The Issue of the Day - Updated

(Update at the end.)

With the Obamacare ruling expected in a few hours, here's my in-before-the-deadline thoughts on the individual mandate. Not being a constitutional lawyer myself, as far as I can tell there are three clauses in the US Constitution that might make the individual mandate constitutional. The first and most easily dismissed is the Commerce Clause; second is the Necessary and Proper Clause; third, with the most relevance, is the Tax and Spending Clause.

The Commerce Clause allows Congress to regulate interstate commerce. If that is taken to mean actual interstate commerce, the Commerce Clause would be completely irrelevant here. Almost every state specifically prohibits its residents from purchasing out-of-state health insurance. There is no interstate health insurance market, and that is a direct, deliberate result of government policy. How then, can Congress regulate interstate commerce that doesn't even exist? Interstate commerce doesn't mean that lots of states have their own intrastate commerce. Interstate commerce has to be between states, which for most states is specifically forbidden when it comes to health insurance. At best, the Commerce Clause might allow a health insurance mandate for the three states (RI, WY, GA) that allow out-of-state insurance. Now, I haven't seen any legal expert even mention what I'm talking about, so maybe there's a really awesome legal argument for why I'm wrong. But until I find out what that is, this just seems like common sense to me.

The Necessary and Proper Clause allows Congress to do things that aren't authorized elsewhere, but that are necessary and proper to do things that are authorized elsewhere. The problem is, you won't find "health insurance" in Congress' enumerated powers. Lots of people say it's included in the Commerce Clause (see above), and I suppose it might be counted under "general welfare." But that seems like a stretch to me. Even if the public health is included in "general welfare," when you get to the point of mandating individual citizens to buy specific products from private parties, you've gone way beyond either public health or general welfare.

Even if health insurance is included under "general welfare," it's not clear to me that the individual mandate is either necessary or proper. I understand that the mandate is necessary to prevent the insurance industry from collapsing under the weight of the rest of Obamacare, but that hardly seems like a proper use of the word necessary. That's like me holding Hank's head under water, and then saying it's necessary for you to go buy scuba gear for Hank so he doesn't drown. Giving Congress extra powers to undo damage caused by exercising their other powers just seems like a bad idea to me-- the phrase perverse incentives comes to mind.

The Tax and Spending Clause allows Congress to basically tax whatever they want, as long as it applies equally throughout the country. If the individual mandate is a tax, I think it would pretty clearly be constitutional via the Tax and Spending Clause. The federal government has all kinds of taxes and credits and deductions for very specific, very personal individual behaviors, like buying a house or having a kid or giving to a list of federally-approved charities. I can't see how these would be allowed but health insurance wouldn't be.

In legal circles, the big debate is whether the mandate actually is a tax (which is allowed) or a penalty (which isn't allowed). What's the real difference? There isn't one. Right now, the law explicitly calls the mandate a "penalty," but every instance of "penalty" could be replaced with "tax" and the meaning would be no different. In fact, Congress did exactly that in the other direction-- early drafts called the mandate a tax, but the final law calls the same mandate a penalty. They do exactly the same thing. So why is one constitutional and the other not? As far as I can tell, because constitutional law is stupid. That link makes it a bit difficult to end on that note, but I really don't have a better explanation. 

Conclusion
I have no idea how the Supreme Court will actually rule in a few hours, nor is this an attempt to guess, or to sort out the legal arguments. This is just my attempt at a common sense approach to the Constitution, which is admittedly something even the Founders never intended. I may be way off-base, but based on my interpretation, the individual mandate cannot be justified under the Commerce Clause or the Necessary and Proper Clause. It probably can be justified under the Tax and Spending Clause, and even if it can't, it could be with a nearly-identical law that does the same thing but explicitly calls it a tax instead of a penalty.

Update
The full text of the ruling (193 pages) is here in PDF form. It looks like the Court agreed with me that the Commerce and Necessary & Proper Clauses do not allow an individual mandate, although for different reasons than mine. I was apparently wrong that the mandate would be unconstitutional if you called it a penalty but constitutional if you called it a tax-- constitutional law is more internally consistent (ie less stupid) than I thought. At the same time, Roberts and the four liberal justices ruled that the mandate is not a tax for purposes of the Anti-Injunction Act (ruling otherwise would have prevented the Court from even considering the case), while it is a tax for purposes of the Tax & Spending Clause. In other words, constitutional law is both more and less internally consistent than I thought. (Decide for yourself how that impacts my own internal consistency.)

