And the Winner Is….

The Supreme Court has been a veritable festival of economic ignorance the past few days, but if I had to pick a prize specimen, I think it would be Paul Clement’s response to Justice Kennedy’s observation that the uninsured — given our unwillingness to turn them away from emergency rooms — impose a burden on the rest of us. Mr. Clement (the plaintiff’s attorney) tried to argue that the same is true in any market:

When I’m sitting in my house deciding whether to buy a car, I am causing the labor market in Detroit to go south…

thereby blurring the key distinction between a pecuniary and a non-pecuniary externality.

The point is that Mr. Clement’s decision not to buy a car (and therefore to drive down the price) is bad for Detroit auto workers only to the extent that it’s good for other car buyers. It is therefore in no sense a net burden on the rest of society. Contrast that with the clear burden imposed by the uninsured fellow who wants you to pick up his hospital tab.

Pecuniary externalities (such as result from the decision to buy or not buy a car) are sometimes glossed over in lower level economics courses (I wouldn’t be surprised if many of my good undergraduate students have never heard of them), but I’d have liked to believe that we could expect a bit more sophistication from the lead attorney arguing a central point in a case of major national importance.

Share/Save

114 Responses to “And the Winner Is….”


  1. 1 1 Martin-1

    Steve,

    can it really be called a burden when you want to pick up the hospital tab of someone else and actually do so? I’ll grant you that when ‘we’ as a society pick up the tab, then the burden is that of taxation due to taxation separating the cost and benefit. Is it however really the case with an individual voluntarily paying the hospital bill of someone else because she feels compelled to do so?

    And what if that individual wants to pay taxes to reduce someone else’s hospital bill and agrees to do so ex ante? Is it then really a burden on that individual?

  2. 2 2 Super-Fly

    Martin-1,

    I think he was tacitly saying that society was “picking up the tab” through extra taxes. I can’t imagine any economist suggesting that voluntarily paying someone’s medical bills is a bad thing.

  3. 3 3 Ricardo Cruz

    “can it really be called a burden when you want to pick up the hospital tab of someone else and actually do so?”

    sure. going to the hospital is a burden given those resources are not (we presume) idle. they would have an alternative use. of course, if you earned the money fair and square, it is a burden canceled out by the resources you yourself made available.

  4. 4 4 Andy

    I pay tax and I don’t want to pay for the hospital bill of someone else. The people who do can go ahead and donate money to some charity that does just that.

  5. 5 5 Harold

    I think you underestimate the sophistication of the lawyers. You must remember that they are not trying to establish truth but win their case. The hope is that, with two balanced attornies, the truth will come out in the end. The fault lies with the opposite number, who failed to challenge the false claim.

    Our intuition often leads us astray with economics – because we have failed to consider the unbroken window or whatever. In this case, I think intuition would lead most people to think that Mr. Clement was talking out of his backside, even without an understanding of pecuniary externalities.

  6. 6 6 blink

    Yes, Mr. Clement (intentionally?) obscures the point about externalities. However, I think you are wrong to expect better. After all, Mr. Clement’s goal is not to present true arguments or even good arguments, but merely any plausible arguments that will increase the probability that the government prevails in the case. By that metric, I have to give him credit for a job well done.

  7. 7 7 Matthew

    blink,

    I think you have it backwards. Clement is trying to stop the gov’t.

  8. 8 8 Kevin

    SL is, of course, right on the economics. But he is wrong on the charge of ignorance. Clement is making a legal argument and it so happens blurring the distinction between pecuniary and nonpecuniary externalities advanced that argument. (see ‘blink’, with correction on who Clement represents) So all we can conclude is that he is a good and opportunistic lawyer—we can say nothing about his grasp of the underlying economic concepts. He may well even have a good argument for why the distinction in this case isn’t relevant. Instead, it is the Solicitor General who is likely to have revealed his ignorance of the economics by failing to make the distinction and use it as a bright line limitation on the commerce clause. I’m surprised SL didn’t pick up on that, given his acumen for looking beyond the obvious to the unseen.

  9. 9 9 Ken B

    Steve is missing an important point.

    ” given our unwillingness to turn them away from emergency rooms ”

    There is no comparable caveat pertaining to the guy in the car buying story. Let’as assume then that given our unwillingness to turn them away from the taxi stands we have to hire taxis for the non car buyer to do his shopping every time he runs out of groceries. Now his refusing to buy a car does impose a burden on the rest of us.

  10. 10 10 Martin-1

    Super-fly,

    “I think he was tacitly saying that society was “picking up the tab” through extra taxes. I can’t imagine any economist suggesting that voluntarily paying someone’s medical bills is a bad thing.”

    I realize that. My point is more in the direction that if you feel compelled to do so, that it should not matter for the burden whether an intermediary collects it on your behalf or whether you pay for it directly.

    If we all feel compelled to do so, can you really speak of a burden?

  11. 11 11 ThomasBayes

    Why does this matter to the Supreme Court? Economic soundness — or lack thereof — is not a reason for the court to strike down a law, is it? A law that is ‘optimal’ in an economic sense can still be unconstitutional, right?

    The predictions about the likely voting by this Court remind me of an interesting analysis of the second Rehnquist Court:

    http://www.pnas.org/content/100/13/7432.full.pdf+html

    I suspect that the Shannon entropy for the current court would be equally interesting.

  12. 12 12 Josh

    I still can’t seem to see how some of the justices are getting so hung up over whether we can require people to buy health insurance, when we force most working people today to essentially “buy” future health insurance through Medicare withholding from their paychecks. If you somehow live your life without paying or anyone else paying on your behalf into the Medicare trust fund, you won’t get Medicare when you turn 65, right?

    From what I’ve heard the justices are fine with Medicare withholding because it’s a “tax,” which technically of course can be used for anything. So, in other words, the government can force you to hand over money so long as the money can be used for anything…

    But is this just not semantics? If they knew the supreme court wanted this to be a tax, why doesn’t the Obama administration simply call this or even structure it to behave more like a “tax”?

  13. 13 13 Ryan P

    Dr. Landsburg,

    The line between “fiscal externalities” (the uncompensated care argument) and “pecuniary externalities” is indeed somewhat blurry — Mr. Clements didn’t need to make it so. I think Buchanan & Stubblebine had a point here.

  14. 14 14 Ken B

    @Josh: You seem to think the SC’s job is to judge the merits of the law. They are judging a quite different matter. Your argument is more properly directed at your congresscritter.

    And the money handed over cannot be used for anything. It cannot be used to build churches for instance. It can be used for those purposes the constitution authorizes the gov’t to spend it for, which is pretty broad, but not unlimited.

  15. 15 15 ThomasBayes

    Josh: If they knew the supreme court wanted this to be a tax, why doesn’t the Obama administration simply call this or even structure it to behave more like a “tax”?

    I think the Obama administration would have preferred to make this a tax and have the federal government administer the ‘insurance’. But they wouldn’t have had enough votes to pass that law, so they passed a different one, and that is the one the Supreme Court has to judge.

  16. 16 16 Ken B

    We discussed this some time ago. SL and many others made a simple error: they didn’t count *all* the consequences. They did not count such trivial matters as what people think or feel, what labels might be applied to people, and what precedents might be set.

    For example, if Thomas Bayes declines to buy health insurance he becomes a criminal.

    You simply cannot judge a policy solely by what it does to goods and services and money. Compare and contrast: Steve gives me $5; I take $5 from Steve and no-one objects. Same goods, services, money. Minor differences in what Steve thinks, what I think, and what precedents are set.

    I’m willing to try half of this experiment btw. I have PayPal and Steve has my email.

  17. 17 17 Will A

    For those wanting the public option (eventually), the supreme court striking down this law would not be such a bad thing.

    The next time 60 Senators believe everyone needs access to health insurance (maybe 150 years from now), the only negotiation needed will be long do you take to phase in the eligibility age for Medicare dropping to 0 years and 0 days old.

    It will be interesting if the judges have this in the back of their minds while making their ever impartial and based only on case law decisions.

