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He Loves the Mandate, He Loves It Not.

The Obama administrationís individual mandate flip-flops.

Peter Suderman
February 2, 2011

There’s an old game played by love-struck teenagers trying to figure out what the object of their affection thinks of them. Take a flower and pull the petals off one-by-one. For each petal, alternate between saying “she loves me” and “she loves me not.” Whichever refrains corresponds with the final petal supposedly reveals the truth.

Those attempting to make sense of President Barack Obama’s record on the individual mandate—a provision in last year’s health care overhaul that will require most Americans to either purchase health insurance or pay a federal fine—might try a similar exercise. “He loves the mandate. He loves it not.” But there’s no need to pull the final petal to find out the truth; they’re both correct.

On the campaign trail, soon-to-be-President Barack Obama warned that an individual mandate to purchase health insurance was an obviously foolish idea. “If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house,” he quipped. He ran TV ads attacking his Democratic primary opponent, Hillary Clinton, for supporting a mandate, and even declared that in Massachusetts, the only state that already had such a requirement on the books, the health insurance mandate had already made some workers “worse off.” 

That didn’t last long. By June 2009, less than six months after taking office, Obama said he had concluded that a mandate was necessary. In March 2010 he signed into law a massive health care overhaul with just such a mandate. Since then, his administration has not only vigorously defended the law in court, it has argued repeatedly that the mandate is absolutely “essential” to ensuring that the legislation functions properly.

It’s not the only instance in which the president has tried to have it both ways on the mandate. In September, 2009, Obama was asked whether he believed the individual mandate constituted a tax. His response was unequivocal: “I absolutely reject that notion.” Worried that the public would perceive the mandate as a tax anyway, the law was scrubbed of any mention of the mandate being a tax before it was signed into law.

But in defending the law in court, his administration absolutely accepted the notion that the president had once absolutely rejected. In July, 2010, The New York Times reported that the White House had come to believe that the idea that the mandate constituted a tax was “a linchpin of their legal case in defense of the health care overhaul and its individual mandate.”

The ensuing rhetorical backtracking was flagrant enough that when responding to the White House’s motion to dismiss the case, Judge Roger Vinson, the federal judge overseeing a multistate challenge to the law’s constitutionality, scolded the administration in its arguments about the mandate:

Congress should not be permitted to secure and cast politically difficult votes on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an “Alice-in-Wonderland” tack and argue in court that Congress really meant something else entirely.

Of course, officially the administration argues that only the penalty for non-purchase is a tax. But that doesn’t match up to the original understanding of the mandate. When economist Mark Pauly first proposed the mandate in 1991, the insurance premiums paid under the mandate were considered to be taxes. As Pauly explained in an interview in The Washington Post, “The way it was viewed by the Congressional Budget Office in 1994 was, effectively, as a tax. You either paid the tax and got insurance that way or went and got it another way.”

It's not an unreasonable idea: There's little functional difference between the government collecting a tax and then disbursing the revenues to insurers and the government forcing individuals to pay the same funds directly to insurers.

But as HillaryCare backers discovered, that conception of the mandate caused the official price tag of the law to skyrocket. In 1994, the CBO scored all premiums paid as taxes, driving up the cost and contributing to the proposal's eventual failure. 

Last year’s health care was carefully structured to avoid a similar scoring problem. But again, the administration slipped up in court when lawyer Ian Gershengorn described health insurance as a revenue-raising “financing mechanism”—essentially buying into the original conception of the mandate’s federally required premiums as a way for the government to collect revenue to pay for a service, a practice otherwise known as taxation. 

Obama’s early instincts about the mandate were right: He argued that it was unduly punitive, that it made those who paid the penalty worse off, and—most importantly—that it failed to solve the real problems with the American health care system. “I believe the problem is not that folks are trying to avoid getting health care. The problem is they can't afford it,” he said. If only he’d listened to himself.

Peter Suderman is an associate editor at Reason magazine and a 2010 Robert Novak journalism fellow. This column first appeared at Reason.com.


Peter Suderman is Associate Editor


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