The Option of Indifference and the TWO Mandates

[alcibiades_mystery]

A few points on the healthcare decision yesterday. The primary argument against the insurance "mandate" is that it violates a basic principle: people should have the "option of indifference" when it comes to private contracts. If this is the basic reasoning, then you run into a problem on the insurance "supply-side" as well. Something to think about:

Mandate 1: People MUST enter into private contracts with private entities by buying insurance. This is the mandate that the federal judge invalidated yesterday, and the one that supposedly raises all kinds of Constitutional issues about liberty. The reasoning is simple: people should have the "option of indifference" relative to private contracts. In other words, people should be able to do nothing - to not enter into a business relationship they don't want to enter into.

Mandate 2: Insurance companies MUST enter into private contracts with private entities by providing insurance. Specifically, a private entity (an insurance company) is forced to conduct business with another private entity (a person), even though the company has judged this business relationship to be unfavorable. This is the mandate very few people are talking about, and the one that was NOT invalidated yesterday. We've heard almost no objections to this government mandate on private relationships, and, indeed, most people would claim to support this mandate. By mandating that insurance companies accept customers with pre-existing conditions, the government is denying those insurance companies the "option of indifference."

I have a very simple claim here: the two mandates are structurally identical, yet they receive very different treatment, both here on DU, and in the public sphere more generally. Both mandates force private entities into contractual obligations and remove the option of indifference. If mandate 1 is unconstitutional, then so is mandate 2. They raise the exact same philosophical issues on government, law, and private liberty. For this reason, I'd argue that you can't be against Mandate 1, and for Mandate 2 without producing significant incoherence. (There is also a third mandate, which requires private hospitals to accept uninsured patients for treatment - a strict coherence on the "option of indifference" would require that even this mandate be cast aside.)

So, a few conclusions here:

1. The system of private insurance will structurally and necessarily raise these issues. The only way to avoid these conceptual problems is to develop a single-payer system for which the various mandates are not private but public. You cannot run a healthcare system exclusively through private entities without encountering these problems, which means that you either change the Constitution, or develop a public healthcare system.

2. Any judicial branch decision that overturns Mandate 1 will eventually serve as precedent for overturning Mandate 2 (and, I'd suggest, Mandate 3), since the Constitutional reasoning is identical. By opposing the mandate to buy insurance on "option of indifference" grounds, we are also - implicitly and necessarily - opposing the mandate to provide insurance (to people who get sick, to people with pre-existing conditions, to people with unfavorable genetic traits, and etc.). For this reason, the insurance companies themselves have every reason in the world to oppose mandates. This seems like a counter-intuitive point, but they'd much rather see the status quo continue and their own freedom of association enhanced.

[Statistical]

1. Your analysis ignores some real world examples.

Cable TV for example. The franchise agreement mandates cable companies enter into an contract (denying "option of indifference") to provide service yet doesn't mandate citizens to purchase service.

My mother for nearly 40 years refused to purchase cable TV. This year she finally did. Cox communication rolled out a truck only to find the line had been dry rotted. Due to location of the lot the only available junction box was on the other side of the street. To restore service Cox had to tear up the road and run a line nearly 800 ft, retrench it, and repair the sod. The road work had to be done by the city with bill sent to Cox.

I am not sure the exact cost but it is significant. Cox analysis likely indicates this was an unfavorable situation, a contract they shouldn't enter into if they had a choice. Now my mother is unlikely to live long enough for cox to even break even on the investment, however the franchise agreement requires it. Insurance companies ALWAYS have an "option of indifference". If they feel they can't be competitive under the law they cans simply stop offering health insurance.

[Blue Meany]

2. One critical difference

No insurance companies are actually forced to provide health insurance to all comers. They have the option to stop selling health insurance. This makes it analogous state-mandated car insurance for individual, who do have the option of not driving a car to avoid the mandated requirement.

The mandate for individuals in the health insurance law does not provide for opting out. Ironically it was the health insurance companies that lobbied for this and a conservative judge who ruled against it.

[notesdev]

3. They key difference

is that the insurance companies WANT this arrangement - they certainly lobbied hard enough for the bill they wrote.

That's why no one is talking about that part of the law, because no one is objecting to it - the people who are in a position to object aren't going to overturn the free apple cart delivered to their doorstep.

[Hello_Kitty]

4. When the requirement to accept all children went into effect

Some companies stopped offering policies for children.

[MadHound]

5. Analogy fail

Insurance corporations can, and have, and will, simply drop out of offering health insurance. There is no law forcing them to offer health insurance, just as there should be no law forcing individuals to buy health insurance.

Nice try though, but still an analogy fail.