As a health care advocate in Massachusetts and later as an aide to Sen. Ted Kennedy, I first opposed and later embraced the “individual mandate” as a pathway to increase health insurance coverage for millions of people. At the time of my switch in 2004, the mandate was considered a conservative idea and seemed like a way to achieve one of liberalism’s most cherished goals, universal coverage. It succeeded and has helped to make Americans healthier. But it proved to be a flashpoint, and has outlived its usefulness as a policy tool.
Now, I find myself in the uncomfortable position of hoping that the Supreme Court will kill it rather than use it to kill the Affordable Care Act.
By the end of June, the U.S. Supreme Court will rule on a lawsuit seeking to overturn the entirety of the ACA. For the second time, the core legal argument confronting the Court involves the ACA’s “individual responsibility requirement,” better known as the “individual mandate” that requires most Americans to obtain health insurance. For 33 years, and especially since President Barack Obama signed the ACA into law in 2010, the mandate has been a prize and a booby trap for Republicans and Democrats, conservatives and progressives alike, rarely at the same time. Initially a policy favored by many Republicans and conservatives and reviled by most Democrats, both sides swapped roles during the ACA’s creation between 2008 and 2010. Since then, the mandate has been the least favored part of the now popular health law, and the most disputed feature of one of U.S. history’s most contested laws.
The mandate has always been a case of tough love. First introduced into public conversation in the United States in 1989 by the conservative Heritage Foundation, the concept was written and promoted then by its chief domestic policy expert, Stuart Butler. It became law in the U.S. for the first time in 2006 in Massachusetts. In 2012, after the mandate had become part of the ACA, USA Today published an op-ed by Butler titled: “Don’t Blame Heritage for the Obamacare Mandate.” In 2020, he signed onto an amicus brief to the Supreme Court in opposition to the now-pending lawsuit seeking to take down the mandate and the whole ACA. For Butler, for me and for many others, the mandate has been a journey of twists and turns.
Stuart Butler’s personal journey is also noteworthy. A British ex-pat who emigrated to the States in 1979 to advance the free-market revolution envisioned by Nobel economist Milton Friedman and others, he is an unfailingly polite and amiable man of conservative instincts and ideas who obliterates the stereotype of a right-wing firebrand. His intellectual and policy journey reflects the rise and fall of President Ronald Reagan’s conservative revolution that shaped U.S. public policy for 40 years between 1980 and 2020. Butler’s leasehold on the individual mandate came to haunt his final years at Heritage which he left in 2014 for the more genteel and ecumenical Brookings Institution. Butler agreed to participate in interviews in the crafting of this article.
Stories about public policies are also stories about persons, the creators and destroyers, and those in between. Policy ideas that hatch in people’s minds are products of time and context. As eras shift, so do the policies that define them, and so do the persons who gave birth to the ideas. The story of the ACA’s individual mandate involves many ideas and persons and, in particular, the ideas of one person who provoked it, a revealing anecdote for an epoch in American history now coming to a close.
Following the path of Thatcher
Butler was born in 1947 in Shrewsbury, England, located between Birmingham and Liverpool, to working class parents, both traditional and non-active Conservative Party loyalists. His father left school at age 13 to work at the post office until he started his own auto business. His mother, from Scotland, won a full scholarship to Oxford and then couldn’t go because her father thought young women should look after the home and gain “practical” skills.
Stuart was the middle child of three brothers and the first to obtain higher education, which he did at the University of St. Andrews on the southeast coast of Scotland. He obtained bachelors, masters and doctoral degrees there, the last concentrating on American economic history. After a bachelors focused on physics and math, he switched to economics and philosophy after experiencing an intellectual epiphany that led him toward free market, conservative, neoliberal thinking in an otherwise leftist, Labor Party-dominated environment.
“Milton Friedman was the counter-culture in British universities in the 1960s,” he recalls. “If you were radical on the right, you absorbed Friedrich Hayek for theory and Friedman for practical steps forward.”
Butler’s younger brother, Eamonn, followed Stuart’s passion and led the charge to erect a statue to 18th century classical liberal economist Adam Smith in downtown Edinburgh, still standing today. In the late 1970s, Stuart and Eamonn helped found the Adam Smith Institute in London which continues today with Eamonn as director. The term “neoliberal” or “classical liberal” refers to Hayek and Friedman’s updating of 18th century Smithian liberalism, brought into the 20th century context, they maintained.
Butler was an early supporter of Margaret Thatcher well before she won her first election as British prime minister in 1979. Like Butler, she experienced an epiphany influenced by Hayek and Friedman. At a Conservative Party policy conference in the mid-1970s, as recounted by historian John Ranelagh, Thatcher stood to confront her colleagues who suggested that the party pursue a moderate course. As the new party leader, she pulled Hayek’s book The Constitution of Liberty from her briefcase and slammed it on the table, saying, “This is what we believe!”
