Obamacare “Tax”: How Roberts “Tax” Dooms Obamacare

One of the talking points in the political promotion of the Affordable Care Act (ACA) also known as Obamacare was the attempt to provide health insurance to the vast majority of the estimated 45 million uninsured Americans. Arguments about the ability of an overburdened health-care system to absorb upwards of 45 million more potential patients is a particularly interesting argument. The specter of rationing when price is eliminated as the rationing agent [price fixing scheme of Obamacare and the subsequent outcomes of price fixing schemes] and other arguments regarding the scheme’s viability and implementation are very valid arguments regarding the absorption of upward of 45 million new participants.
 

However, will in fact upward of 45 million people become insured or will the number be much, much smaller?


Putting aside arguments that the current number of insured(s) may actually fall and concentrating on the potential 45 million additional insured(s), will in fact the 45 million become a much, much smaller number than anticipated due to the “penalty” of the individual mandate being depicted as a “tax” by SCOTUS?



Thomas Lambert, law professor from the University of Missouri in an assay entitled How the Supreme Court Doomed the ACA to Failure explains at length why the Obamacare fine/penalty/tax is much more rational to pay than acquiring coverage. That is, Lambert puts forth the formula of rationally paying the tax and acquiring coverage only when a sickness, illness or accident manifests itself and/or occurs.


More importantly Lambert explains the reasoning behind Justice Roberts conclusion that the penalty was a tax and how the tax has to be relatively small in size (not punitive) and how the tax must remain the same amount adjusted for inflation. That is, the “tax” can not be increased per the Roberts decision except via an inflation adjustment which means the tax remains relative in size to the inflation adjusted Obamacare insurance premium. Therefore, the tax remains relative and hence it will always be rational to follow the Lambert formula of paying the tax and acquiring coverage only as needed. The only exception to the formula is if health-care prices fall, but Obamacare does precious little to address the underlying health-care price.


Lambert also points out that the framers/promoters of ACA likely figured they, in the future, could increase the penalty/tax via congress. Problem is the same framers/promoters never figured on the individual mandate and associated penalty being framed constitutional via a “tax” argument and hence made no process arrangements for raising the penalty aka “tax”. Hence no mechanism exists in ACA to raise the tax as that was something the framers/promoters would have gotten around to later but now can not make any changes at all due to Roberts decision and the requirement that the tax can not change except adjustments for inflation. Ops!


With the formula in hand and with the rational response being to pay the fine and acquire coverage when necessary, anti-selection sets in, in a big way, with only older and infirmed individuals buying coverage which means health insurance premiums skyrocket. Given the Lambert formula via the tax depiction by Roberts, the mantra of upwards of 45 million new insured(s) fizzles.


Thomas Lambert’s entire essay can be found in the link below:



www.cato.org/…s/files/regulation/2013/1/v35n4-5.pdf

ObamaCare Funding Accelerates Despite Supreme Court Case

“While President Obama and his Senate allies continue to spend more tax dollars implementing an unpopular and unworkable law that may very well be struck down as unconstitutional in a matter of months, I’ll continue to stand with the American people who want to repeal this law and replace it with something that will actually address the cost of healthcare,” said Rep. Denny Rehberg (R-Mont.), who chairs the House Appropriations subcommittee for healthcare and is in a closely contested Senate race this year.

The Obama administration has plowed ahead despite the legal and political challenges.

 It has moved aggressively to get important policies in place. And, according to a review of budget documents and figures provided by congressional staff, the administration is also burning through implementation funding provided in the healthcare law.

The law contains dozens of targeted appropriations to implement specific provisions. It also gave the Department of Health and Human Services (HHS) a $1 billion implementation fund, to use as it sees fit. Republicans have called it a “slush fund.”