  18. 18 18 Tom

    How about the burden the insured place on the uninsured? The reason the uninsured are unable to pick up the tab is because the cost of health care is so high ordinary people are unable to afford it without insurance. The government subsidizes the insured by $250 billion through tax breaks for their employer provided health insurance. Government insurance subsidies to the elderly through Medicare and the poor through Medicaid run about $750 billion. The insured are getting $1 trillion in subsidies driving up the cost of medicine. Now, is it any wonder that someone who is uninsured cannot afford medical care? But the reason why it is unaffordable for the uninsured is because of all the subsidies that go to the insured that drives up the cost of health care to dizzying heights. Then after complaining about the free ride the uninsured get, the insured want a free ride by compelling the healthy uninsured into the insurance pool in order to bring down the premiums to the insured.

  19. 19 19 Ken B

    @Will A: First, I appreciate your swipe at Breyer and Kagan. Very nice. But if you want to make health insurance ‘available’ to everyone then the simplest thing is to pay for it. Demanding I buy it myself and paying for mine yourself are really very different things. The second of course is quite explicitly one thing the mandate does not do.

  20. 20 20 AMTbuff

    @Josh:

    The government may force you to hand over money to it. The government may spend that money on most things, since the 1930′s including transfer payments to individuals. What it may not do is force you to make a transfer payment directly to the recipient even thought the net economic effect may be very similar or even superior.

    As a practical matter, this distinction prevents hiding large spending programs off-budget. That’s a transparency benefit for our democracy. If a law like this does not have enough votes to pass as an on-budget expenditure, it should not pass at all. The courts certainly should not uphold an unconstitutional off-budget version enacted in that form to deceive the voters.

    Another point made in the opponents’ argument is that uncompensated care is a relatively minor aspect of health care financing. Yet it is being cited by proponents as the reason for many unrelated and unnecessary changes, for example overcharging the young to subsidize for the old. A mandate under which rates were set by age, or even by risk category with a voucher covering the excess risk, could eliminate uncompensated care equally well. The proponents’ arguments sound like “We had to do something, and this is something, so we had to do this.”

    One point not contested in the arguments was that Congress has the power to regulate the insurance industry into bankruptcy by imposing economically impossible requirements. That sounds like it would be a Takings clause violation to me, but I’m not a lawyer. Perhaps that issue was not considered ripe for adjudication because the law’s destruction of the insurance industry is not yet completely certain.

  21. 21 21 Blake Watson

    Kevin,

    I agree with all of your comment and you may be right that Clement may well have a good enough counter the distinction between pecuniary and non-pecuniary externalities. However, I can’t think of one.

    The distinction SL has pointed out seems to me to be exactly the kind of bright line distinction that the government has been failing to express. I can’t find anyone else expressing this distinction but it seem to me to clearly separate health care from broccoli, cars, and gym memberships, though not caskets and burial insurance. Health care is special because it creates “real” not merely pecuniary externalities in that it diverts real resources to sick, poor people who will never pay for those resources. This means less medical care for the rest of us. If I’m forced to buy broccoli all we have is a pecuniary externality of a change in broccoli price.

    This seems like pure gold for mandate defenders, all they need is a little something to hang their distinction on and this seems like alot more. Why is nobody talking about this? Am I missing something?

  22. 22 22 Josh

    AMTBuff: “As a practical matter, this distinction prevents hiding large spending programs off-budget. That’s a transparency benefit for our democracy. If a law like this does not have enough votes to pass as an on-budget expenditure, it should not pass at all.”

    Your post makes sense on some level, but I think I disagree with your last sentence above. If, at the end of the day, two programs are essentially the same but the money flows a little differently, I wouldn’t care if it’s in the budget or not. It seems to me there could be some sort of reporting mechanism that would provide needed data to see what we’re spending on health insurance, even if the premiums weren’t first flowing to the government.

  23. 23 23 Will A

    @ Ken B:

    Actually my swipe was at every justice who have ever served on the supreme court.

    I don’t think I was defending the Mandate.

    Luckily, my income is more than 4 times the poverty level, however, I imagine that if my household income was around $ 40,000 that I would have a hard time coming up cash to purchase insurance initially. And of course I can’t get the tax credit until I purchase insurance which means that I would have to pay a penalty on my taxes.

    A voucher system would have helped the working poor. Of course the ACA isn’t designed to help the working poor.

  24. 24 24 Ryan P

    Blake Watson,
    Diverting resources from one group to another doesn’t sound like a true technological externality — that again sounds just like any other pecuniary or fiscal externality.

  25. 25 25 Ken B

    @Will A: I thought you were defending ‘the public option.’ I also think you implied the hypothetical 60 senators wanted everyone to have ‘access to health insurance’. I was pointing out a problem.

  26. 26 26 Floccina

    I do not see what the arguments have to do with constitutionality.

  27. 27 27 Economiser

    ThomasBayes et al:

    The Supreme Court devoted an entire day of oral argument (Monday) to questions related to whether or not the ACA is a “tax,” and if so whether the Court has jurisdiction to hear challenges before anyone actually is required to pay the tax.

    See:

    “Plain English” summary: http://www.scotusblog.com/2012/03/anti-injunction-act-oral-argument-in-plain-english/

    Slightly more technical summary: http://www.scotusblog.com/2012/03/argument-recap-moving-on-to-the-mandate/

  28. 28 28 Ken B

    @Economiser: I assume I’m part of et al.
    The is-it-a-tax rulings seem pretty consistent so far: not a tax. That also fits the plain text and the politics. From what I read no-one expects the court will rule this is a tax.

  29. 29 29 ThomasBayes

    I was once pulled over by a police officer for driving my car faster than the posted limit. I asked if this constituted breaking the law. He gave me a piece of paper that looked like a $100 fine.

    “Pay the tax, then you are in compliance with the law.”

    I think the officer’s name was Verrilli.

  30. 30 30 Will A

    @ Ken B:

    Good point, I should have said for those wanting to cover Americans via Medicare expansion …

    As it relates to severability, I believe that my snide comment insinuating that judges are not always impartial can still stand.

  31. 31 31 Scott H.

    OK, SL is right on the economics. However, I agree with Ken B. that we need to count all the consequences. Most importantly is this bill’s effect on the power of the SCOTUS. If the mandate passes, why would the court need to review another law invoking the commerce clause ever again — what couldn’t the government do? The means here turn out to be even more important than the ends.

    My prediction is that SCOTUS strikes down the bill to protect its own turf. In my opinion it would take a very partisan, leftist judge to overlook not just the Constitutional issues, but the threat to judicial power. There are only three justices like that. 6-3 against ACA.

  32. 32 32 iceman

    The swing vote is asking whether healthcare is unique. SL points out that Clement’s car example for why it’s not is bad economics (but perhaps clever lawyering). But Martin-1 has a good point: regarding the involuntarily uninsured, it’s not really a burden to be forced to help people you wanted to help anyway. In terms of the case, it’s a “problem” Congress created by forcing hospitals to take all comers, so even if we define away all meaning from the commerce clause, there’s a question of “necessary and proper”. A tax would be constitutional – but apparently also a tougher sell politically than calling it “insurance”. If the SC upholds it’s a victory for obfuscation.

    So @ Blake Watson, I don’t see how your argument would distinguish healthcare from any other charitable function (which involve transferring real resources). ‘Diverting broccoli to poor people who will never pay for it mean less broccoli for the rest of us’ (or less of whatever else is not grown in order to grow more broccoli), because we chose to do that. There’s also a fixed amount of space for gym memberships. The bright line that proponents of the ACA attempt to draw is that if the healthy do not purchase insurance the entire “market” unravels for everyone, i.e. it deprives everyone of a public good. Which seems to presume insurance is a uniform good for which insurers (unfettered) couldn’t and wouldn’t apply risk-based pricing in the first instance.

    The voluntarily uninsured may create an unwanted burden when they end up needing care, but 1) as a group they probably represent net subsidizers not a net burden (which is why the ACA wants them in the exchanges), and 2) assuming we’re not going to turn them away from the ER either, it seems the main difference is that in those instances where they do impose a burden, it’s spread across other taxpayers instead of policyholders (in the sense Ricardo Cruz suggests that a burden is imposed anytime anyone pays for hospital services via insurance, i.e. not with resources you yourself made available).