In 1973, both Stuart and Eamonn Butler began traveling back and forth between the U.K. and the U.S., doing teaching stints at the conservative Hillsdale College in rural Michigan, looking for opportunities to advance their cause and to make a difference. In 1974, the Heritage Foundation published a book, co-written by both of them, comparing the British National Health Service and the U.S. Medicare and Medicaid programs, finding all three wanting. Of the two, Stuart became more discouraged by the state of British society and politics. He obtained permanent U.S. residency, and left the U.K. for good in 1979 just as Thatcher won her first election as prime minister.
He had a job offer from the Heritage Foundation in Washington that was too tempting to resist.
Reinventing public policy
The late 1970s and 1980s were bold and invigorating times for conservatives and Republicans in America and especially in Washington. Since 1933, Democrats, Keynesians and other progressives owned the policy ideas ranch named the New Deal. That era didn’t end with President Franklin D. Roosevelt’s death in 1945. Yale historian Steven Skowronek writes that the New Deal was the dominant “regime” in America from 1933 to 1980 until Ronald Reagan’s election. In that 48 year epoch, Democrats controlled the D.C. “Trifecta” (holding White House, Senate and House simultaneously) for 30 years, with 18 years of divided government, and a mere two held by Republicans.
In that era in 1947, in the Swiss Hotel du Parc in a town called Mont Pelerin sur Vevey, Austrian economist Friedrich Hayek assembled a global group of like-minded intellectuals and businessmen to forge a new political and economic philosophy inspired by Adam Smith’s ideas. The assembled participants opposed what they saw as a slippery slope to totalitarianism in the New Deal and its progressive elite along with their global allies. Hayek’s first popular book, The Road to Serfdom, attacked central government planning as a threat to liberty, preferring an updated version of unbridled 19th and early 20th century capitalism grounded in a reinterpretation of Smith. Joining Hayek at that first global meeting of the Mt. Pelerin Society was his future fellow Nobel economics laureate, Milton Friedman. They knew that their journey would take decades, not years, and that their prime audience would be subsequent generations, not those then in power.
By the time Stuart Butler settled in America, he and many like him viewed Milton Friedman “like a god,” in his words. Friedman used his fast and voluminous writing skills to produce a large body of work, including his 1962 book, Capitalism and Freedom. His technical work on economics is highly regarded, even today, including by economists such as Paul Krugman. His political writings and advocacy were, however, sharply contested.
Friedman’s bottom lines were many, articulated in books, articles, Newsweek columns, a 1980 PBS series called Free to Choose and more. Freedom is society’s watchword, he maintains, and economic freedom is the gateway to political freedom and general prosperity. Competition between economic freedom and equality in outcomes is zero sum, and the former must win. Preceding Reagan’s inaugural address by nine years, Friedman wrote in Newsweek in 1972 that “government is the problem, not the solution.” Taxes are bad, ditto for regulations, and both should always be reduced. Budget deficits are never an excuse to raise taxes. Unions interfere with economic freedom. Global free trade, governed by clear rules, is the boss, even when partners manipulate their own markets. Though monopolies are bad, government intervention is a cure worse than the disease—so free markets should prevail. An influential proposition in his September 1970 op-ed in the New York Times Magazine asserted that the only legitimate purpose of for-profit corporations is return on equity to shareholders. Obligations to workers, customers, communities, the environment? Just say no. Just stay within the boundaries of law, he cautioned.
In 1979, Margaret Thatcher in Great Britain and Deng Xiaoping in China each assumed power with the Hayek-Friedman doctrine as a key influence. In 1981, Ronald Reagan joined them, declaring in his inaugural address that “in the current crisis, government is not the solution, government is the problem.” A new era—political, cultural and economic—had dawned in America and around the world and Stuart Butler had arrived just in time.
Camping with the Heritage Foundation
In 1973, a rising generation of conservative thinkers and activists formed the Heritage Foundation, intended as a “think and do” tank, a conservative force to counter the influence of the imposing Brookings Institution, the think tank of the liberal establishment. Unlike conservative fellow travelers at the American Enterprise Institute and the Hoover Institution, Heritage founders wanted their experts and writers of reports, books and white papers to get in the face of members of Congress, offering free and timely advice, anytime, anywhere. They rejected only talking with conservative media, preferring relationships with anyone and everyone.
“Heritage was a bridge between the academic and the policy-making communities,” Butler remembers. “It was set up to combine the research functions of a Brookings with the activist approach of a [Ralph] Nader-type group.”
As a young, politically-oriented PhD, Butler fit Heritage’s profile well. And Heritage fit his. As an IRS 501(c)(3) tax exempt organization, Heritage responded to requests for consultations without endorsing legislation or candidates. Their experts circulated accessible research on key issues rapidly to get analyses to mostly Republican members of Congress before votes, not after. In the 1970s, this was unprecedented help for congressional conservatives who noticed Heritage, as did the media and a significant part of the public. Though heavily funded in its early years by deep pockets such as Joseph Coors, Richard Scaife and other wealthy conservatives, Heritage rapidly developed a sizable paying membership base.