“HHS plans to drain the entire fund by September — before the presidential election, and more than a year before most of the healthcare law takes effect. Roughly half of that money will ultimately go to the IRS.” – Sam Baker, thehill.com, 04/09/2012

A link to the entire article appears below:

http://thehill.com/blogs/healthwatch/health-reform-implementation/220475-white-house-has-diverted-500m-to-irs-to-implement-health-law

Toothpicks, Tinker Toys and Health-Care: the Non-Price Phenomena

One can not help but read media reports handicapping the Supreme Court’s decision regarding the individual mandate. Will it stay or will it go? Moreover, many of the reports describe a situation of ripple effects within the health insurance sector if only the mandate is struck down -or- if the mandate and certain sections are struck down such as state expansion of Medicaid (which was argued the third day) -or- the entire legislation of ObamaCare being struck down.

“After three days of historic Supreme Court debate, the political world and health-care companies confronted the prospect of President Barack Obama's health law being wiped away, a decision that would upend years of planning by businesses and roil the November elections.

Among those set to implement the law, insurers would have to ditch changes to their businesses designed to bring in millions of new customers. Provisions that have already gone into effect, including letting children stay on their parents' insurance plans until they turn 26, would no longer be required.

Companies facing the law's requirements would be reprieved, including health firms set to pay new taxes and businesses that would have been required to insure their employees or pay a fee.” - Health Care Ripples Outward, The Wall Street Journal, 03/29/2012 (1)

　

The point the media seems to miss is the underlying delivery system of health-care is the problem. That is, the underlying model is broken. The ripple effects in health insurance due to striking down ObamaCare is not the basic problem. That is, ObamaCare missed the target to begin with as it was a quasi-insurance plan based on coercion and a price fixing scheme that was supposedly going to “fix” the underlying model. Health insurance or quasi-health insurance, the changing of the insurance system thereof, does not change the underlying health-care system in any meaningful way. Thinking that a health insurance system based on coercion and price fixing is going to “fix” the underlying model is confused thinking.

Health-care has become the giant Barking Cat. Health-care is a decades in the making patch work of legislation directing health-care delivery, processes, and requirements that with each piece of government intrusion has merely created a health-care system that suits the sponsor and supporters of the each new piece of particular legislation. That is, each piece of legislation basically boils down to Milton Friedman’s famous quote of: "I would like to have a cat, provided it barked". (2)

The counter argument is the tried and true: it’s a complex issue, and experts say….. Uh huh. Right! Somehow, someway simple solutions can not occur in today’s world as everything from toothpicks to tinker toys are so extremely complex that only extremely complex answers are suitable.

One very simple solution, among several simple first step solutions, is to give the consumer of health-care a price signal. Are prices marked at the grocery store? At the discount store? At the department store? Does the auto body repair shop give you an estimate? Roofing estimates? Would you go shopping at the grocery store where prices are unmarked, then check out at the register with no sales slip, then have the unknown value of your purchase shipped off to a third party to pay because you pay a very high monthly premium to cover those unknown price items you purchase? Rather insane is it not?

　

The above scenario seems rather silly. Nay, nay! Think about it for a moment. Exactly where does the consumer go shopping where prices are not clearly marked or marked at all? Its called health-care purchases. The public has been duped into purchasing health-care with no price signal. Brilliant! The consumer would never go shopping at a store with no prices marked yet do it everyday in the health-care sector! Dupery at its best!

　

If one wants to know the price the general rebuff is “..can you put a price on your health?” -Or- you get the “complicated/expert” answer that knowing the price is too complicated as who knows what has to be done regarding tests, screenings, scans, etc.. Yes, you can’t get them to answer the price question as they don’t want you to know the answer to the price question. Why don’t they want you to know price? Because they don’t want to compete on price. More succinctly, the health-care industry doesn’t want to compete, period. It’s a special case where dupery through nitwitery reins supreme regarding “price”.


Notes:

(1) http://online.wsj.com/article/SB10001424052702304177104577310050863533554.html

(2) Barking Cats, Milton Friedman, Newsweek, 02/19/1973

http://www.johnlatour.com/barking_cats.htm

Roscoe Filburn, Wheat, The Supreme Court, and the “interstate commerce clause”

“When a 1942 Supreme Court decision that most people never heard of makes the front page of the New York Times in 2012, you know that something unusual is going on.

