The ACA Mandate and Single Payer Health Care

Yesterday when the Supreme Court upheld the individual mandate in Obamacare, the three top search results for this blog were all about the link between the Affordable Care Act and single-payer health care. This is not surprising: unlike a lot of news commentators who shared their view on the ACA ruling on Thursday, the American people realize that the end goal of Obama’s health reform efforts is indeed a single-payer health care system.

They are right. The path to single-payer health care is as open as ever. And the measures that friends of freedom can use to turn the country around have narrowed notably. The silver lining in that, though, is that it now makes sense to concentrate the fight against ever growing government to fewer, more focused efforts.

Before we look at the options to protect and restore individual and economic freedom, let us take another look at how the Supreme Court ruling promotes the march to single-payer land.

Here is what I wrote on Wednesday, the day before the ruling:

[There] is no doubt that the ACA was only a half-baked measure in terms of statist health care reform. The real goal has always been to create a single-payer system in America, modeled after the European systems that are currently struggling to keep their patients alive and themselves afloat financially. Every Democrat presidential candidate since at least Michael Dukakis has explicitly supported one form or another of a single-payer system. Therefore, we can expect that the Obama administration will respond to the Supreme Court ruling by moving in the same direction. How they go about it depends, of course, on how the Court rules on the ACA.

And with the mandate upheld, Obama and his fellow Congressional Democrats have passed one major obstacle on the route to single-payer: they now have the tax they need to fund it.

The most logical way forward, from the view of the Obama administration, is to activate the public option, i.e., to offer a federal health insurance plan to the general public. The major obstacle for doing so has been how to fund it: whenever there has been a debate over the public option among friends of health care freedom, the argument has been that Congress can always stop the public option by not funding it. That strategy is now dead: the Supreme Court has defined the individual mandate as a tax, and as such it can be used to buy any authorized insurance plan. That includes a public option plan.

I would like to see Congress pass a bill that says “you can buy health insurance plans A, B and C with this tax, but you cannot buy health insurance plan D.” In theory, of course, anything is possible, but since the public option is already embedded in the Affordable Care Act – it is just not active right now – Congress has already created it. Therefore, it is up to the executive branch to activate it, and since they no longer have to worry about asking Congress for funds for it, the activation basically becomes an administrative matter for the Secretary of Health and Human Services.

Whether or not Obama will do it before the election is a matter of political strategy.

An active public option will have far-reaching consequences, eventually as far-reaching as wiping out private health insurance. It will happen in two steps.

The first step has to do with pricing. The individual-mandate tax that the Supreme Court has now declared constitutional is technically supposed to only pay for the premiums that buy an insurance plan. But the ACA also comes with a system of subsidies for insurance purchases. These subsidies are supposed to help low-to-middle income families buy health insurance by reducing or eliminating market pricing of health plan premiums. It would be an easy matter to design the public option so that it gets a maximum of subsidy-supported enrollment: the smaller out-of-pocket cost people have to cough up for their health insurance premium every month, the more inclined they will be to buy that plan.¬†As enrollment grows, the public option will nibble away at enrollment in private plans and slowly but steadily grow to become “the” health plan for the bulk of Americans.

The second step is to convert the public option into a single plan for all Americans. Again, this is done through the income tax we have hitherto known as the individual mandate. Today the ACA does not strictly regulate what tax rate you should pay for your health insurance: you shop around and find the plan and premium you like, of course within parameters dictated by the ACA. With the mandate defined as a tax and a public option active, it is easy to take the next step and streamline the tax as a defined percentage, much like Social Security or Medicare. That streamlining would define your health insurance premium as a percentage of your income. In President Clinton’s Health Security Act the health insurance tax was capped at 7.4 percent of personal income.

With a defined percentage the plan choices narrow further. Reasonably we can expect the streamlining to be tailored to fit the public option, making it hard for remaining, competing plans to stay in business. If not before, this measure will assure that only the public option remains. It is entirely possible that the streamlining will come with an explicit elimination of competing plans (roughly the way the health insurance markets were socialized in Canada and several European countries) in which case the “end game”, socialized health care, will be brought about rather swiftly.

The question, then, is how friends of freedom can fight this welfare-state onslaught. I will address this issue in detail in another article – it is a long topic; for now, let me suggest that America’s freedom fighters need to look beyond the constitution for a solution. This does not mean that the constitution is irrelevant – quite the contrary – but the Supreme Court has just said that the constitution does not preclude any expansion of government so long as that expansion is paid for with taxes.

The Founders and Framers never envisioned the modern welfare state. Therefore, the constitution was not written to be a firewall against the kind of big government that the welfare state represents. In essence, the statists found a constitutional loophole through which they could push their welfare state onto the American people.

Herein lies the key to how to fight back against the welfare state. More on that in another article. Stay tuned.