As we reach today's one-year anniversary of the passage of the Patient Protection and Affordable Care Act, we also draw near another infamous date: Jan. 1, 2014, which is when all Americans will be forced to buy federally mandated health insurance. The law's individual mandate was intended to compel all Americans to enroll in a health plan to lower the nation's uninsured rate. But the law not only fails to accomplish its main goal, it infringes upon Americans' basic constitutional rights.
The health law assesses a fine on Americans who do not purchase a health-insurance plan that meets the federal definition of "minimum essential benefits." The law claims that health care is inextricably connected with interstate commerce, thus allowing a constitutional power to require that citizens purchase coverage or face a tax.
The penalty for failing to comply is the greater amount from a flat penalty or income percentage (which is phased in, starting at 1 percent and going up to 2.5 percent by 2016). The penalty is phased in over a three-year period, with the fixed penalty set at $95 in 2014, $325 in 2015 and $695 in 2016. The law also amends the Internal Revenue Code, providing mandate exemptions for incarcerated criminals, illegal aliens and foreign nationals.
This mandate is unprecedented. It is considered to be the law's most controversial provision, setting off a record number of state lawsuits and state legislative countermeasures. Congress also has usurped the states' traditional authority in regulating health insurance. Last month, Ohio joined Florida and 25 other states in filing a suit against the law, challenging the individual mandate's constitutionality.
On Jan. 31, the Florida Federal District Court upheld the states' challenge and struck down the mandate and the law itself as unconstitutional. Ohio Attorney General Mike DeWine made the following statement when joining the lawsuit last month:
"Our Constitution provides for a federal government of significant, but defined and limited powers. By ignoring the constitutional limits on federal power, the [health care] law tramples on the rights of Ohio's citizens. We need to defend the checks and balances that our Constitution creates through its divisions of power and protect the people of Ohio from this huge federal overreach."
Even with the mandate, the Congressional Budget Office estimates that over the next decade, 23 million Americans will remain uninsured. Faced with paying a less expensive penalty or extraordinarily high insurance premium, many Americans will choose to pay the tax and sign up for insurance when they get sick.
This new mandate also creates an enforcement nightmare. As a presidential candidate, Barack Obama opposed the individual mandate for health insurance in part because he considered it unenforceable. IRS Deputy Commissioner for Services and Enforcement Steven Miller indicated that the IRS does not envision a mass audit of Americans, but the agency would withhold tax refunds if taxpayers cannot prove they own federally approved insurance coverage.
Supporters of the mandate claim it will eradicate the "free rider" issue. Under current law, federally funded hospitals must treat and stabilize anyone who enters an emergency room. One side effect of this law has been the increase of "free riders," or people who use the hospital ER for their health needs and skip out on the bill. These uncompensated-care costs are shifted onto taxpayers, who end up paying them through higher taxes and insurance premiums.
While no one expects Congress to restrict hospital ER access, the health-care law will make matters worse with its massive expansion of Medicaid - which is a major contributor to the rising ER overcrowding. The problems with the uninsured, including the "free rider" issue, are best addressed through a judicious combination of positive economic incentives.
Congress should create tax credits and vouchers to help Americans buy private insurance, as well as innovative mechanisms to better facilitate coverage (such as automatic enrollment plans with a transparent right to refuse coverage). Transparency in personal choice and consequences - such as an upfront signed acknowledgement of financial liability for refusing coverage - also could have a positive impact on the nation's uninsured rate. These policies would encourage greater coverage adoption and individual responsibility while not compromising Americans' fundamental freedoms.
Robert E. Moffit, Ph.D, is a Senior Fellow in the Center for Policy Innovation at The Heritage Foundation.
First appeared in The Colombus Dispatch