Of Course I'm Right!
NPR’s Morning Edition reports today that the numbers are the worst since the Census Bureau started keeping statistics in 1987. Take the poll: how are you insured?
Loading ...
I had a guest here this weekend who told me of one theory of why states might sue the federal government over portions of the Obama Healthcare Plan that requires individuals to buy insurance. The theory goes that the federal government is not authorized by any clause in the Constitution to force individuals to pay for healthcare. A plain and superficial reading of the Constitution would seem to support that. This leads to three questions:
First, a caveat: I am not a lawyer. All lawyers: please chime in.
Next, some Constitutional basics. The way our form of government works, each and every law that Congress passes must find some authorizing basis from within the Constitution, because the 10th Amendment of the Constitution clearly states:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
In other words, Congress has to find a basis for the law from within the Constitution. For the better part of three centuries, however, Congress has largely been able to get around this restriction through what has become known as the Interstate Commerce Clause (Article I, §8 Cl. 3):
[The Congress shall have power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;
“Commerce among the several states” has been interpreted to mean, for instance, the ability of someone in New York to charge for access to its waterways. That was what Gibbons v. Ogden (22 US 1) in 1824. It’s largely the basis of how drug laws are authorized today by the federal government. Some people might say that this is a stretch of the clause, and that in fact requiring expenditures from individuals on health insurance would be even more of a stretch.
So what’s the logic in favor of the law? That has its basis in the theory of insurance. Here I will say that I am not an insurance expert, by the way. This much I know: a risk pool requires that everyone not make a claim at the same time, and the lower the likely percentage of claims over some period of time, the need for less money by the insurance companies to satisfy claims.
In the context of health care, if only old and sick people buy insurance, because they make up for the bulk of claims, the money required to pay out claims would require very high premiums, thus reducing any benefit to having insurance. On the other hand, if only healthy people bought into the system, since there would be very few claims, there would be no need for high premiums. Indeed, healthy people might not buy insurance at all, or very limited policies. In short, insurers can only sell health insurance to sick and old people if they have a group of otherwise healthy and young to reduce costs.
Does the decision of someone to not buy insurance in one state impact consumers in and companies in other states? If there exist risk pools that cross state boundaries, then the answer would appear to be yes. Otherwise it would seem the answer is no.
Supposing the Supreme Court found mandatory premiums unconstitutional, what could the Congress and administration do to get around it? The tax system offers us one possibility. The 16th Amendment authorized Congress to tax us:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
One way the Congress could get around this would be to impose a tax that is the amount of a minimum premium, and then allow for a credit based on the costs expended on that premium. Loophole? Perhaps. But not the first.
Coming back to the Commerce Clause, the Congress probably could not have imposed a national speed limit without relying on highway funding. They probably could not themselves have prosecuted individuals for traveling over 55 or 65 mph. Instead they required the states to pass laws or face losing highway funding.
Ultimately if we look at the states that have filed suit, I’m sure we’ll see a distinctly Republican red tinge to them. For one thing, the strategy of Republicans has been to obstruct any Democrat initiative, no matter the harm that obstruction causes to individuals. Here, what possible benefit could individuals who are uninsured gain from not having health insurance? Today 45 million Americans don’t have a choice because they cannot take part in a well balanced risk pool, and hence cannot afford any coverage. Tomorrow even if they don’t have a choice on insurance, at least they’ll have some coverage.
In short, while considering the constitutional elements is interesting at an academic level, the officials doing the suing are harming the very people they are supposed to be serving. Perhaps voters should remember that.
Today’s Wall Street Journal reports that mega-telcos Verizon and AT&T are in discussions with senior staff of the Federal Communications Commission (FCC) over a compromise for enabling legislation for the FCC to regulate access to the Internet. This is no small deal. Chairman Julius Genachowski has made very clear for quite some time that he thought there was a need to provide for some form of net neutrality to protect customers against service providers, and to insure openness. Another thing is perfectly clear to everyone: the rules of the 1980s and 1990s certainly are antiquated.
However, one problem with net neutrality is that it can mean different things to different people. To some it might mean protection from service providers charging for services that they themselves do not provide. To others it might mean an inability for service providers to manage what they deem as excessive use of a shared resource (their network) by some consumers, as their cost models are all structured on the notion of over-subscription. That is– if everyone tried to use a vast amount of bandwidth at once, we would all get very little, and not those megabits/second in the advertisement.
Here are a few facts to think about when you hear the term net neutrality:
That’s what all the fuss is about.
This year’s Workshop on the Economics of Information Security (WEIS2010) enlightened us about Identity, privacy, and the insecurity of the financial payment system, just to name a few presentaitons.
Every year I attend a conference called the Workshop on Economics of Information Security (WEIS), and every year I learn quite a bit from the experience. This year was no exception. The conference represents an interdisciplinary approach to Cybersecurity that includes economists, government researchers, industry, and of course computer scientists. Run by friend and luminary Bruce Schneier, Professor Ross Anderson from Cambridge University, and this year with chairs Drs. Tyler Moore and Allan Friedman, the conference includes an eclectic mix of work on topics such as the cyber-insurance (usually including papers from field leader Professor Rainer Böhme, soon of University of Münster), privacy protection, user behavior, and understanding of the underground economy, this year’s conference had a number of interesting pieces of work. Here are a few samples:
The papers are mostly available at the web site, as are the presentations. This stuff is important. It informs industry as to what behaviors are both rewarding and provide for the social good, as well as where we see gaps or need of improvement in our public policies, especially where technology is well ahead of policy makers’ thinking.
Today I bring to your attention two excellent pieces of work. The first is by friend and colleague John Levine, whose books you may have read. He is in fact today writing about the eBooks industry. I have something of a personal interest in the topic, not so much because I’ve written books (I write RFCs), but because my wife wrote an excellent book, in which the publisher encouraged her to create an eBook. It was ripped off and circulating on P2P networks within days of its ePublication. How annoying. Anyway, John goes to some lengths to talk about the economics of the situation. He’s a great and incisive writer, and a pointer to his writings can now be found on my little blog roll to the right of this post on Ofcourseimright.com.
Separately, Bruce Schneier has been writing about Worst Case Thinking, and what it means to him. While I don’t agree with everything Bruce writes in that article (particularly about his nuclear example), I do agree that societies generally do an extremely poor job of risk management. To me that is because those challenging incumbent politicians always aim for the emotional side of the brain, to get people angry that Something Bad happened, and so incumbents avoid risk at all costs. To me that’s not good government. Don’t get me wrong. Some risks are not worth taking, but let’s be smart about it.