Browsing the blog archivesfor the day Friday, December 17th, 2010.

The McArdle Mystery

Obama Administration

… the mystery being why a respectable publication like The Atlantic keeps a dimwit like Megan McArdle on the payroll.

In the past few hours McArdle has dropped two Atomic Bombs of Stupid, one of which is nicely debunked by Scott Lemieux.

In the other, titled “Government Arguing That Health Insurance Premiums Are Really Taxes?“,

The arguments on the health care mandate in Florida went forward today, with the government trying to clarify how the mandate is a tax, (though not in a way that would mean Barack Obama lied about raising taxes on people with incomes below $250,000 a year), and not an attempt to grossly exceed the enumerated powers of the legislature.

Is the Obama Administration arguing that the mandate is a tax? McArdle provides no evidence for this.

McArdle is discussing a suit brought by the state of Florida against the insurance mandate. The state of Florida’s argument is that the feds are assuming the right to regulate all economic behavior. The judge asked, “They can decide how much broccoli everyone should eat each week?” and an attorney for the plaintiff said yes. But, McArdle continues, the State Department attorney argued that insurance is a financial mechanism, not a product.

I am glad to see that the government’s fine lawyers can make these sometimes difficult distinctions. But the issue here is not whether insurance is a financing mechanism or a physical good like shoes or vegetables. The issue is whether under the Constitution the federal government can compel an individual to participate in a private market transaction–purchasing health insurance from a private company–in which the individual had not otherwise chosen to participate.

Moreover, if it’s really just a revenue-raising mechanism, a way for the government to pay for health care, then aren’t they saying that the insurance premiums paid to health insurance companies actually taxes? This is different from the administration’s argument that the penalty for not complying with the mandate is a tax. Instead, they’re effectively describing the premiums themselves as taxes–financing mechanisms that the government uses to pay for care.

But in this case, it’s not the government paying for the care. The care is being paid for by private insurance.

But if that’s the case, shouldn’t the CBO have scored the total cost of these premiums–the cost involved for everyone to purchase insurance? That wouldn’t be unprecedented.

Is she saying that the cost of all the insurance purchased from private insurance companies be figured into the federal deficit? If she’s arguing that someone should calculate the overall impact of the mandate on the nation’s health care costs, lots of people already have done that, including the CBO.

I have a different question: could it possibly be legal to define the health insurance premiums as a tax? As far as I’m aware, it’s not legal for a third party to collect and disburse US government tax revenues with relatively minimal oversight, which is what we’re talking about here. Not that I want to define our massive health care bureaucracy as constituting “minimum oversight”, but there are a bunch of missing controls that we’d require from an actual government agency.

In other words, it’s not the Obama Administration who is arguing that the mandate is a tax. It is McCardle arguing that it is the same thing as a tax. The constitutional argument has nothing to do with taxes, however, but with Congress’s powers to regulate interstate commerce.

I wrote earlier this week that the individual mandate is necessary to making the health care reform law work at all. Without it, the whole thing will pretty much collapse. The Obama Administration is arguing that the commerce clause applies, because all the decisions to purchase health insurance in aggregate will have a massive impact on the cost of insurance for everyone and the cost of health care generally.

Anyway, this big ol’ pile o’ stupid inspired the second big ol’ pile of stupid, linked above, arguing that if Congress can tax anything it wants, it could discourage abortions by taxing them. I don’t have the strength to deal with that one, which is why I defer to Scott Lemieux.

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