I still think the individual mandate is a horrible policy, even if it is constitutional. I sincerely hope we can repeal it in 2013. I'm encouraged that individual mandates are not constitutional under the Commerce or Necessary & Proper Clauses; to be passed, they must now be passed as taxes, which will be more politically difficult. The libertarian in me also hopes that this prompts the nation into taking a good, hard look at our tax code and the wide-ranging tax powers our government has. Maybe it's time for a constitutional amendment restricting Congress' tax power.

If I Were the King of the World

Last Friday, Kevin Grier (Angus) at Kids Prefer Cheese listed the 5 things he would do as Supreme Ruler of the United States. Grover Cleveland at Pileus (ht Cafe Hayek) and later Brandon Christensen at The Republic of Liberty made their own lists. All three lists have some good ideas, and this sounds like fun, so I made my own.

I've tried to focus on more radical and interesting structural ideas, instead of more common policy ideas like tax reform or cutting sugar subsidies. That means I'm not so much convinced that these are actually good ideas. At present, I think on balance they probably might be mostly good (is that enough qualifiers?), but the academic's motto of "more study is needed" definitely applies to all five. So without further ado, here they are, in approximate descending order of probability (or ascending order of ridiculousness, if you prefer):

1. Submit Supreme Court Justices to Re-election
The entire Obamacare fiasco has underscored just how ridiculous the Supreme Court system is. By most accounts, whether or not we keep one of the most significant pieces of legislation in the last few decades will be decided by just one man-- the unelected, unaccountable Anthony Kennedy. The Constitutional idea of checks and balances was supposed to prevent exactly that.

My proposal is simple. Supreme Court Justices will continue to be appointed by the President and approved by the Senate, but they will also be subject, on a rotating basis, to re-election. Every two years, put one Justice up for re-election on a straight yes-or-no vote. If the result is yes, they stay in office, but if the result is no, they step down and a new one is appointed. Re-elections would rotate so that we always vote on the Justice that has gone longest without being re-elected. Without retirements, this means Justices would face re-election every 18 years; with retirements, it would usually happen faster. Hopefully, that's long enough that purely political motives will still be discouraged, but short enough to introduce at least some measure of accountability.

2. Create a Fourth Branch of Government - The Delegislature
As it stands, two of the three branches of government are entirely focused on creating new laws and new regulations. The judiciary is the only branch that regularly considers whether old laws should be eliminated, but they can only eliminate a law for being unconstitutional. The problem is that there are many bad laws and bad regulations that are perfectly constitutional, including many that once were good laws but no longer are.

The fourth branch of government, the Delegislature, would have as its sole power the ability to strike down bad laws and regulations. In a way, it would be like a Supreme Court that could focus on whether a law was actually good or bad, not just whether it was constitutional. It would also, of course, be elected in a similar manner to the Congress, and would be able to take on any existing law rather than be limited to court cases like the Supreme Court is. Politicians seeking re-election to the Delegislature would have to campaign on how many bad laws they've overturned. Hopefully, the underlying question of political discourse would eventually shift from "How should we control people?" to "How should we free people?"

3. Turn the Presidency into an Issue-Based Triumvirate
Just as concentrated power is bad at the Supreme Court, the same goes for the Presidency. At the same time, the nature of political discourse means that government's focus seems to grow without end. Rather than asking government to make us better off in general, we should seek a government that fulfills only those social functions that we need it to fulfill.

With an issues-based triumvirate, we would have three Presidents at once. We could stagger their elections; maybe they would serve six-year terms, with a new one being elected every two years. But once elected, each President would not have carte blanche to set policy in every area he can imagine. The three Presidential offices would each set policy on certain predefined issues. Very broadly, I'm thinking maybe they would be foreign policy, economic policy and social policy, although there are probably better ways to split up the issues. Obviously, there are some overlapping areas, so conflicts would be settled by a vote between the three. Hopefully, each election would focus more on the issues, and even if they didn't, the ongoing mission creep of the federal government would at least be slowed down. 

