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The Mandates We Love

June 24, 2012

As the Supreme Court prepares to decide the fate of the 2010 Affordable Care, recent polling from Reuters and the Kaiser Family Foundation shows that Americans support its major provisions except for one. The individual mandate to purchase private health insurance beginning in 2014, the part of the ACA most likely to be struck down by the Roberts Court, is opposed by 61 percent of Reuters' respondents.
That finding is more than a little ironic. After all, Social Security and Medicare, which in effect are government mandated public programs for old-age income security and health insurance, are extremely popular. And as it turns out, the roughly 20 million Americans who will be impacted by the ACA's individual mandate pales in comparison to the 160 million people who pay the Social Security and Medicare payroll taxes today.
A quick glance at Polling Report shows the continued popularity of Social Security. A September 2011 CNN survey found that "eight in 10 Americans think Social Security has been good for the country, with 70 percent of young adults agreeing and almost nine in 10 senior citizens saying the same. Meanwhile, a CBS poll showed that by a 61 to 29 percent margin, respondents believe that Medicare has been worth the cost. (That includes 41 percent of Tea Party Republicans, a group the data show are much more likely to demand that the government should "stay out of Medicare.") And while Kaiser's data reveal that 70 percent of Americans oppose changing the Medicare system, recent polling from the Pew Research Center shows people want more federal spending on Social Security and Medicare:

As we learned during the recent debate over the extension of the payroll tax cut, 160 million Americans pay taxes to fund the Medicare and Social Security trusts for today and tomorrow's retirees. Since 1935, workers and their employers have each paid into the Social Security trust fund, a figure which next year will return to its 6.2 percent rate on the first $106,000 of income. In addition, employer and employee alike are on the hook for another 1.45% for Medicare, the insurance program for the elderly established in 1965.

In comparison, the Affordable Care Act's individual mandate impacts just a small fraction of Americans. For starters, over 80 percent already have health insurance, compared to roughly 17 percent who do not. The Economic Policy Institute estimates that 59% of those under age 65 receive employer-sponsored insurance, while another 22% are covered by public programs including Medicaid and SCHIP. Of the 50 million people who currently uninsured, about 20 million (including undocumented immigrants and those with religious objections or claiming economic hardship, are not covered or are otherwise exempt from the health insurance mandate. As a recent Urban Institute analysis concluded:

What may be surprising, however, is that if the ACA were in effect today, 94 percent of the total population (93 percent of the nonelderly population) or 250.3 million people out of 268.8 million nonelderly people--would not face a requirement to newly purchase insurance or pay a fine.

As Ryan Grim noted, that's because "98 percent of Americans would either be exempt from the mandate -- because of employer coverage, public health insurance or low income -- or given subsidies to comply." The Urban Institute estimated that 8.1 million Americans would have their insurance paid for by the expansion of Medicaid to 133 percent of the federal poverty level. Another 10.9 million people would receive subsidies to buy private insurance in the new state exchanges, while only 7.3 million (2 percent of the total U.S. population) would be required to purchase a health plan using their own resources alone. As for those Americans choosing to instead to pay the penalty for failing to obtain insurance at all, the CBO estimated that number at 4 million. (That forecast is almost double the rate in Massachusetts, where only 48,000 in a state of 6.6 million people opted to pay the penalty rather than acquire health insurance under Mitt Romney's version of the individual mandate.)
But if far more Americans pay the Social Security and Medicare mandates, the number of direct beneficiaries of "Obamacare" is much lower. In 2011, over 55 million people received Social Security benefits. Of those, 44.7 million got old age and survivors insurance, with another 10 million receiving disability benefits. Forty seven million people are enrolled in Medicare, with 8 million of them non-elderly, disabled recipients. In comparison, the Congressional Budget Office now forecasts that 30 million Americans will gain health insurance under the Affordable Care Act. (That figure understates the program's benefits, as the closing of the Medicare donut hole, ending lifetime benefit caps, mandatory coverage for a range of preventive care services and barring discrimination for pre-existing conditions is already helping millions more.)

Of course, the direct taxes Americans pay now to Social Security and Medicare are not perfectly analogous to the mandate to buy health insurance in the private market that about 20 million will be forced to pay. During oral arguments, Justice Kennedy suggested early on that constitutionally speaking, that difference meant all the difference. Focusing on the Commerce Clause at the heart of the case, Kennedy asked the government:

"Can you create commerce in order to regulate it?" Justice Kennedy asked.
"This is a step beyond what our cases have allowed, the affirmative duty to act to go into commerce" he said. "If that is so, do you not have a heavy burden of justification?"

Justice Ruth Bader Ginsburg explained to Kennedy there is nothing new under the sun with the Affordable Care Act:

Ginsburg brought up Social Security as an example, likening it to a government old-age annuity that everyone is forced to purchase.
"It just seems very strange to me that there's no question we can have a Social Security system (despite) all the people who say: 'I'm being forced to pay for something I don't want,'" she said.
"There's something very odd about that, that the government can take over the whole thing and we all say, 'Oh, yes that's fine,' but if the government wants to ... preserve private insurers, it can't do that."
Kennedy mused that Congress could have created a Medicare-style program for the uninsured, run exclusively by the government without the involvement of private insurers.
"Let's assume that (Congress) could use the tax power to raise revenue and to just have a national health service, single payer," said Kennedy. "How does that factor into our analysis? In one sense, it can be argued that this is what the government is doing; it ought to be honest about the power that it's using and use the correct power.
"On the other hand, it means that since ... Congress can do it anyway, we give a certain amount of latitude," Kennedy continued. "I'm not sure which way the argument goes."

The argument goes this way. If the Supreme Court stands by the much wider-ranging mandates for Medicare and Social Security (which it did in 1937), the Affordable Care Act should as well. If not, the schemes of Republicans to privatize Medicare and Social Security should similarly fail the conservative Court's scrutiny.
Ultimately, it all comes down to what the meaning of "liberty" is and what steps the Supreme Court will allow the United States government to take to make it meaningful. As the AP concluded back in March, the fate of President Obama's individual health insurance mandate "may well turn on how Kennedy decides."
But if the Court strikes down the unpopular individual insurance requirement, Americans should worried - very worried - about the mandates for Social Security and Medicare they love.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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