  33. 33 33 Marcelo

    Steve, I think you might be missing the inter-state aspect of Mr. Clement’s point, which is captured in his specific reference to “Detroit” and which is crucial to the consitutionality issue here. If a consumer in NY decides not to buy a Chrysler made in Michigan, he has an adverse impact on Chrysler’s Michigan-based employees.

    The net impact would indeed be zero on a national level for the reason you cited, but could be greater than zero on an inter-state basis. For the Commerce Clause to apply, the inter-state calculus is key.

    Mr. Clement’s example is intended to demonstrate that, if the government’s argument is taken to its logical conclusion, the Commerce Clause could be used to force non-Michigan consumers to buy Michigan-made cars.

  34. 34 34 Blake Watson

    @ iceman, Ryan
    It’s not that mandating health care and broccoli don’t both have pecuniary externalities, they do, just like practically anything you could think of. But health care (granted because of gov’t policy’s implicit promise to never refuse emergency care) also creates a different kind of externality in addition. This seems like a distinction with real effect.

    Besides, your disagreements aren’t really with me, they’re with SL. I’m merely emphasizing the distinction he says exists:

    “The point is that Mr. Clement’s decision not to buy a car (and therefore to drive down the price) is bad for Detroit auto workers only to the extent that it’s good for other car buyers. It is therefore in no sense a net burden on the rest of society. Contrast that with the clear burden imposed by the uninsured fellow who wants you to pick up his hospital tab.”

    No one is handing out free broccoli or cars, we do hand out free health care sometimes which creates a free-rider problem (non-pecuniary externality), which we don’t have in other markets (though we could easily create the same problem by handing out free broccoli). If we treat the federal “never turn sick people away from hospital” law as a fundamental law of nature, instead of a gov’t. creation then I think there is a valid distinction here.

    So, is it the case that there is no such distinction between pecuniary and non-pecuniary externalities? Or is it that this isn’t an example of the distinction? Or maybe the distinction is not constitutionally relevant? I understand that the government isn’t forwarding SL’s argument I’m just asking why not? Can the gov’t not make this argument because they are the basically source of the problem?

  35. 35 35 djp

    Perhaps what Clement meant was that if the guy on the couch doesn’t buy a car from Detroit automakers, then the gov will increase taxes in order to divert monies to the labor unions. ;)

  36. 36 36 KS

    “No one is handing out free broccoli or cars, we do hand out free health care sometimes which creates a free-rider problem (non-pecuniary externality), which we don’t have in other markets (though we could easily create the same problem by handing out free broccoli).”

    Exactly! The government already mandates that providers offer free emergency health care (notice how this mandate should be exactly as constitutional or as unconstitutional as the individual mandate to purchase health insurance). This is what separates the market from, say, broccoli. In fact, my 10-year old cousin can figure this one out.

    In fact, the term “mandate” is stupid. The government isn’t forcing you to purchase health insurance. It’s making you pay the cost if you choose not to. It’s internalizing the costs of health care insurance, since it’s already been decided that the benefits should be spread — ie, EVERYONE gets free emergency coverage.

    It is no different than the government “mandating” I pay for the lamps in my street or the traffic lights on my road (via taxation). After all, is the government then not coercing me into purchasing a good I might not have? (I.e., Anthony Kennedy, you are a fool).

  37. 37 37 Steve Landsburg

    KS:

    It is no different than the government “mandating” I pay for the lamps in my street or the traffic lights on my road (via taxation).

    I agree with you that the health insurance mandate is no more or less coercive than taxes for lamps or traffic lights. But there’s still an important difference: Those lamps and traffic lights are public goods, whereas health care (for the most part) is not. So the level of coercion might be the same, but the potential justification for the coercion is certainly different.

    A better example, I think would be that it is no different than the government mandating that I participate in the Social Security program. This is a much closer analogy.

    edited to add:

    You also wrote:

    The government already mandates that providers offer free emergency health care (notice how this mandate should be exactly as constitutional or as unconstitutional as the individual mandate to purchase health insurance).

    Nice point.

  38. 38 38 Jimbino

    I think a good case can be made that it is the uninsured who subsidize the insured in the healthcare market.

    Much of health care nationwide is subsidized through general revenues, and many of the uninsured–young people, alternative medicine adherents, rich bastards, and expatriate Americans–under-utilize national health care in general and the “free” emergency care in particular, all the while paying more than their “fair” share of general-revenue taxes that subsidize such, especially when tax-favored treatment of employer-provided health insurance is taken into account.

  39. 39 39 Jason

    I am one of those undergraduates (not necessarily a good one), and we do learn about pecuniary externalities at some point in our economics education. We discussed them in the context of a person selling their house. When someone sells their house it sets the market price for other similar houses in the neighborhood. If your neighbors are asking $500,000 for their home and you sell yours for $300,000 they will now have to lower the price of their home if they want to sell. You could say that you have imposed a $200,000 cost on your neighbors, but of course home buyers are now $200,000 better off. The gains to society are a net neutral, but your friendship with your neighbors suffers.

    Most of us have never heard of them because a pecuniary externality is just a fancy way of saying sellers compete on price! It seems like it got its own term because noneconomists kept calling this competition an externality and to appease them we made up a nice little term. (Who coined this term anyway?)

    The feds have used this pecuniary externality argument to justify interference in corn markets under the commerce clause. Growing corn on your own property for your own consumption can be regulated under the commerce clause because by not buying corn on the market you drive down the price of corn. Hence, you have affected interstate commerce and the feds have a right to regulate your garden.

  40. 40 40 ThomasBayes

    Steve and KS:

    You both think this is a good point:

    The government already mandates that providers offer free emergency health care (notice how this mandate should be exactly as constitutional or as unconstitutional as the individual mandate to purchase health insurance).

    But the government does not mandate that you have to be a health-care provider. If you don’t like this rule, then you can opt out of the health-care business. A mandate that everyone must buy health insurance doesn’t seem to be exactly the same as this. Related, but not exactly the same.

  41. 41 41 rednecktech

    It is interesting to me how many arguments are made without including a serious look at reducing the actual cost of health care for those that can’t afford insurance or the cash option at current rates. Some years ago I knew some people on the Texas/Mexico border that took their kids across the border when they got sick. They said that the Mexican doctors would prescribe something strong enough to knock out the problem at a tiny fraction of the cost of American doctors. The downside was that any malpractice type problems came under the TS heading.

    It might be interesting to speculate on the possibility of an unregulated niche medical capability for those that are willing to accept more risk in exchange for affordability.

  42. 42 42 Steve Landsburg

    ThomasBayes:

    But the government does not mandate that you have to be a health-care provider. If you don’t like this rule, then you can opt out of the health-care business. A mandate that everyone must buy health insurance doesn’t seem to be exactly the same as this. Related, but not exactly the same.

    A fair point, and also the basis of an argument that the mandate on providers is worse than the individual mandate, because it distorts the decision to enter the industry.

  43. 43 43 Steve Landsburg

    Jason: Thanks for this. I’m glad that you do learn about pecuniary externalities. Your example about corn markets is accurate, and depressing.

  44. 44 44 itk

    As others have pointed out, the distinction isn’t legally relevant under the Court’s Commerce Cause doctrine. Time is also limited at oral argument, so he’s not going to engage in an extended disquisition on fine economic distinctions that are irrelevant.

    Clement read postgraduate economics at Cambridge. It’s probably safe to assume that he’s not “unsophisticated.”

  45. 45 45 Harold

    If the corn example is a precedent, then why is there dicussion over this instead of the corn? That would seem to be a much simpler case (as there is no complication of mandated corn buying). Why did the big guns not wheel out to protect the constitution in this case?

  46. 46 46 Steve Landsburg

    Harold:

    Why did the big guns not wheel out to protect the constitution in this case?

    Some tried!

