Posts Tagged ‘ obamacare ’

The legal case against Obamacare is ridiculous

As far as I can tell, the legal case against the Affordable Care Act (Obamacare) is based on a string of technicalities, half-truths and strange distinctions. Very little of it appears to be based in reality or on previous case law, for that matter. Bear with me as I lay out just how crazy it would be to strike down this law. Here are the charges Republicans have brought against health care reform:

  • They argue that the individual mandate is not a tax, (as it certainly appears to be) but some form of legal coercion distinct from Congress’ taxation powers.
  • Building off that, they argue that Congress does not have the power to coerce people into buying health insurace. Congress, they claim, only has the power to regulate economic activity, not economic inactivity. They say that the decision not to buy health insurance is an example of economic inactivity.
  • Finally, they argue that there is no “limiting principle” behind Congress’ use of the “Commerce clause”  to enact the individual mandate. In other words, if Congress can force you to buy health insurance, they can make you do anything  and that is against the principle of a limited government.

All of these claims are bogus to some degree or another. Here’s why:

Wait, the individual mandate isn’t a tax?

The individual mandate is the common name for the part of the ACA that is meant to pressure the uninsured into buying insurance. It is a tax penalty equal to $695 or 2.5% of your income, whichever is greater. If you have enough money but still choose not to buy health insurance (starting in 2014), then this penalty will be added to your tax return and will be collected by the IRS.

For the life of me, I can’t figure out why this isn’t a tax. The mandate’s challengers allege that it would have been Constitutional if Congress had raised everyone’s taxes by $695 and then given a rebate to every person that gets health insurance. Then, only people without health insurance have to pay the extra tax. But that’s just a more roundabout way of doing  exactly what the individual mandate does! As even this blogger from The American Conservative agrees, the mandate clearly is a tax. But at the Supreme Court we heard this exchange:

JUSTICE SOTOMAYOR: Here we have one where the Congress is not denominating it as a tax; it’s denominating it as a penalty.

MR. LONG: That’s — that’s absolutely right, and that’s obviously why, if it were called a tax, there would be absolutely no question that the Anti-Injunction Act applies.

Ah, so the problem is that Congress didn’t specifically call the mandate a “tax,” they called it a “penalty.” Well, that’s an open-and-shut case. Courts obviously can’t be expected to use their own powers of deduction and logic to conclude that something is a tax, when its not explicitly called that…… O wait, they do that kind of thing all the time. AND there’s even a Supreme Court decision saying:

In a 1941 decision on “the constitutionality of a tax law,” the Supreme Court ruled that it was “concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it.”

If it walks like a tax, talks like a tax and acts like a tax, then it IS a tax and the Supreme Court is allowed to say so. Except when it doesn’t want to for some reason.

“Economic inactivity”- I wonder if this is a well-founded legal doctrine?

If the mandate isn’t a tax, then it has to be justified under Congress’ powers outlined in the Commerce clause of the Constitution, which reads:

[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States…

As established by the Supreme Court in Wicker v Filburn, Congress even has the power to regulate private economic activities which are never intended to cross state lines or to enter into the open market, as long as it is part of a broad national regulatory scheme. But the law’s opponents claim that this is something different. Conservative scholars claim that instead of Congress regulating someone’s actions, here it is regulating their inaction.

The court has never upheld a federal law that punishes Americans for exercising their God-given right to do absolutely nothing. Even the furthest reaches of the Commerce Clause have extended only to affirmative actions, such as growing wheat or possessing illegal drugs.

Of course, the Supreme Court has never held that there is a difference between “economic activity” and “economic  inactivity.” After all, what would be the point of regulating someone who was economically inactive? There would be no point, and that’s not what the individual mandate does. It regulates how people will pay for the medical care that they will eventually receive. Everyone, by virtue of their mortality, eventually will be active in the health care market. No one can predict when a disease will strike or how much it will cost. That’s why everyone needs insurance. Care isn’t free, everyone will need it, and if you aren’t paying for your own care, the rest of us are.  The individual mandate was put into place to say: either pay for your own care (buy insurance) or pay us a penalty to cover your care for you.

