Health care and the Constitution: On the individual mandate and pre-existing conditions

Mark D. White

As you may have heard, U.S. District Judge Henry E. Hudson ruled Monday that the part of the Affordable Care Act (the health care reform bill passed earlier this year) dependant on the individual mandate to purchase health insurance is unconstitutional. From his ruling (as reported by The Wall Street Journal): "At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate."

I'm no constitutional law scholar, so I won't try to comment on the technicalities of the decision, but as I've said here before, I don't believe the principles inherent in the Constitution allow the federal government to require someone to purchase something solely as a condition of citizenship, regardless of the rationale or purpose. As Judge Hudson said, the Constitution does not provide for the "regulation of a person's decision not to purchase a product, notwithstanding its effect on interstate commerce or role in a global regulatory scheme."

What I will comment on is the adminstration's argument for the individual mandate, which comes to the simple economics of adverse selection, but without the necessary ethical subtext. Quoting the WSJ, "The Obama administration says that without the individual mandate, it could no longer require insurers to provide coverage to people with pre-existing conditions because that would create an unhealthy pool of consumers and drive up insurance prices for everyone."

There are two problems with this, one conceptual and the other ethical. The conceptual problem is with providing health insurance for pre-existing conditions. Insurance covers against risk; we buy insurance (if we choose) to protect us from the financial impact of disasterous events, such as auto accidents, fire, or illness. But with pre-existing conditions, the risk has been realized, and "insurance" collapes to financial coverage. If someone has a pre-existing conditions that costs $10,000 a year to treat, there is no insuring against that: someone will have to pay that $10,000 a year. That person can buy insurance against other conditions that he or she is at risk for, but that $10,000 cost cannot be insured for--it is a certainty, and someone has to pay for it.

So mandating coverage of pre-existing conditions amounts to shifting the burden of their cost, partially or in whole, from the person who has them to someone else, and this provides the administration's justification for the individual mandate: it will bring healthier-than-average people into the insurance pool and use their premiums to help offset the costs of pre-existing conditions. This raises the ethical aspect of the situation, which involves several contentious assumptions: 1) that the persons with the pre-existing conditions should not be held primarily responsible for the costs of them, and 2) that other persons should be. And the individual mandate brings in yet another problem: 3) that of coercing some persons into involuntary purchases in order to pay for the mandate coverage of pre-existing conditions. I'm not comfortable with any of these three assumptions, especially the last two.

So in addition to opposing the individual mandate on grounds of economic freedom, I also disagree with the reason the administration wants it: to shift the costs of pre-existing conditions from those who are likely responsible for them to those who are definitely not. Supporters of this law are using governmental denial of individual responsibility to justify coercion, which is simply adding insult to injury.

Let's start over, shall we?

Comments

[Nathan Ellebracht]

I have two issues with your analysis that stem from my conception of Kantian ethics. First, it is far more than unclear that those with "pre-existing conditions" are responsible for paying for them, for the simple reason that it is almost certainly the case that those with "pre-existing conditions" are not responsible for the existence of those conditions. After all, no one would intentionally choose to be severely ill or incapacitated.

Who is responsible for them? Again, I don't buy the claim that other people are not. Causal analysis of the most costly illnesses, such as various types of cancer, often reveals that the surrounding or upstream/upwind communities are at least partly responsible, through the pollution they emit. Otherwise, these sorts of illnesses or injury are the result of unforeseeable acts of Nature. I think one can make an argument that it is the entire community of moral agents that is responsible for unforeseeable acts of Nature, at least in terms of retribution.

Therefore, it makes sense to use a variation of taxes to pay to fund the treatment of this kind of medical care. Think of it like this: The mandate says you have to pay a tax to pay for financing other people's medical care (and maybe your own in the future), but you get an exemption from that tax if you own health insurance.

The second issue I have is with the concept of "pre-existing conditions" as it is used by insurance companies, and is used in your analysis. This concept is one invented by insurance companies to deny covering treatment, so long as they can find evidence that the illness or precursors to the illness existed prior to the insurance contract. But this is virtually always the case, especially in serious illness.

This is acting in bad faith for several reasons, but I'll highlight the biggest problem below. People buy insurance so that they will be covered when they need it, but the insurance comes with terms and the insurance only pays for treatments, not for disease. You only have coverage as long as you pay, most people can only pay when they have a job. But when are not yet ill enough to have to quit, treatments are not (yet) expensive. As soon as you have to quit, you lose your ability to pay, so you lose your coverage for treatments for that illness. Moreover, you can no longer get coverage because it's suddenly a "pre-existing condition."

As long as insurance companies only pay for treatments occurring within their terms, and not for curing diseases that occur within their terms, "pre-existing conditions" is a concept that relegates patients to mere means for the profit-seeking ends of insurance companies.

[Mark D. White]

Thanks for the long and thoughtful comment, Nathan. Here are my thoughts in response:

1. I agree that responsibility usually derives from causal action--we're responsible for what we voluntary do--but if no cause for a pre-existing health condition can be determined, the responsibility would fall (tragically) on the sufferer, if only because no one is causally responsible either (as the tort system treats liability). (And if some party can be found responsible, then the tort system can provide compensation for that.)

2. My point with insurance for pre-existing conditions was that it made no sense, regardless of the bad faith (or not) of insurance companies. There can be no insurance (literally) for pre-existing conditions--just care. Of course, it does become more complicated when one loses or changes jobs, but that is an implication of employer-based health insurance, which is an artifact of history. If we could sever the link between employers and health care, then people would not be afraid to leave or change unsatisfactory employment simply for fear of losing their insurance (or the coverage of conditions which will become pre-existing ones under new insurance).