  47. 47 47 Ken B

    Steve landsburg: “the basis of an argument that the mandate on providers is worse than the individual mandate, because it distorts the decision to enter the industry.”

    Worse economically. Not worse CONSTITUTIONALLY.

  48. 48 48 Ken B

    @Harold: the case of interst is Wickard. It’s an awful decision but perhaps the best precedent in favor of the mandate. However even Wickard regulates activity not inactivity.

  49. 49 49 Ken B
  50. 50 50 Ken B

    Stev and KS agree on this:
    “The government already mandates that providers offer free emergency health care (notice how this mandate should be exactly as constitutional or as unconstitutional as the individual mandate to purchase health insurance).”

    On what basis? An action of the federal government is constitutional or not based not on economics but the constitution.
    I think the federal government should no more draft young men than it should require them to attend Bob Murphy’s church. But one is plainly constitutional and the other not based not on the wisdom or morality of the policy but the text.

  51. 51 51 Ken B

    Will A: ” I believe that my snide comment insinuating that judges are not always impartial can still stand.”

    Actually, I think it can dance.

    I was just tweaking you.

  52. 52 52 KS

    “But the government does not mandate that you have to be a health-care provider. If you don’t like this rule, then you can opt out of the health-care business. A mandate that everyone must buy health insurance doesn’t seem to be exactly the same as this. Related, but not exactly the same.”

    Nope, they are the same. The federal government mandates an individual must engage in some activity X. In case A, X = offer emergency health care for free to someone. In case B, X = purchase health care insurance.

    Your interpretation, to me, doesn’t seem relevant. If I am a doctor, and I don’t want to offer emergency health care to someone who presents with a gun shot wound unless I am certain they can pay, I cannot. The federal government is regulating my inactivity just the same.

    @ Ken B-

    “On what basis? An action of the federal government is constitutional or not based not on economics but the constitution.”

    On the basis that the two are functionally equivalent. If A = B, then the constitutionality of A = the constitutionality of B.

    If you are against the constitutionality of the individual mandate in PPACA, then maybe you are against the federal government coercing an individual to engage in a market they would not otherwise. Well then, I am a provider, and I do not want to offer my services for free to the next gunshot wound victim.

  53. 53 53 Ken B

    “The government already mandates that providers offer free emergency health care ”

    Is this actually correct? Isn’t the mandate actally to provide the emergency care without proof of the ability to pay? Treat first, no questions asked, bill later. The hospital can send a bill afterwards. You still owe for the services consumed. So then the real externality problem is people who consume the care but default on paying for it?

  54. 54 54 Blake Watson

    Jason + KenB

    Thanks, I believe you’ve given me my answer. I still find it bizarre that a pecuniary externality counts as an externality. But it sounds like that battle was lost during Wickard and the last frontier is this activity/inactivity distinction.

  55. 55 55 KS

    “Isn’t the mandate actally to provide the emergency care without proof of the ability to pay? Treat first, no questions asked, bill later. The hospital can send a bill afterwards. You still owe for the services consumed.”

    You are correct, but there’s no guarantee that the treated individual can, or even has to, pay. For instance, DUMC writes off almost $300 million each year in losses due to treating the un-insured.

    The argument is the same, though: force providers to provide emergency health care for free, or force providers to provide emergency health care for free without inquiring into ability-to-pay and then try to obtain reimbursement later but no guarantee that you might.

    The truth is, this is all a bad, bad, joke. You may not like this law, and I certainly don’t. But to call it unconstitutional, you would have to call the entire 20th century unconstitutional, and prevent the federal government from being able to do anything, really.

  56. 56 56 Ryan P

    Blake Watson,

    I wasn’t arguing that cars don’t have pecuniary externalities. I was arguing that the externality you’re saying exists with healthcare is basically just a fiscal externality, and fiscal externalities are mainly just pecuniary externalities (which is to say, not an externality). Mainly we’re just saying “you get X but you don’t pay for it, so I have to”, which might be bad from a fairness or distribution point of view, but that’s not Pareto inefficient. The most you can say is that maybe I consume more of X than I would if you had just given me the cash equivalent, but even that’s going to be a smaller issue than you’d think by just looking at my X expenditures.

  57. 57 57 Ken B

    I got curious. Let’s go to tape, my bold

    MR. CLEMENT: And with respect to the health insurance market that’s designed to have payment in the health care market, everybody is not in the market. And that’s the premise of the statute, and that’s the problem Congress is trying to solve.

    And if it tried to solve it through incentives, we wouldn’t be here; but, it’s trying to solve it in a way that nobody has ever tried to solve an economic problem before, which is saying, you know, it would be so much more efficient if you were just in this market -­

    JUSTICE KENNEDY: But they are in the market in the sense that they are creating a risk that the market must account for.

    MR. CLEMENT: Well, Justice Kennedy, I don’t think that’s right, certainly in any way that distinguishes this from any other context. When I’m sitting in my house deciding I’m not going to buy a car, I am causing the labor market in Detroit to go south. I am causing maybe somebody to lose their job, and for everybody to have to pay for it under welfare. So, the cost shifting that the government tries to uniquely associate with this market — it’s everywhere. And even more to the point, the rationale that they think ultimately supports this legislation, that, look, it’s an economic decision; once you make the economic decision, we aggregate the decision; there’s your substantial effect on commerce. That argument works here. It works in every single industry.

    So I think Clement is arguing that the job loss is a comparable externality because the transaction costa associated with those job losses become a burden on the rest of us through welfare.

  58. 58 58 Steve Landsburg

    So I think Clement is arguing that the job loss is a comparable externality because the transaction costa associated with those job losses become a burden on the rest of us through welfare.

    Ken B: But if we’re talking about people who have lost their jobs anyway, so the welfare payments are not inducing them to stop working, then the welfare payments too are a net zero as far as externalities go.

  59. 59 59 Ken B

    @Steve: I don’t think it is a net zero in principle here. Maybe I haven’t made clear the point I think Clement made. Clement buys no car so Detroit loses a job, but Atlanta Rickshaws gains one say due to lower wage rates etc. If I get laid off I get 99 weeks UI. If someone not on UI is hired then there is a net burden on the tax payers as UI is not actuarially sound. If on the other hand I am on welfare not UI then there is a net cost during the transition time between my job disappearing and the replacing job being filled. And if the job in Atlanta is not created at all then my being on welfare or UI places a burden on you because the law says I can collect it from you taxpayers.

    Because of our social safety net the transaction costs of such job losses are partly paid by working taxpayers.

  60. 60 60 Ken B

    A simpler example. Bob is laid off at GM because I don’t buy a car. He is hired one year later by Atlanta Rickshaw. In the interim Bob has been on the dole, funded by other taxpayers.

  61. 61 61 Steve Landsburg

    Ken B:

    A simpler example. Bob is laid off at GM because I don’t buy a car. He is hired one year later by Atlanta Rickshaw. In the interim Bob has been on the dole, funded by other taxpayers.

    I still dont get it. The taxpayers lose, say, $20K, and Bob gains $20K worth of leisure. Where’s the social loss?

  62. 62 62 Ken B

    @Steve: I don’t get it. The uninsured Bob gets say $20K worth of healthcare and we pay the $20K. Where’s the social loss?

    In your post the guy who wants you to pick up the tab for Bob’s operation puts a burden on you. Why is 20K for Bob’s leisure not a burden then?

  63. 63 63 Ken B

    let try another way. You want to give Clement a dunce cap for missing an economics point subtler than ones Krugman often misses or distorts. OK. But what did Clement actually count as the effect? He did NOT count the drop in the car price, and he did not even count the job loss. He counted the welfare because that’s a cost that goes back to the employed tax payers. Unemployment burdens the employed. Why? because of the social safety net: we will pay him anyway. He was answering the claim that Jim’s lack of insurance puts a cost on insured Steve to pay for Jim’s hospital stay: being uninsured places a burden on the insured. Why? because of the social safety net: we will pay for the care anyway.
    Not so bad for an ex tempore challenge from a judge.

  64. 64 64 Al V.