What makes that 1942 case -- Wickard v. Filburn -- important today is that it stretched the federal government's power so far that the Obama administration is using it as an argument to claim before today's Supreme Court that it has the legal authority to impose ObamaCare mandates on individuals.

Roscoe Filburn was an Ohio farmer who grew some wheat to feed his family and some farm animals. But the U.S. Department of Agriculture fined him for growing more wheat than he was allowed to grow under the Agricultural Adjustment Act of 1938, which was passed under Congress' power to regulate interstate commerce.

Filburn pointed out that his wheat wasn't sold, so that it didn't enter any commerce, interstate or otherwise. Therefore the federal government had no right to tell him how much wheat he grew on his own farm, and which never left his farm.

The Tenth Amendment to the Constitution says that all powers not explicitly given to the federal government belong to the states or to the people. So you might think that Filburn was right.

But the Supreme Court said otherwise. Even though the wheat on Filburn's farm never entered the market, just the fact that "it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market" meant that it affected interstate commerce. So did the fact that the home-grown wheat could potentially enter the market.

The implications of this kind of reasoning reached far beyond farmers and wheat. Once it was established that the federal government could regulate not only interstate commerce itself, but anything with any potential effect on interstate commerce, the Tenth Amendment's limitations on the powers of the federal government virtually disappeared.

Over the years, "interstate commerce" became magic words to justify almost any expansion of the federal government's power, in defiance of the Tenth Amendment. That is what the Obama administration is depending on to get today's Supreme Court to uphold its power to tell people that they have to buy the particular health insurance specified by the federal government.” - Thomas Sowell, Back to the Future, writing at Townhall.com, 03/28/2012.

Link to the entire essay appears below:

http://townhall.com/columnists/thomassowell/2012/03/28/back_to_the_future

　



　

SCOTUS and ObamaCare: this week’s schedule of arguments

‘ “Hans von Spakovksy, senior legal fellow and manager of the Civil Justice Reform Initiative at The Heritage Foundation, explains what is in store this week.”

　

"There's three days of hearings, and the Court has very specifically laid out which issues it wants discussed each day," says Spakovsky. "So on Monday at 10 a.m. [Eastern] they're going to start off with 90 minutes of argument about this 145-year-old federal law called the Anti-Injunction Act, and it's a law that basically says that you can't sue to get an injunction to stop a tax from being imposed. The only thing you can do is file suit after you've paid a tax or after you've paid a tax penalty, and then you can sue to try to get your money back."


Spakovsky says arguments on Tuesday and Wednesday will be about the unconstitutionality of the individual insurance mandate.

"The third day is going to be arguing about severability," he adds. "In other words, if the Court finds one or more provisions unconstitutional, does that mean they have to throw out the entire law?"

On Wednesday afternoon, the Court will hear arguments about the claim being made by 26 states that the expansion of Medicaid as called for by ObamaCare is unconstitutional.

The arguments will not be televised, as the Supreme Court decided against that idea -- although Spakosvky says they have never allowed cameras in the courtroom.

"They do release the audio recordings of arguments," he says. "But no, the Court has always been pretty firm, most of the Justices, on not wanting cameras in the courtroom because they believe that that would change the arguments made before them because it would mean that lawyers might be playing to an outside audience, rather than dealing with the specific issues in their cases, and addressing those to the Justices." (Editor's note: According to Associated Press, the court will release audio recordings of proceedings at the end of each day of legal arguments.)

Spakovksy thinks there might be a ruling by the end of the term.

