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Monday, April 19, 2010

More on Barnett on Health Care Reform

Over at the VC, Randy has a post sorta-responding (in an apparent emulation of a senate tradition, he refuses to name any of his interlocutors except Orin) to my earlier posts criticizing his view that portions of the health care reform legislation are unconstitutional.  His new line of argument, as I read it, abandons the position that the "IRR" or "mandate" is unprecedented in the sense that the U.S. government has never done anything like it, and instead maintains that the thousands of similar statutes on the books are framed as subsidies rather than penalties, and therefore would be seen as distinguishable by many people.  He labels my argument that there is no difference between a $10 bribe to act and a $10 penalty on omitting to act "counter-intuitive," and suggests that judges would not see them as identical.  

Randy may well be correct about the inability of federal judges to add and subtract.  But surely that is not supposed to be a normative argument.  Yes, indeed, convincing my law & economics students that opportunity costs are real costs is difficult.  But I'm not expecting economists to renounce everything they've said about utility since John Stuart Mill -- all of which is founded on the basic proposition that turning down a $10 opportunity is no different than paying $10.  And I doubt that important issues of constitutional law should or (I hope) would turn on propositions that are appealing to the ignorant but untrue.

Some more clarifications below the jump.

First, I should clarify my own arguments.  If the IRR were written as a criminal statute, making it a felony or misdemeanor to omit to purchase health insurance, I might be more inclined to agree that it is meaningfully different than subsidies for the purchase of insurance.  The stigma of criminal sanction, the lasting societal taint it carries, and the threat of imprisonment or bodily harm all seem quantitatively different to me than a simple monetary incentive.  Randy exploits that intuition, I think, in repeatedly calling the IRR a "penalty," while eliding the fact that the only "penalty" is the same one faced by anyone who turns down a subsidy.         

Next, Randy argues that the fact that some unnamed commentators have turned to the taxing power implies we think that the Commerce Clause arguments are weak.  Maybe he's talking about other people, but in my case, I wrote about the taxing power for self-serving reasons: I thought I had something to add that other people hadn't yet said.  In my essay, I'm pretty clear that I also think the Commerce power is a perfectly adequate basis for enacting the IRR, and that I'm arguing in the alternative. 

But, since he brings up the subject of what each of us is saying or not saying, I will ask again his views about the necessary and proper clause.  As I argued when I started on this subject, and as the legislation itself states, the IRR is needed in order to make possible the ban on discrimination against people with preexisting conditions.  Does Randy also think that provision is beyond the Commerce power?  (That seems a difficult argument if his claim is a descriptive or predictive one, since the Court upheld federal regulation of insurance in the 1940's -- not to mention that any such claim would also threaten the Americans with Disabilities Act, which I very much doubt any court is planning to do).  I'm no expert on the necessary & proper clause, but my understanding is that the Court is incredibly deferential to Congress' views about what steps are "really calculated to effect any of the objects entrusted to the government," as McCulloch puts it.  Does he think the IRR somehow fails that test?

For me, this silence on the necessary and proper clause is revealing.   

Finally, Randy repeats his claim that the IRR controls not how one engages in economic activity, but whether one does so.  Again, so what -- every subsidy ever enacted does pretty much the same.  But the more basic fallacy here is the suggestion that a person who elects not to buy health insurance from a private provider hasn't chosen her insurance.  Of course she has: she's chosen to rely on Medicaid, bankruptcy, the tax deduction for uncompensated medical expenses, free care, and other charity.  If she gets sick, one or more of those will help her obtain care: that's insurance.  So the IRR simply dictates which form of insurance each person obtains, and thereby reducing free riding on the existence of these other strands of the social safety net. 

Posted by BDG on April 19, 2010 at 09:16 PM in Current Affairs | Permalink


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Aaron, I guess the draft buy-out example is supposed to be a reductio ad absurdum, but I don't see why it would be. Yes, of course it was a tax: like all taxes, it was a fee imposed on those who would otherwise take a free ride on the provision by others of a valuable public good (in that case, national defense). But note my reservations above about enforcement mechanisms: I would take seriously an argument that the taxing power enabled the Union government to tax those who failed to serve in the army, but did not enable Congress to jail those who dodged the draft.

By the way, contrary to your suggestion (or the suggestion of whoever you're quoting), the requirement to purchase insurance is not a flat fee. It varies depending on household income. That's significant, because the Constitution treats income taxes differently than other forms of taxation.

Posted by: BDG | Apr 22, 2010 10:28:05 AM

What do you think of his argument: "Imagine, for example, if the first draft during the civil war was sold as a tax provision. Why? Because people could either serve in the draft or they could pay a flat fee to get out of the draft. Which is essentially how the health insurance mandate is structured in the bill"

Posted by: aaron | Apr 21, 2010 8:08:21 PM

Perhaps Barnett is getting lost in his restoration project as it goes up in smoke.

Posted by: Shag from Brookline | Apr 20, 2010 10:49:50 AM

I second the first comment -- it is a basic fallacy and pretty annoying as much as all this talk about being "forced" to buy insurance. It is in fact so false that it is offensive as a matter of sound reasoning.

Along with repeatedly calling something that basically is the result of the Senate "Obamacare," I find all of this hard to take seriously. It is not a matter of simply disagreeing. I can disagree with any number of things. But, when the arguments are this weak, it's different.

Posted by: Joe | Apr 20, 2010 8:44:39 AM

"Of course she has: she's chosen to rely on Medicaid, bankruptcy, the tax deduction for uncompensated medical expenses, free care, and other charity. "

Importantly, now that we have pre-existing condition coverage, they've also chosen to rely on the fact that they can buy insurance when they need it. This is why the distinction made by opponents that this is a simple regulation of 'inactivity' vs 'activity' is uncompelling. It's not simply 'inactivity' to decide today that I will buy insurance at some later time, when I will know it will have a positive return.

Posted by: gct | Apr 19, 2010 10:52:07 PM

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