Can We All Just Admit This?


Jason Kuznicki

Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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193 Responses

  1. Avatar E.C. Gach says:

    I agree.

    It’s simple. Does the Constitution say the government can do X? No? Then by default it cannot do X.Report

    • Avatar Glyph says:

      Agree in full, gentlemen. But I fear that makes us fuddy-duddies.

      Maybe I am just a simpleton, but people on the other side of the issue like to talk a lot about the social compact/contract; but what else *is* the Constitution, but a contract laying out terms of the govt’s obligations and limitations? Isn’t that the point? If it isn’t in the contract, needn’t the contract’s terms be updated, if you want it done?Report

    • Avatar Burt Likko says:

      Does the Constitution say the government can do X? No? Then by default it cannot do X.

      But see also.Report

  2. Avatar Jason Kuznicki says:

    Thinking a bit further, it would seem that (at least in commonsense reasoning) the tax/penalty distinction would have to rest on an underlying distinction of intent — was it the intent of Congress to raise revenue? Or to prevent an unwanted (in)activity?

    Intent is a tricky thing, but not by any means off-limits to the law. It is also the reason the lower courts rejected the “mandate is a tax” claim: If the mandate worked as intended, virtually no one would pay the tax, and it would collect a trivial amount of revenue.Report

    • Avatar E.C. Gach says:

      When it comes to taxes, I agree that intent is triky but not off-limits, but since it is open to analytic sleights of hand, it would be nice to more clearly codify what the government can and cannot tax (income vs. property, buying (sales tax) vs. not buying (individual mandate).Report

      • Avatar Jason Kuznicki says:

        I would prefer to see some kind of generality requirement for taxation.

        Arguably we already have one, although it’s not usually interpreted that way. And I know that implementing one would mean a major overhaul of our tax system. Still, it would be a useful limit on government power, particularly when, as now, it can apparently tax the failure to act in some preferred way.Report

    • Avatar Bad-ass Motherfisher says:

      Sorry, don’t see the distinction.

      Does EITC raise revenue? Clearly not. Is it part of taxing authority. I’d like to see someone argue that it’s not.Report

      • Avatar Jason Kuznicki says:

        Does EITC raise revenue?

        Does failure to qualify raise revenue? Of course it does.

        I suppose one way to draw the lines that’s defensible while not perfectly aligned with my policy preferences might run as follows:

        From a general tax, a specific carve-out or exemption might be permitted, even to achieve a given policy goal.

        Specific one-off taxes that can be substantially avoided by complying with the policy goal, should not really be called taxes at all. They are penalties.

        Fully refundable tax credits aren’t taxes at all. They are welfare with a complicated qualifying mechanism.Report

    • Avatar Chris says:

      If I’m not mistaken, it was initially discussed as a tax (and revenue is a part of the explicit intent), but it was changed to a penalty for political reasons. Basically, no one wants to be the one who creates a new tax.Report

      • Avatar Jason Kuznicki says:

        I think you’re correct. This case has exposed the ways in which these two forms of government action are not as clearly divided as anyone would probably like.Report

    • To an extent, I am willing to agree that it’s legal chicanery, but I cannot agree that it’s silly for the reasons stated below.

      Intent is a tricky thing, but not by any means off-limits to the law. It is also the reason the lower courts rejected the “mandate is a tax” claim: If the mandate worked as intended, virtually no one would pay the tax, and it would collect a trivial amount of revenue.

      In the case of a tax provision, the intent can be both to raise revenue and to coerce behavior, and it’s only if it’s wholly extraneous to any tax need that it becomes an unconstitutional penalty (this is the rule in the Kahriger case I cited in my 2009 post).

      Here, the relation to the tax need is very clear and the actual coercive effects of the mandate fairly small – the costs to the system of being uninsured (and thus the free-rider benefits) on the whole far exceed the purported “penalty” for being uninsured. The mandate’s actual effect then is just to alleviate these costs, not to prohibit the behavior. In effect, it’s constitutional because it won’t actually function to prohibit being uninsured, nor does it even seriously attempt to do so. So if you just look at the effects, it’s clearly constitutional under longstanding precedent, and if it had just been called a tax from the beginning, we don’t even get to the point where this is even controversial.

      The problem arises from the fact that the legislation itself calls the mandate a “penalty,” and “penalties” are not uses of the taxation power. The reason no lower court gave this argument the time of day is the seemingly common-sense point that if Congress called it a penalty, then it’s a penalty and thus unconstitutional, regardless of whether it meets the judiciary-created test for a penalty.

      And this is why I say that Roberts’ argument here is somewhat sua sponte – even the government’s argument on this point referred to the mandate as a “tax penalty.” That it was a “penalty” was in effect still being conceded by the government.

      But here is where I think Roberts’ turn comes into play. That statutes are to be construed in such a way as to find them Constitutional if such a construction is at all possible is a fairly well-established rule of interpretation. In other words, it’s a well-established rule, and indeed a fairly logical one, that as long as there exists some way of construing the statute that would render it constitutional and is not “plainly contrary to Congress’ intent,” then it’s constitutional, but only insofar as the statute is construed in that manner.

      This is where Roberts’ turn is especially brilliant: he relies on a pre-West Coast Hotel v. Parrish case, US v. Constantine for the proposition that whether something is a “tax” or a “penalty” for taxing powers purposes is not a function of the name applied to the payment in the statute, in effect reviving and reaffirming Constantine, which held that Congress could not get around the penalty/tax distinction just by calling something a “tax,” and that instead whether something is a “tax” or a “penalty” is entirely a matter of how the provision actually functions. The implication here is that, for purposes of taxing power cases, the term “penalty” is a judicially created and defined term of art, and not a term that Congress has any power to define, one way or another (he’s right about this, by the way, and in most conceivable cases, this will work to libertarians’ benefit). What matters under the taxing power, according to Roberts, is what the law actually does, not what it calls itself, and this cuts both ways.

      But even though it may cut both ways, in the overwhelming majority of cases, this is going to cut against the “tax” at issue, since Congress’ use of the word “penalty” in a taxing power case is almost uniquely sloppy and idiotic. In the overwhelming majority of cases – the cases that aren’t so high profile, but that ultimately tend to matter the most – Congress tries, and will continue to try, to phrase “penalties” as “taxes.” By relying on Constantine, Roberts is telling them that he’s ready to look through their bullshit again, and next time, they won’t be so lucky.Report

      • Avatar Stillwater says:

        That’s an excellent summary Mark. Thanks for taking the time to think about and write it.

        I’m especially impressed with the way you diffuse the potential sua sponte charge being leveled at Roberts (I’ve been troubled by something like that, tho I needed to look up what that term meant). At least it grounds his arguments in legal precedent and justifies the acrobatics he goes thru to establish why he’s voting yea on sustaining the ACA (after completely rejecting the government’s primary argument).

        I also think that Jason K’s claim that the intent of Congress is important wrt establishing the causal and conceptual reasons for writing “penalty” instead of “tax”. Your response seems to extend that reasoning a bit to highlight why Roberts was justified, given the intentions of Congress, in reading past the actual language of that provision (a “penalty) to an analysis of the mechanisms by which it functions (it’s a tax).Report

      • Avatar Jason Kuznicki says:

        In the case of a tax provision, the intent can be both to raise revenue and to coerce behavior, and it’s only if it’s wholly extraneous to any tax need that it becomes an unconstitutional penalty (this is the rule in the Kahriger case I cited in my 2009 post).

        This may be true, but it raises a very serious difficulty. Many, many taxes are currently extraneous to the purpose raising revenue. The money could always be borrowed.

        . In effect, it’s constitutional because it won’t actually function to prohibit being uninsured, nor does it even seriously attempt to do so.

        If the facts were eventually to prove you wrong, would you change your mind on the constitutionality of the provision? If so, at what percentage level of compliance?

        As to the rest of the analysis, I hope it is correct. Time will tell.Report

        • Avatar Kimmi says:

          At the level where we lose the Mennonites. And the Amish. (I’ll count 75% of them leaving America as “lose” all right?)Report

        • “The money could always be borrowed. ”

          Wouldn’t the borrowed money have to be paid back, presumably with taxes?

          “‘In effect, it’s constitutional because it won’t actually function to prohibit being uninsured, nor does it even seriously attempt to do so.’

          “If the facts were eventually to prove you wrong, would you change your mind on the constitutionality of the provision? If so, at what percentage level of compliance?”

          If I’m not mistaken, part of what Mark was referring to was Roberts’s assertion–that he backed up with some sort of Congressional (or perhaps GAO) estimate–that the penalty/tax would probably never be higher than the project premium for a qualifying insurance plan. I presume, in my own non-lawerly way, that if the penalty/tax were, say, 5 times the projected price of any premium, it would then be more a penalty than a tax. Mark, of course, (or someone else) can correct me if I’m wrong.Report

        • It’s not so much about level of compliance – there are, after all, plenty of things that are wholly permitted that virtually no one actually does (or, in the alternative, things that aren’t required, but virtually everyone does), and there are plenty of things that are quite clearly prohibited that virtually everyone does (think of speeding here).

          But there is a level when a fee crosses the line from merely incentivizing conduct to outright punishing it or seeking to punish it, and having little other purpose.

          At what level would I deem a mandate punitive? Easy: if it ever were to approach or exceed average baseline insurance premiums.Report

    • Avatar Will Truman says:

      Intent is a tricky thing, but not by any means off-limits to the law. It is also the reason the lower courts rejected the “mandate is a tax” claim: If the mandate worked as intended, virtually no one would pay the tax, and it would collect a trivial amount of revenue.

      The same is true of cigarette taxes, but we still think of them as taxes.Report

    • Avatar Murali says:

      Pigouvian taxes (carbon taxes etc) are not exactly aimed at raising revenue.Report

      • Avatar Mike Schilling says:

        They’re an attempt to model externalities. In the case of the carbon tax, that’s the environmental damage done by greenhouse gasses. With the mandate, it’s the economic harm done by free-riding.Report

        • Avatar Will Truman says:

          Or simply to discourage undesirable behavior. Tobacco actually saves the federal government money, but it’s taxed anyway.Report

          • Avatar Mike Schilling says:

            Sin taxes are a different grammar entirely.Report

            • Avatar BlaiseP says:

              Doesn’t the Pigouvian adjective decline using both conjugations? The “sin” in sin tax represents some negative externality.

              If this analysis is correct (pdf) the cost of obtaining health insurance is almost entirely tax deductible. Yes, you or your employer will have to pay a fine/tax, call it what you will. PPACA simply pushes you into the pool, as owning a house pushes you into many a pool you may not want to swim in, such as oldsters paying for schools with property taxes.Report

              • Avatar Mike Schilling says:

                The “sin” in sin tax represents some negative externality.

                As Will points out, smokers save us money by dying earlier of less expensive diseases. To me, cigarette taxes are popular because smokers are the Other, so we don’t mind taxing them.Report

              • Avatar BlaiseP says:

                That’s reasonable. Sin taxes (and gas taxes) are popular because politicians can get them passed with less trouble than other sorts of taxes. But around here, the cig smokers rely on the truckers they know to bring back a coupla cartons from Georgia.Report

              • Avatar Kolohe says:

                Um, gas taxes are about as popular as Brian Johnson was in Shermer High School.Report

              • Avatar Murali says:

                Not all sins in Sin taxes are externalities. A negative externality is an effect that at least one of the parties doesnt like and doesn’t take into account when agreeing to a particular transaction. This says nothing about whether he ought to like it or not or whether he ought to take it into account or not. Txes on alcohol don’t tax the production of negative externatlities because the parties to the transaction do not necesssarily find a situation where there are many such alcohol transactions to be particularly problematic.