The opponents of health care reform have conceded that Congress could force people to buy insurance at the moment they enter the doctor’s office, hospital or ambulance with a severe disease. But of course, that’s not how insurance works. Can you buy life insurance on your death bed? Can you buy car insurance after you’ve already gotten in a wreck? Of course not. If Congress can require insurance when it would do no good, then they can require it when it would do some good. No one is immune from having an accident and being rushed to the hospital at any moment. No one is “economically inactive” in the health care market.

Limiting Principles for Some. Guaranteed health care for none!

So now that the Supreme Court has established that the mandate isn’t a tax (wink, wink) and that there are all these people in America who want nothing more than to be free from the burdens of life-saving medicine, we arrive at our last problem with health care reform: if the Court let’s Congress do this, they can get away with anything! Jonathan Chait tackles that problem here:

If Congress can force you to purchase health insurance, why can’t it make you buy broccoli, or anything at all? (And since this would be bad, then obviously Congress can’t be allowed to make you buy health insurance.)

There are many possible ways to solve this objection, if a Justice were so inclined to look for them. Health insurance is inherently different from almost any other product, with inherent problems of cost-shifting and adverse selection. (The economics of this seem to be utterly eluding the conservative justices.)

In other words, your decision to not eat broccoli doesn’t directly financially burden anyone else, but your decision not to buy health insurance does. A broccoli mandate would not be necessary or proper to solving a major national problem, the individual mandate is. But as Chait goes on to point out, there aren’t “limiting principles” in a lot of Congress’ powers:

As Akil Amar notes, if Congress can tax income it could tax income at 100% percent. If you can conscript 18-year-olds into the army, you can conscript them for 25-year terms like the Czars did. You could put them into the Army Corps of Engineers and turn them into a vast pool of government slave labor. But such hypothetical possibilities don’t normally dominate jurisprudence the way they have at the Court this week.

There are not well-defined limits on a lot of  things Congress and the President are allowed to do, and for good reason. Sometimes problems or needs arise and people expect their government to be able to solve them in new ways. How about we worry about the validity of broccoli or gym membership mandates when Congress actually passes something that stupid. And besides that fact, defenders of the law, like President Reagan’s former Solicitor General, can offer limiting principles for this power.

Conclusion

So there you have it. There is an unusually weak case against Obamacare which the Supreme court is taking unusually seriously. The fact that this law could get thrown out shows us the utter ridiculousness in this case:

  • No one argues that it would be unconstitutional for Congress to impose a single-payer, government-run health care plan on America. But a moderate plan that preserves the free market while making badly needed reforms in a broken system? That’s a bridge too far.
  • This case would be over if instead of the word “penalty” in the law, it read “tax.”
  • The Supreme Court is actually considering striking down a 2,000 page law with hundreds of mostly unrelated, moving parts becauseone of those parts may be constitutionally defective.
  • The Supreme Court is putting the right of a few million people to burden the rest of society with their health care bills ahead of the right of Congress to make laws and the right of 40 million people to the medical care Congress has given them.

If the most conservative Court in decades strikes down this law it will be for of political, not legal reasons.

Can Health Reform survive without the individual mandate?

Wednesday, the Supreme Court heard arguments over whether the individual mandate is “severable” from the rest of the health reform law. That is, if they choose to strike down the individual mandate, do they also have to take down other parts of the law that may or may not depend on the mandate to function? The Court should rule that all of the rest of the law should stand, even if the mandate falls.

The individual mandate is in the law as a companion to the law’s prohibition on discriminating against people with pre-existing conditions. If we want universal coverage, the insurance companies have to be required to cover everybody. If  they have to cover everybody then everybody has to sign up. If not, then only the sick would sign up for health insurance and rates would go through the roof.

