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Opinion

Individual mandate in Obama's health care law: good for freedom, bad for free-riders

The Supreme Court begins hearings today on the constitutionality of President Obama's health care law, often called Obamacare. Critics say its 'individual mandate' threatens freedom. It actually protects it.

By John E. Schwarz / March 26, 2012

A woman waits to enter the the US Supreme Court March 26, as the court begins hearing arguments on the constitutionality of the Patient Protection and Affordable Care Act, labeled 'Obamacare' by its opponents. Op-ed contributor John Schwarz argues the law's controversial 'individual mandate' protects freedom by eliminating free riding – a form of theft he says drives up health-care costs for everyone.

Carolyn Kaster/AP

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The Supreme Court begins hearings today on the constitutionality of President Obama’s health-care law. At the heart of the hearings is the law’s “individual mandate,” requiring every American to purchase health insurance. Its critics tell us that the mandate violates basic constitutional principles of individual freedom and limited government.

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Opponents ask: If the federal government has the power to compel all Americans to purchase private health insurance, why couldn’t it require every American to purchase broccoli and other foods that it deems healthy to reduce health-care costs?

They claim that if the government has the authority under the interstate commerce clause to penalize even inaction – in this case, the decision not to buy insurance – there is effectively no limit on what government could require. As Judge Stanley Marcus of the 11th Circuit Federal Court of Appeals asked: “If they [the federal government] could compel this, what purchase could they not compel?”

This idea has great currency in opponents’ circles, but its rationale is utterly flawed.

Why? Because of “free-riders.” A free-rider is a person who benefits from something without paying for it, meaning that somebody else must shoulder the cost. A primary aim of the insurance mandate is to prevent free-riders who receive health-care services but do not pay for them because they lack adequate insurance coverage.

In the health-care market, the only recourse that free-riders leave providers is to withhold their services in what are typically emergency circumstances – the very instances in which we all agree services should not be denied. It is often impossible, in any case, to determine whether individuals who are in severe pain or delirious can pay or not. Current law, in fact, does not permit providers to deny medical services in these circumstances. And beyond these logistical and legal obstacles, most providers are also reluctant to deny care for humanitarian reasons.

Free-riding, in turn, shoves the free-riders’ costs onto others through higher prices. This problem is so substantial that in 2009, Newt Gingrich castigated individuals who didn’t purchase health insurance yet could afford it, calling them free-riders and saying that they ought to be required by law at least to post a bond.

An insurance mandate aimed at stopping free-riders is in complete harmony with a free market. Indeed, the mandate is essential for a free market to be able to operate properly, which is why the Heritage Foundation, a fierce advocate of the free market, was among the first to propose mandating the purchase of health insurance as a solution to both the free-rider problem and rising health-care costs.

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