                By contrast, pollution is an externality because people presumably want to breath clean air, but do not take into account the pollutants released by the marginal industrial activity.Report

              • Avatar BlaiseP says:

                Without getting atop my little soapbox and ranting about the Evils of Demon Rum, (Release the Kraken!), alcohol produces a host of negative externalities, to the point where Native American tribal reservations still forbid its sale.

                Perhaps I’m misunderstanding you. My problem with Sin Taxes resolve to the the fact that such taxes never seem to remediate these sins. When Illinois established a state lottery, we were told it would all go to Education in an attempt to mollify its critics. Guess how much of those revenues managed to make their way into the actual education budget — that’s right, almost none.

                When a gambling boat went into Elgin, the town doled out some of the tax revenue to the other towns up and down the Fox River, again a mollification effort. I was bicycling back into town, stopped for some Gatorade, just south of the casino. Heard a gunshot. The police arrived, then an ambulance, none of them with their lights or sirens going. Some guy had lost everything in the casino, went out to his car in the parking lot and put a bullet through his head. Didn’t even make the papers. These negative externalities to Sinning and Taxing often get covered up, my friend. Pecunia non olet, but lots of tax money is made in very stinky places.Report

              • Avatar Murali says:

                My point was that while Sin taxes are taxes on things we disapprove of (i.e. sins) the negative externality is something the party to the transaction disapproves of (but failed to take into account). While the two can coincide, they don’t necessarily do so.

                The point I was rather inelegantly trying to make was that since people who are sinning in fact don’t (sufficiently*) care that their behaviour is immoral and socially destructive, it is not really a negative externality or need not be so. (i.e. I may be nitpicking)Report

              • Avatar BlaiseP says:

                The taxers are looking for the line of least political resistance. Sin taxes only seem to impede immorality. They don’t, of course: they only serve to extract cash from the sinner’s pocket. He goes right on sinning, if somewhat less cheerfully.Report

              • Avatar Murali says:

                But that would only be for people who are sufficiently addicted that demand is inelastic to changes in price. Presumably a mark-up in retail price would cause some people at the margins to decide that the new price was not worth the enjoyment.Report

              • Avatar Rod says:

                Isn’t an externality a cost or effect that is borne by otherwise uninvolved third party(ies)?

                Example: Fred goes to Bob’s Bar and Grille and has a few drinks. Later gets in his car and crashes into Sally, killing her.

                What you seem to be talking about is more like Information Asymmetry or something.Report

              • Avatar BlaiseP says:

                @Murali: yeah, I did stipulate to that Less Cheerfully business. But curiously, it’s not working out that way. Booze and cigs, while addictive, are still legal. The big argument for legalisation of other drugs is always “But we could tax the hell out of them, look at the revenue we’re losing.”

                Legalising a product with some third-party negative externality is always troublesome. Meth heads aren’t going to hold down jobs. See how long an employer will put up with an intoxicated employee: exactly as long as he’ll put up with an inebriated one.Report

              • Avatar Murali says:

                Isn’t an externality a cost or effect that is borne by otherwise uninvolved third party(ies)?

                Yes, but incomplete. A cost is basically a “bad thing” so to speak, and involves a kind of value judgement. According to who must it be that the effect counts as a “bad thing”. Sin taxes are imposed when the effect iseither subjectively counted as bad by the third party, or is deemed by society to be “objectively” bad. My point was that something can only count as a negative externality if the effect would be counted as bad if it happened to either of the first two involved parties.

                People often use the word negative externality too broadly.Report

              • Avatar Rod says:

                Yes, but I didn’t say negative externality, only externality. Such a beast could be positive as well.

                Returning to your post I replied to, I don’t see how the viewpoints of the primary participants matter much one way or the other. The point of an externality is that it is an effect external to the primary participants. So, for instance, Exxon sells you gasoline that you burn in your car, but I get to breathe your exhaust fumes nonetheless. I have no say in the matter, don’t participate in any way in the transaction, and receive no benefit (which would count as a positive externality if I did).

                Perhaps this is getting bolloxed up by linking it to sin taxes, which may be officially predicated on negative externalities but are really an expression of social opprobrium as well as a handy, politically correct, source of revenue.Report

              • Avatar Rod says:

                My point was that something can only count as a negative externality if the effect would be counted as bad if it happened to either of the first two involved parties.

                Let me emphasize that this is just plain wrong in my opinion. The effect is bad if it’s counted as bad by the person affected. I see no reason to give a shit what the primary participants think.

                What you seem to be saying is if Bob manufactures a product–incidentally causing pollution–and sells it to Jim, then as long as neither Bob nor Jim object to the pollution it doesn’t count as a negative externality? So the opinion of Mary living downwind of Bob’s plant doesn’t count?Report

              • Avatar Stillwater says:

                I see no reason to give a shit what the primary participants think.

                I think that’s why it’s called an “externality,” no?Report

              • Avatar Stillwater says:

                Rather than just let a trivial semantic point be my only contribution to this thread, I’d add to some of the distinctions above by mentioning that tobacco use causes to readily apparent externalities. One is side stream smoke, which may cause harms to third parties that go beyond mere nuisance. The other is the added cost of cancer treatments born by private insurance plans or public program like Medicare. Private insurance increased premiums for tobacco users. So far as I know, tho, there is no way to cover the added costs from tobacco use in public services other than sin taxes.

                (All or part of this may be completely wrong.)Report

              • Avatar Tom Van Dyke says:

                Since oldsters past their taxpaying days are a liability not an asset to the gov’t, wouldn’t it be best to let them smoke themselves to death ASAP?

                [Paying cig tax on their way out!]Report

              • Avatar Stillwater says:

                A new EBT program? Euthanize By Tobacco?

                I dunno. I don’t think even Big Gummint Barry would sign off on something like that. But he might sign some legislation taxing people who didn’t engage in that practice…Report

              • Avatar Murali says:

                What you seem to be saying is if Bob manufactures a product–incidentally causing pollution–and sells it to Jim, then as long as neither Bob nor Jim object to the pollution it doesn’t count as a negative externality? So the opinion of Mary living downwind of Bob’s plant doesn’t count?

                Would Bob and Jim object if the pollution levels got much higher? I’m assming no. Then in this case pollution isn’t an externality.

                Mary’s opinion could only count as a matter of justice or morality. Not as a matter of whether the production of pollution gets to count as a market failure.

                Consider an alternate case: Jim and Bob decide to get hitched. Mary, their neighbour, is a social conservative whose utility function takes a massive hit when Jim and Bob get married. Does Jim and Bob’s marriage therefore produce a negative externality for Mary? (In this case, a neighbourhood with a gay couple being the putative negative externality in question)

                Let’s go bace classic case of negative externalities. Jim sells bob an item which releases pollution into the air. Because the pollution spreads out, they themselves don’t suffer for it. But over many such transactions, the pollution gets so thick that Jim and Bob’s subjective utilities take a hit.

                Externalities are called externalities not because the effect is on an external party, but because the cost is external to the otherwise rational cost-benefit calculation that determines whether a particular transaction goes forward. But whose costs and benefits determine the rationality of the transaction? The transacting parties’ costs and benefits. Externalities thus pose a well recognised exception to the pareto efficiency of the outcome of a competitive market transaction.Report

              • Avatar Rod says:

                My bad, Murali. I didn’t realize you were using a private definition instead of the public definition used by economists. Here’s one example I found here:

                Externalities are third party effects arising from production and consumption of goods and services for which no appropriate compensation is paid. Externalities cause market failure if the price mechanism does not take account of the social costs and benefits of production and consumption.

                Google gave me a bunch of sites defining externalities, both positive and negative, but they all say pretty much the same thing and none of them define it the way you do. I can only presume your private definition has conferred some rhetorical advantage to you in the past when arguing with “statists.”Report

              • Avatar Brandon Berg says:

                No, an externality is an effect on an otherwise uninvolved third party. See, for example, the first sentence of the Wikipedia article, or page 204 of Mankiw’s Principles of Economics (you can use Amazon’s Search Inside feature):

                An externality arises when a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives any compensation for that effect….In the presence of externalities, society’s interest in a market outcome extends beyond the well-being of buyers and sellers who participate in the market to include the well-being of bystanders who are affected indirectly.

                Gay marriage does indeed have negative psychic externalities on certain individuals, as do churches for certain other individuals, but we don’t generally recognize a right to freedom from such externalities.Report

              • Avatar Brandon Berg says:

                The “No” in my comment above is in reponse to Murali, not to Rod, who is correct. Maybe “externality” is used differently in Singapore?Report

              • Avatar BlaiseP says:

                So Jim and Bob don’t care if Bob’s Pollutomatic offends Mary. Their opinions are entirely irrelevant. It’s an externality because Mary would rather not breathe the Pollutomatic output and neither would anyone else. You’ve got it exactly backward: Jim and Bob aren’t morally offended, though in truth they wish the Pollutomatic didn’t pollute and Bob will now have to hire an external PR firm to put up adverts with smiling girls and boys holding shiny Pollutomatics and a high-priced lobbying firm to ensure Congress doesn’t crack down on this device.

                I wish we could confine terms like Pareto Efficiency and Negative Externality to actual gains and losses in economic terms. But let’s just soldier on for a moment with this specious misapplication of economics.

                As for Jim and Bob getting married, how has Mary’s utility function varied in the slightest? Perhaps she had a secret crush on Bob, in which case we might be able to say such a thing, but in point of fact, here in the USA, the best values in the real estate market are to be found where gay couples have done renovations. I have seen this effect in three cities now, two neighbourhoods in Chicago (Halsted at Lake Boy’s Town and Clark at Diversity Boy’s Town before then) and Central West End in St Louis. Mary’s quite glad to see gays move into her neighborhood if it drives up the price of her home.

                But let’s say she didn’t approve, especially if her Precious Tiffany wanted to play with Jim and Bob’s child Marilyn. Trust me, there’s nothing Mary can do. There’s no cost involved, therefore no utility function. She might forbid Precious Tiffany from playing with Marilyn in which case she’s still cost-neutral, there’s no externality unless we’re talking about her bigotry affecting Tiffany and Marilyn.

                There’s no Pareto Efficiency to measure. The Pareto frontier has advanced. Nobody lost anything. In the case of Mary, unless she’s still holding a torch for that cute Bob, we’re talking about how Jim and Bob have driven up house prices and now occupy the old Gibbon house which has stood vacant since it was foreclosed on in 2008.Report

              • Avatar Murali says:

                Alright guys, this is me officially eating crow. I was wrong.Report

              • Avatar Mike Schilling says:

                One could argue that drunk driving (and other drunken behavior) are an externality not taken into account by buyer or seller.Report

              • Avatar Murali says:

                Drunk driving can be separated from drunkenness. But I agree. I forgot about stupid things people do when they are drunk and then regret once they are sober.Report

              • Avatar BlaiseP says:

                … but are taken into account with Dram Shop Insurance.Report

  3. Avatar b-psycho says:

    Clearly. Either way it’s “do this or we penalize you”.

    Oh yeah…I haven’t read the full opinion yet, but based on what the “reform” law actually does I catch a whiff of Kelo there. Obviously not saying it’s cited, but that in similar fashion it equates taking property for the benefit of a “private” 3rd party as a “public good”.Report

  4. Avatar Tod Kelly says:

    I am not sure that a demand to “incur this expense or we penalize you” is a “tax.”

    The closest financial model to the Obamacare model of HCR I can think of is the workers compensation system. Is a workers compensation premium a “tax?” You are required to have it as an employer in all but one state. If it turns out you don’t have it you are retroactively charged exorbitant rates by your insurance commissioner; if you are unable to have the voluntary insurance market provide you with coverage the state provides a pool you can buy into. All of this absolutely makes it a cost that is forced upon you by the government, but is it a tax? I tend to think not; and in fact I believe that the way your CPA treats the premium payment has different tax implications than the taxes you pay. (It is also my understanding that how you treat premium payments for Obamacare will not be treated the same way as, say, your state tax is treated by ether your state or fed IRS.)