    Re. the point that a couple of people made, that the tax deductability of health insurance is a subsidy of the insured by the uninsured, many people have called Obama a socialist for passing the ACA. In fact, I could argue that the ACA makes us less socialist, because it reduced the tax deductability of health care, thus implictly reducing the subsidy.

  65. 65 65 Iceman

    KS – things can definitely be functionally equivalent but not constitutionally so. See today’s post on block grant coercion, which I believe is how we have a federal minimum wage, drinking age etc. These are constitutional end runs. Everyone agrees the govt could tax everyone for health care and then exempt those who have insurance. They should be forced to go back and sell this thing honestly.

    BTW I think Wickard was about wheat, and such a poor decision one of the affirming judges said it might have been different had the farmer threshed or not threshed the wheat (I forget which but how could that matter?). And this case is a step further because we cannot say any particular uninsured person will impose a burden, that is pure speculation — and as mentioned, in fact the voluntarily uninsured are probably *less* likely to incur excess costs. Yet that seems to be the group over whose “proximity” to impacting rates Kennedy expresses concern.

  66. 66 66 KS

    @ Iceman–

    “things can definitely be functionally equivalent but not constitutionally so. See today’s post on block grant coercion, which I believe is how we have a federal minimum wage, drinking age etc. These are constitutional end runs. Everyone agrees the govt could tax everyone for health care and then exempt those who have insurance. They should be forced to go back and sell this thing honestly.”

    The silver lining for the likely strike down of PPACA is that it would rule out any possibility for future universal coverage other than single payer (i.e., Medicare for all). Of course, it might be another 20+ years until we get there again.

    Anyway, I don’t see the distinction.

    I’m a doctor; I don’t want to provide my services for free without knowing my consumer (ie, patient) can pay. The federal government says (or effectively says, by denying Medicare reimbursement otherwise) too bad, you need to offer your services for free at the point of sale, then worry about compensation later.

    I’m a patient; I don’t want to buy health insurance until I need it, at the point of sale. The feds say too bad, either buy it now, or pay a tax/penalty/whatever-you-want-to-call-it.

    To me the only difference between the two is (1) precedence, and (2) partisanship. Remember the limiting principle goes both ways. If the Court says the feds can’t make someone buy health insurance, what can the feds do? Can they make me pay taxes for Social Security? Medicare? etc…

  67. 67 67 David

    I simply do not understand why it is accepted that being uninsured directly translates into a burden of those who are insured. Some uninsured are financially capable to pay and do so. Some uninsured are financially incapable of even paying for insurance and are not a net effect on the burden calculation — just a movement between burden classifications. After all these people are eliminated — what is the real effect of the uninsured that we are even attempting to address with the mandate?

  68. 68 68 KS

    “I simply do not understand why it is accepted that being uninsured directly translates into a burden of those who are insured.”

    I don’t have the paper in front of me, but this is an established and empirical fact. Essentially none of the un-insured can pay for the emergency medical care they receive, and that money has to come from somewhere.

    But this kinda isn’t the point. Even if there were no cost-shifting, precedence would suggest the federal government can compel you to purchase health insurance.

  69. 69 69 Ken B

    @David: there are two arguments made.

    1. If you — young healthy low risk — are in the pool there is more money to pay for me — old unhealty high risk. The arguemtn is your absence then burdens those of us in the pool.

    2. If you are uninsured and go to an mergency room you will be treated and can later default. The law says the doctor may not sue you to collect if you decide not to pay. The argument is that it is your lack of insurance not your defalcation which presents the burden.

    Convinced?

  70. 70 70 Iceman

    I think we’ve established here that ‘burden’ is not really the term at issue. We know the involuntarily uninsured can’t pay and we choose to bear that burden. A direct tax would be a necessary and proper remedy, but the govt prefers to use insurance cos as bogeyman to disguise the transfer. Relying on bad precedence is lame. And the voluntarily uninsured, the group the ACA targets, are likely not a net burden (KS if your paper isolated them and showed a net burden I’ll eat my tie; but I feel for you, I agree the mandate on hospitals is worse — at least it’s logical to tell someone it’s not insurance if you wait until you need it to purchase).

    Again, ACA defenders are really arguing for a specific ‘non-pecuniary externality’ (new term for me I admit) that the voluntarily uninsured are not just failing to subsidize others, but depriving everyone else of a public good because the entire insurance market depends on it. This is the relevant sense of ‘burden’ in Ken B’s example 1. Again, this seems to require a presumption that insurers couldn’t risk price in the first instance. But it is a pretty slick way to repackage a redistributive goal.

  71. 71 71 KS

    “And the voluntarily uninsured, the group the ACA targets, are likely not a net burden”

    Why is that?

  72. 72 72 KS

    I think the debate here is changing to focus on the policy effects of the law. But the Court doesn’t (or shouldn’t) judge that; it solely judges if the law is constitutional or not. This law is clearly constitutional, although I agree, it’s far from ideal, and not what I would have come up with were I a dictator with a magic wand.

  73. 73 73 Ken B

    KS:”I think the debate here is changing to focus on the policy effects of the law. But the Court doesn’t (or shouldn’t) judge that; it solely judges if the law is constitutional or not.”

    yes, exactly.

    “This law is clearly constitutional”

    Obviously wrong. It might be constitutional — you haven’t made an argument I note — but it isn’t OBVIOUSLY so. For instance you called Kennedy a fool for advancing a reason the law might pass constitutional muster.

    “A = B” ? It is simply not equivalent to say I have to buy insurance or be a criminal and you will pay for my insurance. One of the ways it differs is in the legal precedent it sets.

  74. 74 74 KS

    “Obviously wrong. It might be constitutional — you haven’t made an argument I note — but it isn’t OBVIOUSLY so. For instance you called Kennedy a fool for advancing a reason the law might pass constitutional muster.”

    I mean, what exactly is the argument for its unconstitutionality?

    (1) That the federal government cannot mandate individuals purchase health insurance. Okay, so they already do (Medicare), let’s move on to:

    (2) That the federal government cannot compel individuals to purchase a private product (or enter a private market by doing so). Then explain vaccines — i.e., if I want to attend public school, I have to purchase private vaccines. Okay, so maybe the federal government HAS forced individuals to purchase private products before. Let’s move on to:

    (3) That I’m a Republican and I liked/supported this idea when we proposed it, but now the Democrats have used it, I hate it and consider it an unconscionable assault on individual liberty. Ahh, yes, we have a winner. And finally:

    (4) I’m a Supreme Court justice about to serve as an independent legislature.

  75. 75 75 KS

    ““A = B” ? It is simply not equivalent to say I have to buy insurance or be a criminal and you will pay for my insurance. One of the ways it differs is in the legal precedent it sets.”

    What legal precedence? The federal government already compels me and you to do a lot of things, and some of these include engaging in private commerce, believe it or not. This individual mandate sets no legal precedent and in no way represents an increase of government oversight onto individual liberty.

    Now, if you are against the individual mandate, and want to be consistent, then I suggest you also find the following to be unconstitutional as well:

    - Medicare
    - Social Security
    - Vaccination mandates (i.e., I, a free individual, am required to purchase vaccines from a private manufacturer if I want to attend public schools)
    - Criminal background checks when applying to certain jobs (i.e., I, a free individual, am required to purchase a background check from a private third-party business before applying to work at some places)
    - Basically, all of the 20th century

  76. 76 76 itk

    “I still dont get it. The taxpayers lose, say, $20K, and Bob gains $20K worth of leisure. Where’s the social loss?”

    By the same token, taxpayers lose, say, $20k, and the uninsured patient gains $20k worth of medical care. Where’s the social loss?

  77. 77 77 Steve Landsburg

    itk: By the same token, taxpayers lose, say, $20k, and the uninsured patient gains $20k worth of medical care. Where’s the social loss?

    The social loss comes in when people choose too much medical care because they are insured. Likewise, of course, with unemployment insurance, which is why, a few comments earlier in that discussion, I had made it clear that my point applied only to workers who were going to be unemployed anyway, those being the workers who were relevant to the particular line of argument that was being made at that point.