In 1980, shortly before Reagan’s inauguration, Heritage produced a 1,100 page “Mandate for Leadership” blueprint for the incoming administration, with 2,000 actionable recommendations to help them to hit the ground running in disassembling the New Deal state. Butler was a contributor, and when the project was repeated for the start of Reagan’s second term in 1985, he was lead author. He made a name fashioning and refashioning ideas for ambitious conservatives. In the early 1980s, he developed a U.S. version of the “urban enterprise zone” concept that offered tax advantages to corporations locating in distressed inner cities, an idea he borrowed from England and sold to policy entrepreneurs including Rep. Jack Kemp (R-NY).
Later in the decade Butler advanced “privatization” of government services including public housing, education and transportation. Many government services should be privatized, he argued, to save money and improve quality. In his 1985 book, Privatizing Federal Spending: A Strategy to Eliminate the Deficit, he wrote: “I see privatization as a very powerful device to change the rules of the game. It allows us to accept that society has an obligation to provide certain services, but gets you out of the trap of saying that they must be provided by government.” During the Reagan administration, Butler made the National Journal’s list of the 150 non-government officials with the greatest influence on decisions in Washington.
The health insurance conundrum
When Butler arrived in the U.S. in 1979 as a permanent resident, he remembers being shocked to learn that he had to sign up for health insurance. In England, access to health care had been a right since 1947 thanks to its National Health Service—no premiums, cost sharing, enrollment, narrow networks or the like that bedevil American consumers. This experience made an impression. “I went to the Blue Cross office in D.C. to sign up,” he remembers. “They asked, ‘who’s your employer?’ I said: ‘What’s that got to do with anything? This is odd.’”
Joe Antos of the American Enterprise Institute sees the U.K. connection as important to the evolution of Butler’s thinking: “Though he was no big fan of the NHS and had lived under it, he could ask questions that average smart Americans wouldn’t think of.”
In 1982, Butler became director of Heritage’s Domestic Policy Studies, a job spanning multiple policy domains. For the first time, health policy was his responsibility, and he managed a team that included health specialists such as Ed Haislmaier, who had strong analytical skills, and Bob Moffit with wide connections.
In the second half of the 1980s, U.S. health policy involving universal health insurance went from sleepy to hyperactive. In 1987, activists led by Boston physicians Steffie Woolhandler and David Himmelstein started Physicians for a National Health Program that reinvigorated activism for a Canadian-style “single payer” health system. In Congress, the Pepper Commission chaired by Sen. Jay Rockefeller (D-WV) proposed national reform built on a mandate for most employers to provide health insurance for their workers. This approach gained traction with passage in 1988 of a universal health care law in Massachusetts, signed by Democratic Governor (and presidential candidate) Michael Dukakis, that included an aggressive employer mandate, a law never implemented and repealed by 1996.
In a 1991 U.S. Senate special election in Pennsylvania, little-known Democrat Harris Wofford defeated former U.S. Attorney General Richard Thornburgh by declaring: “If criminals have a right to a lawyer, I think working Americans should have the right to a doctor.” An energetic debate had begun between single payer versus employer mandates, and the public was starting to pay attention.
During President George H.W. Bush’s term, Republican interest in health reform was evident and less noticed as an alternative to single payer and employer mandates. Health economists Mark Pauly and Martin Feldstein had published articles back in the 1970s for universal coverage built on tax credits to help lower-income households buy health insurance, and including a mandate for individuals to purchase insurance so that younger, healthier people wouldn’t opt out. In 1989, Pauly and colleagues started working with Bush administration officials. Their proposal to mandate coverage got dropped from the plan President Bush announced in February 1992, in the midst of his re-election campaign. Pauly and colleagues wrote up their ideas in 1991 in the journal Health Affairs: “[A]ll citizens should be required to obtain a basic level of health insurance,” they proposed. In 1991, Milton Friedman endorsed the concept in his Newsweek column.
Butler first spoke publicly about his new plan for universal coverage in a talk on October 2, 1989, at Meharry Medical College in Nashville at a conference titled “Health Care for the Poor and Underserved.” His address was accompanied by a monograph, Assuring Affordable Health Care for All Americans, identified as “The Heritage Plan,” with the first objective asserting: “All citizens should be guaranteed universal access to affordable health care.” Key components sought to change the tax treatment of employer provided insurance, give tax credits to those who could not afford coverage, reform programs for the elderly and, on page 6: “Mandate all households to obtain adequate insurance …
“This mandate is based on two important principles,” Butler wrote. “First, that health care protection is a responsibility of individuals, not businesses … Second, it assumes that there is an implicit contract between households and society … A mandate on individuals recognizes this implicit contract.”
This was not a one-shot deal. Earlier in 1989, Butler and Haislmaier wrote a Heritage-published book, titled A National Health System for America. Butler now was deeply into health policy. Before 1989, he had written three health-related articles; by late 1992, he had 12 more, most expanding on his plan. Heritage, too, was all in, as seen in the “The Heritage Consumer Choice Health Plan,” dated March 5, 1992: “All heads of households would be required by law to obtain at least a basic health plan specified by Congress.”