Of course, most of the Affordable Care Act (ACA) isn’t related to the individual mandate and would not be affected if the mandate is struck down by the Supreme Court. For example:

  • The Affordable Care Act will expand Medicaid so that it covers everyone who makes under 133% of the poverty line. Currently in many states, you cannot qualify for Medicaid even if you make nothing in income. The only way for adults in many states to get on Medicaid is if they (1)have children and (2) make less than a third of the poverty line! (How’s that for a social safety net?) The ACA patches up this hole and of course, the individual mandate does not affect Medicaid at all.
  • The law also starts several experiments in payment reform through Medicare. Currently Medicare, like almost all insurance plans, pays doctors for every service they perform. This is a problem because it means insurance pays for more care rather than better care, driving up the cost of health care in America. The ACA aims to change that. It is already starting several small scale experiments in cost-control. Its payment reforms include giving a hospital a set amount to treat one disease or a lump sum to treat one group of people for a year. It also starts lowering payments to hospitals that have high rates of re-admission and has given out grants to medical providers so that they can better share information about patients and study which treatments are the most cost-effective for a given disease. All this is to say that the ACA is trying lots of different ways to bring down the cost of medical care in the US. These methods have nothing to do with the individual mandate.
  • Finally the ACA reforms the individual buyer’s insurance market. Even these provisions, though they are related to the mandate, should be able to stand if it is declared unconstitutional. For example, the ACA makes insurance companies display information about their plans in an easy to read format. Its sort of a “nutrition facts” label for insurance plans. As it stands currently, you would need a lawyer to wade through countless pages of insurance jargon to tell you what you are buying  from an insurance company.  This is as big of a no-brainer as I can think of in the bill. The law also creates online exchanges where you can compare and buy these newly-understandable insurance packages. It also says that insurance plans must cover preventive care and cannot retroactively cancel coverage when you get sick.

So, can you  think of a way that the expanded Medicaid program would be affected by striking down the individual mandate? I can’t.  Besides the fact that they are both tools to increase insurance coverage, I don’t see them overlapping at all. Likewise with the reforms to Medicare. Those reforms are done in order to reduce costs in the Medicare program. The Medicare program and the population it serves are completely unaffected by the individual mandate.

Finally, the ACA’s improvements to the individual insurance market do not rely on the mandate to function. Some, like the exchanges and the insurance plan fact sheet won’t be terribly affected by the loss of the mandate. Even the guarantee of insurance coverage–the part of the ACA most related to the individual mandate–can still stand (though it wont work nearly as effectively).

For instance, New York, New Jersey, Maine and Vermont all force insurers to cover everyone in the state and do not have an individual mandate. This is less than ideal, and insurance premiums are much higher in those states because of that decision, but it is obviously possible to have a health insurance system with guaranteed issue  and without an individual mandate. Congress is also more than capable of coming up with a substitute for the mandate.

At any rate, it is not the Supreme Court’s job to make political decisions about a statute. If part of a law is unconstitutional, then they should strike only that portion. The Courts should not and cannot wade into the political and policy issues involved in deciding which *Constitutional* parts of the law need to be thrown out alongside a (supposedly) unconstitutional provision.

Explaining the individual mandate

What is the individual mandate?  

Protesters in front of the Supreme Court this week

In 2014, it will be a tax penalty that will be assessed against anyone who can afford health insurance but who chooses not to purchase it. It will be a penalty of 2.5% of income or $695, whichever is greater. People on Medicare, Medicaid, on their employer’s health plan, or who have bought an individual policy will not have to pay this penalty. (Also starting in 2014, the government will begin giving out subsidies to individuals so that they can afford to purchase health care individually.)

Why did Congress enact the individual mandate?

The individual mandate is in the law as a companion to the law’s prohibition on discriminating against people with pre-existing conditions. As it stands now, insurance companies will refuse to cover people who have ever been struck by a serious disease or who are at risk for one in the future. Yes, another side-effect of childhood leukemia is that you will never be able to qualify for private individual health insurance for the rest of your life! So Congress, reasonably enough, put a stop to this practice in the Affordable Care Act.