4. Eliminate Elections in Favor of Democracy Markets
We see this time and again-- a politician is elected on promises of governing from the center, and then once in office immediately pushes through the most extreme parts of his agenda. Closer to the next election, he shifts back to the center enough to get re-elected, and the cycle starts over again. This works so often because voter memory is significantly shorter than terms of office. What if there was a way for voters to express their discontent and keep politicians in line all the time?

Enter what I call democracy markets-- think of a stock market, where the "stock" you own reflects which politician you support. You would get one vote per office, and at any time you could transfer that vote to anyone who had registered as a candidate. The system doesn't have to be any more complex than automated online or phone banking, and there's no reason it can't be just as secure. There's no need to wait 2, 4 or 6 years to have your voice heard, because you could change your vote at any time. No need to wonder if your ballot was actually counted, because you could check your current vote as easily as you can now check your bank balance. And most importantly, politicians would get active, real-time feedback. Hopefully, they would be forced to do what the people actually wanted.

5. Decouple Governance from Geography
For as long as there have been governments, they have been linked to and identified by geography. For most of human history, this was just a necessity, for reasons of defense if nothing else. But governments in general, and defense in particular, have changed a lot over the last century or so. Many, if not most, of the things governments now do have no direct relation to actual geography.

If I want to buy insurance, or save for retirement, or invest in an exciting startup, I don't have to be in a particular geographic area to do so, government restrictions aside. Living in a particular geographic area should not mean I have to join a particular government service provider either. If I don't like Washington state's laws, I have the right to move away. But why should I have to uproot my life, give up my home, my job, my friends in the area because I don't like what some doofus in Olympia is doing? Obviously there are some government services necessarily tied to geography, so leave those be. But for everything else goverunment does, we should encourage some healthy competition. Ideally, we should be able to switch governments as easily as we switch grocery stores. Hopefully, this would encourage existing governments to become more responsive to what people actually want, and maybe it would even allow new, more efficient, more competitive governments to sprout up wherever there was demand for them.

Your Turn
What do you think? Would you support any of these ideas? Do you see any problems with them? What five things would you do if you were the Supreme Ruler?

Mitt Romney on Health Policy

This is the fourth in a series of entries revisiting Mitt Romney's policies as stated in the debates. The first covered foreign policy; the second covered economic policy. The third covered the social issues of religion, gay marriage, contraception, abortion, and guns. This entry covers health care, including Obamacare, Romneycare, Medicare, Medicaid and other health reform ideas.

Obamacare vs Romneycare:

Romney often highlighted differences between the Massachusetts health care reform commonly called "Romneycare" and the national Patient Protection and Affordable Care Act, commonly called "Obamacare." While he supported and throughout the debates continued to defend Romneycare, he opposed Obamacare to the extent that he promised to grant waivers to all 50 states on his first day in office and to press Congress for full repeal. Claimed differences include:

• Obamacare raises taxes; Romneycare didn't
• Obamacare takes money from Medicare; Romneycare didn't
• Obamacare is a national program; Romneycare is a state program
• Similarly, Obamacare is unconstitutional for the national government; Romneycare is constitutional because it's at the state level
• Obamacare includes "a panel that ultimately is going to tell people what kind of care they can have," referring to the Independent Payment Advisory Board; Romneycare does not include such a panel
• Obamacare applies to 100% of the citizenry; Romneycare supposedly only addressed the 8-9% who were uninsured (he said 9% in the 5th debate, 8% in the 6th, 7th and 17th debates)
• Obamacare leads to regulations like the contraception mandate; Romneycare had a provision that people did not have to buy coverage for treatments or medical devices which violated their religious beliefs
• Obamacare was 2,700 pages long; Romneycare was 70 pages long

Note that these are differences claimed by Romney; whether or not you find them believable is up to you. Also, some of these were repeated (a lot) more than others. Throughout the debates, Romney often returned to Obamacare's cuts to Medicare and to the federalism defense that states can adopt individual mandates but the national government cannot. On the other hand, the IPAB point was, to my knowledge, only mentioned once.

