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Reason Foundation... He Loves the Mandate, He Loves It Not.
The Obama administration’s individual mandate flip-flops.
By Peter Suderman
February 2, 2011
There’s an old game played by love-struck teenagers trying to figure
out what the object of their affection thinks of them. Take a flower
and pull the petals off one-by-one. For each petal, alternate between
saying “she loves me” and “she loves me not.” Whichever refrains
corresponds with the final petal supposedly reveals the truth.
Those attempting to make sense of President Barack Obama’s record on
the individual mandate—a provision in last year’s health care overhaul
that will require most Americans to either purchase health insurance or
pay a federal fine—might try a similar exercise. “He loves the mandate.
He loves it not.” But there’s no need to pull the final petal to find
out the truth; they’re both correct.
On the campaign trail, soon-to-be-President Barack Obama warned that an
individual mandate to purchase health insurance was an obviously
foolish idea. “If a mandate was the solution, we could try that to
solve homelessness by mandating everybody buy a house,” he quipped. He
ran TV ads attacking his Democratic primary opponent, Hillary Clinton,
for supporting a mandate, and even declared that in Massachusetts, the
only state that already had such a requirement on the books, the health
insurance mandate had already made some workers “worse off.”
That didn’t last long. By June 2009, less than six months after taking
office, Obama said he had concluded that a mandate was necessary. In
March 2010 he signed into law a massive health care overhaul with just
such a mandate. Since then, his administration has not only vigorously
defended the law in court, it has argued repeatedly that the mandate is
absolutely “essential” to ensuring that the legislation functions
properly.
It’s not the only instance in which the president has tried to have it
both ways on the mandate. In September, 2009, Obama was asked whether
he believed the individual mandate constituted a tax. His response was
unequivocal: “I absolutely reject that notion.” Worried that the public
would perceive the mandate as a tax anyway, the law was scrubbed of any
mention of the mandate being a tax before it was signed into law.
But in defending the law in court, his administration absolutely
accepted the notion that the president had once absolutely rejected. In
July, 2010, The New York Times reported that the White House had come
to believe that the idea that the mandate constituted a tax was “a
linchpin of their legal case in defense of the health care overhaul and
its individual mandate.”
The ensuing rhetorical backtracking was flagrant enough that when
responding to the White House’s motion to dismiss the case, Judge Roger
Vinson, the federal judge overseeing a multistate challenge to the
law’s constitutionality, scolded the administration in its arguments
about the mandate:
Congress should not be permitted to secure and cast politically
difficult votes on controversial legislation by deliberately calling
something one thing, after which the defenders of that legislation take
an “Alice-in-Wonderland” tack and argue in court that Congress really
meant something else entirely.
Of course, officially the administration argues that only the penalty
for non-purchase is a tax. But that doesn’t match up to the original
understanding of the mandate. When economist Mark Pauly first proposed
the mandate in 1991, the insurance premiums paid under the mandate were
considered to be taxes. As Pauly explained in an interview in The
Washington Post, “The way it was viewed by the Congressional Budget
Office in 1994 was, effectively, as a tax. You either paid the tax and
got insurance that way or went and got it another way.”
It’s not an unreasonable idea: There’s little functional difference
between the government collecting a tax and then disbursing the
revenues to insurers and the government forcing individuals to pay the
same funds directly to insurers.
But as HillaryCare backers discovered, that conception of the mandate
caused the official price tag of the law to skyrocket. In 1994, the CBO
scored all premiums paid as taxes, driving up the cost and contributing
to the proposal’s eventual failure.
Last year’s health care was carefully structured to avoid a similar
scoring problem. But again, the administration slipped up in court when
lawyer Ian Gershengorn described health insurance as a revenue-raising
“financing mechanism”—essentially buying into the original conception
of the mandate’s federally required premiums as a way for the
government to collect revenue to pay for a service, a practice
otherwise known as taxation.
Obama’s early instincts about the mandate were right: He argued that it
was unduly punitive, that it made those who paid the penalty worse off,
and—most importantly—that it failed to solve the real problems with the
American health care system. “I believe the problem is not that folks
are trying to avoid getting health care. The problem is they can’t
afford it,” he said. If only he’d listened to himself.
Peter Suderman is an associate editor at Reason magazine and a 2010
Robert Novak journalism fellow.
Read the story at Reason
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