JONATHAN COHN DECEMBER 5, 2011
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The legal case against the Affordable Care Act may have just become weaker. And it’s not because of anything that happened in Washington. It’s because of something that happened in Florida: The filing of bankruptcy papers by Mary Brown, who until recently owned and operated an auto repair shop near Pensacola.
Brown’s story, which the Wall Street Journal reported in Monday’s editions, seems genuinely heartbreaking: From the sounds of things, the twin shocks of the recession and the Gulf oil spill basically killed her business. One former employee tells the Journal that Brown fought “every day” to keep the shop going. Another describers her as “professional, truthful, honest" and adds that "she really took care of us."
But Brown isn’t just any old small business owner. She’s the lead plaintiff in the lawsuit against health care reform that the National Federation of Independent Businesses (NFIB) and 26 states filed in 2010. Yes, that’s the same case the Supreme Court just agreed to hear – the case that could determine whether Obamacare, as it’s come to be known, will stand or fall.
The Journal story – the product of excellent reporting by Emily Maltby, Vanessa O’Connell, and Jess Bravin* – focuses on the new legal issue that Brown’s financial situation raises: She may no longer have the standing to sue. According to the article, the bankruptcy makes it more difficult for Brown to claim that the Affordable Care Act will harm her interests, since she can no longer claim it will damage her business. In addition, the article states, her financial situation makes it more likely she wouldn’t even be subject to the mandate – again, calling into question whether she can claim the law would harm her.
I’m not a lawyer, so I’m really in no position to adjudicate the standing question. Among other things, this particular lawsuit has another named plaintiff. NFIB certainly thinks the case can go on, just as before.
But the more interesting and, to my mind, more important implication is what Brown’s bankruptcy says about the actual merits of the lawsuit – and, ultimately, the legal rationale for the Affordable Care Act. Based on available information, it may illustrate almost perfectly why the law is necessary – and constitutional.
The legal case against the health care reform really boils down to one question: Does the government infringe upon your freedom when it demands that you obtain insurance or pay a penalty, as long as you have the money to afford it? Or is the government merely asking you to help bear the cost of medical care you will inevitably consume – a cost that, otherwise, the rest of society would have to pick up, chiefly in the form of higher taxes, higher insurance premiums, and lost income?
Brown adheres to the former point of view: “No one has the right to try to control how you spend your money,” Brown told the Journal. But the bankruptcy filing that she and her husband made, and which TNR obtained via online court records, lists among the couple's unsecured creditors several providers of medical care – a hospital and a physician group in Florida; an anesthesiology group based in Mississippi; and an eye care center in Alabama. The total, based on the court filing, appears to be a little less than $5,000. The bankruptcy filing also indicates that the couple has $400 in expected monthly "medical and dental" expenses.
I can't be sure how those bills were generated. And I certainly don’t want to speculate on whether Brown and her husband will end up paying part or all of those bills, as I have no way of knowing. (Brown's bankruptcy attorney declined to comment when reached by phone and the lawyer in the federal suit referred calls to the NFIB, whose spokesman said she was unable to comment on the specifics of Brown's situation. I also tried calling a number in Florida that appears to be Brown’s, based on a web listing. A recording said the mailbox was full.)
But this much I do know: Bankruptcy proceedings frequently leave doctors and hospitals with unpaid bills. When that happens, doctors and hospitals write off the cost as “uncompensated” care – and pass along at least some portion to the rest of society, in one form or another. Some credible estimates have suggested uncompensated care adds up to more than $40 billion a year.
Also note that Brown's creditors include providers from three different states. A key issue in the constitutional challenges to the Affordable Care Act is whether health insurance status has consequences for "interstate commerce." If nothing else, this filing is a reminder that the business of health care frequently spans state borders.
Just to be clear, I’m not blaming Brown for her bankruptcy or for her lack of health insurance. Far from it! According to the Journal story, Brown and her husband used to have health insurance -- and dropped it because the cost, more than $1,100 a month, was prohibitive.
