wonder if there is a massive misunderstanding at the heart of America’s left–right division.

George Will, an erudite and respected conservative columnist, has written repeatedly that liberals agitate for action against global warming and other environmental hazards because we are fundamentally determined to expand the role and control of government over the lives and liberties of individual Americans. Will must believe this, and yet it represents, as far as I am concerned, a surreal misunderstanding of the liberal view of government.

New York magazine’s Jonathan Chait has written about this eloquently. Liberals like me do not value government, and its control over people’s lives, as an end in itself, but as a necessary means to an end. And certain ends, such as limiting carbon emissions, correcting ‘market failure’ in the market for health care, or indeed, fighting necessary wars, can only be attained through government. It is true that these tasks do tend to enlarge and strengthen government, and so the question that remains is whether they are so necessary as to make bigger government palatable. (George Will, to his credit, recognises the importance of war in empowering the state, and is correspondingly less sanguine than many US conservatives about the use of military force.)

Making health care a right does entail a further redistribution of wealth via progressive taxation, and taxation is, at least in the abstract, an infringement on liberty. But I gladly pay taxes because the alternative would be a Hobbesian dystopia that would threaten my liberty far more concretely.

In any event, the argument about levels of taxation now returns to the political arena, where it belongs. President Obama went on television the afternoon of the ruling to enumerate the concrete benefits of the legislation, something he has arguably done inadequately so far. Mitt Romney, his Republican challenger, said: ‘This is now a time for the American People to make a choice. You can choose whether to have a larger and larger government making intrusions into your life… or whether instead you want to return to a time where Americans have their own choice in health care.’

The election is four months away.


One Comment on “Health care and the American state”

  1. [...] colleague Dana Allin wrote a compelling essay earlier this month on health care and the American state from his perspective as a self-described ‘American liberal’. Following the US Supreme Court’s [...]

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