About the PPACA

Well, I said that I wasn't going to be posting about politics. But fortunately this is about policy!

There's a difference. I swear.

Anyways. As some of you may (and all of you should) know the PPACA--Patient Protection and Affordable Care Act aka Obamacare to the current crop of Presidential hopefuls and RomnObamacare to anyone who knows anything about the act's history--is up before the Supreme Court this week. But I'm not really going to talk about that. Instead, I'm going to address something which annoys me deeply: conservatives who oppose the bill's individual mandate. If you are even even slightly opposed to a national or government-run healthcare system (in any of its forms), you CAN'T be against the individual mandate. It literally defies logic. Here's how the reasoning works.

First, it is an undeniable fact that a healthcare system exists in this country. If you don't believe me, call your doctor. If he (or she) answers, he (or she) exists: there's your healthcare system.

Okay, tongue removed from cheek now.

Given that there's a healthcare system, we can either change something about it or leave it alone. Let's assume we want to change something about it. Specifically, let's look at how we change access.

In this country, the access portal is insurance. Even the public systems of Medicare and Medicaid provide no services themselves: they merely reimburse private providers, thus making them a form of (free) insurance. Hence, to increase access, we can either (A) expand the list of the insured or (B) scrap the insurance model and replace it with something with broader reach. Since I'm guessing that most conservatives don't like the idea of the government arbitrarily abolishing an entire private industry, then let's go with (A).

Bit #1: The insurance we're giving to the newly enrolled will either be from private insurance companies or else the government can bankroll it. Let's say that the new insurance is private. The private health insurance market in this country is healthy and thriving. It is also (as all markets are) out to make a profit. If insuring the currently uninsured were profitable, the insurance companies would already be insuring them. Hence, the new law has to force insurance companies to agree to cover people who would be bad investments from an actuarial standpoint: the insurance companies can no longer deny insurance to or inflate the premiums for clients with preexisting conditions or on the basis of their age or geographic location.

Bit #2: If all we do is force the insurance companies to make bad investments, we will destroy the insurance industry. If the insurance companies have to ensure me in sickness and in health, then it makes no economic sense for me to carry insurance when I'm healthy. And since the insurance companies can't charge me more for being sick before buying insurance, then the entire economic model of insurance collapses: they need lots and lots of healthy people paying into the system--the technical term is the "risk pool"--so that they can cover the sick people and make a profit. If all the healthy people forgo insurance, then, in the lingo of the biz, we've "fractured the risk pool". In order to avoid this catastrophe, we include a shared responsibility requirement: we force healthy people who could now forgo insurance to purchase it anyway.

Bit #3: We recognize that if we're now making everyone buy something, they might not all be able to afford it. So we include some subsidies to ease the economic burden.

The combination of Bits 1 (Guaranteed Issue and Community Ratings), 2 (the Individual Mandate), & 3 (Subsidies) is the PPACA (the guts of it, anyway). Hence, IF we want to (A) both retain the current model of private insurance AND (B) expand access to it, then our ONLY option is the PPACA model.

Therefore, anyone who disagrees with the PPACA model is either in favor of doing nothing at all, or else is in favor of abandoning private insurance altogether.

P.S. I would like to point out that noting of what I just said is sufficient to determine whether the individual mandate is constitutional: to couch the issue in relevant terms, while the individual mandate is inarguably necessary--at least, for the PPACA model, itself an entirely reasonable extension of Congress's power over interstate commerce--it might not be proper. I haven't yet been able to decide this myself. Also, literally everyone involved agrees that if Congress had flavored the Individual Mandate as a tax, its constitutionality would be entirely unquestionable.

Anyone who wishes to dispute my reasoning is heartily invited to do so in the comments.

EDIT: The wonderfully insightful Dr. Aaron Carroll has set me straight on whether or not the mandate is truly essential to this style of healthcare reform; in fact, there are other ways of averting the "adverse selection death spiral", while still ensuring an expansion of the eligibility pool. However, most of these measures are would be less effective than a simple mandate.