Other conservatives, and their think tanks and advocacy groups, expressed alarm at the Butler/Heritage framework, particularly the individual mandate, regarded by them as a violation of liberty. Conservative groups such as the Cato Institute, Consumers for Affordable Health Insurance and the National Center for Policy Analysis objected, while few outsiders paid attention.
At the time, Butler defended his position: “If a proposal moves policy in a conservative direction, go for it.” He argued that conservatives were losing at health reform “a yard at a time. We could keep on losing ground or put forward a real alternative that contained real risk.” Today, Butler recalls: “If you look at the state of the knowledge in the ’80s for how to construct a stable health system in a competitive private model, if you didn’t have everyone in, it wouldn’t be stable. Conservatives and Republicans would always have to play defense against Ted Kennedy unless they embraced the notion that everyone should get health care.”
The Clinton fiasco
The drama over President Bill Clinton’s national health insurance plan became the first moment of opportunity for the Butler/Heritage plan, especially the mandate, to get noticed as a legitimate Republican and conservative alternative. After his January 1993 inauguration, Clinton put First Lady Hillary Clinton in charge of a 500-person task force to devise health reform legislation based on the concept of “managed competition” and managed care. Early on, prospects for passage were bright, especially in September when the president introduced the plan to a joint session of Congress and in October when the First Lady winningly testified before multiple Congressional Committees.
Senate Republicans, then in the minority, had recognized in 1992 that universal coverage bills would be introduced by either presidential campaign winner and began formulating proposals, especially Senators Bob Dole (R-KS), John Chafee (R-RI) and Don Nickles (R-Okla.), all seeing value in an individual mandate for policy and political reasons. Butler, following the Heritage playbook of meeting with anyone, offered research and analysis assistance, engaging all comers from both parties, including the Clinton White House, and especially Nickles.
Then things began to unwind. In December 1993, conservative writer Bill Kristol circulated an electrifying strategy memo to Republicans urging them to abandon cooperation with Democrats on health reform. “There is no health care crisis,” he wrote, a line Dole began using publicly within one month, challenging Clinton’s core rationale. The memo encouraged Senate and House Republicans to follow their instincts and harden their position against any reform bill. The tide had turned and quickly. Chafee and Dole had collaborated on legislation resembling the Heritage plan with tax credits and an individual mandate. After Kristol’s memo, Dole retreated. More conservative Sen. Don Nickles (R-OK) advanced his own bill including a mandate. Hearing from conservative critics, he deleted that provision in his bill’s final version.
Butler and Heritage collaborators, Moffit and Haislmaier, kept pressing, hiring the prestigious Lewin Group consulting firm to produce financial and coverage estimates on Nickles’ plan, sharing numbers with both parties and with the Clinton White House. In January 1994, Health Affairs published a Moffit article, “Personal Freedom, Responsibility, and Mandates.” He wrote: “An individual mandate for insurance, then, is not simply to assure other people protection from the ravages of a serious illness … it is also to protect ourselves. Such self-protection is justified within the context of individual freedom.”
During this time, Heritage’s critics became more outspoken. The libertarian Cato Institute’s Tom Miller wrote in June 1994, “Nickles-Stearns Is Not the Market Choice for Health Care Reform.” (Rep. Cliff Stearns of Florida was Nickles’ House partner on this issue.) “By endorsing the concept of compulsory universal insurance coverage, Nickles-Stearns undermines the traditional principles of personal liberty and individual responsibility that provide essential bulwarks against all intrusive governmental control of health care." Leaders including Phyllis Schlafly of the American Eagle Forum, Grover Norquist of Americans for Tax Reform and John Goodman of the National Center for Policy Analysis, signed a petition with 37 movement leaders against the Heritage plan. In spring, the Cato Institute’s President Ed Crane complained that “our friends at the Heritage Foundation have endorsed a mandated, compulsory, universal national health plan which flies in the face of the American heritage of individual liberty and individual responsibility.” Butler shot back: “Attacking Heritage for its alleged political incorrectness seems to have become a cottage industry at Cato and at NCPA.”
In late September 1994, Senate Majority Leader George Mitchell (D-Maine) officially threw in the towel on any effort to achieve health reform that year in Congress, awaiting the judgment of the American people in upcoming mid-term elections. The verdict: Democrats lost control of both branches of Congress for the first time since 1954.
The states take center stage
The Clinton failure offered bushels of lessons that future reformers remembered in crafting the ACA in 2009 and 2010, mostly concerning what not to do, such as setting up a 500-person task force to invent a plan. Unexpectedly, the Clinton process also legitimized the individual mandate as an emerging policy idea. It provided Republicans such as new House Speaker Newt Gingrich (R-GA) with a rationale to oppose Democrats on employer mandates and single payer while endorsing universal health insurance via an alternative pathway.
American society and even most Democrats abandoned universal coverage as an issue after 1994, focusing on incremental efforts that led to passage of the 1996 Health Insurance Portability and Accountability Act (HIPAA) and the 1997 Children’s Health Insurance Program. When Republicans reclaimed the White House in 2001 under President George W. Bush, their major health policy achievement was the 2003 Medicare Modernization Act that created outpatient drug coverage for Medicare enrollees. Universal coverage got occasional public hearings and little more.