    However, if we are going to agree that it is a tax, is there ever a line you draw between “mandatory expense” and “tax?” Is the safety equipment you are required to provide for your employees that wash windows on multi-story buildings a “tax?” When we built our house, we were required to make sure that there was proper drainage on the property before construction could begin. Was the cost of installing and testing that drainage a “tax?”

    The answer to any of these questions might well be “yes.” I’d assume not, because I tend to think of taxes as an income stream designed to be, and only be, a source of revenue for a governmental body – which is why I don’t think of a traffic ticket as a tax. But I’ll be the first to admit this is my own semantic choice.

    Of course, at the end of the day, I’m not sure that the “tax” question is anything but insider baseball.Report

    • “However, if we are going to agree that it is a tax, is there ever a line you draw between ‘mandatory expense’ and ‘tax?'”

      For what it’s worth (not much!) I once worked at a fast food place, and the general manager complained to us that the minimum wage was “just a tax.”Report

  5. Avatar DensityDuck says:

    If a failure to collect taxes on an action can be defined as a subsidy, then I don’t see why a failure to perform an action can be defined as taxable.

    (Note that I don’t actually agree with either of these things.)Report

  6. Avatar Kazzy says:

    What is the difference between taxing the failire to do something and offering tax credits /deductions for doing something?Report

    • Avatar Jason Kuznicki says:

      One big distinction is the object of the tax itself, outside of the deduction or remission of it.

      An income tax will tax certain kinds of income, with remission for, say, solar energy production or whatever.

      A solar compulsion tax will tax you not for your income, but for your failure to install solar panels.

      The object of the initial taxation is different, and not trivially so.Report

      • Avatar Kazzy says:

        But if they structured this as an across-the-board tax hi,e and ohbytheway, everyone with health insurance just so happens to get an equal tax credit…? (Which is how I thought they should do it all along, if they were going to compell it, which I have lots of misgivings about…)

        When you say “intent”, do you mean what was actually in their heads? Or how they structure it?Report

        • Avatar Jason Kuznicki says:

          I am not sure I understand your hypothetical. It seems like it would lead to a three-step death spiral. Insurance company raises rates; workers enjoy a larger credit; employers cut wages to match, then add to what they pay for health insurance, and so…

          As to “intent,” yes, I do mean what’s in their heads. The law often does. How they structure the thing may help give some clues, as will the debates they had while passing it. Circuit and Supreme Court decisions consider these all the time.Report

          • Avatar Kazzy says:

            I should have specified it as an income tax hike. Everyone’s income tax goes up 2%. Folks with insurance get a 2% credit (or deduction… Whichever is the right one… I always mix them up). And the argument is that they are using the income tax code to promote a “good”… Just like they do with mortgage interest and silar panels and medical spending and etc, etc, etc. Is that clearer?

            Again, I’m generally opposed to the mandate. I am even more strongly opposed to the income tax code being used to promote social policy. However, if it is going to be used to do that, health care and insurance is one of the least objectionable goals, IMO.Report

            • About the income issue, my understanding is that the amount of tax/penalty one must pay does indeed correlate with one’s income. That of course doesn’t answer the other elements of Jason’s objection to the tax/penalty.Report

      • Avatar Brandon Berg says:

        The other problem is that the tax is blatantly pretextual. The purpose of the tax isn’t to raise revenue—it’s to force people to buy health insurance. The government shouldn’t be able to game limits on its regulatory powers through pretextual taxation.Report

        • Avatar BlaiseP says:

          Let’s stipulate to the notion forcing people to buy anything is nothing but a Gimme Law for the exclusive benefit of the sellers.

          Problem is, probability and statistics tell us insurance schemes can only work to anyone’s benefit is if the pool of lives is maximally large. Law of Large Numbers. Irrefutable.

          So how do we do it? At present, the markets are distorted. We will all need health care and the current system isn’t providing it effectively. We’re paying too much money as a society for too little benefit. If you don’t like this approach, why haven’t the markets solved this problem yet?Report

        • The purpose of the tax isn’t to raise revenue—it’s to force people to buy health insurance

          Not true at all. If the purpose of the tax was solely and exclusively to force people to buy health insurance, then it would have been set at a level so high as to leave people with no choice but to buy it. The mandate is set well below that level – if you just don’t want health insurance, it’s still cheaper to pay the mandate amount than it is to buy health insurance. But the fact is that there is a huge free rider problem associated with being uninsured, and a (not the) purpose of the mandate amount is to create what amounts to a Pigou tax. It’s not solely “hey, we want more revenue for the general fund,” it’s “hey, free riders should be forced to pick up at least some of the bill due to them being free riders.”Report

          • Avatar Stillwater says:

            Mark, I get the feeling you’re warming up to this whole PPACA thing. You’re defending it better than any advocate I’ve ever read.Report

            • Oh, I still think it’s bad legislation, doubling down on the worst aspect of our system. But I also don’t think it’s disastrous legislation, either. On the mandate specifically, I’m not a huge fan of it on philosophical grounds, but due to the way it’s structured, I don’t see it as anything terribly earth-shattering from a precedential standpoint, it’s a pretty mild infringement on individual liberty (since it really is a tax!), and unlike most legislation, actually has a logical basis.

              The weird thing about all of it is that while what the legislation actually does is only modestly offensive to me, the way it was actually drafted is abhorrent to me, and my defense of it on Constitutional grounds basically amounts to insisting that the world recognize how incredibly abhorrent the drafting was.

              (I’m flattered nonetheless).Report

              • Avatar Tom Van Dyke says:

                But I also don’t think it’s disastrous legislation, either.

                You will.


                Tax increases which took place in 2010 after the passage of the bill:

                1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971

                2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

                3. “Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

                4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

                5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

                6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

                By my count $53.4 billion plus that collected in point 1.


                7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

                8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

                $6.4 billion more ($59.8 billion and counting).


                9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

                No actual number but let’s just say “billions and billions” as the middle class gets taxed for its health benefits. Next year (2013), these kick in:

                10. Surtax on Investment Income ($123 billion/Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93

                Also known as a “tax on the rich”. To what effect? Well in 2012 capital gains is taxed at 15%, dividends at 15% and “other” at 35%. If you’re wondering what constitutes “other” here’s how it is defined:

                *Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens.

                In 2013 capital gains will be taxed at 23.8%, dividends at 43.4% and “other” at 43.4%.

                11. Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Current law and changes. Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

                12. Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

                13. Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

                14. Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

                15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013) Bill: PPACA; Page: 1,994

                16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013). Bill: PPACA; Page: 1,995-2,000

                Your running total through next year? $322.9+ billion in taxes.

                And on to 2014:

                17. Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following:

                Of course, there are exemptions (Catholics need not apply regardless of what it says):

                Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

                “Undocumented immigrants” get a bye … more of the DREAM Act?

                18. Employer Mandate Tax (Jan 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

                Combined score of individual and employer mandate tax penalty: $65 billion/10 years

                19. Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

                And 2018:

                20. Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956Report

              • Avatar Liberty60 says:

                So to sum it all up: we are all going to pay a little bit more out of pocket, so that uninsured people can get health care.

                Sounds good to me.Report

              • Avatar Morat20 says:

                I think the CBO’s estimate was that health care costs would remain basically unchanged, but 30 million more people would be insured.

                Which does indeed sound like a win.Report

              • Avatar Morat20 says:

                How is it’s draffing abhorrent to you?

                I’m curious. It seemed basically the same as any other major bill, except the horse trading was considerably more covered than normal AND the Senate super-majority requirements resulted in a bill that was considerably less…singular, perhaps..than it otherwise would have been.

                Had it passed by simple majority, the driving decision makers would not have been Joe Lieberman — nor, frankly, would Ried and Obama wasted as much time in a futile attempt to court GOP moderates.

                Were I president and not faced with a filibuster in the Senate, I’d have probably pushed hard — and likely gotten — a public option, at least, to keep insurers honest.

                Still, the end result is the end result. It’s basically a hodgepodge of regulations to address some serious problems, a laundry list of proposed solutions thrown up in pretty much an attempt to see what works on bending the cost curve, and the core of the expansion is half Medicaid and half-GOP 1994 plan.

                Literally it’s how every bill ever is made. All the complaints about “not knowing what’s in the bill” were laughable. The thing was debated and horse traded and lied about on Fox for six months. The final draft was voted on in relatively short order, but it’s not like anyone snuck in any hidden riders.

                It’d be like my thesis advisor screaming that I’d only given him a day to review my thesis. Well, sure, the final copy. But I’d been trading copies back and forth with him for months prior. We BOTH knew what was in it, although he had only a few hours to skim my final draft (mostly to check that the last set of changes was in). He’d be technically telling the truth, but in a fashion designed to massively mislead.Report

              • Avatar Tom Van Dyke says:

                Literally it’s how every bill ever is made. All the complaints about “not knowing what’s in the bill” were laughable.

                Now that it’s a reality, nobody’s laughing, Mr. Morat. We’ll find out soon enough what’s in it and you’re going to hear about it chapter and verse. Not only were the republican s and independents hoping that the supreme Court would kick Obamacare to the curb, I suspect that many Democrats were hoping the big bad 5-4 partisan majority was going to get them off the hook for forcing through one of the worst bills in American history—and then they could cry foul.

                No such luck, Mr. Morat. Send lawyers, guns and money—the shit has hit the fan.Report

              • Avatar Morat20 says:

                Seriously, Tom?

                Everyone knew what was in it when they voted on it. Not how it’s work out, in the end — there are no oracles in Congress, last I checked.

                But everyone KNEW what was in the bill, despite the frequent claims to the contrary. That’s pretty self-evident — if people had truly been voting on the bill without knowing exactly what it was doing, there would have been a large number of post-vote stories and GOP press releases about hidden riders and the like.

                As for your apocalptic woes — Jesus, get a grip. You’re practically standing on the corner in sackcloth and ashes, holding a sign saying “THE END IS NIGH!”.

                It’s the 1994 GOP bill. It’s Romneycare. It was the Republican solution two decades ago. You’re acting like Congress ordered all the doctor’s shot and turned to faith healing.Report

              • When I say the drafting was atrocious, Iam referring primarily to the fact that the most significant and cpntroversial provision was drafted in such a way that it called what is objectively and clearly a “tax,” a “penalty,” which is exactly what 80 years of precedent have said are impermissible. The only reason the bill survived is because John Roberts was willing to look beyond the nomenclature and focus on what the law in fact does.Report

              • Avatar Morat20 says:

                Oh, that. Frankly, *pshaw*. I think Roberts is entirely correct. Congress could have called it a “raccoon” if they wanted. Names are meaningless — call it whatever you want. (Heck, remember the Patriot Act?).

                Maybe it’s just my programming background, but I look for how it WORKS. And that? It walks like a duck, it quacks like a duck…call it a racoon, but it’s still a duck.

                And Constitutionally, I think it’s far more important “what it is” than “what it’s called”.

                Honestly, I thought the Supreme Court already DID that. I’m honestly a bit shocked to hear that apparently Roberts went further than normal by saying “Is this thing actually a tax or not?”Report

              • Avatar Jaybird says:

                For the record, the White House is still arguing that it’s not a tax.Report

              • Avatar BlaiseP says:

                This depends on whether we view a penalty as a tax. This “tax” is entirely avoidable.Report

              • I’ve made pretty clear that I think Roberts was correct. I’ve also made prety clear that it would have been entirely understandable had he not gone quite so far. The use of the penalty language was behind moronic. Like, seriously, they couldn’t have just called it a “fee”?

