Health-care reform bill included big GOP idea: individual mandate

MIAMI — The 13-state lawsuit against the new health-care law is focused on a provision long advocated by conservatives, big business and the insurance industry.

The lawsuit, a Republican-led effort including Washington Attorney General Rob McKenna, focuses on the provision that virtually all Americans will need to have health insurance by 2014 or face penalties.

The lawsuit states the Constitution doesn't authorize such a mandate, the proposed tax penalty is unlawful and is an "unprecedented encroachment on the sovereignty of the states."

In fact, requiring each American to have health insurance was created by a conservative economist in the 1980s and slowly gathered momentum until the insurance industry embraced it in 2008.

Mark Pauly, a free-market economist at the University of Pennsylvania, said he came up with the proposal for the first Bush administration. His proposal required only catastrophic coverage — as an alternative to those pushing for all employers to offer insurance.

The idea was picked up in 2006 by Mitt Romney, who as Massachusetts governor crafted a health-care law that requires almost all state residents to have coverage.

"Some of my libertarian friends balk at what looks like an individual mandate," Romney wrote then in The Wall Street Journal. "But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian."

Romney was referring to the federal law that requires everyone to be treated in emergency rooms, regardless of their ability to pay.

Neither Sens. John McCain nor Barack Obama embraced the concept during the 2008 presidential campaign. Obama instead preferred strong requirements that employers be required to provide coverage.

But others began advocating it as a sensible compromise. Tommy Thompson, secretary of Health and Human Services under President George W. Bush, sought to make the idea more acceptable, by saying: "Just like people are required to have car insurance, they could be required to have health insurance."

The Business Roundtable, an association of chief executives of America's largest companies, endorsed it in summer 2008, and others joined the bandwagon, including the Service Employees International Union.

Days after Obama's landslide victory, America's Health Insurance Plans (AHIP), a trade group, made a stunning announcement: It favored universal coverage and supported a law that would stop insurers from rejecting applicants because of pre-existing conditions.

After being adamantly opposed to an overhaul during the Clinton years, AHIP said it had changed its mind — based on one condition: Any plan had to require that all individuals have insurance or pay stiff penalties.

AHIP's reasoning: Without an individual mandate, Americans could wait until they got sick and then sign up for insurance — a financially disastrous situation for insurance companies.

On Monday, the day after it was passed, Florida Attorney General Bill McCollum was ready with a news release: "The health-care reform legislation passed by the U.S. House of Representatives last night clearly violates the U.S. Constitution and infringes on each state's sovereignty."

Pauly, the conservative economist who developed the concept, shrugged off the lawsuit Wednesday. "That's lawyer stuff," he said. "I'm an economist." He noted that people were not forced to have coverage: They could pay a fine instead.