That is all too typical of the insurance market today. Small business owners frequently struggle to find decent health benefits, particularly as they get older, because the market for both individuals buying on their own and small businesses is extremely dysfunctional. Insurers jump in and out of the market, broker fees drive up premiums, and plans tend to have spotty benefits. Most important of all, carriers are practice aggressive forms of “risk selection” – that is, altering coverage, raising premiums, or simply denying coverage to people with pre-existing conditions and other signs of medical risk.
Brown told the Journal that the costs of health care are one reason she opposes the law; if the Affordable Care Act takes effect, she said, more businesses will "close because they can't afford health care, and more people will be out of work." But I think the predicament of small business is more an argument for the Affordable Care Act than against it.
The first time I ever heard about Brown was more than a year ago, when Harris Meyer, the veteran health care reporter, wrote about her decision to file suit. As Meyer explained then, a small business owner like Brown likely would be eligible for substantial subsidies.
Depending on Brown's specific financial circumstances, those subsidies could allow her to obtain insurance not only for herself but also for her employees, to whom, according to Meyer’s story, she had not been able to provide coverage. Better still, starting in 2014 Brown could buy insurance through one of the new exchanges – where all plans must include an essential benefits package and where insurers cannot discriminate against people based on medical condition.
I am guessing Brown would disagree. Almost a year ago I had a similar discussion about these issues with Steven Hyder, a small business owner in southeast Michigan who was a named plaintiff in another suit against the Affordable Care Act. He told me, politely but quite firmly, that he believed the mandate was an imposition on his liberty. "It’s a complete intrusion into my business and into my private life," he said.
He's entitled to his opinion, as is Brown and everybody else who doesn't like the Affordable Care Act. And if they wanted to make the case against some substantive provisions of the law, I'd probably agree. (For example, I wish those subsidies were more generous.) But the reality of their lives –specifically, the fact that they will almost certainly get sick and run up medical expenses, as virtually every single person does – suggest that their health insurance status will eventually impact everybody. And that's the issue on which the court decision may turn.
*According to the Journal story, it was a call to the plaintiff attorneys by Journal reporters that prompted the attorneys to notify the Solicitor General’s office of Brown’s bankruptcy status.
Update: I tweaked the wording in a few places – among other things, to make even clearer how much about this case I still don't know. I also wanted to emphasize that the Browns had dropped health insurance because it had gotten so expensive – and that her opposition to the law reflects, in part, her belief that it will make things harder on small business rather than easier.
18 comments
It's not the mandate, it's the new entitlement, an entitlement that mostly benefits insurance companies, that's the objection of many who oppose ACA, perhaps the Browns. I don't object to the new entitlement; I object to the entitlement ACA provides for the insurers (all those young and healthy insureds, with many having their insurance premiums paid by taxpayers). I agree with Cohn about most issues, especially HCR, but we diverge when it comes to the "necessity" (to avoid the death spiral) of imposing on taxpayers the cost of guaranteed insurability.
- rayward
December 5, 2011 at 6:22pm
The American system of health insurance, tied in to employment, as always struck me as quite mad. Eventually, most of us (unless felled by accident, crime, war, etc.) get sick and die. A decent society postpones and alleviates our mortal suffering as much as it can. This is easy to say and difficult to do. ("Devil in the details.") Nevertheless, for all our faults and stumbles, we are an intelligent and mostly honorable and decent society. We can do better than the current mess. Everybody reading this (starting with me) let's put our shoulder to the wheel and do better. Perhaps next week I will donate a dozen of our freshly laid, omega-3 rich free run chicken eggs to the local food bank to help keep hungry people a little healthier.
