Morgen on September 14, 2009 at 7:51 am
With the Administration frantically trying to tamp down the ongoing controversy over the public option – and no less of a source than the NY Times indicating that the public option is all but dead – it seems likely that the next component of ObamaCare to come under more scrutiny will be the individual mandate. Pundits on the left are criticizing the individual mandate as an immoral bailout of the private insurance industry. And of course many conservatives are troubled by the loss of personal liberty inherent in this sort of mandate.
In researching this topic, I came across an interesting article published by the Congressional Budget Office (CBO) in 1994 analyzing the possible impact to the federal budget of an individual mandate proposed under HillaryCare. The issue in question was whether or not a federal mandate for the purchase of health insurance – even in the private market – necessitated including these transactions in the federal budget. The CBO included an outline of the various philosophical and economic arguments surrounding this question. I found this one to be the most compelling (emphasis added below):
A second argument, closely related to the first, reasons that any mandatory portion of the premiums would meet the definition of governmental receipts. The commission’s report recommended that payments received by the government as a result of “activities that are essentially governmental in character, involving regulation or compulsion, should be reported as receipts.” The General Accounting Office, which is required by law to publish standard definitions of terms used in the federal budget process, defines receipts as “collections from the public based on the government’s exercise of its sovereign powers”. The mandatory portion of the health insurance premiums paid by individuals and families not enrolled in government health programs would be compulsory. Because the mandatory portion would result from an exercise of the federal government’s sovereign power, it would be essentially governmental in character and would meet the definition of receipts. The fact that private firms would collect the premiums directly, rather than receive them from a federal agency that had collected them, would not alter the fact that they resulted from public, rather than private, decisions about resource allocation.
In other words, under this argument any insurance premiums collected under a government mandate – even by the private sector – would be reportable as “receipts” by the federal government. Receipts, as in revenue. AS IN TAXES.
Now the current incarnation of the CBO took up this question as well. And while they seemed to have staked out a more liberal (and assertive) position than the CBO did in 1994, they also recognized the possibility that a mandate under some circumstances would require the feds to book revenue and outlays as a result. Under what sort of circumstances? (emphasis added)
In sum, the existence of a mandate, by itself, is not sufficient cause to bring transactions between private-sector entities into the federal budget. Similarly, the existence of a tightly regulated but still voluntary activity is also insufficient to bring such transactions into the budget…In CBO’s view, a combination of the twoâ€”a mandate and tight federal control over how that mandate can be metâ€”is necessary and sufficient to justify recording the affected private-sector transactions in the federal budget.
Thus, in the CBO’s view the controlling factor will be whether there is “tight federal control” over how individuals can meet the requirement to obtain insurance under the mandate. Considering that under the Democrats’ bill the only way for individuals to obtain insurance will be through the new insurance Exchange – which will be regulated by the federal government in every way possible – I don’t see how this standard cannot be met.
And regardless of the CBO’s ultimate determination on this somewhat technical question, one thing is certain. Millions of people – many of them relatively young and healthy – will be required by the federal government to spend a considerable amount of money on an insurance policy that they otherwise may not have purchased. And even more troubling is that under the premium rating provisions of the Democrats’ bill, these costs are likely to be considerably higher for younger purchasers than they would be under current law. In fact, this is a key reason why the Democrats are seeking to subsidize insurance premium costs all the way up to 400% of the poverty level. Because they are justifiably worried that these mandated costs will be portrayed for what they effectively are: a tax increase disproportionately impacting the middle-class. Which would be the first such increase since Bill Clinton raised marginal tax rates in 1993.
I’ll wrap this up with another interesting observation from the 1994 CBO report (emphasis added):
A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government. Federal mandates that apply to individuals as members of society are extremely rare. One example is the requirement that draft-age men register with the Selective Service System. The Congressional Budget Office (CBO) is not aware of any others imposed by current federal law.
I am almost certain that this statement remains true to this day.