Thursday, March 29, 2012

The Difference between Healthcare Insurance and Broccoli Markets

Democrats and the Obama administration have seriously if not fatally fumbled on the simple answer to a question Justice Scalia posed:

"Could you define the market -- everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli?"

According to Senator John Kerry, "Like it or not, at some point in our lives, every single person will receive healthcare." That is a terrible answer.

Solicitor General Verrilli, the person the Obama administration entrusted to make the case for the individual mandate responded to Scalia, saying "if you go in and -- and seek to obtain a product or service, you will get it even if you can't pay for it." But he didn't finish the thought and missed the heart of the distinction.

It is not that broccoli is different from healthcare because it is not about the nature of the product but the nature of their markets. It is not that everyone needs healthcare because again this is about the product and not the market. It is not even that people can get healthcare without having to pay for it. This begins to talk about the market, but it doesn't say what is it about such a market that may invoke the government's authority to regulate commerce.

What he ought to have said is that people can get healthcare without having to pay for it and the rest of us who do buy insurance must. Those of us who are paying for health insurance are forced to subsidize those who do not. This, if anything, is what would invite government regulation.

Recognizing that the health-care industry suffers from a free-riding problem helps us pinpoint two general solutions. 1. We get rid of the law that creates the free-riding problem. 2. Or we enact a law that closes the free-riding loophole -- and that is the individual mandate of the Affordable Healthcare Act, or "Obamacare."

What is the law that creates the free-riding problem? It is the Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986 which requires that hospitals provide emergency care to anyone seeking it regardless of ability to pay. Now, why would millions of Americans buy health insurance voluntarily if we can get it for free? Actually, this is the law that small government conservatives ought to be challenging. This is what causes the problem; Obamacare is only the fix.

Yet for whatever reason, we have decided as a society that we will not engage in patient dumping. Maybe we should, maybe we shouldn't, but statutory law already accepts that there is something different about the healthcare product from broccoli. No point harping on that argument. But liberals and Obama are too fixated on this line of reasoning because they are too quick to use the victim-centered approach to selling their political programs. Oh, those poor 40 million Americans without health-care insurance, they say.

But they are shooting themselves in their empathetic feet this time. It is not those poor 40 million Americans. It is those free-riding 40 million Americans who could and have gotten healthcare for free and made everyone else pay for it that necessitates regulation of an industry bloated and rendered inefficient by free-riding.

The free-riding problem reaches deep into our pockets -- at least for those who have health insurance. Unregulated commerce can be coercive too, not just "individual mandates." Can we really expect someone who doesn't buy health insurance (and therefore who does not, allegedly, perform an action) never to seek free services in an emergency room when the law says s/he can? Maybe we won't need Obamacare if, as Madison intoned in Federalist 51, "men were angels." If we won't go in for a free service when we haven't paid for it.

But we are not angels. And that is why Publius proposed a federal government to, among other things, regulate inter-state commerce. The Solicitor General should have framed the debate in terms of the Emergency Medical Treatment and Active Labor Act (EMTALA). Does the Court want to strike that law down? If the answer is "no," then we have a free-riding loophole that only the government can close. Yes, the individual mandate is perhaps constitutionally novel, but so is the EMTALA. But no one is challenging the Emergency Medical Treatment and Active Labor Act before the Court now, is there?

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