- skahn
December 6, 2011 at 1:09am
“No one has the right to try to control how you spend your money,” Brown told the Journal. ================================= As absurd a statement as has ever been uttered. We are required to buy auto insurance; prohibited from buying heroin; required to pay taxes, from sales to income; prohibited from paying employees less then the minimum wage. And so on. Brown's involvement in the lawsuit sounds more like it stems from libertarian fantasies than anything else. Dan PS How do you go broke in the auto repair business? The recession caused cars to stop needing repairs. Really?
- dbuck1
December 6, 2011 at 8:50am
Per the WSJ article, Brown collects unemployment benefits, a program based on the government controlling how you spend your money, i.e., federal and state payroll taxes are collected and later distributed pursuant to a common good, supporting the unemployment. Brown is allied with the wrong acronym, NFIB. Her patron saint is FDR. Dan
- dbuck1
December 6, 2011 at 9:06am
Er, supporting the unemployed. Dan
- dbuck1
December 6, 2011 at 9:07am
"One former employee tells the Journal that Brown fought “every day” to keep the shop going." Yet she had time to be lead plaintiff and give tons of interviews? And they then have the gall to use bankruptcy laws to avoid paying their own debts, if they couldn't afford to get sick then they shouldn't have gotten sick, and if they got sick how dare they stick it to the Doctors and Dentists, isn't that theft? Put them in a debtors jail then, make them work off their debt. This is the type of world that Brown wanted for America, but when times get tough she seeks to exempt herself from it from her own rigid standards. It might sound cruel but I am glad this has happened, it might teach them compassion and basic decency. Personally I am against the mandate because I think it should have been a tax and credit regime, which is Constitutional and which I think is fairer since it mandates nothing but you would be an absolute idiot not to avail yourself of it. ray, c'mon, you know the insurance beast in America must be fed. I really like my IMSS down here, which is the Mexican governments public health insurance plan. I get taxed and whenever I need medicine I go to the clinic, I never pay a penny (or centavo). In 7 years I have only used it 5 or 6 times and all for minor things like an ear infection. Mexico pays probably 1/10th the US but is really not far away as to outcomes. I will dread going back to the states.
- blackton
December 6, 2011 at 10:53am
Dbuck calls it. They both sound like your basic right wing ideologoes. If either had said, "I'm suing because the supposed subsidies in the ACA for small businesses are not enough to cover real costs, so this will actually make things worse for me" that would be one thing. But they did not - they parroted emtionally based bullsh*t.
- WandreyCer
December 6, 2011 at 11:12am
JC writes: "The legal case against the health care reform really boils down to one question: Does the government infringe upon your freedom when it demands that you obtain insurance or pay a penalty, as long as you have the money to afford it?" But then why not just pay the government for everything, and let the government provide your house, car, food, etc? In other words, we'd never get a paycheck. Just report the gov assigned house when told to, and start working. And if you needed something, you'd fill out a requisition form, just like Occupy Wallstreet folks did. And if the board approves it, hooray! You get a new drum! You aren't really this perplexed by the mandate are you JC? You don't see this as a slippery slope? The gov could have fixed this by saying "If you want insurance, you can buy it no matter what. But if you don't buy it, then it will take 2 years to kick back in to 100%. We'll pay 25% of your medical the first 6 months, 50% the next 6 months and 75% the final 6 months." That would have encouraged most everyone to get insurance. And for those whack jobs that still didn't want it, they'd not have to buy it. As I've noted before, the complexity of Obama care will be its undoing. It could have been so much simpler and accomplished the same thing.
- seattleeng
December 6, 2011 at 11:39am
Yes, Blackton, and you are by no means the only non-native who benefits from Mexico's excellent health care at a fraction of costs here. I have several friends who have acquired dual citizenship just to be able to afford to live in the U.S. and get health care. My partner and I are thinking of doing the same thing. Despite the cartels, life isn't all the much worse in Mexico. Mexicans basically are a non-violent people, unlike their gringo neighbors.
