Richard Kirsch: The Economic Question at the Core of the Individual ...

It is fitting testament to the fundamental problem with our health care system that the key legal question the Supreme Court is considering today is whether the requirement that most people have health coverage is a violation of the commerce clause. The legal issue is whether the act of not buying a product constitutes commercial activity. Opponents question whether the government could require people to buy any product, with broccoli as the favorite example. (Do people really hate broccoli that much?) The underlying premise of the challenge is that health coverage is a commodity, not a public good.

In defending the individual mandate, the government argues that health care is not like other commodities. As NPR's Julie Rovner reported last May when a federal appeals court in Virginia was considering the issue, "[Acting U.S. solicitor general Neal] Katyal drove his point home repeatedly: Health care is not like any other product; everyone consumes it, whether they buy insurance or not. 'That is a virtually universal feature of human existence,' he told the judges. 'Everyone is going to seek health care. Nobody can know precisely when.'"

Candidate Obama made the same point during a memorable moment of a debate with John McCain in October of 2008. When NBC's Tom Brokaw asked the candidates, "Is health care in America a privilege, a right, or a responsibility?" Obama's answer was crystal clear: "I think it should be a right for every American."

In economic terms, the point that both Obama and Katyal are making is that health care is a public good, not a private commodity. As I write in Fighting for Our Health:

The theory that health care is a consumer good like any other commercial product and that health care markets work like other markets is pure fantasy, at odds with everything we know about how health care is actually consumed. Health care markets violate the fundamental tenets of market economics...

Health care is a public good, not a commodity. The reason that other developed countries spend so much less on health care, and cover all their people and deliver higher health quality care, is that these countries recognize this fact. As a public good, health care must be made available on an equitable basis to all, and prices and supply must be regulated. In the rest of the developed world, almost everyone has their health coverage supplied by the government or by a regulated nonprofit insurer, and the coverage comes with very low out-of-pocket costs. In other words, other developed countries follow the exact opposite course recommended by conservatives and achieve systems that are much more efficient economically.

The passage of the Affordable Care Act sets the United States on the course to making health care a public good, which is why conservatives are so deeply opposed to it. For the first time, the government has a legal obligation to make health care affordable. The ACA accomplishes this in a uniquely American way, a combination of a big expansion of public coverage through Medicaid, financial penalties for employers who do not provide coverage for their workers, and income-based government subsidies for people to buy regulated private insurance.

The individual mandate is a key component of that last measure. Without the mandate, the regulated market would fail, since allowing people to buy coverage only when they need it drives up costs for everyone else and leaving people without coverage shifts the costs of their care to others. In short, a private decision not to buy a public good has substantial public consequences.

The great irony of the conservative challenge to the individual mandate is that there is no credible legal challenge to the concept that the government could raise taxes to provide public health coverage to everybody. Because both conservatives and those who profit from the health care industry have opposed a national insurance system, the ACA was developed first in Massachusetts and then nationally as a grand compromise. If the Supreme Court were to rule against the individual mandate, the only remaining constitutional course to provide coverage to everyone is through national health coverage.

Regardless of what the Court rules about the constitutionality of the individual mandate, health care will still be a public good, even if our health care system continues to have a schizophrenic relationship with the economics of health care, treating it like a public good and a commodity at the same time. In the long run, the only way to achieve a health care system that provides quality care that is affordable to the nation will be for the system to recognize that health care is a public good. The ACA is a major step in that direction and would be so even without the mandate. The expansion of Medicaid, the incentives for employers to pay for coverage, and other features of the law that regulate insurance rates and change the way Medicare pays providers all treat health care this way.

If the Supreme Court rejects the mandate, millions of people will go without health coverage, thousands of them will continue to die prematurely each year because they lack coverage, and tens of thousands will continue to suffer from crippling medical debt. Still, the economic pressures and tragic personal pain caused by our current health care system will continue to drive the United States in the direction of making health care a right. That will be true even if the Supreme Court decides that health care is more like broccoli than clean water and air.

Cross-Posted from New Deal 2.0

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Source: http://www.huffingtonpost.com/richard-kirsch/the-economic-question-at-_b_1382992.html

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