Starting in the late 1980s and expanding after the 1994 Clinton failure, state governments began trying to improve and expand coverage using their available authorities. A prime reform target for governors and state legislators was a policy called “guaranteed issue” that prohibited insurance companies from considering an applicant’s current or prior medical history in issuing or pricing health insurance. States including New Hampshire, Massachusetts, New York, New Jersey, Kentucky, Vermont and Washington State proudly passed guaranteed issue laws to protect consumers from being turned down for having pre-existing conditions.
In each state that implemented guaranteed issue, premiums skyrocketed and markets collapsed. New Hampshire, Kentucky and Washington quickly repealed or watered down their laws, while the others stuck with the policy.
New York saw its number of people with private coverage outside of employer plans plummet from 752,000 people in 1994 to around 30,000 by 2009. The message was clear: guaranteed issue and pre-existing condition exclusion bans were unsustainable without an individual mandate or expensive premium subsidies, or both. The reason was that, with insurers required to offer plans to sick people, many customers would wait until they got sick to enroll. For policy makers the question became: how robust a mandate and/or how deep the subsidies? No one knew.
Butler and the Heritage health policy team deepened their policy in this period, incorporating the idea that states and/or the federal government should authorize or establish “health insurance exchanges” to provide a consumer-friendly marketplace for individuals to shop for private insurance policies.
Massachusetts steps up
In 2003, moderate Democratic Senator John Breaux (D-LA) decided that Democrats were ready to embrace an individual mandate as a “radically centrist” path to universal coverage, filing legislation to that end. His bill went nowhere and convinced observers that Democrats were unmovably against the idea. He was just a little bit ahead of his time.
On April 12, 2006, after decades of political stalemate on universal coverage, a bipartisan breakthrough happened in Massachusetts in historic Faneuil Hall in downtown Boston at the signing of the Massachusetts Universal Coverage Law. Republican Governor Mitt Romney successfully teamed with President George W. Bush and Democratic U.S. Senator Edward Kennedy along with the overwhelmingly Democratic State Senate and House of Representatives.
The Romney-backed system included a “three-legged stool” of insurance market reforms that later would be embedded in the ACA, including guaranteed issue, generous public subsidies for income-eligible consumers, and an individual mandate with a tax penalty on those who could afford to buy insurance and failed to do so. After years of talk about individual mandates, plus great uncertainty whether Republicans really meant it, Mitt Romney did it. On January 1, 2007, Massachusetts became the first state in America to mandate that most residents must have health insurance or pay a tax penalty.
Months before the signing, Romney had announced he would not run for re-election that year. The national press came to Boston to witness the signing by a prospective presidential candidate. Sharing the stage with Romney and public officials was one non-government person, Robert Moffit, senior fellow at the Heritage Foundation. At the ceremony, Moffit and Heritage were saluted by Romney for their contributions to the law’s individual mandate and new Health Insurance Connector, a version of Heritage’s exchange model. Butler was not part of the ceremony or the prior consultations with Romney or his team.
“I want to begin by saying thank you to Bob Moffit and Ed Haislmaier,” said Romney at a 2006 Heritage event. “Bob and Ed worked extensively with our team as we were developing our plan for health care.” Replied Moffit, “We’ve been honored by your request—myself and my colleague Ed Haislmaier, who’s done a lot of the work on this bill—to participate in giving our best advice and our technical assistance in designing a new and different kind of health insurance market.” As the duo wrote articles explaining the Massachusetts model, Stuart Butler held back, writing a paper in 2007—for Brookings—suggesting that the individual mandate would not be a suitable model for every state, even if it inspired action by some. Butler recalled the flak from Faneuil Hall: “Lots of people felt it would have been better if we had not been on the stage. It was done and we couldn’t back away.”
Romney left as governor before the law’s full implementation, which happened smoothly on the watch of new Governor Deval Patrick, a Democrat. After 17 years, the 1989 policy idea had become real and judged workable as Massachusetts’ rates of uninsured dropped to unprecedented levels of 2-3 percent. Even conservative firebrands such as Sen. James DeMint (R-SC), who became Heritage’s president in 2013, praised Romney and the law as a national model. Gingrich wrote that year: “The health bill that Governor Romney signed into law this month has tremendous potential to effect major change in the American health system.”
On the conservative/libertarian right, organizations such as Cato, the Council for Affordable Health Insurance, the Galen Institute and others issued stern condemnations of the Massachusetts model as an assault on conservative values. Though they got noticed by some, Republicans appeared on the verge of major policy success, achieving a universal coverage scheme to their liking. What could go wrong?
The birth of Obamacare
In the 2008 Democratic presidential nominating process, Senators Hillary Clinton (D-NY) and John Edwards (D-NC) publicly embraced the Massachusetts path in their respective platforms, including an individual mandate. The rising star, Sen. Barack Obama (D-Ill.) publicly rejected it, arguing that sufficient subsidies would obviate need for a mandate. Obama won the nomination and the general election against Sen. John McCain (R-AZ), castigating his opponent’s proposal to slash federal tax deductions for those with employer-sponsored insurance.
