President Obama, who opposed a health insurance mandate during
the campaign and has vowed not to support a middle-class tax
hike, has come out in favor of a mandate that would raise taxes
on those in the middle class who do are uninsured.
During an exchange with George Stephanopoulos on Sunday,
President Obama tried to deny that a mandate was the same as a
tax increase, even when confronted with a dictionary definition:
STEPHANOPOULOS: I -- I don't think I'm making it up. Merriam
Webster's Dictionary: Tax -- 'a charge, usually of money,
imposed by authority on persons or property for public
purposes.'
OBAMA: George, the fact that you looked up Merriam's
Dictionary, the definition of tax increase, indicates to me
that you're stretching a little bit right now. Otherwise, you
wouldn't have gone to the dictionary to check on the
definition. I mean what...
STEPHANOPOULOS: Well, no, but...
OBAMA: ...what you're saying is...
STEPHANOPOULOS: I wanted to check for myself. But your critics
say it is a tax increase.
OBAMA: My critics say everything is a tax increase. My critics
say that I'm taking over every sector of the economy. You know
that.
Look, we can have a legitimate debate about whether or not
we're going to have an individual mandate or not, but...
STEPHANOPOULOS: But you reject that it's a tax increase?
OBAMA: I absolutely reject that notion.
Yet the idea of a mandate as a tax does not merely come from
Stephanopoulos, or critics, or Merriam Webster, but from language
in the current draft of the Baucus bill itself. In fact, on page
29, the Baucus proposal reads,
'The consequence for not maintaining insurance would be an excise
tax....The excise tax would be assessed through the tax code and
applied as an additional amount of Federal tax owed.'
Obama argues at another part of the interview that, 'right now
everybody in America, just about, has to get auto insurance.
Nobody considers that a tax increase.' But there are many reasons
why this is a flawed analogy. Most importantly, car insurance
mandates, which apply at the state level, only apply to people
who drive a car on public roads. If I don't drive, I don't have
to purchase car insurance. By contrast, the health insurance
mandate would apply, with few exceptions, to everybody in the
United States. Also, people aren't forced to report car insurance
in their federal tax returns, and fines are not assessed through
the federal tax code. And if car insurance mandates are the
model, then they certainly aren't effective, with an
estimated 13.8 percent of drivers going without coverage in
2007, according to the Insurance Research Council.
Obama also argued:
You and I are both paying $900, on average -- our families --
in higher premiums because of uncompensated care. Now what I've
said is that if you can't afford health insurance, you
certainly shouldn't be punished for that. That's just piling
on.
If, on the other hand, we're giving tax credits, we've set up
an exchange, you are now part of a big pool, we've driven down
the costs, we've done everything we can and you actually can
afford health insurance, but you've just decided, you know
what, I want to take my chances. And then you get hit by a bus
and you and I have to pay for the emergency room care,
that's...
So, Obama is saying that nobody who can't afford health insurance
will be forced to buy it, but he has an odd definition of
'affordable.' Under the Baucus plan, individuals would face a tax
of at least $750 if they do not purchase health coverage. And
while the proposal would provide subsidies to lower-income
Americans, those subsidies would stop at 300 percent of the
federal poverty level. What that means is that a family of four
with a household income above $66,150 would face a tax of $3,800
if it does not obtain health insurance, while an individual with
income above $32,490 would face a tax of $950. While the proposal
would in fact waive the requirement for individuals who can prove
they can't afford a minimal health insurance policy as defined by
the government, to qualify for the exemption, premiums would have
to exceed 10 percent of adjusted gross income -- or somewhere in
the neighborhood of $3,000 for somebody with income of $32,490.
Then there's this larger idea of uncompensated care. While it is
true that some people end up showing up in emergency rooms
without paying and that imposes costs on others, there's two
things that Obama isn't taking into account. First, just because
you mandate coverage it doesn't mean you elimate the
uncompensated care. Second, if you have to spend hundreds of
billions of dollars on subsidies enabling people to purchase
insurance, then that costs far more than whatever would be saved
by reducing uncompensated care.
In a prior
article for our magazine, I looked at the Massachusetts
example -- the only state with a health insurance mandate:
In 2006, Massachusetts enacted a landmark health care reform
that increased coverage by expanding Medicaid eligibility and
providing subsidies for citizens to purchase coverage on a
state-run insurance exchange. As more people obtained insurance
to comply with a mandate, uncompensated care declined by 38
percent between 2006 and 2009 (projected), saving the state
$246 million. However, the Commonwealth Care subsidy program
created as a result of the 2006 reform is projected to cost
$820 million in 2009 alone, and during the same time period,
the state’s expanded Medicaid program saw its price tag swell
by $1.1 billion. So in other words, while costs declined by a
quarter of a billion dollars in one area, they increased by
nearly $2 billion in other areas.
The other thing to keep in mind is that while Obama likes to
describe those who are uninsured by choice as freeloaders,
there's a flip side to this. Many of those who are currently
uninsured simply have very low health care costs, which they are
willing to pay out of pocket when they get sick. The reason why
Obama supports a mandate is that he wants to be able to force
insurers to cover those with preexisting conditions, and the only
way to do that is to bring uninsured healthy people into the
system. So really, this isn't about eliminating freeloaders, it's
about forcing healthy people to pay for more health care than
they need to so that they can make premiums more affordable for
the sick.
I think candidate Obama had this one right when he talked about
mandates last year. 'In some cases, there are people who are
paying fines and still can't afford it, so now they're worse off
than they were,” candidate Obama
said during a February 2008 debate, referring to conditions
under the Massachusetts mandate. 'They don't have health
insurance and they're paying a fine.'
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