The Health Insurance Industry and the Individual Mandate

At Balkinization, Yale law professor Jack Balkin emphasizes the fact that the health insurance industry supports the Obama health care bill’s individual mandate requiring most Americans to buy health insurance. This is not at all surprising. Is there any industry that wouldn’t support a law requiring people to buy its products? If Congress passed a bill requiring people to buy cars, it would surely get the support of Ford and General Motors. This is just one of many examples of the difference between being “pro-business” and pro-free market, which I have previously written about here, here, and here. Business interests often support government interventions that give them a leg up on competitors or, better still, create a captive market of people who have no choice but to purchase their wares.

Balkin also speculates that industry support might lead the Supreme Court to hesitate to strike down the mandate and/or persuade congressional Republicans to stop trying to repeal it. Perhaps so, but I am skeptical. For one thing, as Balkin notes, the industry will be less angry if a decision striking down the mandate also eliminates the provisions requiring insurers to cover preexisting conditions. Given the close connection between the two (emphasized by the federal government itself in its briefs and elsewhere), it seems unlikely that the Court would invalidate the one without getting rid of the other. When federal courts strike down a law as unconstitutional, they also usually invalidate other provisions of the same legislation that are inextricably connected to it. The lack of a severability clause in the legislation makes this outcome even more likely in this case.

The industry, of course, probably prefers the status quo to a situation where there is neither a preexisting conditions requirement nor a mandate. But that preference hasn’t been enough to prevent virtually the entire Republican Party from supporting repeal of the bill, and it probably won’t give much pause to the conservative justices on the Supreme Court, assuming the latter are otherwise inclined to strike down the mandate. They haven’t hesitated to stick it to business interests when they thought an important legal or constitutional principle was at stake.

Moreover, while health insurers may support the mandate, some other important business constituencies do not. For example, the National Federation of Independent Business, the nation’s leading small business organization, is one of the plaintiffs in the Florida lawsuit challenging the mandate. Thus, even if the justices and/or the Republicans adopt a “pro-business” mindset, that won’t necessarily lead them to support the mandate.

Obviously, if the mandate loses in court or gets repealed, there will continue to be political pressure to address the issue of preexisting conditions. But there are many possible ways to do so, such as economist John Cochrane’s proposal. It’s unlikely that the new, more Republican Congress, will enact a plan that either closely resembles the individual mandate or requires even greater government intervention.