                And that they continue to refuse to acknowledge that it’s a tax is no longer simply dishonest and disingenuous( if par for the course in politics), it’s now both ungrateful and kind of pathetic.Report

              • Avatar Stillwater says:

                That’s amazing. They look like fools on this issue.Report

              • Avatar BlaiseP says:

                I wonder if I can designate speeding tickets as a cost of doing business? Calling this a tax is correct insofar as it’s a check made out to the government on the basis of falling into some window of taxability. But it’s nonsense to call this a tax on any other basis. The only route to this tax is not to purchase health insurance.Report

              • Avatar Morat20 says:

                *shrug*. Politically, denying it’s a tax is probably wise. Nobody likes paying for things.

                In any case, it is a funky tax. It’s one I don’t have to pay, for instance. (I have insurance).

                It’s more like the world’s most funky tax credit, except they made it so that you claim the credit by default, and even when you shouldn’t the IRS can’t really do much about it.

                Honestly, most people hear “tax” and think “Thing everyone has to pay”. As a politician, I’d probably say “It’s not a tax” too, because nobody is going to listen to “It’s a tax that the majority of Americans won’t pay, and the ones that will won’t if they get insurance”.


              • Avatar Stillwater says:

                But it’s nonsense to call this a tax on any other basis.

                The way the mandate functions is to impose a blanket tax on everyone – $695/yr or 2.5% taxable income (or whatever) – which is voided for individuals who can demonstrate they’re covered by an insurance plan. The mechanism works in the other direction than a penalty, which would be to impose a fine for failure to have insurance.

                Functionally, it works like a penalty, but the mechanism employed is clearly (to me anyway) a tax.Report

              • Avatar Stillwater says:

                it’s now both ungrateful and kind of pathetic.

                Maybe the Obama people will take Roberts out for Sushi as a gesture of gratitude since they can’t thank him publicly for bailing them out.Report

              • Avatar Mike Schilling says:

                Another 10 or 12 decisions like this one, and he might undo a visible fraction of the damage caused by Citizens United.Report

              • Avatar Mike Schilling says:

                remember the Patriot Act

                I had the same thought, that it should have either been struck down on the grounds that creating a police state is not patriotic, or allowed provided it was renamed the “Pants-Wetting Coward Act”.Report

              • Avatar Jaybird says:

                If only we had allowed the government to ban speech, books, and movies…Report

              • Avatar Mike Schilling says:

                “He’s safe at second. In fact, everyone who’s ever slid into second is safe.”Report

  7. It might be chicanery. But now that “we can all just admit this,” what have we proven? Is it then therefore unconstitutional to tax someone for choosing not to do something?

    Maybe it is, especially if what one is taxed for not doing would be a violation of one’s rights or would serve to advance a power that has not been delegated to the federal government.

    Is the chicanery legal or rhetorical? One line of interpretation one can adopt is that Obama’s solicitor general, for venal, political reasons, did not argue aggressively for the “mandate is a tax” idea but kept it in reserve as a “well, if this doesn’t work, then how ’bout this” argument. And Roberts, for whatever reason, seized on the tax argument. He came to the conclusion–rightly or wrongly, although I’m inclined to say rightly–that the mandate functions as a tax, albeit one that is imposed for failing to do something.Report

  8. Avatar James K says:

    The other thing to bear in mind is that insurance companies do pretty well dealing with adverse selection on their own, if they’re allowed to.

    In most countries, a pre-existing condition will simply result in you not getting coverage for that condition, unless the government requires all insurance contracts to cover a specific list of conditions, in which case the insurance company will probably deny you coverage entirely.

    Equally the way to deal with people with a higher risk of illness (given everyone’s state of knowledge ex ante) is to charge them more for premiums. That way insurance companies make the same expected profit off each customer, which gives them no reason to prefer young, healthy customers over older, sickly ones. In the US the requirement that premiums within artificially-defined pools be charged the same means that insurance companies have an incentive to invent ever-more creative ways to drive the sickest people out of health insurance, while the young and healthy are driven away by what is for them unreasonably high premiums.

    My problem with the ACA or Obamacare or whatever you want to call it is that it is an attempt to solve the problems of past ham-fisted regulation with additional ham-fisted regulation. Can I see a role for government here? Yes. But if I didn’t know better I’d be inclined to think your health insurance system was designed for minimum performance. And recent reforms have done nothing to change that.Report

    • Avatar Stillwater says:

      James, can I rant? (Please say yes.)

      Man o man am I tired of all the nitpicking about the ACA. The status quo *sucked*. This is an improvement. A big one. On a bunch of metrics. It is not, nor has it ever been sold as, Healthcare Nirvana. Our healthcare system, like so many things in life and society, is a work in progress, and the ACA is a huge first step. For us. To catch up to the rest of the civilized world. (/end rant.) (Thanks)Report

      • Avatar Will Truman says:

        Hey, you bit your tongue better than I did!

        I do hope you’re right about PPACA. My position was and is “against,” but it’s the law of the land and I hope it does everything as well as the proponents say it will, and that I will later regret my opposition.

        (Obviously, I am skeptical. Hence my position on it. I agree that the status quo sucks, though am not sold on the improvements. Yet, anyway.)Report

      • Avatar Brandon Berg says:

        On that note, I have a challenge for supporters of the ACA. Most of you seem to believe that the gap between the US and Europe on certain health care metrics is primarily due to the fact that we don’t have universal health care, rather than to demographic and lifestyle factors.

        So let’s have some predictions. Name some specific metrics and how much you think the gap between the US and Europe will close, and how soon.Report

        • Avatar Ken says:

          One would hope the the gap in infant mortality would close due to better access to pre-natal care.Report

        • Avatar Brandon Berg says:

          That wasn’t as good a segue as I thought. I misread and thought you said that the status quo sucked on a bunch of metrics, referring to things like life expectancy and infant mortality. I’m still interested in seeing predictions, though.Report

          • Avatar Stillwater says:

            I don’t have any predictions of outcomes, since the ACA is primarily concerned with access to healthcare. And those numbers will go up. (That’s the big thing.) I mean, the bill wasn’t drafted to lower infant mortality, or extend life expectancy, or increase the number of cancer survivors. It was intended to make provision of care easier to obtain. Extrapolating from that, tho, it seems reasonable to assume that our WHO rank in certain categories will go up.

            I’d like to think we can get ahead of Cuba.Report

            • Avatar Brandon Berg says:

              Lack of universal access to health care was supposedly the reason that we lag behind countries like France, Canada, and Germany on certain health metrics, right? So why shouldn’t universal access result in the gap closing, or at least narrowing substantially? Why are we doing this, if you don’t expect it to improve health outcomes?

              Communist dictatorships don’t have a great track record when it comes to accurate reporting of statistics. That said, Hispanics in general tend to be healthier than you’d expect based on socioeconomic characteristics. Hispanic Americans, despite having much lower rates of health insurance coverage than even blacks, do about as well as or better than non-Hispanic whites on most health metrics.Report

      • Avatar James K says:

        I’m not nitpicking – it does nothing to fix what is actually wrong with your insurance system, and by eliminating catastrophic insurance, it only spreads the dysfunction further. I’m not arguing that it’s less than ideal I’m arguing that it’s worse than useless.Report

        • Avatar Stillwater says:

          Lots of models seem to refudiate that claim. The Dutch model is insurance-centric, with caps on P-L ratio, mandatory coverages, paid maternity leave, a whole slew of benefits.

          Now, if your argument is that rich people won’t want to pay for those benefits in the long term, I concede. If your argument is that incentives are so distorted as to create an unsustainable system, then I’d have to disagree on purely ideological grounds (especially given the first point).Report

          • Avatar Murali says:

            At least according to wikipedia,the dutch system doesn’t seem to be doing a particularly good job of containing costs. I don’t have access to numbers, but I wonder how much of the cost difference between healthcare in the Eurostates and in the US is attributable to price controls and defensive medicine. Colour me extremely sceptical about the ability of PPACA to contain costs.

            Also note that the dutch system is much more tightly regulated than PPACA currently is. To the extent that the tighter regulation will work, I am sceptical about the extent to which congress can get the right kinds of regulation in place. Also, regulation works best in the presence of an ethos that respects the spirit of the regulation. Or else, when people follow merely the letter, you get a lot of unintended consequences. I am extremely doubtful whether an such ethos exists in the US.Report

          • Avatar Stillwater says:

            Part of the problem with the Dutch system is that it’s too generous. As one example, I’ve heard stories of women getting divorces during pregnancy so they can access the maternity-leave benefits. Kids up to 18 are free. Stuff like that.

            Constraining costs is a problem for everyone, from single payer systems thru what we had until the ACA. Finding the right mechanisms to balance the scope of services covered with long-term sustainability is tricky. Or so it appears.

            On the upside, premiums in Holland are only about US$200/month.Report

            • Avatar Stillwater says:

              The $200/month number is from Wiki.Report

              • Avatar Murali says:

                At least part of that is because the insurance companies are heavily subsidised/compensated by their government. So, the lack of subsidy in PPACA means that the poor and rich alike pay the full price of the premium. This makes it far more regressive than the dutch system. I certainly cannot foresee the US increasing the marginal tax rate at the top so as to subsidise either the poor directly, or the insurance companies themselves.Report

              • Avatar Stillwater says:

                I’m not sure what you mean by “the full price of the premium”. People who earn income at or below the poverty line don’t pay anything into the system. People who earn income up to 3 times the poverty line receive subsidies. Beyond that individuals bear the full cost of the policy.Report

            • Avatar Brandon Berg says:

              Mine’s $100. Individual market, no subsidies.Report

              • Avatar Stillwater says:

                Dayum. what company? what’s the ded/oop?Report

              • Avatar Rod says:

                Yeah… well mine’s $500/mo through my employer. Family plan but even without that it would be at least $350-$400.

                You must have truly enormous deductibles. Either that or it doesn’t cover squat. When I was scoping out the individual market the lowest priced plans I could find were in the $500 – $700 range with $7500 deductibles.Report

    • Avatar Will Truman says:

      The other thing to bear in mind is that insurance companies do pretty well dealing with adverse selection on their own, if they’re allowed to.

      The PEC requirement was not a solution in search of a problem. The problem was quite clear. People with relatively minimal risk were denied insurance outright with nowhere to go. For a variety of reasons, some but not all of it having to do with regulation, the individual insurance market wasn’t really where the money was at anyway. PEC’s were less of an issue on group plans, due to regulation, though the market might have sorted that out on its own eventually (I don’t think it would have). The options for individual coverage were truly, truly awful.

      Charging more to people that carry more risk, if this had been a more widely-available option, is a fine market solution unless you’re one of those people that have some sort of risk due to no fault of your own. Incurring all of the financial obligation is an extraordinary hardship. It’s one of the things that a society should exist to share.

      In most countries, a pre-existing condition will simply result in you not getting coverage for that condition, unless the government requires all insurance contracts to cover a specific list of conditions, in which case the insurance company will probably deny you coverage entirely.

      The problem here is that insurance companies have a history of defining PEC’s so broadly that comparatively unrelated things as being a part of that PEC. We’re having an issue now where every health care claim my wife makes is now somehow tied to her pregnancy, and therefore subject to out-of-pocket payments until we hit the deductible.

      Lack of PEC coverage, and condition-specific rates, also make it so that even if you have a health problem after you signed up for the policy, they raise your rates. What are you going to do? Go somewhere else? They’ll exclude coverage or raise your rates, too. Or refuse to cover you entirely.

