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This blog is the work of an educated civilian, not of an expert in the fields discussed.

Thursday, February 03, 2011

Congressional Findings on the Coverage Requirement

In the The Patient Protection and Affordable Care Act (sic), we read:
SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.

(a) FINDINGS.—Congress makes the following findings:

(1) IN GENERAL.—The individual responsibility requirement provided for in this section (in this subsection referred to as the ‘‘requirement’’) is commercial and economic in nature, and substantially affects interstate commerce, as a result of the effects described in paragraph (2)
(2) EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE COMMERCE.—The effects described in this paragraph are the following:

(A) The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased.

(B) Health insurance and health care services are a significant part of the national economy. National health spending is projected to increase from $2,500,000,000,000, or 17.6 percent of the economy, in 2009 to $4,700,000,000,000 in 2019. Private health insurance spending is projected to be $854,000,000,000 in 2009, and pays for medical supplies, drugs, and equipment that are shipped in interstate commerce. Since most health insurance is sold by national or regional health insurance companies, health insurance is sold in interstate commerce and claims payments flow through interstate commerce.

(C) The requirement, together with the other provisions of this Act, will add millions of new consumers to the health insurance market, increasing the supply of, and demand for, health care services. According to the Congressional Budget Office, the requirement will increase the number and share of Americans who are insured.
(D) The requirement achieves near-universal coverage by building upon and strengthening the private employer based health insurance system, which covers 176,000,000 Americans nationwide. In Massachusetts, a similar requirement has strengthened private employer-based coverage: despite the economic downturn, the number of workers offered employer-based coverage has actually increased.

(E) Half of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.

(F) Under the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health Service Act (42 U.S.C. 201 et seq.), and this Act, the Federal Government has a significant role in regulating health insurance which is in interstate commerce.


(G) Under sections 2704 and 2705 of the Public Health Service Act (as added by section 1201 of this Act), if there were no requirement, many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of preexisting conditions can be sold.


(H) Administrative costs for private health insurance, which were $90,000,000,000 in 2006, are 26 to 30 percent of premiums in the current individual and small group markets. By significantly increasing health insurance coverage and the size of purchasing pools, which will increase economies of scale, the requirement, together with the other provisions of this Act, will significantly reduce administrative costs and lower health insurance premiums. The requirement is essential to creating effective health insurance markets that do not require underwriting and eliminate its associated administrative costs.

(3) SUPREME COURT RULING.—In United States v. South-Eastern Underwriters Association [1944] that insurance is interstate commerce subject to Federal regulation.
President Ronald Reagan’s former Solicitor General — Harvard Law Professor Charles Fried is "quite sure" that the regulation of interstate commerce here is constitutionally proper, citing precedent back to the early 19th Century. The above suggests why. The findings in fact cite a possible third enumerated power beyond commerce and taxation with the reference to bankruptcies.

There is some opposition to being forced to buy insurance. If this is what occurs here, it has been deemed proper to regulate interstate commerce by "penalizing" (if taxation doesn't work for you) those who don't enter the market. What works with wheat works with insurance, thus this works with the necessary substitutions: "forcing some farmers into the market to buy what they could provide for themselves" was accepted in 1942, even if only to benefit the market as a whole. The same applies to purchase of health insurance. If allowed, the "the wisdom, workability, or fairness, of the plan of regulation" is left to the legislature.

It is noted that the findings speak of "activity." It is said that not buying insurance is "inactivity." But, "activity" is still being regulated here, even if the overall scheme is advanced by regulating some inactivity in the process. Thus, a boycott (not buying ... inactivity?) is regulated since it is part of an overall scheme to affect sales (activity). Regulations often pull in those who are not immediately benefited, such as a requirement to buy a device that is only useful when there is a fire. The damage from the fire might never come, but if it did, the small outlay for all beforehand prevents major damage for a few who very well might not afford it. This damage, e.g. by bankruptcy, affects society at large. A 'one size fits all' rule is a valid approach.

It is unclear what "inactivity" means, however, since those who don't purchase insurance don't only do that. They do other "activities," including using the money they saved and using other means of maintaining health. The findings as a whole also provide a justification for the scheme that is a closer fit and easier to execute than requiring people to eat broccoli or to exercise in a certain way. But, not to worry, such parade of horribles will be raised, akin to the fact that the war power can always mean we will invade Canada.

Hey, we did it a couple times before, right?