Congress, Repeal the Individual Mandate. It's Only Fair.

Imagine the outcry if Congress compelled all individuals to purchase a new automobile. Moreover, let’s say Congress didn’t just command Americans to buy cars, but in Henry Ford-like fashion told us everybody must buy one of a very small number of identical cars, the features of which would be dictated by the government. What if Congress told us exactly what food, clothing, housing, legal or dental services we were required to procure? That is exactly what Congressional Democrats did for health insurance when they enacted the Affordable Care Act (ACA) and its mandate that all individuals purchase one of but a few health plans these legislators deemed permissible.

The individual mandate imposes a financial sanction on American citizens who do not purchase government-sanctioned health insurance. Note the use of the term “government-sanctioned.” The ACA’s punishment is not only imposed on those who fail to obtain any health insurance, which would be odious in its own right, but also on Americans who choose to buy insurance that isn’t to the liking of the Democrats who enacted the mandate into law.

In National Federation of Independent Business v. Sebelius, the United States Supreme Court upheld the constitutionality of the individual mandate as within Congress’s power to tax. Despite Democrats’ insistence that the mandate’s financial sanctions were intended as a “penalty” and not a tax, Chief Justice John Roberts on behalf of the court wrote, “The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.”

Whether the fine for not buying government blessed health insurance is called a penalty or a tax, the individual mandate inflicts a far more pernicious indirect tax on those who acquire health insurance in the individual market. Yes, the mandate is an affront to the freedom to make our own health care decisions. That is likely the primary reason it is so despised.

However, the most monetarily venomous effect of the individual mandate tax is to coerce millions of Americans into buying overpriced health plans that cover services they neither need nor want. It is these individuals on whom the costs of care for the chronically and seriously ill have been disproportionately saddled.

The individual mandate unjustly targets its financial pain on those who can least afford it, the self-employed or workers between jobs. These Americans are already penalized relative to those with employer-sponsored insurance by having to pay for their health care with after-tax, rather than pre-tax, dollars. It is the height of unfairness to slam them with another overwhelming liability that they themselves have not incurred and cannot afford.

Rather than pawning off a societal obligation on these unfortunate souls, the honest, transparent and ethical course is for everybody to pay for the increased utilization and health costs of those suffering from chronic diseases. If we believe that each citizen is entitled to such a broad set of benefits, all should bear the expense, not just buyers of insurance in the individual market.

As usual, the Chicken Littles claim the skies will fall on the individual health insurance market if the mandate is abolished. This belies reality. According to the non-partisan Congressional Budget Office (CBO), individual insurance markets “would continue to be stable in almost all areas of the country throughout the coming decade.” 

Although the CBO predicts some premium increases, for many purchasers these increases would be offset by federal subsidies. Most important, millions could avoid them entirely by choosing more reasonably priced policies that better meet their needs.

Senators Lamar Alexander and Patty Murray have proposed reinstating insurer subsidies known as “cost sharing reduction payments” (CSRs) that are intended to compensate for ACA required discounts for some beneficiaries. President Trump last month correctly stopped payment of the CSRs, which had not been appropriated by Congress and were therefore illegal. Coupling the Alexander-Murray bill to repeal of the individual mandate should allay concerns about possible destabilization from the mandate’s abrogation, while substantially increasing the odds the Alexander-Murray bill will become law.

Another oddity engendered by the convolutions of ObamaCare is that repeal of the mandate is predicted to return $300 billion to $400 billion to the U.S. Treasury over the next decade. This itself supports the case for repeal. However, a much more compelling argument for removing the individual mandate is its fundamental unfairness, a problem inherent to this dictate that cannot be repaired.

Dr. Roger Klein is a member of the Regulatory Transparency Project on healthcare. He is a former adviser to the FDA and HHS. Klein graduated from Yale Law School and completed his post-graduate medical training at Yale Medical School.