During recent state legislative debates on Tennessee challenging the new federal health care policy mandates, an auxiliary issue that’s come up is Medicare: What kind of penalties do people face who opt out of the U.S. government’s health insurance plan for the elderly?
The question has arisen in committee discussions on the “Health Freedom Act,” which has already passed in the Senate.
Some House Democrats who oppose the act say its language directing the state attorney general to defend Tennessee citizens against involuntary federal health care directives might give people the impression they can also avoid participating in Medicare without fear of federal government retaliation, or with the backing of state legal resources.
During a Commerce Committee hearing last week, Rep. Craig Fitzhugh, a Ripley Democrat, asked the Health Freedom Act’s sponsor, Mike Bell, if the act’s language “is…broad enough to say that I could quit paying my Medicare taxes, and there would be no penalty for doing that if I just opted out of Medicare.”
Bell, a Riceville Republican, answered that current law already allows one to opt out of Medicare. However, in order to do so, a person must also forfeit entitlement to federal Social Security benefits.
Bell went on to indicate that the Health Freedom Act’s intent isn’t to shield Tennesseans from paying federal taxes of any kind already in existence — just that they not be punished for refusing to buy health insurance or participate in new federal health programs going forward.
In fact, the question of just how mandatory Medicare is — and whether the government can indeed withhold Social Security benefits from those who choose to opt out — is a legal dispute that may be coming to a head.
Congress has in reality never stipulated that, as a condition of dropping out of Medicare, Americans must also forfeit their Social Security entitlements, argues Kent Masterson Brown, a Kentucky-based attorney currently suing the federal government on the issue.
There is indeed an active and operative bureaucratic directive to Medicare and Social Security administrators, nearly two-decades old now, that says citizens who opt out of Medicare must forfeit Social Security benefits. Part of the Social Security Program Operating Systems Manuals, it furthermore declares that people must return any Social Security payments they’ve accepted should they choose to ditch Medicare.
Those policies were instituted by the Department of Health and Human Services in 1993, at the height of then-First Lady Hillary Clinton’s effort to overhaul the country’s health care system.
But while Mrs. Clinton’s effort ultimately fizzled, the policy lives on — even though it is a clear violation of both the intent and language of federal statutes governing Medicare and Social Security, Brown said. Brown and five clients he represents who are challenging the policy are arguing that because the directive was illegally promulgated, it should be nullified.
“Making Medicare mandatory is totally contrary to the statute,” Brown told TNReport. “It is an entitlement — you shall be entitled. Entitlement doesn’t mean you have to take it. It just means you have a right to it. Social Security and Medicare both read the same way — ‘shall be entitled.’
“Historically, the secretary of Health and Human Services and the commissioner of Social Security have always interpreted Social Security to be voluntary — you can take it or not,” Brown added. “If you want to leave all your money in there, fine. If you want to take it you can take it.”
Just last week, over the objections of the U.S. Justice Department, Brown and his five clients were given the go-ahead to proceed with their case from a U.S. District Court judge in Washington, D.C. “(N)either the statute nor the regulation specifies that Plaintiffs must withdraw from Social Security and repay retirement benefits in order to withdraw from Medicare,” wrote Judge Rosemary Collyer of the District of Columbia.
Brown’s clients want out of Medicare but don’t want to give up the Social Security benefits they’ve paid into all their lives. All five — one of whom is former U.S. House Republican Majority Leader Dick Armey, now the chairman of the conservative activist group FreedomWorks — say they prefer their own health plans. The policies belonging to the plaintiffs — who in addition to Armey include four others, two of them former federal employees — range from high-deductible insurance coupled with health savings accounts, to standard Federal Employee Health Program benefit packages, said Brown.
Brown attributes the fact that the government’s punitive policy has gone unchallenged for so long to the prohibitive costs associated with legal challenges against the federal government on health care issues. Also, the administrative appeals processes people must typically exhaust before they’re allowed to use the courts to settle their federal regulatory grievances is extremely long and grueling, he said.
“Litigation like this is vastly expensive — it takes a tremendous amount of resources,” he said.
Brown said that in his dealing with federal attorneys on the matter, they’ve mostly justified the government’s actions by arguing that agency decision-makers are deserving of much latitude and deference when it comes to interpreting federal laws as they go about implementing or administering programs.
Brown added that it is unclear how Clinton administration officials determined they had the authority to make such sweeping policy shifts contrary to the statutes. For his purposes, Brown said he doesn’t really care what they did to rationalize their actions; that he can prove the bureaucrats did indeed promulgate unlawful rules is all that really matters.
And while Brown, who occasionally writes for and speaks on behalf of free-market organizations like the Cato Institute, is quick to point out that his clients’ Medicare case is far removed, legally speaking, from the ongoing debates over the federal health care overhaul, he also believes it serves as a warning that where vast and powerful agencies are concerned, policies are often executed very differently manner than that promised not just by politicians, but the law itself.
Brown worries the agency officials who will administer the health reforms signed into law last month could promulgate “the most onerous rules imaginable.”
His case “illustrates the power these people will wield,” said Brown. “It’s absolutely frightening to think what they could do.”