President Obama maintained public opposition even as his experts and Congressional leaders began working on reform legislation with a mandate. They all knew that the Congressional Budget Office would issue deal-killing financial and coverage projections for their bill absent such a requirement. Obama publicly shifted his position to support for a mandate in June 2009 just as five Congressional committees began marking up their health reform bills, all including a mandate. “I am open to your ideas on shared responsibility,” he wrote Senators Ted Kennedy and Max Baucus (D-Mont.), referencing the go-to euphemism for the mandate.
In spring 2009, a resurgent conservative opposition movement, the Tea Party, stopped focusing on the federal deficit and shifted toward defeating Democrats’ health reform aspirations, embracing the term “ObamaCare” as an epithet. They focused fire on the mandate as an assault on freedom. For the first time since 1989, a grass-roots movement, amply funded by conservative deep pockets, made the mandate a combustible grassroots issue.
While the Tea Party’s impact on Democrats was negligible, it scared remaining Republican office holders who were toying with health reform collaboration. Sen. Charles Grassley (R-Iowa), who had co-sponsored the Chafee-Dole and Nickles bills in 1993-94, as well as the 2007 Healthy Americans Act, all of which included individual mandates, stands out. On June 14, 2009, on Fox News, he stated, “when it comes to states requiring it for automobile insurance, the principle ought to lie the same way for health insurance … I think individual mandates are more apt to be accepted by a vast majority of people in Congress.” Three months later in September, also on Fox, he reversed: “Individuals should maintain the freedom to choose whether to purchase health insurance coverage or not.” In August, Tea Party activists had confronted him in all his 40 town halls across Iowa, some with signs saying, “You’re fired!”
Though America’s right was consolidating opposition, Heritage did not back down. On March 17, 2009, Haislmaier testified publicly before the health subcommittee of the House Energy and Commerce Committee, “if lawmakers are going to reform health insurance markets to make coverage portable and accessible for all, further provide all individuals with a wide choice of coverage options, and finally, ensure that those with lower incomes have sufficient financial help to buy coverage, then citizens have no excuses left for not obtaining coverage, or otherwise paying for the medical treatments that they and their dependents receive.”
The ACA’s treacherous path to passage involved multiple cliffhangers. The final bill reached President Obama’s desk for signing on March 23, 2010, with the individual mandate intact, scheduled for full implementation, along with Medicaid expansion, guaranteed issue and tax subsidies for income-eligible purchasers of private coverage, on January 1, 2014.
The Supreme Court makes health-policy history
Democrats mistakenly assumed that, post-passage, animus toward the ACA would diminish as both sides focused on an unprecedented, complex implementation of the law’s 10 titles and 487 sections. Over time, though, intense and substantial Obamacare opposition persisted. Federal courts got involved in multiple lawsuits. Republican members of Congress grabbed every opportunity to vote to repeal or undermine the new law, emboldened by recapturing the House in the November 2010 elections and the Senate in November 2014.
According to the National Conference of State Legislatures, between 2010 and 2013, 18 states passed laws or constitutional amendments to prohibit agents of the state from implementing or enforcing mandates related to individual or employer health insurance. Since the ACA was a federal law, states could not block implementation inside their borders, though these efforts made clear the opposition’s intensity. In August 2010, Missouri voters approved a ballot initiative, 71-29 percent, declaring the individual mandate to be null and void inside the state.
Most important, the individual mandate became the primary target of anti-ACA lawsuits that reached the U.S. Supreme Court in 2012. Oral arguments were set for late March with a rare three days of court hearings, and a final ruling by late June. Obama administration officials used two tried-and-true rationales to defend the mandate. First, they relied on the U.S. Constitution’s Interstate Commerce Clause to justify the ACA—because the interstate and commercial nature of American medical care is undeniable. The second rationale relied on Congress’ constitutional authority to levy taxes because enforcement of the individual mandate penalty was assigned to the Internal Revenue Service. But in 2008, candidate Obama had promised not to raise taxes on the middle class, so that second argument created discomfort for a president seeking re-election. Congress had used the Commerce Clause rationale often since the 1930s. Conservative and Republican legal scholars and activists had wanted to limit this power since the 1980s. This was their chance.
ACA opponents asserted that the Commerce Clause permits regulation of economic activity, not economic inactivity such as not buying health insurance. If permissible, mulled late Supreme Court Justice Antonin Scalia, what could prevent the federal government from mandating that citizens must purchase broccoli? In a pirouette mirroring Republican and Democrat position-swaps on the mandate itself, both pro- and anti-ACA advocates switched positions before the court. During the ACA legislative process, Democrats relied on the Commerce Clause and denied that the mandate was a tax, while Republicans always called the mandate a tax. Before the court, with justices noticeably leaning against the Commerce Clause justification, Democrats hastily agreed that the mandate was a tax while Republicans opposed that explanation.
