INQUIRER: 'OBAMACARE' AND THE FREE RIDER PROBLEM--
& PHILHEALTH
MANILA, JULY 6, 2012 (INQUIRER) Passion For Reason By: Raul C.
Pangalangan - Last week, the US Supreme Court upheld US President Barack
Obama's grand program to extend health coverage to every American.
Here in the Philippines, we are just now energizing our program
for universal health insurance coverage under PhilHealth's new president, Dr.
Eduardo P. Banzon, a health rights activist since his student days at the
University of the Philippines College of Medicine and the London School of
Economics.
Both Obamacare and PhilHealth face the same challenge—what the US
court calls the "free rider" problem, and which Philippine law calls the problem
of "adverse selection and social inequity."
The key provision in the US health reform law (or the Patient Protection and
Affordable Care Act, also called the ACA) is the "individual mandate" that
requires virtually all Americans to be covered by health insurance.
A person is required to buy insurance coverage from private companies unless
he receives health benefits from his employer or government programs. Otherwise,
should he be hospitalized, he gets a free ride from tax- and dues-paying people.
Universal coverage is thus indispensable for this program to be both viable
and fair. To enforce this, the law requires potential free riders to make a
"[s]hared responsibility payment" by way of a "tax penalty" paid to the Internal
Revenue Service together with the individual's taxes.
The reform law will also expand federal subsidies to the states for
vulnerable patients: pregnant women, children, needy families, the blind, the
elderly, and the disabled. States that fail to expand their coverage may lose
not only the federal funding for these new requirements, but all of their
federal funding altogether.
Otherwise, not just persons but also states can be free riders: states that
adopt Obamacare will merely serve as "bait to the needy and dependent
elsewhere."
The decision was so finely calibrated by the 9-member US Supreme Court that
initially even CNN got it wrong and reported that the ACA had been struck down!
The court held 5-4 that the federal government didn't have the power to require
people to buy insurance but, by a different 5-4 vote, the free rider penalty can
be considered a tax and was therefore valid. The individual mandate required for
universal coverage thus survives.
What won the day for the ACA was the vote of Chief Justice John Roberts,
identified with the 5-member conservative wing (that was expected to strike down
the law), versus the 4-member liberal wing (that was expected to uphold it).
He voted with the conservatives in saying that the individual mandate is not
a valid exercise of Congress' power to "regulate commerce," one source of
federal power over the states. He argued: The clause assumes that there already
exists something to be regulated but here, the law actually compels individuals
to engage in commercial activity by purchasing health insurance. "The Framers
knew the difference between doing something and doing nothing."
The liberals disagreed: Certainly every human being will at some point in his
life get sick and seek medical care. So what if it is merely potential
("prophesied") commercial activity, so long as it is inevitable? The
"formalistic distinction" between activity and inactivity, the liberals said, is
simply "untenable."
On the other hand, Obama's lawyers argued that alternatively, the individual
mandate may be upheld as a valid tax on those who do not buy insurance. The
conservatives disagreed: There is "a clear line between a tax and a penalty. [A]
tax is an enforced contribution to provide for the support of government; a
penalty … is an exaction imposed by statute as punishment for an unlawful act."
On this point, Roberts broke ranks with the conservatives, and argued that
"every reasonable construction must be resorted to, in order to save a statute
from unconstitutionality." He did this, even if Congress itself failed to call
it a tax, and for which he has been accused of exercising "judicial
statesmanship" in bending over backward to validate Obama's reform law.
For us in Manila, the federal-state power distinction is totally irrelevant
since we have a unitary republic. However, the same problem of mandatory
coverage versus the free rider is starkly relevant. Our 1987 Constitution calls
on the state to "make essential goods, health and other social services
available to all the people at affordable cost."
Accordingly in 1995, we established the Philippine Health Insurance Corp.
(PhilHealth) to provide access to health insurance based on universality: "All
citizens of the Philippines shall be required to enroll in [PhilHealth] in order
to avoid adverse selection and social inequity."
Note the contrasts between the United States and us. One, our starting points
differ. They have a good mix of the insured and uninsured. We start on the
assumption that the typical Filipino is uninsured, and we "actuarialize" the
health costs via the charity of family members and doctor friends. Two, they tax
the free riders but we don't.
Without a socialized health insurance program, there are strictly speaking no
free riders because all health costs are presumed to be out-of-pocket. The
subsidy is invisible, through tax-supported public hospitals like UP-PGH or
through Robin Hood-type doctors whose rich patients subsidize the charity
patients. PhilHealth's success will hopefully change all that.
I spoke at a training seminar for PhilHealth lawyers two weeks ago. I noted
that, when Filipinos finally discover what it means to have universal health
coverage, not just in actual benefits but in the peace of mind that it offers to
every struggling Filipino parent, then we shall have built a lasting legacy for
the next generation.
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
All
rights reserved
PHILIPPINE
HEADLINE NEWS ONLINE [PHNO] WEBSITE
[Non-text portions of this message have been removed]
------------------------------------
-------------------------------------------------------------
Follow us on Twitter: http://twitter.com/phnotweet
This is the PHILIPPINE HEADLINE NEWS ONLINE (PHNO) Mailing List.
To stop receiving our news items, please send a blank e-mail addressed to: phno-unsubscribe@yahoogroups.com
Please visit our homepage at: http://www.newsflash.org/
(c) Copyright 2009. All rights reserved.
-------------------------------------------------------------Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/phno/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/phno/join
(Yahoo! ID required)
<*> To change settings via email:
phno-digest@yahoogroups.com
phno-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
phno-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
PH Headline News Online. Copyright 2011 All Rights Reserved