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Kill the Insurance Mandate

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If Congress manages to pass a health-insurance bill in the next few weeks, it will undoubtedly require every person to have medical coverage or pay a fine. If someone’s employer doesn’t offer a policy, he will be obligated to buy one for himself no matter how expensive. (Subsidies will be available to lower- and middle-income people.)

Coverage is not likely to be cheap because the bill that President Obama signs will also undoubtedly mandate that “basic” coverage contain far more than coverage for bankruptcy-threatening catastrophic illness. It will also include a large variety of elective and preventive services that are actually inappropriate for insurance, since they are discretionary. The day of high-deductible, low-cost insurance will be gone. Congress and the president will decree that you must have Cadillac coverage even if a Ford suits your needs and your budget better.

Everyone who believes he lives in a free country should be asking himself, By what authority do the Congress and the president force me to buy insurance?

That this question is hardly discussed is an ominous sign. The public discussion about so-called health-care reform has focused almost entirely on whether the government should compete with private insurers through a “public option.” Abortion financing and the impact on the budget deficit have also gotten their share of attention.

But nearly everyone takes for granted the government’s authority to force us to buy medical insurance. How does that square with the traditional American belief that government should leave you alone unless you commit a crime against person or property? Where does compulsory health insurance fit into that principle?

I imagine that most people think that the government doesn’t even need specific grounds to exert that power. If a majority of Congress and the president in their wisdom think we need insurance, then they can compel us to buy it — or so the implicit reasoning seems to go.

But that shouldn’t be good enough for a country whose founding document speaks of inalienable rights to life, liberty, and the pursuit of happiness, not to mention the right of revolution.

Even the Congressional Budget Office calls the mandate “unprecedented,” adding, “The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

So why aren’t we all asking, “By what authority?”

Senate Majority Leader Harry Reid’s 2,074-page bill tries to answer that question. It states that health insurance is interstate commerce, which Congress has the power to regulate under the Constitution’s Commerce Clause. The first question that should arise is that even if you grant that government may regulate interstate commerce, what does forcing consumers to buy insurance have to do with regulation? The bill states that the mandate is necessary because the insurance market won’t work effectively without it. And why not? Because the same bill also compels insurance companies to cover everyone essentially at the same price regardless of health status. If the sick and the healthy must be charged the same premium and healthy people choose to opt out of insurance, then premiums to the remaining sick policyholders will be higher than otherwise. Therefore, the healthy must be forbidden to opt out. Hence the mandate.

Notice the circularity: The mandate is necessary to protect the insurance market from the high premiums caused by the bill containing the mandate. And by what authority are insurers compelled to cover everyone at the same price? The Commerce Clause, of course. However you construe that clause, it is twisted logic for the government to burden interstate commerce through price controls, then impose a mandate on consumers to fix the problems the burden created. (By the way, if health insurance is interstate commerce, why does the federal government stop insurers from selling across state lines?)

Government intervention begets more intervention. When politicians forbid insurers to charge customers according to risk, that is not real insurance. It’s welfare, requiring forced participation by those who would opt out if free to do so. Congress and Obama are about to violate the rights of Americans in an attempt to avoid the mess they know they are about to make. But they forgot something:

Free societies don’t have mandates.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.