On June 28, 2012, the Justices by a 5-4 vote upheld the ACA’s constitutionality, in particular, the individual mandate, by relying on the Constitution’s taxation powers, ruling against Commerce Clause applicability. As a result, the Supreme Court put Congress on notice that future legislation justified by the Commerce Clause is under suspicion, an important win for conservatives who were distracted by their intense antipathy at Chief Justice John Roberts for providing the fifth vote upholding the ACA.
In the midst of this judicial drama, on February 6, 2012, seven weeks before the Court’s public hearings, USA Today published an op-ed by Butler titled“Don’t Blame Heritage for the Obamacare Mandate.” In it, Butler declared his opposition to the ACA’s individual mandate, casting his earlier support as a “technical matter.” The column appeared at an intense point for the Right, facing health reform armageddon and the opportunity to cancel Obama’s signature accomplishment. A ruling against the ACA might have been the stuff needed to win the 2012 presidential election for GOP nominee Mitt Romney. Instead, journalists never stopped asking Romney about the individual mandate he had signed as governor.
Obama and journalists taunted conservatives, noting Heritage’s role in promoting the mandate. Butler commented on this in his column:
“Nevertheless, the myth persists. ObamaCare ‘adopts the ‘individual mandate’ concept from the conservative Heritage Foundation,’ Jonathan Alter wrote recently in The Washington Post. MSNBC’s Chris Matthews makes the same claim, asserting that Republican support of a mandate ‘has its roots in a proposal by the conservative Heritage Foundation.’ Former House speaker Nancy Pelosi and others have made similar claims.”
A tight spot it was, even for a seasoned policy hand such as Butler used to rough-and-tumble political action. Who better for him to summon in such a fix than the ghost of Milton Friedman, who had died in 2006:
“My view was shared at the time by many conservative experts, including American Enterprise Institute (AEI) scholars, as well as most non-conservative analysts. Even libertarian-conservative icon Milton Friedman, in a 1991 Wall Street Journal article, advocated replacing Medicare and Medicaid ‘with a requirement that every U.S. family unit have a major medical insurance policy.’”
Butler’s ending was candid and revealing:
“Changing one’s mind about the best policy to pursue—but not one’s principles—is part of being a researcher at a major think tank such as Heritage or the Brookings Institution. Serious professional analysts actually take part in a continuous bipartisan and collegial discussion about major policy questions. We read each other’s research. We look at the facts. We talk through ideas with those who agree or disagree with us. And we change our policy views over time based on new facts, new research or good counterarguments. Thanks to this good process, I’ve altered my views on many things. The individual mandate in health care is one of them.”
It wasn’t just Butler who had changed. It also was Heritage, which formerly took pride in its hands-on interactions with public officials without endorsing bills or rating politicians. In 2010, Heritage set up its own IRS 501(c)(4) organization called Heritage Action for America to do direct advocacy and lobbying.
“They were going down a road that I don’t care for and I’m not good at,” recalls Butler. In 2013, long-time Heritage President Ed Feulner stepped down and his successor was DeMint, among the Senate’s most hardline conservatives. In a 2009 conference call with conservative activists, he said, “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.”
In 2014, Alice Rivlin, the first director of the CBO in the 1970s, and then Brookings Institution president, invited Butler to join Brookings, where he could write whatever he wanted. He said yes, and bid Heritage goodbye after 35 years.
To repeal or not to repeal
When Republicans took control of both houses of Congress in 2015, they finally could advance legislation to Obama’s desk to repeal the ACA. Knowing that the president would veto their bills and block defunding, they sought to assure conservatives that they would not surrender, especially if they held Congress and won the White House in 2016. All Congressional Republicans united in 2015 and 2016 to fight Obamacare, never needing to specify a replacement.
Much of President Donald Trump’s first year in office in 2017 was focused on keeping the Republican promise to repeal and replace the ACA. By October, Republicans admitted failure and switched to another priority, major tax cuts for corporations and individuals. To accomplish this, as they had intended to do in their unsuccessful ACA repeal efforts, they used the “budget reconciliation process.” The upside to reconciliation is that such bills cannot be filibustered or blocked by a minority in the Senate, and can pass with 51 votes instead of 60 needed for regular legislation. The downside: Only matters directly relating to the federal budget, up or down, are game.
Sen. Tom Cotton (R-Ark.) began advocating in November to insert repeal of the individual mandate into the tax cut bill. Unfortunately for him, the Senate parliamentarian ruled that full mandate repeal was impermissible under reconciliation rules. However, zeroing out the mandate’s financial penalty was permissible and got included. While not as exciting for conservatives as full repeal, it was de facto repeal, and Republicans could boast a victory.
Though the CBO and other experts predicted disaster from young and healthy adults dropping coverage because of the penalty defenestration, it didn’t happen. Turns out, the ACA’s individual mandate mattered less than most had imagined because of the premium subsidies. Drew Altman, president of the Kaiser Family Foundation, wrote last year that the ACA’s “insurance market has not been materially affected by the elimination of the individual mandate penalty … Healthy enrollees have not left the market in droves, premiums have not spiked and there has been no market death spiral.”
