Government Arguing That Health Insurance Premiums Are Really Taxes?

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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.  This led to a rather novel formulation of what, exactly, the mandate is for, as chronicled by the Official Asymmetrical Information Spouse:


According to an Obama administration lawyer, you don't have to worry about the precedent set by ObamaCare's individual mandate to purchase health insurance. The government isn't going to make you buy vegetables or new cars. After all, with the mandate, the government isn't really forcing you to buy a "product," because insurance is just a way of financing health care. 

Nope.

From Bloomberg's report on the hearing regarding the health care law the took place in Florida earlier today:

[U.S. District Judge Roger] Vinson asked [lawyer for the states David] Rivkin whether the government's theory would allow regulation of any behavior with an economic impact.

"They can decide how much broccoli everyone should eat each week?" Vinson asked.

"Certainly," replied Rivkin, an attorney in the Cleveland-based law firm Baker Hostetler LLP.

"We've always exercised the freedom whether we want to buy or not buy a product," Vinson told the Obama administration's lawyer.

[Obama lawyer Ian] Gershengorn said health insurance is "a financing mechanism," not a product. "It's not shoes," he said. "It's not cars. It's not broccoli."

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 ins

Not really getting it, are we?

urance 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 if that's the c

ase, 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. One of the things that  helped kill HillaryCare in 1994 was a decision by the Congressional Budget Office to score the cost of requiring private-sector employers and individuals to purchase insurance. Each and every one of those mandatory premiums was added to the cost, revealing just how expensive the scheme was. 

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.

I don't know the answer to this question, so I'm genuinely asking: would it be constitutional to effectively declare that the nation's health insurers are branch offices of the Internal Revenue Service?

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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