      All of these things represent real problems that an unregulated market is ill-equipped to handle unless “tough luck, buddy” is handling it. But “tough luck, buddy” is what we’re trying to avoid here (granted, there is only so much that you can avoid it, but there are reasons to try).Report

      • Avatar Brandon Berg says:

        It seems to me that what we need, to make free-market health insurance work well for everyone, is insurance against the development of chronic conditions. That is, you buy insurance when you’re healthy—your parents buy it for you before you’re born and continue to pay for it until you’re an adult—and if you ever develop a condition that makes it impossible for you to obtain cheap health insurance, you get either a lifetime subsidy to allow you to purchase insurance, or a lump sum payment equal to the net present value of all future subsidy payments you would have gotten (to protect against your insurer going bankrupt).

        The reason this has never developed, I suspect, is that there’s always been the expectation that people would be able to get insurance from work, or from Medicaid in the worst case.Report

        • Avatar Mike Schilling says:

          It has the problem that the customers will be humans, and thus likely to skip insurance when they’re young and healthy. If only there were some way to require people to contribute during those years.Report

        • Avatar Will Truman says:

          The tension is between a system that encourages you to keep insurance, but doesn’t kill you for making an irresponsible choice. Locking someone out if they forget to or make an unwise decision not to keep paying the insurance premium is something that we, as a society, are going to have a hard time dealing with.Report

      • Avatar James K says:

        Charging more to people that carry more risk, if this had been a more widely-available option, is a fine market solution unless you’re one of those people that have some sort of risk due to no fault of your own. Incurring all of the financial obligation is an extraordinary hardship. It’s one of the things that a society should exist to share.

        I have no problem with that, but the way to share that cost is through transfer payments (i.e. welfare), not by breaking the insurance market.

        Lack of PEC coverage, and condition-specific rates, also make it so that even if you have a health problem after you signed up for the policy, they raise your rates. What are you going to do? Go somewhere else? They’ll exclude coverage or raise your rates, too. Or refuse to cover you entirely.

        Of course they change their rates, your risk profile has changed. Again, if this causes hardship the solution is welfare, not trying to make insurance something it isn’t. If you stop them raising premiums they try to drive you out of the market instead by stonewalling you or fighting over every little thing.

        Removing these regulations and separating employment and insurance (which will help with competition and consumer responsiveness) will improve the functioning of the market and fix most of what is wrong with your healthcare system. Welfare support of some kind will handle the rest.Report

        • Avatar Will Truman says:

          I’m sympathetic with conservatives and libertarians that insurance isn’t copays to visit the doc or monthly meds, but believe that long-term protection against chronic illness or catastrophic incidents is precisely what insurance should be for.Report

        • Avatar Snarky McSnarksnark says:

          Car and health insurance used to take race into account: and, indeed, race is correlated with both health care risk, and auto accident rate (racial minorities have higher rates of obesity, lower lifespans, and drive crappier cars in crappier neighborhoods, on average).

          Nevertheless, we, as a society, decided that rate-setting by race was beyond the pale. Similarly, we can decide that pre-existing conditions should not be taken into account.

          The purpose of insurance is to pool risk. And it will serve that function even if some ground rules are set for the insurance market.

          I think you have some magical notion of what insurance “is.” It doesn’t turn “insurance” into “not-insurance” if we collectively decide that there are certain criteria that we don’t take into consideration when pricing insurance–even if they have do relate to medical risk.Report

          • Avatar Will Truman says:

            As a bit of an aside on the auto insurance thing, when we were in the Pacific Northwest, our rates jumped from $150 to $200 a month after they ran their “credit check.” On its own, that has crack-all to do with how good of a driver we are. We are just associated with “the wrong people” due to some imperceptible problem with our credit.

            I say “imperceptible” because they couldn’t tell us what the concern was, and our credit ratings were both above 700 – mine was above 800. I get the desire to assess risk as accurately as possible, but we’re talking about being rated on factors either beyond our control (in our case, beyond explanation) or profiling incidental to what is supposed to be being assessed.

            On the health insurance side, I don’t actually mind being charged more as a smoker. Being charged more due to a family history of glaucoma, though, is problematic. Makes perfect sense from the side of the insurance company, but is based on factors beyond our individual control.Report

          • Avatar Morat20 says:

            Large pools mean an insurer doesn’t really GIVE a crap if you get cancer. Because, statistically, a certain number of people are gonna get cancer in that group. And a certain number of people will never darken a doctor’s door. Another percentage will just keel over dead, in a surprisingly cheap way.

            Since a significant chunk of your health insurance “risk” is totally random — and can start before BIRTH (my friend’s daughter was very premature. Anyone trying to assess her lifetime risk of medical problems might well decide to offer her no coverage at all). Further, it’s inevietable as you age that your care will be more expensive.

            PEC’s are a given. Random acts of God that manifest in expensive medical bills are a given.

            Right now? Lots and lots of people pray lightning won’t strike, and when it does sticks society with the bill. Because really, most people will never have the earning power to pay for a case of cancer — even if it was an interest free 10 year loan.

            Since society is STUCK with the bill, there’s no point not to create giant pools of people, work out the actual costs, and charge accordingly. We’re not going to let people die in the streets due to failing a credit check, after all.

            Denying people coverage due to PEC effectively removes them from actually paying their medical bills (unless they’re lucky), but society demands they get treated if critically ill. That’s not “ham-fisted regulation”. That’s society making a goal, and government trying to shoehorn that goal into a free-market framework.

            Bluntly put, there shouldn’t be a free market in health insurance. Society’s goals don’t fit it. You might as well have a universal pool and allocate the money as taxes.

            Frankly same with education. Free market doesn’t work when the vast bulk of society says “I refuse to accept the downside of the free market in this situation”.

            But hey, some people believe the free market can solve anything in any way whatsoever, so we’re trying it. Instead of just owning up to the fact that people act like health care is, in fact, something closer to a basic right than a commodity for purchase.Report

          • Avatar James K says:

            You can do whatever you like to the insurance market, but be prepared to suffer the consequences.Report

        • Avatar Liberty60 says:

          Of course, all this flailing about in search of some “system” that will preserve the health insurance market while not casting sick people out into the street, causes me to question the purpose of even having health care delivered via the marketplace.
          What benefits are there to society in using the marketplace to deliver health care?
          What if, for instance, health care was simply offered as a public utility like freeways and roads?
          How would our society be better or worse than it is now?Report

          • Avatar Morat20 says:

            Society demands health care as a right, but then demands the American government provide it via the free market.

            Chaos and suboptimum performance ensues. People are surprised.

            Can’t have a free market without failure. And “Failure” in health care insurance terms is “denied care”. And that has to include “denied care that would otherwise save your life”.

            Health Care is a market like car insurance. Except your insurance has to cover all accidents, including those that you weren’t at fault. And, oh, whether you’re deemed “low-risk”, “medium risk”, “high risk” or “effectively uninsurable” is partially determined at birth.

            And you can’t choose to walk or bike.

            And the free market doesn’t solve this? Color me shocked, sir.Report

          • Avatar James K says:

            Single payer would be an improvement on the status quo, at moment your system is the worst of both worlds. My concern would be that your government lack the basic competence to run a single-payer scheme properly.Report

            • Avatar Morat20 says:

              Let’s be honest: The problem is one of the two major political parties doesn’t WANT government to do anything competently.

              It’s amazing how well FEMA worked under Clinton and now Obama, but couldn’t do shit under both Bushes.Report

              • Avatar James K says:

                Was FEMA so much worse under Bush, or was Katrina an unusually large problem that tested it beyond its capability? I think there’s a lot more to good government services that who’s in charge of them. And part of a well-run single-payer system is that it’s no so generous that it ruin’s the government’s finances. I don’t think that’s a Republican-specific problem.

                And even granting that, you still have a problem if your health care reform only works if the Republicans never retake the White House.Report

              • Avatar BlaiseP says:

                FEMA really was that bad under Bush43. Katrina was horribly mishandled. The disaster itself was large but FEMA’s incompetence made itself manifest in the months and years which followed the disaster.Report

              • Avatar Morat20 says:

                It was REALLY THAT BAD under Bush. They failed the basics of hurricane response. It was not a matter of “Did not have enough for what turned out to be a massively worse than expected storm”. It was a matter of “did not have anything. Or appear to have noticed the hurricane at all”.

                Same problem under Bush the Elder. It’s not rocket science — when you believe government is the problem, and not the solution, you appoint people who (shockingly!) agree with you. Which is why Bush appointed a horse judge to head FEMA and Clinton a disaster management specialist. Bush didn’t expect FEMA to work and appointed accordingly. Clinton did.

                And yes, the fact that the GOP doesn’t seem to care or even desire that government function is indeed a massive problem. But not just for health care.

                Honest to God, I think they’ve simply resigned themselves to the existance of government and have decided that if it exists, the wasted money might as well go to them and their friends and just run with that.

                Democrats still expect it to function, and get pissy when it doesn’t.Report

              • Avatar Mr. Blue says:

                Bumbling by top disaster-management officials fueled a perception of general inaction, one that was compounded by impassioned news anchors. In fact, the response to Hurricane Katrina was by far the largest–and fastest-rescue effort in U.S. history, with nearly 100,000 emergency personnel arriving on the scene within three days of the storm’s landfall.

                Dozens of National Guard and Coast Guard helicopters flew rescue operations that first day–some just 2 hours after Katrina hit the coast. Hoistless Army helicopters improvised rescues, carefully hovering on rooftops to pick up survivors. On the ground, “guardsmen had to chop their way through, moving trees and recreating roadways,” says Jack Harrison of the National Guard. By the end of the week, 50,000 National Guard troops in the Gulf Coast region had saved 17,000 people; 4000 Coast Guard personnel saved more than 33,000.

                These units had help from local, state and national responders, including five helicopters from the Navy ship Bataan and choppers from the Air Force and police. The Louisiana Department of Wildlife and Fisheries dispatched 250 agents in boats. The Federal Emergency Management Agency (FEMA), state police and sheriffs’ departments launched rescue flotillas. By Wednesday morning, volunteers and national teams joined the effort, including eight units from California’s Swift Water Rescue. By Sept. 8, the waterborne operation had rescued 20,000.

                While the press focused on FEMA’s shortcomings, this broad array of local, state and national responders pulled off an extraordinary success–especially given the huge area devastated by the storm. Computer simulations of a Katrina-strength hurricane had estimated a worst-case-scenario death toll of more than 60,000 people in Louisiana. The actual number was 1077 in that state.Report

              • Avatar BlaiseP says:

                FEMA’s incompetence was immediately apparent before and after the disaster. Its complete inability to coordinate the various elements of the disaster led to many completely avoidable deaths and years of suffering for the victims of that tragedy.

                Tell you something about refugee work. Done a fair bit of it over time. The tragedy’s not over until the refugees go home. That’s what refugee work is all about and that’s where FEMA absolutely failed. FEMA failed when it could have done something, the storm’s scope and magnitude was well understood for a week before it arrived. FEMA was instituted to manage large-scale disasters beyond the scope of state and local authorities. It didn’t even have its radios set to work on those frequencies.

                I could write a book about Katrina’s refugees. If FEMA failed, and it clearly did fail, its incompetence tore away any illusions about American poverty. Katrina rubbed America’s face in the reality of that situation. It’s still there, the poverty and the crime and the incompetent politicians.

                The lessons of Katrina are lost on everyone. Anyone who’s ever smelled Katrina mold won’t soon forget it but Louisiana and Mississippi and the Gulf remain basically in the Third World. And we don’t care as a nation. Why should we? They’re just poor black people and coonasses down there.Report

              • Avatar Stillwater says:

                And even granting that, you still have a problem if your health care reform only works if the Republicans never retake the White House.