Medicare and Medicaid

As mentioned above, Romney often criticized Obamacare for cutting Medicare. In fact, almost every time Romney mentioned Medicare, it was either to criticize Obamacare for cutting it, or defending Romneycare for not cutting it.

Regarding actual reforms to Medicare, he wants a shift to a premium support model like the Ryan plan. He also favors means testing for Medicare, where the rich would receive lower benefits and everyone else would receive higher benefits. Finally, he would not repeal Medicare Part D.

He would send Medicaid to the states as a block grant and only allow it to grow at either 1-2% per year (in the 8th debate) or inflation-plus-one-percent (in the 10th debate). He never mentioned any other reform to Medicaid, but repeated this block grant plan in several debates. 

Other Health Reforms 

Individual Mandates: While Romney opposes Obamacare, including its national individual mandate, he often defended the individual mandate itself as a good policy to carry out on the state level. In the 3rd debate, he compared it to states' ability to require children to attend school. He sees individual mandates as ways to provide the uninsured with what he called in the 6th debate "market-based, private" insurance. In the 8th debate, he said about the individual mandate in Massachusetts, "A lot of people were expecting government to pay their way. And we said, you know what? If people have the capacity to care for themselves and pay their own way, they should." Romney disagrees with Obama on what level of government should impose the individual mandate, but he agrees that it's a good policy in the first place.

Health Savings Accounts: In the 5th debate, Romney said health care "isn't working like a market," but rather is "working like a government utility" because consumers are separated from the cost of health care. He advocated health savings accounts to fix this problem, mentioning HSAs in the 5th and 9th debates.

Employer-based Insurance: In the 9th debate, Romney said we should treat individually-purchased insurance the same as employer-purchased insurance in regards to the tax code. He also mentioned this in the 19th debate.

Tort Reform: In the 9th debate, he advocated tort reform as part of the package of reforms he would replace Obamacare with. 

Health Issues Covered Elsewhere

Romney's positions on contraception and abortion were covered in the third entry in this series, on social issues. In addition to the section above, Obamacare was also covered in the second entry in the context of regulations and fiscal responsibility.

Repeal the Individual Health Insurance Tax

The number of uninsured in the United States is estimated by the Census to be around 47 million people. Many of them are only uninsured because they lost their job, and their health insurance was tied to that job. When someone gets sick, they're more likely to lose their job but are in much greater need of health insurance. It's remarkable that so many Americans take that risk of losing their insurance right when they need it the most. Even so, about 93% of Americans who have private health insurance have that insurance through their employer. Now why would they do that when it's such a risk?

It's actually pretty straightforward. Back in the 50s, the federal government began giving Americans a tax break for purchasing health insurance through their employer. Any income you spend on employer-based health insurance is exempt from the income tax. However, if you want to purchase an insurance plan not provided by your employer, you have to pay the full tax on that income. Depending on your tax bracket, for most people that's a 20-25% penalty fee just for wanting to buy insurance that won't disappear if you lose your job.

The solution? Just extend the tax break. If you spend any portion of your income on health care or health insurance, you are refunded all tax paid on that income.

How much of a difference would that make? For one thing, the tens of millions of people who are uninsured simply because they're between jobs would be able to afford insurance in the interim. That could be as much as one-third to one-half of the uninsured at any given time. It's not a silver bullet solution, but I think it's as close as you can get on an issue this complex. This one tiny change could cover at least a third of the uninsured. I think it's a great place to start.

So what would it cost? The biggest cost would be to the government in lost tax revenue, but even that is not very much. There's about 12 million Americans currently paying this tax. The average annual premium for one-person non-employer insurance is about $3,000, and the average marginal tax rate in the US is about 22%. [Sources: insurance, taxes] That works out to about $8 billion in tax revenue that the government would be giving up with this policy, or $26 per American. That's pocketchange to a government that's running deficits hundreds of times this amount.

So why isn't it being considered? Well, I don't know. Maybe someone reading this can provide a counterargument? It's worth noting that the only play this has gotten in the Democrats' plan has been suggestions to eliminate the tax break entirely, and tax the entire country on their health plans (but that's only to pay for the trillion-plus cost of the rest of the program). That would be much more devastating to the average American, although it would eliminate the incentive for employer-based insurance.