Explaining the individual mandate

What is the individual mandate?  

Protesters in front of the Supreme Court this week

In 2014, it will be a tax penalty that will be assessed against anyone who can afford health insurance but who chooses not to purchase it. It will be a penalty of 2.5% of income or $695, whichever is greater. People on Medicare, Medicaid, on their employer’s health plan, or who have bought an individual policy will not have to pay this penalty. (Also starting in 2014, the government will begin giving out subsidies to individuals so that they can afford to purchase health care individually.)

Why did Congress enact the individual mandate?

The individual mandate is in the law as a companion to the law’s prohibition on discriminating against people with pre-existing conditions. As it stands now, insurance companies will refuse to cover people who have ever been struck by a serious disease or who are at risk for one in the future. Yes, another side-effect of childhood leukemia is that you will never be able to qualify for private individual health insurance for the rest of your life! So Congress, reasonably enough, put a stop to this practice in the Affordable Care Act.

However, this does present a legitimate problem for health insurance companies. If they can’t refuse coverage to people with existing medical conditions, what’s to stop someone from calling to buy medical coverage from the ambulance on the way to the hospital? (to take the most extreme example) In order to keep people from waiting until they get sick to buy insurance (and thereby overloading the insurance system), Congress said that anyone who does not buy insurance will be docked a tax penalty.

Why is the individual mandate being challenged before the Supreme Court?

Detractors say that Congress does not have the power to enact an individual mandate. They say this would amount to forcing people to buy a private good which they may not want. They say that the Constitution only gives Congress the power to regulate “economic activity” and not a person’s choice to remain “inactive” in the health insurance market.

Supporters say that everyone is involved in the health care market because disease or illness can impact anyone at any time. Therefore, to protect society at large from having to pay for an individual’s medical bills, Congress can require people to have some form of insurance to cover them when they fall ill. They say that the Constitution’s “commerce clause” gives Congress the power to regulate health care and the “necessary and proper clause” gives Congress the power to enact a mandate as part of an broad regulatory scheme.

Who originally thought up and popularized the “individual mandate”?

Actually, the same people who now say that this is an unprecedented and unconstitutional infringement on civil liberties are in many cases the individual mandate’s old supporters. Republicans across the board used to think the mandate was a great idea. However, once Democrats decided to include it in their health care bill, every Republican politician in the country suddenly had a collective change of heart. As Ezra Klein shows: “If you’re talking about Republicans who were in any way active during the 1990s, there’s a very good chance you’re talking about Republicans who either supported or said nice things about bills that included an individual mandate.”

How does the mandate relate to the rest of health care reform?

The mandate is very intertwined with the law’s ban on discrimination against people with pre-existing conditions  and some other reforms to the individual health insurance market. But the law does much more than just reform the individual insurance market. It expands Medicaid, reforms Medicare, regulates insurance companies’ profits, allows young adults to stay on their parents’ health insurance plans, etc. However, the Supreme Court has the power to strike down much of the rest of the law if they determine it is inextricably linked to the individual mandate. More on this in my next post.

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