                That’s true. All policy is subject to potential revision by the next Congress or President. One thing the ACA has going for it is that each of the major provisions (other than the mandate) is already pretty well embraced by the electorate. And once they take effect, for better or worse, I don’t think people will want to go back. That might – in fact I think it will – act as a constraint on how much tinkering is likely to occur.Report

            • Avatar Will Truman says:

              James, I can’t disagree with you on this. Single-payer done well wold be an immense improvement. Of course, that would require single-payer done well.Report

              • Avatar Stillwater says:

                It was also politically impossible. There was never enough support in the Senate to even come close to passing it (I think the high number was 44 maybes).Report

              • Avatar Stillwater says:

                Confuzzle. 44 maybes for the public option, which lots of liberals thought would lead to single payer.Report

              • Avatar Will Truman says:

                Huh. I thought they had over 50 votes for the Public Option, just not enough to plow through a filibuster. For some reason I remembered it being closer than that. I may not have been following it that closely yet.Report

              • Avatar Stillwater says:

                There was talk of 50+ Senate support at precisely the same time lots of liberals wanted to use reconciliation to close the deal. At that point, lots of liberals in the media kept saying that there was majority support for the PO, but I don’t think that was ever established. At best, those extra 6-7 gestures towards the PO were contingent on using reconciliation, which no one in the Senate (or in leadership, anyway) wanted to do. So extra PO supporters at best were playing politics it seems to me.

                That’s my ragged, fuzzy memory of those events, anyway.Report

          • Avatar Brandon Berg says:

            There are a couple of benefits. One is that a market system based on people buying their own health insurance doesn’t result in increased marginal tax rates, as a single-payer system funded by a progressive income tax does. I get that you probably see this as a drawback rather than a benefit, but for those of us who see the moral hazard inherent in redistributive policies as a problem, this is a big deal.

            The other is a bit more speculative, but it is my single greatest concern about how you guys are going to fish things up. Pretty much every other country has price controls for pharmaceuticals. Fortunately, the United States still does not, which means that developing new pharmaceuticals is still profitable enough to justify the enormous cost.

            What worries me is that if the government starts paying bills, drug companies will be the most politically attractive targets for cost-cutting. The median voter hates them. Those bastards charge $10 for a little pill that costs like a nickel to make. They’re ripping us off. And they waste all that money on advertising. To kids!

            So the heroic politicians step in to impose price controls, and the masses cheer, and suddenly, developing new drugs isn’t so profitable anymore. Maybe it’s still profitable enough to finish the drugs already in the pipeline. Maybe it’s still profitable enough to do some easy ones. Check out some active enantiomers or metabolites of existing drugs and see if they work any better. Things like that. But overall, new drug development will slow down. There’s just not as much money in it anymore. And millions of people will die from diseases that would otherwise have been cured.Report

            • Avatar Morat20 says:

              You might have a point, except:

              Morally: The world is not paying us to develop drugs for them. They better pony up instead of free riding.

              Not that it matters, because:

              Pragmatically: The vast bulk of ACTUAL drug research is government funded. Pharma companies spend more on advertising than research, and their research is almost entirely “slightly modify a drug about to go out of patent to repatent it and claim it’s improved”.

              So really, it doesn’t matter. They’re not actually spending any real money to research new drugs as it is. So imposing price controls, which is laughable considering Congress wouldn’t even allow Medicare to negiotate bulk rates, wouldn’t actually change anything.

              Let me do the math — Zero minus zero, carry the zero — it’s still zero!Report

              • Avatar James K says:

                Morally: The world is not paying us to develop drugs for them. They better pony up instead of free riding.

                I’m with you there, it’s really not fair what we’re doing to you guys. Unfortunately I can’t think of a way to stop it.

                Pragmatically: The vast bulk of ACTUAL drug research is government funded. Pharma companies spend more on advertising than research, and their research is almost entirely “slightly modify a drug about to go out of patent to repatent it and claim it’s improved”.

                That’s not really true. Sure the basic research is government funded but all that gives you is a molecule with potential that works on paper or in a petri dish.

                To go from that to a drug that you know works that you’re actually allowed to give people you need to undertake a crapton of very expensive clinical trials. This is where the actual cost of drug development is and it’s paid by Big Pharma. Those trials are the reason Big Pharma exists, as you note it doesn’t do much of the preliminary research.Report

              • Avatar Brandon Berg says:

                I’m with you there, it’s really not fair what we’re doing to you guys. Unfortunately I can’t think of a way to stop it.

                You’re not actually doing to us anything that you’re not doing to yourselves. Drugs generally wouldn’t be any cheaper if other countries were paying full price, since the manufacturers charge profit-maximizing prices, not prices designed to hit a specific ROI. What would change is that there would be more new drugs available. In a few cases prices would drop due to competition between substitutable drugs, but I think that would be the exception rather than the norm.

                There’s sort of a multi-way, weighted prisoner’s dilemma going on. A country with a small population can only make a very small impact on the incentive to develop new drugs, so they’re better off defecting and choosing to impose price controls. Big savings, but very little impact on innovation.

                The US, being by far the largest market, doesn’t really face the same payoff structure. It’s possible that US politicians will realize the folly of imposing price controls and refrain, but I think that’s giving them too much credit. It’s unlikely that anyone will ever conclusively be able to tie price controls to declining innovation, since there won’t be any control to compare the actual outcome to. The benefits are immediate and obvious, while the costs are far-off and obscured. It’s a textbook setup for democratic failure.Report

              • Avatar Fnord says:

                Whether coercing other countries into paying their fair share results in lower prices (in the US) or greater R&D, I think either is a win.

                Perhaps rather than implementing outright price controls, the US could forbid the sale of drugs for a higher price than in other countries (perhaps a specific set of other countries, to allow them to continue to offer cheap drugs to Africa, etc).Report

              • Avatar Brandon Berg says:

                Right. I’d rather have more R&D than cheaper pills. My point is that the Europeans and Canadians are killing themselves, not just maknig us pay more.Report

              • Avatar BlaiseP says:

                That’s not exactly how it goes. Getting a drug through Stage 1 and 2 requires an external CRO like Quintiles or Covance. It’s not a pretty picture once it gets there. A lot of those human trials go on using people I do not consider fully informed, Africans, Chinese, people who can’t even read the forms they’re signing. The review boards are moribund when they’re not completely corrupt, just sign off on the consent forms.

                And it’s not that expensive. Pfizer spends more on marketing than research.Report

              • Avatar Brandon Berg says:

                Pharma companies spend more on advertising than research

                Not advertising as such. A big chunk of that is free samples valued at wholesale (which means that much of the “cost” is lost hypothetical sales). The other major category of marketing expenses is physician detailing, which includes both promotional and educational components. Advertising in the traditional sense is a fairly small fraction of total marketing costs.

                All that said, I’m not sure why you think this is relevant. Marketing isn’t a money sink—the whole point is to bring in more money. If they spent no money on marketing, they would ultimately be able to develop fewer new drugs, not more.

                and their research is almost entirely “slightly modify a drug about to go out of patent to repatent it and claim it’s improved”.

                Citation needed.

                And again, even if this were true, it wouldn’t be relevant. The expected profitability of one project doesn’t affect the expected profitability of others. A company can pick up the easy money from a marginal improvement on an existing drug while still pursuing a more risky project, as long as it has a positive expected return.

                The irony of your complaint is that if price controls go into effect, the riskier projects will be the first ones cut, leaving only the ones you’re complaining about.

                Also, note that biotech companies, which are distinct from pharamceutical companies, are doing a lot of the more speculative work. They need the big potential payoffs to motivate them, or at least their investors.Report

              • Avatar Mike Schilling says:

                The other major category of marketing expenses is physician detailing

                And only a churl would deny Russell his racing stripes.Report

            • Avatar Tom Van Dyke says:

              Progressives frustrating progress, dooming us all in the name of “fairness.”

              I’m being arch, but this would become the reality. True, the USA is the only sucker who pays Big Pharma anything resembling retail. The reason is Fixed Costs:

              Spend $X million to research, develop, test and get the FDA to certify a drug. Fit a factory to make it, mfg cost 5 cents.

              After you sell a few billion to the US market at $1 each and start making back your $X million investment, and eventually you start to turn a profit. A profit!

              [That’s if the drug doesn’t fail in testing and safety certification.]

              [Which most do.]

              Meanwhile, with all the costs already sunk, run the factory workers @ time-and-a-half* and make twice as many pills. Cost per pill, 7 cents each @ time-and-a-half, let’s say. Sell the extra pills to Canada and wherever for 25 cents each.

              Still, 18 cents profit on each pill, mebbe almost as much as you make per pill after you’re done with investment costs and Uncle Sam. And it’s pure and guaranteed [no risk] profit.

              If I’m boring y’all with this, it’s because I never see this reality acknowledged hereabouts.
              *Sorta how overtime works throughout the private sector, and why cutting back work hours even from 40 a week is a profit-killer. The costs of hiring, training, benefits and retention are fixed, the costs of product development and infrastructure [rent, telephones, mfg equipment, etc.] are constants.

              Many folks would work 30 hours a week for a 25% pay cut, but that’s a disastrous deal for the employer. Your actual pay is only a fraction of his overhead.

              —I’ve digressed heavily, but the point here is that were the USA stop paying retail for miracle drugs, progress in pharmaceuticals would crawl to a near-halt. Just one more instance of how the world rides on Uncle Sam’s back and how it’s we who have paid the lion’s share of man’s progress for going on a century now.Report

    • Avatar Murali says:

      My problem with the ACA or Obamacare or whatever you want to call it is that it is an attempt to solve the problems of past ham-fisted regulation with additional ham-fisted regulation. Can I see a role for government here? Yes. But if I didn’t know better I’d be inclined to think your health insurance system was designed for minimum performance. And recent reforms have done nothing to change that.


      • Avatar Morat20 says:


        The ACA is an attempt to make the free market solve a problem that is unsuited to the free market.

        If you make 30,000 a year and had cervical cancer, you are uninsurable. No one will sell you a policy, and if they did you couldn’t afford the premiums.

        I make good money — seriously good money. I couldn’t afford to be a consultant or contractor until just recently (even if I had wanted). Because I couldn’t afford, even with my very good salary, insurance. Because I’ve a history of epilepsy and my family has a history of blood clotting disorders (which yes, I have the genetic markers for increased risk for).

        No insurance policy would cover the most likely medical needs I’d have.

        The free market speaks on that and says “Tough. You better hope you get lucky, punk, and can afford it out of pocket — or pay out the nose for insurance and hope your most likely problems never surface, since they won’t pay for it”.

        THAT is a perfectly valid free market response. That market will function. The results, however, are untenable to society. (Hence the fact that no one is calling for ER’s to run credit checks and check insurance prior to stabilizing a critical patient).

        Society has put it’s foot down and said “We will socialize the risks”. It’s just because we want to socialize the risks and yet still pretend it’s a free market, we have a stupid and inefficient method of doing it.

        The ACA was an attempt to preserve a free market veneer on what is actually a socialized system.Report

        • Avatar Tom Van Dyke says:

          Socialize the part that needs socializing—and no more. Texas [of all places!] has a pre-existing condition insurance risk pool. Obamacare is an elephant gun instead of a flyswatter.

          • Avatar Morat20 says:

            Oh god, Tom. That’s hilarious.

            Think about it, just for a second. Texas’s insurance situation is so bad that 1 in 4 Texans don’t have it. We just turned down federal money and tightened up CHIP to start tossing kids off it, making it worse.