Since its 2014 implementation, the mandate had been real. That year, 8.1 million households, or 5.4 percent of the U.S. population, paid the $395 penalty, while 13.3 million filed for an exemption. In 2017, 4.6 million paid the fully phased in penalty of $695, and 12.9 million claimed exemptions, for a total of $3.56 billion in penalties, according to IRS data.
With the tax law’s signing, some journalists wrote obituaries and eulogies for the much-maligned mandate. Reports of its death were premature. Like the villain in a James Bond movie who reappears in the final scene for one last fight, the mandate again claims center stage in a national command performance.
Shortly after the 2017 tax cut law was signed, Texas Attorney General Ken Paxton convinced 19 other Republican state attorneys general to join him in suing in federal court to repeal the entire ACA because the penalty elimination made the defanged individual mandate unconstitutional since it was no longer a tax. They filed suit (now California v. Texas) in a conservative federal district court and won a full-repeal judgment in December 2018. The conservative Fifth Circuit Court of Appeals upheld the lower court in December 2019, sending the suit back to the lower court for additional review. In March 2020, the Supreme Court agreed to hear the case, and oral arguments were held on November 10, 2020. At the hearing, Chief Justice John Roberts and Justice Brett Kavanaugh made statements that have been interpreted as indications they would not vote to repeal the entire law, which would presumably create at least a 5-4 majority against complete ACA repeal. But no one knows how the case will come out.
The elegant and merciful solution would be for the Court to invalidate the now-comatose mandate, delete it from the ACA and do nothing else. No one will mind. In so doing, the Hippocratic Oath, “First do no harm,” would be followed to a T.
A decision is expected between now and the end of June.
Saving lives
In the first decade of the 2000s, Butler concluded that the benefit of the individual mandate was worth less than the price of unending political and legal warfare. Obama sensed that as a presidential candidate in 2008. Princeton’s Paul Starr, author of The Social Transformation of American Medicine, repeatedly offered this advice in 2009 and 2010. Yet scorching memories from the 1990s, when states implemented guaranteed issue without mandates or premium subsidies, had spooked experts, especially at the CBO, whose estimates often mean life or death for legislation. CBO’s opinions made clear how vital they viewed the mandate in the Obama era. Political aid and comfort also came from Massachusetts, where 2007 implementation had gone smoothly. The mandate and the subsidies were seen as belts and suspenders, and few could predict whether one or the other was unnecessary.
“Unnecessary” refers only to political and insurance market stability. While the mandate helped keep markets stable, did it induce anyone to buy health insurance who otherwise would not have done so, and did that coverage matter for their health and wellbeing? These questions were not factors in Congress’ consideration of the ACA because there was no valid answer then beyond limited evidence from Massachusetts. Today, in 2021, we have an answer.
In 2019, Jacob Goldin of Stanford Law School plus two U.S. Treasury Department officials produced a study for the National Bureau of Economic Research, titled “Health Insurance and Mortality: Experimental Evidence from Taxpayer Outreach”:
“We evaluate a randomized pilot study in which the IRS sent informational letters to 3.9 million taxpayers who paid a tax penalty for lacking health insurance coverage under the Affordable Care Act. Drawing on administrative data, we study the effect of the intervention on taxpayers’ subsequent health insurance enrollment and mortality. We find the intervention led to increased coverage in the two years following treatment and that this additional coverage reduced mortality among middle-aged adults over the same time period. Our results provide the first experimental evidence that health insurance reduces mortality.”
The report has been published in the Quarterly Journal of Economics, among the most respected economics research journals.
In 2021, because of President Joe Biden’s American Rescue Plan Act signed on March 11, the ACA’s premium subsidies have been substantially increased and expanded for the next two years. Because of these changes, insurance levels nationally will likely increase in the next several years. But unless Congress and the president extend the added subsidies into 2023 and beyond, an affordability cliff will reoccur. Meanwhile, reinstating the ACA individual mandate penalty is not under consideration.
Another surprising outcome from the 2017 penalty repeal is that some states beyond Massachusetts have enacted their own enforceable individual mandates, including California, New Jersey, Rhode Island and the District of Columbia. All solid blue in political terms, the mandates come from a Democratic Party that does not view them as assaults on liberty. No citizen revolts are apparent in these states. Regardless of the ACA mandate’s fate before the U.S. Supreme Court, the individual mandate as state policy may persist. If other states face pressures on individual health insurance affordability, it may reemerge as a legitimate tool.
It is interesting to recall how Butler in 2007 wrote that the individual mandate might work better as a state prerogative rather than as a federal tool. Once again, he was ahead of the curve. At 73, Butler remains engaged and active. He chairs the board of a community health center in Washington. He moderates challenging multi-stakeholder policy negotiations through the Convergence Center for Policy Resolution. His home base remains Brookings, where he writes about his current passion, how the U.S. health system needs to better address “social determinants of health,” such as housing, nutrition and environmental quality, bringing a conservative perspective to the table.
Earlier last year, he signed onto a friend of the court brief in California v. Texas in support of not repealing the ACA. And, he says, he is still a card-carrying member of the Mt. Pelerin Society.
Kristina Long provided research assistance.
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