- Tgossard
December 6, 2011 at 1:28pm
Ah, the ol' slippery slope argument seattleeng deploys. LGBTs likewise must endure the slippery slope argument, though I haven't seen a human sodomize a pig or acquire a harem (or haremen)! It's the allegers that slip and slide and fall over themselves alleging.
- Tgossard
December 6, 2011 at 1:35pm
"You don't see this as a slippery slope?" Can't you please just make your argument without going into that 'slippery slope' nonsense? There is no reason why bad laws would be the inevitable result of passing less-bad laws related to the same subject. As an example, it is still legal for people to eat other types of meat despite it being illegal to eat human meat. Or do we need to legalize cannabalism to avoid the slippery-slope into coerced vegetarianism?
- Fishpeddler
December 6, 2011 at 1:36pm
Or 'cannibalism', for that matter?
- Fishpeddler
December 6, 2011 at 1:38pm
"Or do we need to legalize cannibalism . . . . ?" Cannibalism is illegal?? Oops.
- ironyroad
December 6, 2011 at 2:23pm
You're fine, irony; 'no cop, no stop' applies to feasting on human flesh as well as stop signs.
- Fishpeddler
December 6, 2011 at 2:29pm
Phew! Thanks Fish -- I was worried there for a minute.
- ironyroad
December 6, 2011 at 4:20pm
seattleeng: But how do you feel about the mandate on its own merits (rather than as a gateway to complete socialism)? Every now and then you demonstrate that you can make strong arguments without trying to change the subject somehow, but it's very rare. Anyway, I worry that if we accept *this* slippery-slope argument, then soon, everyone will say that everything is a slippery slope to something worse! Then our ability to have reasoned arguments would, I dunno, slide downhill somehow.
- frippo
December 6, 2011 at 4:33pm
JC, your update had a puzzling juxtaposition: you wanted "to make even clearer how much of the case" you "still didn't know," yet you also "wanted to emphasize that the Browns had dropped health insurance because it had gotten so expensive." But you really don't know why they dropped their health insurance; all you know is what they said to the WSJ reporter. For all we now the Browns mismanaged their business. The WSJ reporter could have dug deeper. Second, as other readers have pointed out, now the Browns will be depending upon the state (i.e., the taxpayers) for any emergency health care. $1,100 a month, by the way, does not strike me as expensive for a couple, given their circumstances (and without knowing their health history). Third, the Browns filed for bankruptcy, a process that contrary to Ms. Brown's opposition to anyone controlling how you spend your money does exactly that. The process will control their spending in return for protecting them from the ardors of their creditors, which is to say, will also control their creditors' money. It does not get any more controlling than that. All in all, the Browns are neck deep in enjoying the benefits of laws their John Galtian fantasies do not permit. Dan
- dbuck1
December 6, 2011 at 6:26pm
Seattle says "The gov could have fixed this by saying "If you want insurance, you can buy it no matter what. But if you don't buy it, then it will take 2 years to kick back in to 100%. We'll pay 25% of your medical the first 6 months, 50% the next 6 months and 75% the final 6 months."" How on earth is that less intrusive than the Govt. requiring you to go buy your own insurance and then if you don't, you get "fined' or "taxed" for not buying it? Your proposal requires more outright taxpayer subsidization than insurance because you're suggesting that the government pay an increasing percentage of the total medical costs up to year 2 and then they get 100%. Unless I'm reading more into what you're saying Seattle. I do agree that the bill could have been more simple but then we're talking D.C. sausage making here. I would have preferred an automatic enrollment into Medicare for everyone and then provide an 'opt out' clause for those who would like their own private insurance provided that it is equal to the basic coverage of Medicare. Heck, allow folks to keep their "basic services" Medicare and they can go out and add supplemental insurance for other things they want that wouldn't be covered by the 'basic services' coverage. But simple ideas don't fly in D.C. If they did, 95% of the politicians would be out of jobs.
- singlspeed
December 6, 2011 at 6:46pm