            That pool is a freakin’ joke around here.Report

            • Avatar Tom Van Dyke says:

              Sez you. The point is that you don’t tear the house for a leaky faucet.Report

            • Avatar Brandon Berg says:

              What exactly makes it a joke? Do they not actually offer coverage to those who meet the requirements? Are the premiums much higher than what’s stated on the web page Tom linked?Report

              • Avatar Will Truman says:

                Errrr, aren’t these pools a product of PPACA? I seem to remember “state pools for the uninsurable” being in there somewhere. Either way, it’s actually run by the feds and not the state.Report

              • Avatar Will Truman says:

                Here’s a story by McArdle talking about the state pools. It sounds like they were having trouble getting people to sign up for them at-cost and so loosened the requirements and lowered the premiums (so, presumably, they are operating at a loss).Report

              • Avatar Brandon Berg says:

                I kind of suspect that people are just waiting until they actually need it to sign up. If the system invites gaming, why not tatke it up on the offer?Report

              • Avatar Will Truman says:

                Or it’s demonstrative that the uninsured situation is more complicated that it initially appears. Not that these two things are mutually exclusive. One would imagine that, when illness or accident comes, people will feel a need to go onto their state’s website, or some insurance finder, and get coverage double-quick.

                (One of my issues with PPACA is that I am less than certain that the tax will discourage this behavior. I’m not sure it would for me, back when I was young, single, and healthy.)Report

              • Avatar Tom Van Dyke says:

                Again, WillT, the diff between health care and health insurance. Billions for clinics, not a penny for socialism!Report

              • Avatar Will Truman says:

                Both clinics and insurance have their place in my preferred system.Report

              • Avatar Rod says:

                Will T. said: “Or it’s demonstrative that the uninsured situation is more complicated that it initially appears. Not that these two things are mutually exclusive. One would imagine that, when illness or accident comes, people will feel a need to go onto their state’s website, or some insurance finder, and get coverage double-quick.”

                That’s pretty much what I did last year. For several years previous I had been working for a local company that didn’t offer health insurance. But I liked them because the work was set up so that I was home every weekend and usually a time or two during the week as well (I’m a trucker). But my wife was always pining for health insurance. Problem was she was imagining it the way it was back in the day–like when the standard plan was 5% copay, $100 deductible, and no employee contribution. I knew better and knew our budget would suffer enormously for the insurance deduction if I switched jobs.

                But then she got a recommendation for exploratory/diagnostic surgery by her ob/gyn. That settled it and I applied at a company I worked before that I knew would rehire me and had a decent insurance plan. We scheduled the surgery for the week after she would be eligible for coverage. I actually didn’t think they would pay for that surgery, but they did. And more importantly, they picked up the tab for the ovarian cancer that was subsequently diagnosed. FWIW (and to me, of course, it’s everything) it was an early catch and it looks like she’ll be one of the lucky 10 or 15% for that diagnosis.

                But I was right about the hit to our budget. Between the premium deductions and loss of her income during treatment over a few months, it’s looking bad. BK bad. So even with coverage it’s still financially ruinous.Report

              • Avatar Will Truman says:

                I’m glad she is likely to come out of it okay, but sorry to hear about the costs and what I’m sure was a difficult time.

                One of the really frustrating aspects of the current model (including the post-PPACA model) is that you never really know how much these things are going to cost until they’re already done. Not that it would have made a difference in your case. We keep getting these unforeseen expenses since the pregnancy (essentially, the insurance company is assigning anything and everything as pregnancy-related and suddenly we’re paying for everything until we hit the $3k deductible). I hate getting smacked with it after-the-fact, but what would we do if we knew? What we did, most likely.

                (Not that what we’re going through compares with what you did/are. It’s just the view from which I can empathize.)Report

              • Avatar Brandon Berg says:

                Yes, as a stopgap until everything’s implemented in 2014. I was just wondering why Morat20 said it was a joke.Report

              • Avatar Morat20 says:

                Because Texas is one of the worst in the nation in terms of dealing with the uninsured. We have far more, as a percentage of our population, our care is skimpy, and the state has taken steps to prune back that care even further.

                Emulating Texas on health insurance is the way, bluntly, to make the majority of the US worse off. Because they’re pretty much ALL doing better than us on that front.

                It’d be like quoting California as the roadmap to how ballot iniaitives should be handled.Report

              • Avatar Tom Van Dyke says:

                I’m trying to give credit where it’s due—it’s the Dems who are driving health care reform as an issue and it needs to be driven. But it doesn’t mean their prescriptions are good or even less than disastrous.

                We need both left and right in our polity. The status quo is never good enough to be satisfied with, but neither is blowing the whole system up and starting a new reign of terror in its place a self-evident improvement.

                I love liberals. I hate fucking leftists.Report

              • Avatar BlaiseP says:

                Then don’t fuck them. Simple as that.Report

              • Avatar Mike Schilling says:

                I agree. If the Republicans had contributed ideas instead of just screaming “NO!”, the result could have been a much better plan.Report

              • Avatar Morat20 says:

                Technically the Republicans contributed several plans.

                The individual mandate was one, but since that was pushed by RINOs like the 1994 GOP, probably doesn’t count. 🙂

                I believe there were several vague charts, which by Republican standards was practically a how-to guide. They’re still all aglow about the Ryan budget, which is missing half the actual budget.

                And the math doesn’t add up anyways.

                I don’t think the current GOP is really equipped to govern. Be opposition, sure! They can all shout NO together really well. And man, talk about marshalling talking points and getting out there en masse.

                And they can whip up a pretty good riot — good times in Florida.

                It’d be nice if they, you know, had some ideas and solutions. “Cut taxes” and “Deregulate” can’t actually be the solution to everything.Report

              • Avatar Morat20 says:

                Texas underfunds their entire insurance setup, deliberately so, and squeezes people out — also on purpose. We are not exactly a..generous..state, and Texas recently lost quite a bit of federal support for low-income families and children in terms of health care.

                Suffice it to say that Texas’s approach to “people without insurance” is very similar, in terms of success, to the pollution plans we tried in the late 90s. (It was called “They’d agree not to pollute, and Texas would agree not to check.”. It was not a smashing success).Report

              • Avatar Mike Schilling says:

                It was not a smashing success

                Well, not for everyone.Report

              • Avatar Morat20 says:

                Well, true. The polluters made out like bandits.

                The Bush administration, to me, was basically comedy. He did the same stuff on the national stage as he’d done in Texas. And it hadn’t worked here.

                The kicker, for me, was appointing Rod Paige as Secretary of Education and promoting high-stakes testing — based on his
                (Paige’s) miraculous turnaround of HISD. Which was, it turned out, based on what we like to call “Cheating”. (Teachers coaching kids through the test).

                Democrats didn’t exactly cover themselves in glory on No Child Left Behind. *sigh*. Texas is probably the last state to be taking education advice from. It’s bad enough we drive the textbook market, especially given who picks them.Report

              • Avatar Mike Schilling says:

                It sounds like the same logic the Court used to invalidate the Medicaid penalty may be enough to kill NCLB too. Damn good result.Report

              • Avatar Morat20 says:

                Darn skippy. The math under NCLB was ludicrous. Heck, most people’s understanding and beliefs about public education are ludicrous.

                Nothing shows it as much as some of the criteria for failing schools. Second year of NCLB, I was personally aware of a school whose “pass/fail” criteria came down to…two kids.

                The school knew that from the beginning. The entirety of the rest of the school really didn’t matter, it was those TWO kids. Because the math of constant improvements across all demographics is idiocy.

                Kids don’t come in as untarnished uniform wafers. A handful of extra English-as-Second-Language kids might fail your school, even if — in context — their scores were practically miraculous.

                The push for “Experts in relevant fields” stuff is also pretty dumb. My entire college experience was being taught by experts in their fields. At least half couldn’t teach. At all. And this was to adults, whose minds functioned similarly.

                Last I checked, other than a very quick sketch of basic classroom management and learning theory (ie: The basics of how kids aren’t minature adults and how to tell if they’re actually understanding you), these people are mostly just dropped in.

                Poor kids.Report

  9. Avatar Rod says:

    “If Obama can force you to get health insurance just by calling it a tax, than there is nothing to stop him from making you gay marry an illegal immigrant wearing a condom on a hydroponic pot farm powered by solar energy.” — Stephen ColbertReport

    • Avatar Brandon Berg says:

      That’s technically true. There’s no reason they couldn’t jack up taxes and then provide tax credits for people who do just that.Report

      • Avatar Mike Schilling says:

        Other than the whole “having to pass Congress” thing.Report

        • Avatar Morat20 says:

          It’s amazing how often that’s not mentioned.

          “What’s the limiting priciple of the Commerce Clause”

          Well, SCOTUS has set a few itself — guns near schools is the first one to pop to mind, where it required that the laws be fairly well coupled with actual commerce and not some mushy thirty-chain-of-ifs.

          There’s also the principle of “Congressmen would like to be re-elected”. All the whining about brocolli and it never occured to them that no, a mandate like that would never pass, because everyone involved would get fired.

          Although, perhaps I’m wrong. There was a very similar mandate about corn. Oh wait, I’m thinking of subsidies. And some issues with importing cane sugar….:)

          HFCS is an abomination unto God.Report

          • Avatar Brandon Berg says:

            HFCS is an abomination unto God.

            And yet, the subsidies that produce it simply will not die. And the Congressmen that are making that happen aren’t getting fired. This is why we need a limiting principle other than “Whatever Congress thinks voters will let it get away with.”

            This is why we had a limiting principle, until your ideological forebears threw it out because it was inconvenient. The corn subsidies are on you.Report

            • Avatar BlaiseP says:

              We did manage to do something about those market-distorting ethanol subsidies, thank the Flying Fettucini. Now if only we could get rid of those tariffs and subsidies for cane sugar and that nonsensical Cuba embargo so’s we can get a genuine market in alternative fuels going strong.

              For many years now, I’ve been trying to get an Ansari X Prize sorta competition going for a hydrogen powered freight truck. It got to the House and got a Senate number — and died. I am not encouraged to try again.Report

            • Avatar Mike Schilling says:

              If you really want to play that game, Jim Crow is on you.Report

            • Avatar Morat20 says:

              I hate to break this to you, Brandon, but just because you and I dislike HCFS and the corn subdidies doesn’t meant that they should be unconstitutional.

              I mean think of what you really just implied there — the Constitution, or at least the current SCOTUS precedents, should ban subsidies for corn. Because we don’t like them, and people keep voting for them anyways.

              Do you have any idea of what such a precedent or Amendment would actually DO in real life?

              Legislating through the Courts is a very, very, very risky thing. That particular mechanism is often the only route for the minority to try to handle tryanny of the majority, but corn subsidies? Handling the health care market?

              These aren’t basic rights — they’re the functions of government, and choices — good, bad or indifferent — on those should be the call of Congress, not the courts! The courts are for rights, for conflicts, for places where immoveable objects and irresistable forces meet (where does “Freedom of assembly” meet “riot”? Where does “Freedom of Speech” end if it can kill? (Fire in theaters, etc)).

              They are NOT the place to debate whether corn subsidies are a good idea! Nor is the Constitution the best place for it…California is a mess almost entirely to that sort of short-sighted thinking.Report

              • Avatar BlaiseP says:

                Heh. Now try forcing Congress to make those politically unpalatable calls.Report

              • Avatar Morat20 says:

                Not really a Constitutional fault. People are people, and nothing in the Constitution guaruntees Congress can find it’s ass with both hands.

                Stupid does not mean unconstitutional. Bad, idiotic, won’t work in a million years does not mean unconstitutional. If we elect idiots to Congress and they pass idiotic laws, those are the laws as long as they don’t violate the Constitution.

                We get the government we elect. SCOTUS is basically just a boundary checker — it doesn’t (or shouldn’t) care whether it works, as long as whatever it IS doesn’t cross certain lines or have certain effects.Report

              • Avatar Brandon Berg says:

                It’s not a question of whether they’re a good idea. It’s a question of whether they fall under the powers delegated to Congress under the Constitution, which they very clearly do not.