However, this does present a legitimate problem for health insurance companies. If they can’t refuse coverage to people with existing medical conditions, what’s to stop someone from calling to buy medical coverage from the ambulance on the way to the hospital? (to take the most extreme example) In order to keep people from waiting until they get sick to buy insurance (and thereby overloading the insurance system), Congress said that anyone who does not buy insurance will be docked a tax penalty.

Why is the individual mandate being challenged before the Supreme Court?

Detractors say that Congress does not have the power to enact an individual mandate. They say this would amount to forcing people to buy a private good which they may not want. They say that the Constitution only gives Congress the power to regulate “economic activity” and not a person’s choice to remain “inactive” in the health insurance market.

Supporters say that everyone is involved in the health care market because disease or illness can impact anyone at any time. Therefore, to protect society at large from having to pay for an individual’s medical bills, Congress can require people to have some form of insurance to cover them when they fall ill. They say that the Constitution’s “commerce clause” gives Congress the power to regulate health care and the “necessary and proper clause” gives Congress the power to enact a mandate as part of an broad regulatory scheme.

Who originally thought up and popularized the “individual mandate”?

Actually, the same people who now say that this is an unprecedented and unconstitutional infringement on civil liberties are in many cases the individual mandate’s old supporters. Republicans across the board used to think the mandate was a great idea. However, once Democrats decided to include it in their health care bill, every Republican politician in the country suddenly had a collective change of heart. As Ezra Klein shows: “If you’re talking about Republicans who were in any way active during the 1990s, there’s a very good chance you’re talking about Republicans who either supported or said nice things about bills that included an individual mandate.”

How does the mandate relate to the rest of health care reform?

The mandate is very intertwined with the law’s ban on discrimination against people with pre-existing conditions  and some other reforms to the individual health insurance market. But the law does much more than just reform the individual insurance market. It expands Medicaid, reforms Medicare, regulates insurance companies’ profits, allows young adults to stay on their parents’ health insurance plans, etc. However, the Supreme Court has the power to strike down much of the rest of the law if they determine it is inextricably linked to the individual mandate. More on this in my next post.

How Republicans have already won on Health Care Reform

The US Supreme Court is hearing arguments this week (principally) over whether the “individual mandate” in President Obama’s signature health care reform bill is constitutional. This issue is dominating political news coverage this week, just as the issue of the individual mandate has dominated coverage of the Affordable Care Act since Obama signed it into law. This is why Republicans have already won the messaging war on health care reform.

Unfortunately, when most people hear the words “health care reform,” “Obamacare” or “Affordable Care Act” they immediately think of the individual mandate, which (starting in 2014) will put a tax penalty on people who have not signed up for health insurance. It is a tragedy (though not an unpredictable one) that this one small part of the bill has become its best-known feature. The bill does so many good things for people in America, but the continuous media coverage of the court challenges have made sure that the individual mandate is the one thing people associate first with Obamacare. In politics, name association and messaging are everything and the strong popular connection between “health care reform” and “individual mandate” is probably the main reason why health reform remains unpopular.

This is extremely ironic because the individual mandate was originally a conservative idea, advocated by Republicans as an alternative for Pres. Clinton’s proposed health care reforms. Obama didn’t like it when he ran for President, and liberals have never liked it. Conservatives (predictably) turned against it when Democrats included it in their health reform package. And the only reason it made it into the Democrats’ bill was because of a desire to make the bill more appealing to Republicans and centrists. But alas, the mandate is now integral to giving people the good parts included in health reform. I could go on for 10 posts about this but here are some of the good parts:

  • Over 30 million people will be given access to health insurance. Anyone without money to buy insurance will be given a government voucher or will be added to expanded Medicaid rolls.
  • People can no longer be denied coverage because of “pre-existing conditions” or whatever other reasons insurance companies can come up with to deny health coverage.
  • The plan will save tens of thousands of lives every year.
  • The plan will reduce the deficit by over $100 billion in its first 10 years.
  • The plan also starts experiments in payment reforms which could hold the key to bringing down our skyrocketing medical costs.