  78. 78 78 Ken B

    @KS:
    Three times now you have used the phrase ‘precedence’ to refer to earlier court decisions. You keeping using that word; I don’t think it means what you think it means.

    “Now, if you are against the individual mandate, and want to be consistent, then I suggest you also find the following to be unconstitutional as well: Basically, all of the 20th century”

    Novel idea, that Brown v Board is wrong if KS is wrong.

    “I mean, what exactly is the argument for its unconstitutionality?”
    Yeah, I was pretty sure you weren’t paying attention.
    Here are three ‘argumence’. 1.There is no enumerated power. 2. The commerce clause does not cover inactivity. 3 Even if the commerce clause reaches inactivity this exrecise of power cannot be proper to the federal government’s function as it has no limit. (This last is a structural argument like Marbury v Madison).

  79. 79 79 Tony N

    In reply to KS:

    The government compels us to do many things, but the power by which it engages in compulsion matters. The government was quite explicit regarding the particular constitutional vehicles it chose to justify the mandate. And it got it all wrong.

    Also, one doesn’t purchase Medicare or SS.

    The vaccine and background checks are only imposed upon your undertaking of a voluntary action.

    What you don’t seem to grasp is that while the government can compel you to engage in private commerce, its doing so is considered a regulatory action that has been precipitated by your voluntary participation in a particular, and relevant, commercial sphere. Hence, a state can mandate the purchase of car insurance once you voluntarily purchase car.

    Being born is not voluntary nor is it commerce.

  80. 80 80 Ken B

    Tony N:
    “What [KS doesn't] seem to grasp is that while the government can compel you to engage in private commerce, its doing so is considered a regulatory action that has been precipitated by your voluntary participation in a particular, and relevant, commercial sphere.”

    Accurately specifying on the most important precedents that this law would set were it ruled constitutional: the removal of the necessity for a voluntary choice.
    , and the removal of the idea that regulation of interstate commerce is even tangentially constrained by the notion of being a regulation of interstate commerce. [Personally I think that is the goal for many of the law's defenders.]

    [@Tony N: I knew we'd like to have you here! Wilkommen, bienvenue, welcome.]

  81. 81 81 Tony N

    Ken B,

    Agreed. On all points.

    And as for the intentions of the law’s defenders: well, yes, PPACA does look remarkably similar to a camel’s nose.

    Great to be here. Thanks for the recommendation.

  82. 82 82 Iceman

    @KS: ‘why aren’t the voluntarily uninsured a net burden?’

    An empirical question in the end, but it seems very unlikely to me that they would be because of the self-selection involved. Of course *when* they show up at the ER they probably will be, but I presume they will tend to be younger/healthier than average. More importantly the ACA seems to believe this too. And as SL just pointed out, if insured they will probably consume more health care.

    @Tony N: of course the comeback is once born they will someday actively participate in the market. But this is where it seems relevant to me (even constitutionally?) that we cannot say any particular person will in fact consume more than they could pay. It’s pure speculation. Can the SC really rely on that basis? And per the above with regard to the voluntarily uninsured the probabilities don’t even seem to be there.

  83. 83 83 Tony N

    Iceman,

    You’re right, that is the comeback. And, as I suspect you already know, that’s precisely the argument the government makes.

    However, there’s a major problem with that comeback, aside from the fact that it’s substantively tenuous—as you illustrate with your concern with the assumption regarding one’s inability to pay:

    The claim that we will all enter the health-care market is accurate enough, so far as it goes. But the claim that we will all, inevitably, enter the health-insurance market is something quite different. Although the government is correct when it argues that the two markets are fundamentally linked these days (i.e., health care without insurance is unrealistic for nearly everyone due to remarkably high health-care costs), it cannot argue that they will remain that way. Markets are dynamic, prices change.

    Remember, the mandate does not compel the purchase of health care. It compels the purchase of health insurance. Simply put, the link on which the law’s defenders depend to unify the two markets can disappear at any time. But the same can’t be said for the dangerous precedent that the law would set.

  84. 84 84 Ken B

    @iceman: As well it’s the decision to default that places the burden. If every uninsured who received care paid up …

  85. 85 85 KS

    @ Ken B–

    “Here are three ‘argumence’. 1.There is no enumerated power. 2. The commerce clause does not cover inactivity. 3 Even if the commerce clause reaches inactivity this exrecise of power cannot be proper to the federal government’s function as it has no limit. (This last is a structural argument like Marbury v Madison).”

    Please provide a succinct summary of what you mean by ‘inactivity’.

    @ Tony N–

    “The vaccine and background checks are only imposed upon your undertaking of a voluntary action.”

    So the government can compel me to purchase a private product only if I voluntarily undertake an unrelated action?

    “What you don’t seem to grasp is that while the government can compel you to engage in private commerce, its doing so is considered a regulatory action that has been precipitated by your voluntary participation in a particular, and relevant, commercial sphere. Hence, a state can mandate the purchase of car insurance once you voluntarily purchase car.

    Being born is not voluntary nor is it commerce.”

    Well this is where we disagree. Everyone is in the health care market whether they like it or not, because everyone is entitled (by another government mandate) to free emergency coverage. It’s just a matter of when and who. When do you pay the costs for the care you are entitled to receive — before or after the point of the sale? And, who pays the costs for the care you are entitled to receive — you, or everyone else with insurance?

    This is the exact rationale why the ‘individual mandate’ is a conservative-born, conservative-bred idea. Until a Democrat supported it, of course.

    So no, health care is not broccoli. In fact, I have a hard time believing all the PPACA opponents believe that it is; it’s all just naked partisan politics. If the government mandated that individuals must receive broccoli in the moments of most dire need, then broccoli might be like health care. Might.

    @ Iceman–

    “An empirical question in the end, but it seems very unlikely to me that they would be because of the self-selection involved. Of course *when* they show up at the ER they probably will be, but I presume they will tend to be younger/healthier than average. More importantly the ACA seems to believe this too. And as SL just pointed out, if insured they will probably consume more health care.”

    Actually, self-selection can go the other way: the uninsured also consists of populations who are too expensive and consume too much health care and so currently can’t receive insurance. So assuming they are healthier and necessarily consume less insurance is, um, naive. Also, numerous studies have shown people consume more health care when they present later to the ER then when they present earlier to primary care providers, too.

  86. 86 86 KS

    @ Tony N-

    “The claim that we will all enter the health-care market is accurate enough, so far as it goes. But the claim that we will all, inevitably, enter the health-insurance market is something quite different. Although the government is correct when it argues that the two markets are fundamentally linked these days (i.e., health care without insurance is unrealistic for nearly everyone due to remarkably high health-care costs), it cannot argue that they will remain that way. Markets are dynamic, prices change.”

    Just saw this. Laws and governments change too. So to say we can’t regulate a market because the market might change in an unanticipated way in the future is, um, not an argument I would consider legitimate.

  87. 87 87 Ken B

    KS: “Please provide a succinct summary of what you mean by ‘inactivity’.”

    I already did. Or didn’t rather. All those times I didn’t post a definition of inactivity? That was inactivity.

    To expand on Tony N’s point though. ‘Activity’ for the purposes here is voluntary participation in a market, activity, group, etc. The commerce clause allows the regulation of interstate commercial activity. So any non-participation in that would count. My cousin in Toronto for instance is not a participant in the US healthcare system. :)

    The distinction between activity and inactivity is well established in law. If I find you afire by the side of the road I do not have to fetch a bucket, but if I do I must use some care it contains water not gasoline.

  88. 88 88 Ken B

    KS: “This is the exact rationale why the ‘individual mandate’ is a conservative-born, conservative-bred idea.” Pretty much. Except perhaps for the mandate part — providing tax $ to pay for it certainly. However there are plenty of conservative threats to liberty too. Google Gingrich, Newt. Or Santorum, Rick. Or … well you get the idea.

  89. 89 89 Ken B

    KS:”because everyone is entitled (by another government mandate) to free emergency coverage. ” Well not quite but close enough. Still not a good argument, because it’s bootstrapping. It extends govt power in new ways based on prior extensions of govt power. Unless there is a clear stopping point it has to be rejected on the limited powers grounds (10th amendment). States can use this, federal can’t.