                If you’re going to disregard constitutional restrictions when it suits you, then why have them at all? Free speech? Great, as long as it’s not unpopular. Due process? No problem, unless we really want to nail the bastard.

                The Constitution was supposed to act as a check on the folly of popular sentiment. Now it’s just for show.Report

              • Avatar Morat20 says:

                “They very clearly do not”.

                SCOTUS disagrees. So obviously, the very clearly do. I mean, you’re a dude on the internet. You might believe that, clearly, tinfoil protects your brain from alien mind-control rays. (This isn’t meant as an insult — it’s meant to point out that “clearly” is doing a lot of work there, and there’s not a person out there — myself included — who doesn’t believe something false with absolute certainity. Being wrong is part of the human condition).

                SCOTUS’ only job is to, in fact, make a ruling on whether something is Constitutional or not. On corn subsidies? Between them, Congress, and the President the entire federal government believes corn subsidies to be Constitutional.

                For you to say it’s “clearly not” isn’t just blatantly wrong — it’s a denial of reality. It’s apparent you don’t even have the slightest doubt, despite decades of law and the entirety of the federal government — three seperate branches — disagree with you.

                But “clearly unconstitutional” is flat out denial of reality.Report

              • Avatar Stillwater says:

                “Arguably unconstitutional” doesn’t work either. No, you gotta go all in: constitutional, incorrectly decided.

                But how could a policy be both constitutional and incorrectly decided? Is there an objective way to determine incorrectness (eg., that the argument was invalid?), or is it based on a subjectively determined difference of opinion?Report

              • Avatar Morat20 says:

                It’s fairly rhetorical, really. The games lawyers and forum junkies here like to play. Make cases for or against. Decide where you stand. Make guesses as to whether future courts will reverse.

                In the end, SCOTUS has the authority, which means it’s what they say.

                Arguing whether they are right or wrong is a little more pratical than arguing if WW2 would still have happened if Hitler had been six inches taller or gotten into art school, because you’re effectively honing arguments in case SCOTUS decides to think on the matter again.

                And because those conversations might be with people who might end up on SCOTUS, or arguing before it, or whatnot.Report

              • Avatar BlaiseP says:

                Rhetorical games? Stillwater asks the fundamental question: how could a policy be both constitutional and incorrectly decided? What are the objective measures of correctness?

                Brother Berg’s rejoinder’s been heard before in most SCOTUS dissents, some more articulate than others, but his point cannot be gainsaid: the Constitution was supposed to act as a check on the folly of popular sentiment. Look at the 18th Amendment, case in point. Or the oft-proposed Flag Burning Amendment. Everyone’s got a beef with the Constitution, me too.

                Impractical? Of course this is about alternate timelines and butterflies beating their wings in Brazil. Plessy v. Ferguson was incorrectly decided and led to a half-century of horrors being visited on minorities in this country, thousands of dead, horrible riots. Langston Hughes wrote:

                What happens to a dream deferred?

                Does it dry up
                like a raisin in the sun?
                Or fester like a sore–
                And then run?
                Does it stink like rotten meat?
                Or crust and sugar over–
                like a syrupy sweet?

                Maybe it just sags
                like a heavy load.

                Or does it explode?

                Usually it explodes. If we’re all a bit windy and rhetorical hereabouts, these are the essential discussions of men and women of good will. Though we may not end up on SCOTUS, we are each a butterfly in Brazil, beating its wings. What hurricanes may come of it? We don’t know, but hammering out ideas in the smoky forge of debate is not for the faint of heart or people who can’t properly cite a case.Report

              • Avatar Jaybird says:

                how could a policy be both constitutional and incorrectly decided?

                Would Dred Scott count?

                It seems to me that Dred Scott, according to established precedent, the laws as they had been interpreted to that point, reading the 10th Amendment as if the matter of “who is a citizen?” is left to the states or to the people, and so on… was decided in line with the constitution.

                It was also decided incorrectly.

                But I understand how that doesn’t exactly map 1:1 to what we’re talking about here.Report

              • Avatar Morat20 says:

                Perhaps instead of rhetorical games, I should have said: “A law can be both Constitutional and incorrectly decided if, later in time, that decision is changed”.

                Since that can and does happen, people sharpen their arguments and wait — hoping for change. Forward or backwards, it doesn’t matter.

                So I can list you a long number of laws that were Constitutional, but incorrectly decided. Or, more accurately, “Constitutional for a time, and incorrectly decided.”

                I think “Constitutionality” is a bit wrapped up in the Beloved and Perfect Founding Fathers myth.

                The Founding Fathers were a bunch of argumentative politicians, and the Constitution is so vague in places because the very people who signed it had different views on what it should mean, and they wrote that nebulous state into the very document — because it had to be vague to get enough signatures. 🙂

                So it is any wonder that we argue over what is allowed? The Founding Father’s didn’t have a unifying vision, didn’t have a plan — they had a rough idea, some vague language they could get everyone to agree on, and a fond hope the whole thing was flexible enough to bend rather than shatter over time.

                It worked out okay, and I think in large part BECAUSE it was so flexible.

                But that mythos, that almost biblical document handed down by Wise Men from a Better Age dominates too much thinking, imbues the term “Constitutional” with something so much more than what it really, actually means.

                And what it means is simple: “A law, regulation, or act by government that has been upheld, or is supported by, the Supreme Court”.

                That’s all the Supreme Court does, in the end. They take a questionable act (wherein “questionable” means “someone sued and SCOTUS agreed to take a look, sometimes just to slap someone) and stamp it with a big “Yes/No” with some reasoning attached, so the lesser courts know which way to stamp similar questions.

                And sometimes they take something they stamped NO or YES — or something quite close — and say “You know what? We’re calling backsies on this” and stamp it the other way.

                Not quite as cool as revealed truth.Report

              • Avatar BlaiseP says:

                Correct or Incorrect decisions — sometimes the worst decision is to make no decision. That’s a decision, too. There’s only so much real estate under the rug to sweep unpleasant issues and they tend to form up a critical mass, as the slavery issue built up after the Dred Scott decision.

                And we just shined it on as a nation. Read Lincoln’s first inaugural address, it’s a marvel of pretence and Happy Talk. Lincoln had the effrontery to quote from Article IV, that part now repealed by the Thirteenth Amendment. Those words weren’t engraved on the walls of the Lincoln Memorial.

                The Civil War was the direct and unavoidable result of the Constitution being so inflexible. Seven hundred thousand Americans died because those slave-owning hypocritical jackasses in 1789 decided to write Article IV the way they did and it took the Thirteenth Amendment to evict it from the Constitution. Britain didn’t have this problem repealing slavery because it didn’t have a Constitution.Report

              • Avatar Brandon Berg says:

                Check out Madison’s discussion of the taxing and spending (AKA “general welfare”) clause in Federalist 41.

                Note in particular the claim he’s rebutting is not that the clause should be interpreted as giving Congress blanket power to spend money on anything it considered as promoting the general welfare, but rather that the Constitution should not be ratified because it might one day be misinterpreted in that manner.

                The debate at that time was between those who argued that the taxing and spending clause was a liability because it might be incorrectly or disingenuously interpeted as granting broad powers to Congress, and those who argued that such an interpretation was so obviously wrong that this was not a legitimate concern. The idea that we should adopt a Constitution which gave Congress such broad powers wasn’t really on the table.

                There’s also brief discussion of the interstate commerce clause in Federalist 42. It’s fairly clear from how little mention it was given that it wasn’t really seen as a big deal, and its main purpose appears to have been to protect interstate commerce from interference by states lying between the origin and destination. If it were legitimately intended to grant to Congress the kind of carte blanche power it assumed in the 20th century, there would have been a lot more ink spilled over it (really, the Constitution likely would never have bene ratified).

                Really, the only way you can argue that it’s Constitutional is to define “Constitutional” as whatever the Supreme Court lets slide. But then “Constitutional” isn’t really the right word to use, since it doesn’t actually have anything to do with the Constitution.Report

              • Avatar Morat20 says:

                It’s worse than arguing with a Biblical literalist.

                Let me make this very simple: There is one body, and one body alone, tasked with the very simple job of determing the answer to the question “Is this Constitutional?”. (Sure, they may have taken it on themselves, but for 200+ years they’ve been the guys).

                They are LITERALLY the final word. They are the freakin’ Pope on this question. If they said that the Moon was Unconstitutional, then the MOON is unconstitutional.

                You can disagree with them. You can claim they’re wrong. You can predict — and even take comfort from history! — that they will reverse themselves some day. But until they do, what is Constitutional is what they say.

                Why? Because it is their job to determine that. The power they were given. (Or perhaps took). If they struck down Obamacare last week, it would have been unconstitutional. They upheld — it’s Constitutional.

                You may have some magical meaning to the word Constitutional — in fact, from your words above, your exact definition is “Something is Constitutional if Brandon Berg thinks it is, and isn’t if he doesn’t”. Which is awesome and all, but pointless.

                Not to put too fine a point on it, but once again — there is actually a body to decide this. It’s called “The Supreme Court”. And their call, and theirs alone, makes something Constitutional or not.

                You can think they are wrong — by all means. I often do! But it doesn’t change the fact that if they say “Constitutional” it IS — the law goes forth, is enforces, is valid. That’s the way the US works. If they say “Is NOT” then it is struck down, invalidated, gone. Poof. An ex-law.

                Their job, their authority, their call. Right, wrong or indifferent.

                You seem to seek revealed truths in the Constitution — it ain’t the Bible. But unlike the Bible, there aren’t a million different sects appealing laws to a million different courts. There’s just the one, and the federal government bows to it on this issue.Report

              • Avatar BlaiseP says:

                Really, the only way you can argue that it’s Constitutional is to define “Constitutional” as whatever the Supreme Court lets slide. But then “Constitutional” isn’t really the right word to use, since it doesn’t actually have anything to do with the Constitution.

                Actually, that’s exactly what the Constitution says about the Supreme Court. There’s a famous story told about Justice Marshall, who was a wonderful consensus builder, if a bit of a domineering figure on the court. Justice Story was a much better legal scholar and Marshall knew it. Marshall would write his decision, hand it to Story and say “There, Story; that is the law of this case; now go and find the authorities.”Report

              • Avatar Mike Schilling says:

                “But. Marshall, it’s as if all you want is a simple narrative explaining that things are as they are and there’s nothing more to be said.”

                “Just so, Story.”Report

              • Avatar BlaiseP says:

                Brother Likko has this all summed up, far beyond my poor powers to add or detract… heh, heh.

                In our two previous cases, we saw Chief Justice John Marshall using rather crass and often unappealing facts as the vehicles upon which to enlarge the power of the Federal judiciary. Martin v. Hunter’s Lessee (1816) 14 U.S. (1 Wheat.) 304 represents a bit of a departure from two of the three prominent elements of that pattern. The critical element, however, remained in place. And better, we get a real discussion of Constitutional theory, and a strong argument put on the table for the legitimacy of the Court’s early campaign to stake out its own legal power.Report

      • That’s technically true. There’s no reason they couldn’t jack up taxes and then provide tax credits for people who do just that.

        Well, using the standard Roberts seems to have elucidated, the taxes couldn’t be all that high and still be acceptable. A key element in his reasoning is that the mandate is not for his purposes a penalty because the tax/penalty is low.

        Now, I can see some legitimate criticisms here. How do we define low enough? Is Roberts’s reasoning really binding, considering the four people who voted with him didn’t sign on to the reasoning? Where do we draw the line between what Congress can conceivably tax people into doing? But he does seem to adopt some limiting principles.Report

  10. Avatar Matty says:

    I haven’t read all the comments above but the whole debate and the law itself strike me as legal and political chicanery. The American political system seems to be tying itself in knots to avoid having a health care system that looks like anyone elses.Report