*A previous version of this article incorrectly identified the person quoted. The article also has been updated to clarify comments from associate professor of law Thom Lambert.
COLUMBIA — Any family with an income of $45,000 or more two years from now will have plenty of incentive to reject health insurance and instead pay the penalties imposed by the Affordable Care Act, an MU law professor said during a panel discussion on Monday.
Panelists hosted by the MU School of Law in observance of Constitution Day expressed concerns Monday about the economic, policy and constitutional ramifications of the Affordable Care Act, as well as the wording Chief Justice John Roberts used when the U.S. Supreme Court upheld the law on June 28.
The panel included Josh Hawley, associate professor of law; Phil Peters, the Ruth L. Hulston Professor of Law; Thom Lambert, associate professor of law; and Stan Hudson, associate director of the MU Center for Health Policy.
Lambert said that insurance is expensive and may not be something that young, healthy people will want to buy, because they have a low chance of needing health care in the near future. If they know they can buy health insurance when they get sick at rates that don't reflect their medical conditions, they have an incentive to forego insurance, he said.
The "individual mandate" in the ACA is designed to force young, healthy people to buy insurance, Lambert said, adding that the problem is that the penalties in the act are too low.*
The Supreme Court ruled in June that the act's individual mandate that every person buy insurance or face a "penalty" is not a valid exercise of Congress's ability to regulate commerce. However, Congress can require the uninsured to pay a "tax." Hawley said that will create confusion about the power of Congress.
Lambert calculated in an economic analysis of the law, entitled "Why the Roberts Court's Health Care Ruling Dooms the Affordable Care Act," that it would be economically smart only for people with an income lower than $45,000 to buy health insurance when the penalties max out two years after the law takes effect. For people whose income is higher than $45,000, health insurance will remain more expensive than the penalties for not being insured.
The Affordable Care Act, championed by President Barack Obama and passed by Congress, also prohibits insurance companies from denying insurance for high-risk people or charging them more. The constitutionally constrained penalties imposed on people who lack insurance, combined with the fact that people can wait to purchase insurance until they really need it, creates a "perverse incentive" for people to pay the penalty rather than buy insurance, Lambert argued.
"It is the equivalent of calling the fire insurance company while your house is on fire and saying: 'Hello, I need fire insurance,'" Peters* said, putting a hand to his ear as if to make the phone call.
The Affordable Care Act also requires states to establish health-care exchanges that would expand residents' health-care options. The federal government would create exchanges for those states that decline to do so. Hudson noted that Missouri is in a unique situation: Voters on Nov. 6 will decide at the polls whether to prohibit the state from creating an exchange.
States that oppose the Affordable Care Act argue that Congress has never been allowed to force people to buy into markets they don't want to, Hawley said. Roberts, however, wrote in the Supreme Court's majority opinion that the law's requirement that uninsured people have to pay penalties can "reasonably be characterized as a tax."
Because the U.S. Constitution gives Congress the power to levy taxes, the Supreme Court cannot forbid it. Hawley said that creates an ironic effect in that it "dramatically" increases the taxing power of Congress. He posed two questions:
- "Will Congress characterize future law as tax?"
- "In closing a door, did Chief Justice Roberts open a window?"
Hawley also believes there will be confusion in the future about whether the opinion creates binding law or is simply a statement of opinion.
Supervising editor is Scott Swafford.