Federal Judge in Va. rules healthcare law’s individual mandate is unconstitutional

Today’s ruling by U.S. District Judge Henry Hudson means one thing and one thing only: Obamacare is on its way to the Supreme Court. Hudson ruled that the federal government does not have the authority to force citizens to purchase health insurance. Alternatively, the government could simply tax Americans and hand out vouchers rather than subsidize plans Americans are required to purchase, but that was not the route Congressional Democrats took when crafting the law.

Is a voucher system in our future? That’s hard to say. One thing is certain – the law as it is currently written cannot function without a mandate. 

The Affordable Care Act works like many healthcare systems in Europe. Everyone is required to purchase insurance and join in the risk pool. This keeps costs lower and risks spread out. Nobody can ‘free ride’ (theoretically) by not purchasing insurance until they get sick. Without a mandate – or with too weak a mandate, as was the case already with the recent reforms – anyone can game the system by putting off insurance purchases until they need the coverage. This is because insurance companies can no longer refuse insurance based on pre-existing conditions, nor can they charge more based on health.

Most Americans didn’t like the pre-existing conditions rules, and with good reason. The people who needed insurance the most, often middle-class and middle-aged  were in the gray area where they were too wealthy to get on government assistance like Medicaid, and too young to qualify for Medicare. Unfortunately, due to age and health, these people often found themselves priced out of private insurance.

Indeed, many things about the status quo healthcare system in the United States are wrong and need reform. The individual mandate was a reasonable way to attempt these reforms – but many suspected it was a bridge too far, that Congress was overstepping its authority by forcing people to purchase insurance from a private company. I suspect the Supreme Court will agree.

In which case, it’s back to the drawing board. Healthcare reform is necessary if we ever hope to forge a sustainable long-term fiscal outlook. But mandates aren’t necessarily the key. As I mentioned earlier, a voucher system would be a perfectly acceptable alternative.

I recently wrote about several other ideas for healthcare reform here.

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