Thursday, December 13, 2012

ObamaCare Is Dead In The Water

ObamaCare was a poorly conceived and is a constitutionally deficient statute. The Supreme Court's ruling upholding the law has simply made it worse. In the future, that decision is likely to be seen as a prime reason that the federal court judges should just judge and never legislate—even in the cause of rescuing an otherwise unconstitutional law from oblivion.
In the ObamaCare ruling, the Supreme Court correctly held that Congress could not impose the individual mandate as a constitutional regulation of interstate commerce and that Congress could not constitutionally use its spending power to coerce the states to expand Medicaid.
Rather than strike down the law, however, the court construed the insurance-purchase mandate and its penalty as a "tax" on the failure to have health insurance. The justices also interpreted the Medicaid-expansion requirements as optional—permitting states to opt out of these provisions while staying within the traditional Medicaid program. Given that interpretation, the court's majority upheld the statute as constitutional.
The court's determination to preserve ObamaCare through "interpretation" has exacerbated the law's original flaws to the point that it has become palpably unworkable. By transforming the penalties for failing to comply with the law's requirements into a "tax," the court has given the public a green light to ignore ObamaCare's requirements when it is economically beneficial. Law-abiding individuals, who might otherwise have complied with the law's expensive purchase mandate to avoid being subjected to financial penalties, can simply now choose to pay a tax and not sign up for coverage. There is certainly no stigma attached to simply paying a tax, and noncompliance with the law's other requirements—such as those imposed on employers—is arguably made more attractive on the same basis. This effect fundamentally undercuts Congress's original purpose, which was to expand health-care coverage to the greatest number of people, not to improve federal revenues.
Similarly, having reviewed the likely costs and benefits, states are now taking advantage of the court-granted flexibility. Seven states, including Texas, Mississippi and Georgia, have so far opted out of the Medicaid-expansion provisions, and eight (with more certain to come) are refusing to create the insurance exchanges, leaving this to a federal bureaucracy unequipped to handle these new administrative burdens. As a result, a growing number of low-income Americans will be unable to obtain the free or cost-effective insurance that Congress originally meant them to have, although they remain subject to the mandate-tax.
On December 7, New Jersey Governor Chris Christie vetoed legislation establishing a state-run health insurance exchange. This was just after he had visited President Obama at the White House to discuss Superstorm Sandy cleanup costs. Governor Christie said he blamed President Obama for failing to provide answers that he needed to make a fiscally sound decision on the best way to comply with the ObamaCare law.
States have until December 14th to decide whether to establish a state-based exchange. They have more time to decide whether to partner with the federal government or to let federal bureaucrats design and run the state exchange. ((Santi, Angela, Christie Vetoes ObamaCare, Washington Times, Dec. 7, 2012)
Policy problems aside, by transforming the mandate into a tax to avoid one set of constitutional problems (Congress having exceeded its constitutionally enumerated powers), the court has created another problem. If the mandate is an indirect tax, as the Supreme Court held, then the Constitution's "Uniformity Clause" (Article I, Section 8, Clause 1) requires the tax to "be uniform throughout the United States." The Framers adopted this provision so that a group of dominant states could not shift the federal tax burden to the others. It was yet another constitutional device that was simultaneously designed to protect federalism and safeguard individual liberty.
The Supreme Court has rarely considered the Uniformity Clause's reach, but it cannot be ignored. The court also refused to impose meaningful limits on Congress's power to regulate interstate commerce for decades after the 1930s, until justices began to re-establish the constitutional balance in the 1990s with decisions leading up to the ObamaCare ruling this summer. And although the court has upheld as "uniform" taxes that affect states differently in practice, precedent makes clear that a permissible tax must "operate with the same force and effect in every place where the subject of it is found," as held in the Head Money Cases (1884). The ObamaCare tax arguably does not meet this standard.
ObamaCare provides that low-income taxpayers, who are nevertheless above the federal poverty line, can discharge their mandate-tax obligation by enrolling in the new, expanded Medicaid program, which serves as the functional equivalent of a tax credit. But that program will not now exist in every state because, as a matter of federal law, states can opt out. The actual tax burden will not be geographically uniform as the court's precedents require.
Thus, having transformed the individual mandate into a tax, the court may face renewed challenges to ObamaCare on uniformity grounds. The justices will then confront a tough choice. Having earlier reinterpreted the mandate as a tax, they would be hard-pressed to approve the geographic disparity created when states opt out of the Medicaid expansion. But that possibility is inherent in a scheme that imposes a nominally uniform tax liability accompanied by the practical equivalent of a fully off-setting tax credit available only to those living in certain states. To uphold such a taxing scheme would eliminate any meaningful uniformity requirement—a result that the Constitution does not permit.
(The Opening For a Fresh ObamaCare Challenge, Rivkin, David B. and Casey, Lee A.p; WSJ, Dec. 6, 2012)

How the Supreme Court Doomed the Affordable Care Act to Failure

January 9, 2013
The Supreme Court's surprise ruling on the Affordable Care Act (ACA) has left many observers wondering about the implications of the ruling on the law itself, says Thomas A. Lambert, the Judge C.A. Leedy Professor of Law at the University of Missouri Law School.
  • In a 5-4 decision, the Supreme Court ruled that the ACA is constitutional.
  • In writing the opinion, Chief Justice Roberts, argued that the individual mandate is nothing more than a tax.
  • However, the Court struck down the provision that would deny Medicaid funding to states that did not expand their Medicaid roles.
Together, the ruling has a profound impact on the health care market and is likely to raise premiums and the cost of medical care. For example, the cost of paying the tax for not having insurance is not steep enough to encourage young, healthy individuals to enter the health care market. These individuals would rather take the risk and pay the penalty because it would be cheaper than acquiring health insurance.
This is problematic considering that the infusion of younger and healthier individuals is necessary to spread risk in the market and lower overall premiums. In addition, the decision also limits Congress's ability to increase the penalty.
Proponents of the ACA argue that the subsidies in the bill will entice younger people to purchase insurance. However, the subsidies are too small and out-of-pocket costs for insurance will be much higher than simply paying the tax.
Additionally, the efforts to reduce medical costs are likely to fall short of achieving their goals. The ACA has aimed at doing the following:
  • Increased funding for eliminating waste, fraud and abuse.
  • Price controls on Medicare charges.
  • Emphasis on preventative care.
There are other measures as well but none of them attack the root of health care inflation: the lack of competition in providing medical services. If consumers were put in a position to pay more for their health care, there would be more emphasis on finding an affordable insurance plan. As a result, insurance companies and other medical services would compete to lower their prices and attract new customers.
( Thomas A. Lambert, "How the Supreme Court Doomed the ACA to Failure,")

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