In today’s Supreme Court oral argument (the audio is here), Justice Ginsburg again and again pressed the notion that the reason for the individual mandate in Obamacare is that cost shifting from the uninsured to the insured means that everyone is effectively in the health insurance market in one way or another. But that argument is just not based in fact.
John Cogan, Glenn Hubbard, and Daniel Kessler nicely summarized the data on this in the Wall Street Journal last year, saying that “there is no credible evidence of a cost shift of any substantial consequence, either within state boundaries or across state lines.” There is, of course, some shift in costs to taxpayers from the uninsured—costs that present themselves not in the insurance premiums of people who have insurance but in government budgets. But that shift will grow far worse under Obamacare, it will not be alleviated.
The fact is that the individual mandate is a solution to a problem with Obamacare, not to a problem with our health-care system. The new insurance system envisioned under Obamacare, in which insurers are basically not allowed to employ risk rating, could not work if people were allowed to wait to buy insurance until they were sick. Such a system therefore requires the government to mandate participation. But that can’t in itself justify such a mandate—not constitutionally and not practically. Acknowledging that the system you have designed can’t function economically unless everyone is compelled to participate in it should make you wonder about the wisdom of that system, rather than making you defend the proposition that Congress has the authority to compel everyone to buy what you want them to buy. And the attempt to justify the mandate as an independent solution to a problem with American health care that existed before the enactment of Obamacare is simply not valid.