"Well, the term of the Supreme Court ends at the end of June, and normally they issue all of the decisions in their cases that they've heard in the Spring by then," he says. "I suspect we will get a decision by then, but then they could put it off and say We're not going to issue a decision until we come back at the end of Summer. I think that would actually be unusual." ’ - Kickoff at SCOTUS: Legality of ObamaCare, Chris Woodward, Onenewsnow.com, 03/25/2012

　

　

The Supreme Court and ObamaCare: Shifting Arguments to the Necessary and Proper Clause

“The Obama administration has shifted its legal arguments as it prepares to defend the president’s healthcare law before the Supreme Court.

Written briefs in the landmark case increasingly have focused on a part of the Constitution that didn’t get much attention in lower courts.”

“Justice has aggressively defended the mandate as its own regulation of economic activity, but is now stepping up a separate argument emphasizing that the mandate is part of a broader regulatory scheme.

The shift moves the focus of Justice’s argument from the Commerce Clause of the Constitution to the Necessary and Proper Clause, which says Congress can make laws that are necessary for carrying out its other powers.” - Obama shifts healthcare defense, thehill.com, 03/15/2012

Link to the entire article appears below:

http://thehill.com/blogs/healthwatch/health-reform-implementation/216361-obama-shifts-healthcare-defense

ObamaCare and the Supreme Court: What’s Are The Arguments and Briefs Filed?

‘In the last week, the main parties in the health reform lawsuit began filing their opening briefs. Advocacy, consumer and trade groups – including AHIP, America's Health Insurance Plans – weighed in by filing amicus briefs as well.

Oral arguments are scheduled for five and a half hours over three days: March 26-28. The Court will hear arguments about four different issues:





*The constitutionality of the individual mandate.

*The constitutionality of the Medicaid provisions: Are they an illegal commandeering of the states' autonomy?

*Whether the Anti-Injunction Act bars review of the mandate until after 2014: This centers on whether the penalty for not having insurance is a tax, since the Anti-Injunction Act prohibits lawsuits stopping a tax until after the tax goes into effect.

*Which other pieces of the law should fall if the mandate is found to be unconstitutional.

HealthReform GPS has posted a detailed backgrounder on the constitutional issues before the Court and how the lower courts have ruled.

Response petitions, reply briefs and arguments will continue to be filed according to a series of deadlines that extend from now until March 7. These are among the briefs that have been filed with the Court so far:





*A 130-page brief by the Justice Dept., arguing for the mandate. It says that the mandate is needed to break the cycle of cost-shifting that makes health insurance expensive and unaffordable. The administration argues that there are lots of other mandates the federal government has imposed over the years, but the case isn't really about whether Congress can require Americans to buy insurance. It's about whether Congress can regulate the timing and method of payment of health care services.

*A 123-page brief by the 26 states saying that the Medicaid expansion is illegally coercive because states have no real choice in the matter. "No state is exempt from the massive penalty — the loss of the entirety of funding under the single largest grant-in-aid program for the states," the brief says.

*A 169-page brief by the 26 states and the National Federation of Independent Business saying that if the individual mandate is unconstitutional, the rest of the law must be struck down, too.

*An amicus brief by 36 Republican senators, and another filed by the American Center for Law & Justice and signed by about 120 congressional Republicans arguing the same point.

*An amicus brief filed by the American Action Forum and signed by more than 100 economists, including Nobel laureates, also on the issue of severability. It says, "Without the individual mandate, the ACA's reforms, including but not limited to guaranteed issue and community rating, would cause a steep increase in premiums – the opposite of Congress' express intent."

*An amicus brief by AHIP and the Blue Cross Blue Shield Association that argues that if the individual mandate is found to be unconstitutional, the market reforms (for example, guaranteed issue and community rating) must be struck as well.

Meantime, Supreme Court Chief Justice John Roberts defended the Court's ethical standards and Justices Clarence Thomas and Elena Kagan, who continue to be under pressure by some to recuse themselves from the health reform law challenge. "I have complete confidence in the capability of my colleagues to determine when recusal is warranted," Chief Justice Roberts wrote. "They are jurists of exceptional integrity and experience whose character and fitness have been examined through a rigorous appointment and confirmation process." ‘ - Humana, Humana Connections, 01/12/2012