Reviving The Single-Payer Option

If the government wants me to pay for a service – let’s use health care as an example – it can tax me, and then decide how and when I can use the service. I pay a lot of tax money for Medicare and Medicaid, though I do not qualify for those benefits.

Maybe this is fine with me; maybe it isn’t. I can express my feelings here or at the ballot box. It would do me no good to attack the system in court, because the courts long ago decided that the government can tax me to provide services, even services that are used only by other people.

If the government wants to expand Medicare to cover everyone in the country, it could do that, too. It would undoubtedly cost more, so I would undoubtedly pay more. That’s the so-called single-payer option that many Democrats hoped would be part of the recent health care overhaul. This idea did not get off the ground, in large measure because American doctors do not wish to work solely for the U.S. government, and private health insurers do not wish to be put out of business.

So Congress required, instead, that beginning in 2014 virtually all Americans who are not otherwise covered must purchase private insurance. Backers of the health care reform did not see this as a problem. Congress could have forced all of us into a single, nationalized health insurance program; instead, it gave us a bit more freedom to choose, by allowing us to select among what are supposed to be multiple plans meeting certain minimum standards. We’ll see soon enough – maybe – how well this works in the real world.

But the insurance requirement has emerged as the loose thread that could unravel the entire health care deal. This delights a lot of people who opposed the overhaul in the first place. Some want to keep the system we have had until now; others want a new reform package that concentrates more on controlling costs and less on universal coverage.

Virtually none of them want the other possible outcome of a successful challenge, which would be a revival of the single-payer idea.

Earlier this month, a Virginia federal judge became the first to rule part of the Affordable Care Act unconstitutional: specifically, the mandate that all citizens purchase insurance or face penalties. Citing the Commerce Clause of the U.S. Constitution, Judge Henry E. Hudson ensured that higher courts will have dissenting opinions to consider. And it is virtually certain that, sooner rather than later, the new health care reform law will make it to the Supreme Court.

Two issues are at play here: the constitutionality of the law, and its wider economic implications. The former is a close enough question that the courts could go either way, and have so far; in addition to this decision, there have been two federal court decisions upholding the law’s constitutionality, and 12 more cases thrown out altogether. Another challenge to the law, backed by 20 states’ attorneys general, is making its way through a federal court in Pensacola, Fla.

It will be interesting to see how the Supreme Court decides. There are other situations in which government mandates the purchase of private services. In Manhattan, restaurants and office buildings are required to hire private haulers to remove their trash. The system produced a lot of mob-dominated corruption years ago, and a lot of court action that followed, but, as far as I know, nobody has challenged its constitutionality.

Opponents of the insurance mandate claim it oversteps the government’s power by forcing Americans to buy a product just by dint of existing. This distinguishes the law from, say, requirements for auto insurance, as citizens have the choice not to own a car. But the naysayers may be missing the bigger picture.

It boils down to the way insurance works. Collectively, we can’t have insurance if people only buy it after they know they need it. Either everyone shares the risk (and the expense) or premiums become unaffordable. If the Affordable Care Act is ultimately found unconstitutional, we will be left with only the public option to address the policy goal of universal coverage.

The irony, then, is that those who are challenging the Affordable Care Act as it stands are the very people who could drive us to a public option in the end. Those who supported the public option may just need to sit back and wait until the challengers’ court victories suddenly seem a lot less victorious. What remains to be seen is how close they get to the top of this uphill legal climb before they realize what’s waiting for them at the summit.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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