The Individual Mandate as Sleight-of-Hand

by Reihan Salam

The individual mandate is a rhetorical device. To pay for a new health entitlement, we need to impose a tax. But to mask the cost of the new health entitlement, the president and his allies chose a more complex structure. That’s really all there is to it. The federal government can very easily offer everyone health insurance, and it can offer a choice of private insurance providers through an exchange. This is roughly what happens in a number of advanced market democracies. Yet if the individual mandate is found unconstitutional, the federal government will have to do this through a more transparent and coherent vehicle.

Richard Epstein has more on this subject here at NRO:

So the argument now has to be that the only way to fund this is out of general revenues, not out of selective charges against those who do not wish to join in the system. As a matter of political theory, there is no clear rule that says if X group is entitled to the subsidy, we can somehow identify the Y group who is duty bound to pay it. So as a normative matter, it is hard to explain why the individual mandate has to be the flip side of the subsidy when general taxes are still available.

And who believes that taxpayers, many of them stretched to the limit by the need to pay down debt, will favor the creation of an expensive new health entitlement when there are other options, e.g., channeling the employer tax exclusion towards a tax credit for the purchase of catastrophic coverage?

There are some writers, including Matt Miller of the Washington Post, who insist that the individual mandate is essential to the preservation of a private insurance system. But one wonders if a system centered around an individual mandate is any more private than a system in which public dollars are used to purchase insurance from various private providers. As I understand it, food stamps haven’t destroyed the private marketplace for foodstuffs. And it’s not obvious that a system in which the poor are subject to a “food mandate” that they’d meet with the aid of public subsidies would be any more private.

(It’s fun to think through the structure of this “food mandate.” All households would have to purchase at least $5,000 worth of food every year, with various lobbies and pressure groups insisting that $3,000 be devoted to, say, dairy or high-fructose corn syrup. Affluent “young invincibles” who would normally live on a meager diet of root vegetables would thus cross-subsidize more enthusiastic consumers of processed foods. The federal government would close the gap for low-income households. Supermarkets would come out as the big winners, I assume.)

I can’t for the life of me figure out the difference, except that one is clearer about the actual role of government.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.