  90. 90 90 Ken B

    Everybody comes to Rick’s. Of all the gin joints in all the world, everyone (almost) ends up at Rick’s. When you’re at Ricks you can’t speak German. Rick hates it. He’s entitled; it’s his place and you’re there. But now he wants to prevent me speaking German. I’ll be there eventually. HILFE!

  91. 91 91 Tony N

    KS,

    If I’m entitled to emergency care, am I’m also prohibited from paying for it? You make it seem as if everyone goes to the emergency room and leaves society holding the tab. This simply isn’t true. In fact, most people go through their lives without incurring grave injuries that require emergency treatment that can’t be paid for out of pocket. Upon accepting this reality, we have, once again, removed any grounds upon which one can make the connection between health insurance and health care. The need for health care is a given, requiring insurance to pay for it isn’t (it can’t be assumed that it always will be).

    As to your comment re vaccines, talk to the government about that, not me. But they’re only going to tell you that you’re free to home school your child if you don’t want to pay for a vaccine.

    And as for the last bit aimed at me: you’re right, that is a bad argument. Too bad it’s clearly not the one I made.

    Mutability in markets and law doesn’t preclude regulation. However, mutability in market conditions does preclude the expansion of the plenary powers of the federal government, especially when the government’s entire rational for that expansion of power relies entirely on market conditions.

  92. 92 92 Tony N

    Ken B is right. Once again.

  93. 93 93 Tony N

    rationale*

  94. 94 94 KS

    @ Ken B–

    “Everybody comes to Rick’s. Of all the gin joints in all the world, everyone (almost) ends up at Rick’s. When you’re at Ricks you can’t speak German. Rick hates it. He’s entitled; it’s his place and you’re there. But now he wants to prevent me speaking German. I’ll be there eventually. HILFE!”

    In no way is this analogous to PPACA.

    Let’s make an analogy which makes sense:

    Rick’s has a gin joint. Everyone goes there for gin at some point in their life. Now, the government has mandated Rick that when someone presents for gin, he must give it to them, and worry about compensation/reimbursement later — with the caveat that he may not get it. So some people go to Rick’s, get gin, and don’t pay. So Rick has to charge those who do pay more to cover those costs. Now, the same government says, okay, let’s make it so everyone has to pay for the cost of eventual gin they will receive.

    Introducing these tangential ideas like “Rick hates German and so no-one can ever speak German ever” is nonsense.

  95. 95 95 KS

    @ Ken B–

    “It extends govt power in new ways based on prior extensions of govt power. Unless there is a clear stopping point it has to be rejected on the limited powers grounds (10th amendment).”

    False. In fact the individual mandate isn’t nearly as bad as previous extensions of federal government authority; you are just regurgitating some Fox News talking point. In the past, the federal government has mandated that every individual purchase a musket (look it up). They have also mandated that a farmer cannot grow his own wheat in his own farm even if he has no intention of selling it in any market anywhere (look it up). The federal government already “mandates” a lot which are equivalent to this ‘individual mandate’.

    In fact, the term ‘mandate’ is silly. You can still choose not to purchase insurance, you just pay a higher tax for it. The federal government is just distributing the costs of health insurance, since it is already decided that the benefits will be distributed.

  96. 96 96 Iceman

    KS — I thought I was pretty, um, specific in identifying the *voluntarily* uninsured, you know, the ones the ACA wants in the pool to subsidize others. To me your description is probably accurate for the involuntarily uninsured, those who want health care / insurance and can’t afford it (e.g. because they expect to be net consumers).

    BTW I’m glad someone is stirring the pot here.

  97. 97 97 bart.mitchell

    @Andy
    I pay tax and I don’t want to pay for foreign wars. The people who want foreign wars can go ahead and donate money to some mercenary outfit that does just that.

    Logic is a bitch.

  98. 98 98 Iceman

    “I don’t want to pay for foreign wars.”

    This is a common refrain to which I think the simple answer is, while we will certainly disagree over the practicalities of implementation, national defense is inherently a classic public good. The proponents of ACA are trying to cast this issue in terms of a public good as well (the voluntarily uninsured cause the entire insurance market to unravel for everyone), and people will judge for themselves whether that is a thin reed. But I guess we should at least appreciate the gesture; on many other fronts proponents of expanded govt don’t even try to look beyond ‘general welfare’.

  99. 99 99 Ken B

    @bart.mitchell: Alas the constitution allows congress to declare war. Text is a bitch.

  100. 100 100 KS

    “KS — I thought I was pretty, um, specific in identifying the *voluntarily* uninsured, you know, the ones the ACA wants in the pool to subsidize others. To me your description is probably accurate for the involuntarily uninsured, those who want health care / insurance and can’t afford it (e.g. because they expect to be net consumers).”

    I don’t see a difference between the ‘voluntarily’ and ‘involuntarily’ uninsured.

    Your claim seems to be that the ‘voluntarily’ uninsured are the ones who choose not to purchase health insurance because they are younger and healthier, and therefore don’t require it.

    To that I would add, however, that the other group of uninsured are also ‘voluntarily’ uninsured.

    Either way, it’s irrelevant. The basic premise is simple: if there exists a good X, and there exists a mechanism whereby people who purchase X receive the full marginal benefit of additional X but themselves pay less than the full marginal cost of additional X, then the total amount of X consumed will be supra-optimal. In such cases, the government is freely allowed to regulate to remedy the situation.

  101. 101 101 KS

    Might I add, similar arguments were made when the federal government stepped in to forcibly integrate the South, or to oversee voting in some states in the South, etc…

    The claim is the same: if we grant the federal government this unprecedented power to commit X, eventually we’ll have Y.

    It’s just silly. Taxing people who don’t purchase health insurance will one day lead to forcing people to eat broccoli. Allowing gay marriage will one day lead to allowing bestiality.

    I personally don’t — or maybe I can’t — believe a lot of people follow these trains of thought, because they seem absurd to me. Clearly there are nonrival and/or public goods which the government should be allowed to regulate; there are also other private activities which the government shouldn’t. And clearly it’s easy to see the difference between the two, at least to me.

    It would be like me arguing: we cannot let the federal government outlaw murder, because once we do, next thing you know, they’ll prevent me from watching TV.

  102. 102 102 KS

    @ Tony N–

    “This simply isn’t true. In fact, most people go through their lives without incurring grave injuries that require emergency treatment that can’t be paid for out of pocket. Upon accepting this reality, we have, once again, removed any grounds upon which one can make the connection between health insurance and health care. ”

    Actually it is. Basically nobody can pay for health care expenditures out of pocket, unless you are Bill Gates. Either you have insurance coverage, or you don’t pay for it altogether (in which case cost-shifting occurs).

    Either way it doesn’t matter. The federal government is allowed to regulate the health insurance industry, and they are allowed to tax you if you don’t purchase health insurance. Just like they tax me if I rent a home and don’t buy one (via tax deductions). Or like they force me to serve black people and white people the same if I open a restaurant, even though it is “my” restaurant.

    “And as for the last bit aimed at me: you’re right, that is a bad argument. Too bad it’s clearly not the one I made.

    Mutability in markets and law doesn’t preclude regulation. However, mutability in market conditions does preclude the expansion of the plenary powers of the federal government, especially when the government’s entire rational for that expansion of power relies entirely on market conditions.”

    There is no expansion of plenary powers here. The feds are doing things that are entirely consistent with what they’ve done before over the past century.

    Interestingly, when Medicare was passed, Reagan called it “the end of freedom in our country” (or something like that). This type of conservative hyperbole isn’t unprecedented, and neither is this law.

  103. 103 103 Tony N

    KS:

    I have several friends who pay for their health care out of pocket. No insurance.They’re not rich. They’ve simply avoided being hit by a bus.

    As for the balance of your comment, virtually nothing about it makes sense once you acknowledge that the mandate isn’t a tax. It’s a penalty for not buying something. If you can’t appreciate the distinction between a tax and a penalty then we aren’t going to get anywhere.

