In a 42-page opinion, Judge Hudson wrote: “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”
Allowing Congress to exert such authority, he said, “would invite unbridled exercise of federal police powers.”
Compelling vehicle owners to carry accident insurance, as states do, is considered a different matter because the Constitution gives the states broad police powers that have been interpreted to encompass that. Furthermore, there is no statutory requirement that people possess cars, only a requirement that they have insurance as a condition of doing so. By contrast, the plaintiffs in the health care case argue that the new law requires people to obtain health insurance simply because they exist.
If this part fails, then the whole of Obamacare fails.
Leave aside whether you like the plan or not for a moment. Look at the basic economics.
If you have a system where an insurer can exclude pre-existing conditions then you don\’t have to insist that everyone buys health care insurance. Because people who get sick and then try to buy insurance won\’t be able to buy inurance for the thing they\’ve just got sick from.
However, if you do not exclude pre-existing conditions then there will be some number (that number presumably depending upon prices and how secure people like to feel etc) of people who will only buy insurance when they do get sick. Which really isn\’t insurance at all and the entire system will enter a death spiral. As insurers are having to pay for treatments not on the basis of statistical occurence across the population, but on that subset of the people who are already ill and requiring treatment, then prices will have to rise. As they do so the healthy will decide, more and more, to drop insurance coverage and purchase it only when they need expensive treatment.
So, to get around this it\’s necessary to insist that everyone buy insurance. That\’s the only way that you can stop the death spiral.
But, if the Constitution says that you cannot force people to buy the insurance, then you can\’t do that either.
It\’s a hell of a difficulty for Obamacare. If the individual mandate fails then so also must the stopping of the pre-existing condition exemptions.
I will admit that I personally like three entirely different systems. Either something like the Singapore system, with health care savings accounts and the government picking up the costs of chronic or gross illnesses. Or Brad DeLong\’s suggestion of out of pocket expenses up to 10% of annual income, with government again picking up the excess (largely similar ways of doing the same thing) or Arnold Kling\’s preference, of being able to purchase real insurance, catastrophic insurance that is (which would be terribly cheap compared to the current health insurance system), if one wished and not having to purchase insurance that covers everything.
Unfortunately, Obamacare specifically makes that last illegal.
But no mandate and Obamacare fails.
Gonna\’ be interesting watching what the Supremes do, eh?