Imagine if any of these major parts of the bill were what was dominating the news coverage around Obamacare. The individual mandate is a provision that will affect very few people in America but is given out-sized significance. Its too bad, because if people knew the Act contained all these beneficial and popular provisions, our health care debate would be very different. Instead of focusing on the most unpopular part of the Act, we could all be talking about how the US is joining the rest of the world in offering health care to all of its citizens. And that, my friends, is why Republicans have already won the messaging war over Obamacare.

The Wall Street Journal and “Obamacare”

It  always really disappoints me when I see ideologically biased, dishonest journalism on display. Today, Stephen Moore wrote a post in the Wall Street Journal . It reads in part:

ObamaCare Doesn’t Add Up

A new CBO report finds that the costs of Medicare and Medicaid will drive federal spending to all-time highs in coming decades. (1)

What is conspicuously missing from this report is the magical windfall from the new health law. CBO reports that it is “using the same growth rates that would have been applied in the absence of the legislation.” Now they tell us. Hence, Medicare alone is projected to nearly double over the next 25 years, from 3.7% of GDP to almost 7% by 2035. (2)

CBO warns that ObamaCare’s purported payment cuts to doctors and hospitals and the hoped-for reductions in the growth of the insurance subsidies would be “difficult to sustain over a long period.” Let us translate all this mumbo jumbo: The ObamaCare cost savings are mostly bunk. (3)

None of these scary trends is inevitable, and there is still time to get health-care costs contained. But now even CBO seems to agree that ObamaCare bends our health-care bills up, not down, in the long run. (4)

Stephen Moore seems to either completely miss (or just selectively misrepresent) the point of the CBO report. (For clarification, the CBO is the Congressional Budget Office, the non-partisan scorekeeper for all Congressional laws and bills) Let’s go point-by-point:

(1) To start, if there seems to be some tension between the headline and the sub-head its because the sub-head is mostly true while the headline is all sensational. The bills for Medicare and Medicaid will increase in the coming years because health care costs as a whole will increase. If healthcare for everyone else is increasing at a breakneck pace, its only natural that healthcare for the elderly, disabled, young and poor will also increase considerably. Of course, that has nothing to do with “Obamacare,”  which is what the headline leads you to believe.

(2) When the CBO says it is “using the same growth rates that would have been applied in the absence of the legislation,” its saying that it is using those growth rates as a baseline  and then it will “incorporate the projected effects of the legislation on the level of federal spending for health care”  as they affect the baseline they established. Somehow, surely by accident, Moore quoted the CBO out off context so he could make an ideological point not represented by the evidence. Either that, or he was commenting on a report he could not understand.

(3) In one of the two scenarios the CBO presents, it assumes that all the cost savings contained in the Affordable Care Act (ACA) will keep costs down for the coming decade, but then after that, they will prove “difficult to sustain.” Moore thinks this means “the ObamaCare cost savings are mostly bunk,” but the CBO doesn’t. It still projects that the ACA will save money for a decade but thinks that after that a future Congress will vote to spend more money to override some of the savings.

(4) Finally, Moore says that “even CBO seems to agree that ObamaCare bends our health-care bills up.” That is NOT what the CBO says. In the more pessimistic scenario the CBO says that “excess cost growth” in Medicare will drop 88 percent in the first decade of the ACA compared to what it was from 1985-2007. Thereafter, Medicare’s excess growth will still be 25 percent lower than it was before. (pgs 43, 45) Even if everything goes wrong with the law that the CBO thinks may go wrong with it, it will still save money (bend the cost curve down), according to the CBO.

In conclusion, the CBO’s conservative scenario projects that the ACA will save money and everything in this article is a distortion or misrepresentations of what the CBO says.