    But I will leave you with one question to contemplate:

    If the mandate is sanctioned under the taxing power, why did the administration focus nearly all its efforts on a weak-tea commerce clause arguement?

    Here’s a hint: it’s not really a tax.

  104. 104 104 KS

    @ Tony N–

    “I have several friends who pay for their health care out of pocket. No insurance.They’re not rich. They’ve simply avoided being hit by a bus.”

    Yes, just like, right now, I am healthy, and 26, and hey, my health care expenses are zero.

    The assumption for health care is that everyone eventually will need it. That’s a fact. And when they do, no-one can afford catastrophic coverage (besides Bill Gates); insurance is the only way to pay for that, unless you’re Bill Gates. Do you know how much a two day stay plus ER visit costs out-of-pocket? Up to $40k!

    Your viewpoint is too narrow, you are only focusing on individual behaviors at a particular moment in time. The point is to follow individuals longitudinally. The rationale becomes even stronger when you consider no-one can predict when they’ll need such health care catastrophic coverage.

    “As for the balance of your comment, virtually nothing about it makes sense once you acknowledge that the mandate isn’t a tax. It’s a penalty for not buying something. If you can’t appreciate the distinction between a tax and a penalty then we aren’t going to get anywhere.”

    Lol, it’s the same thing.

    Here’s the federal government: if you don’t buy X, we tax you Y.
    Here’s you: the federal government is making me pay a penalty Y, because I didn’t buy X.

    “If the mandate is sanctioned under the taxing power, why did the administration focus nearly all its efforts on a weak-tea commerce clause arguement?

    Here’s a hint: it’s not really a tax.”

    Of course it’s a tax. And it’s a penalty. It’s the same thing. If the federal government had said, okay, everyone who currently has health insurance gets a $2,500 tax rebate, and anyone who buys health insurance gets the same rebate, but no-one else does, that would be the same thing!

    These arguments against its unconstitutionality are weak and semantical. There is no ‘unprecedented expansion of government power on individual liberty’, just like, Medicare wasn’t exactly ‘the end of freedom as we know it’. This is a knee-jerk conservative hyperbolic reaction to a policy they don’t understand.

  105. 105 105 Tony N

    As I said before, if you can’t appreciate the distinction between a tax and a penalty then we aren’t going to get anywhere.

    We are officially nowhere.

    The SCOTUS and I will go wallow in our ignorance now.

  106. 106 106 KS

    @ Tony N–

    You are free to enlighten me on the difference.

    Of course, I don’t think there is a difference, because anything that’s a tax can also be seen as a penalty, and vice versa. But I’m not willing to rule out the possibility there might be a functional (not semantic) difference, if you’re willing to articulate one.

    Essentially all the individual ‘mandate’ says is: if you don’t purchase health insurance, we’ll tax you. And in that light, it’s not exactly unprecedented or unconstitutional.

  107. 107 107 Tony N

    KS:

    “Of course, I don’t think there is a difference, because anything that’s a tax can also be seen as a penalty, and vice versa.”

    When you are issued a speeding ticket, are you being taxed, penalized, or both? If your answer is both then I assume you are arguing from a position of functional equivalence. People often do this and it doesn’t hold up when contemplating legal concepts.

    Contemplate murder and manslaughter. Functionally, they are the same. Someone kills someone else. Essentially, the only difference is malice—in other words, intent. Do you think the law should treat murder and manslaughter the same? Do you think the intent behind a penalty is the same as the intent behind a tax? This is important. Think about it.

  108. 108 108 Ken B

    @Tony N: This is related to a point I have made here often: you need to count all the consequences. Around here on the ‘the law is a ass’ threads many seem to assume that if the economic consequences are the same (or close) that that’s enough.

    An example I gave is my taking $5 from Steve’s wallet, everyone observing, and no-one doing anything. It’s very different if Steve said I could or if I just did it and no-one objected. The consequences are different bec ause implicit agreements, precedents,emotions and beliefs are consequences.

    KS was quire explicit in an earlier comment, saying that if X=Y then the constituionality of X = the constituionality of Y. But of course some equals are more equal than others.

  109. 109 109 KS

    @ Tony N–

    “When you are issued a speeding ticket, are you being taxed, penalized, or both? If your answer is both then I assume you are arguing from a position of functional equivalence. People often do this and it doesn’t hold up when contemplating legal concepts.”

    The same.

    You are being taxed for driving over 65 mph.
    You are being penalized for driving over 65 mph.

    These, to me, are functionally equivalent on every level. The constitutionality of a ‘tax’ is the same as the constitutionality of a ‘penalty’.

    “Contemplate murder and manslaughter. Functionally, they are the same. Someone kills someone else. Essentially, the only difference is malice—in other words, intent. Do you think the law should treat murder and manslaughter the same? Do you think the intent behind a penalty is the same as the intent behind a tax? This is important. Think about it.”

    Now, these are NOT functionally equivalent. Intention to kill someone else is not the same as accidentally killing someone else. Hence, these can be treated differently.

    ———

    But I guess it begs the question. Say the individual ‘mandate’ is a penalty, not a tax. How would that make it unconstitutional?

    After all, when the federal government provides a tax break for people who own homes vs. rent homes, it is basically providing a ‘penalty’ to those who rent. Yet this is clearly constitutional. How are they different?

  110. 110 110 Ken B

    “anything that’s a tax can also be seen as a penalty, and vice versa.”

    New meaning for ‘the death tax’.

  111. 111 111 KS

    “New meaning for ‘the death tax’.”

    This is about as meaningful an argument as (and I paraphrase), ‘if we let the government force us to purchase health insurance omg they’ll prevent me from speaking German’.

    Anyway, these arguments are getting weaker and weaker. So I’ll say this: if you guys agree that a ‘tax’ is constitutional but a ‘penalty’ would not be, I’m just going to go ahead and say okay, I’ve won this debate. After all, all the individual ‘mandate’ says is, “if you don’t purchase private health insurance and can afford it, we’re going to penalize you by taxing you”.

  112. 112 112 Tony N

    Ken B:

    Yes, matters of the law generally require a great deal of precision. Unfortunately, precision generally requires a great deal of effort, which many well-intentioned people just can’t seem to muster. So they reverse engineer incompatible ideas until they find the components they need to create the simpler reality that they’re after. You and I can pluck away several important distinctions from the concepts of taxes and theft and eventually reach the simple conclusion that they are exactly the same thing. It doesn’t mean they are.

    KS:

    See comment above. Also, I think Ken B pretty much covered why functional equivalence alone doesn’t make X the same as Y.

    Congress needs a vehicle to impose a fine or penalty. You need to enter certain realms in order for Congress to have access to such a vehicle. Congress can’t penalize you for freely choosing not to enter into one of those realms. So mandate-as-penalty is unconstitutional.

    If I ignore a tax break, I’m out the money. If I ignore a tax, which you argue is the same as a penalty, I go to jail. So it seems there is a difference. A big one.

    Finally, I’m glad you agree with us that intentions matter. If the intention of a tax is to raise revenue, and the intention of the mandate is not, then they are different.

    I tried to keep this simple. I really did.

  113. 113 113 Ken B

    @Tony N:
    Lincoln asked a riddle :If you deem the tail a leg how many legs does a dog have?
    The answer is four. Deeming the tail a leg doesn’t make it one.

    Seems to fit this thread somehow.

  114. 114 114 Tony N

    Ken B,

    That’s a good one! You could always count on ol’ Abe for an apt statement.

    You know, if you ever find yourself in too good a mood, I mean in really good spirits, and find yourself just a little too optimistic and content with state of our nation, simply dig up an old Lincoln speech and give it a glance. Then google an Obama speech and do the same.

    You’ll be right as rain.

  1. 1 And the Winner Is…. « Daniel J. Smith
  2. 2 JimSwift.net » Blog Archive » Thursday Links (3/29/12)
  3. 3 Steven Landsburg and the Casually Tossed-off Limiting Principle « Curious Task
  4. 4 JimSwift.net » Blog Archive » Friday Funday Links
Comments are currently closed.