Tag: Health Care

The Latest Obamacare Case on Appeal

Last year’s Supreme Court decision holding that Obamacare imposes a “tax” on people who don’t buy health insurance came as a surprise to most Americans. The law doesn’t call it a “tax,” but a “penalty,” and the law’s authors and supporters never called it a “tax” when it was enacted. But Chief Justice Roberts and the four liberal justices held that unlike the penalty in the 1922 case of Bailey v. Drexel Furniture – which was disguised as a tax – what the Patient Protection and Affordable Care Act imposed looked like a penalty but was really a tax.

One of the problems with that – left unaddressed in the NFIB v. Sebelius ruling – is that the Constitution requires “all bills for raising revenue” to “originate” in the House of Representatives. If the PPACA imposes a tax, then it fails this requirement because it originated in the Senate.

That’s the argument being made in the case of Matt Sissel, a veteran and small business owner represented by the Pacific Legal Foundation (including one of us, Sandefur). In a brief filed yesterday in the U.S. Court of Appeals for the D.C. Circuit, Sissel’s lawyers argue that the Obamacare “tax” originated in the Senate in violation of Constitutional standards.

There’s little case law interpreting the Constitution’s Origination Clause. The leading case is 1911’s Flint v. Stone Tracy Corp., which held that the Clause wasn’t violated when the Senate amended a House-passed bill to add a tax to it. The Court held that the Senate – which has the constitutional authority to “propose or concur with amendments” to House-passed revenue bills – was allowed to do this because that Senate amendment “was germane to the subject-matter of the bill.” It’s hard to see how the “germaneness” requirement was satisfied in the PPACA’s case, though. That law originated in the Senate, which took a House-passed bill on a completely different subject (providing incentives for veterans to buy their first homes), deleted its entire text, and replaced it with the bill that became Obamacare. This “shell bill” tactic is not uncommon in legislatures, but the Supreme Court has never held that it satisfies the origination requirement. A federal trial court threw Sissel’s case out in June, on the grounds that the Senate’s “amendment” satisfied the “germaneness” rule because the original House bill had something to do with taxes. But if the standard is that lax, the Origination Clause would mean nothing: the Senate could originate taxes at any time when they have some extremely broad similarity with some other bill the House has passed. In an age of boxcar-sized omnibus bills, that would be easy to do.

That trial court also said that the Origination Clause doesn’t apply to the Obamacare tax anyway, because, while it’s a tax, it isn’t a “bill for raising revenue.” There are precedents that have exempted certain kinds of taxes from the Origination Clause because they’re not revenue measures, but are instead earmarked for some specific fund, or are actually just enforcement penalties meant to ensure compliance with another law. But funds raised by the PPACA aren’t earmarked – they go into the general Treasury, to be spent as Congress chooses. And in NFIB, Chief Justice Roberts’s opinion specifically held that the provision at issue is not a penalty, but only a tax. It’s the reverse of Drexel Furniture.

These are reasons why the judge-made exceptions to the Origination Clause shouldn’t apply here. But there’s a broader reason why the courts should be reluctant to exempt Obamacare. In their decision last year, the majority of justices expressed a desire to preserve what they saw as democratic lawmaking. “We possess neither the expertise nor the prerogative to make policy judgments,” wrote Roberts. “Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.” Whatever you might think of this idea, if the courts are concerned about our democratic process, they should not hesitate to enforce a constitutional provision designed to preserve democratic accountability.

The Origination Clause was written to ensure that the power to tax – government’s most pervasive, dangerous, and easily abused power – was kept close to the people’s chamber: the House of Representatives, elected every two years directly by local districts. Had Obamacare been properly proposed in the House as a tax on not buying insurance in the first place, it wouldn’t have survived more than a few days – and as it stands the backlash against the law’s enactment swept out the House majority that supported that law. If the courts are concerned with empowering the will of the voters, that’s all the more reason that procedural requirements like the Origination Clause – that help ensure accountability and transparency, and keep the taxing power as close to the people as possible – are fully enforced.

New Constitutional Amendment Would Abolish Obamacare’s “Mandate Tax”

I’ve been known to say that Chief Justice Roberts’s transmogrification of Obamacare’s individual mandate created a “unicorn tax” – a creature of no known constitutional provenance that’ll never be seen again. Well, here to ensure that more than congressional discretion prevents any future tax on non-purchases is a constitutional amendment that was recently floated by Congressman Steven Palazzo (R-MS). 

Rep. Palazzo has introduced H.J. Res. 28, which would overturn last summer’s Supreme Court decision that, for the first time ever, under certain limited conditions, granted Congress the power to tax inaction. The amendment reads, in its entirety, as follows: “Congress shall make no law that imposes a tax on a failure to purchase goods or services.”

Short and sweet and, with the mandate-tax set to take effect this next January, now is the time to act to prevent about 11 million mostly middle-class Americans from getting hit.  Indeed, the CBO estimates that 70 percent of those currently without insurance and earning less than $94,000 a year will get slapped with the mandate-tax that goes into effect in 2014. That doesn’t sound like a good, let alone fair, way of either “protecting patients” or ensuring “affordable care,” but hey, I’m just a constitutional lawyer.

Oh, and of course this amendment would prevent all other possible mandate-taxes as well, not just in the field of health care. 

It’s sad that we’ve come to this – the Constitution already prohibits taxes on inactivity – but of course there are many things that the government does (and which courts have allowed it to do) that are plainly unconstitutional. H.J. Res. 28 is an excellent start. 

For examples of more great ideas on how to rein in our out-of-control government, see Randy Barnett’s “Bill of Federalism” and the Compact for America.

Debate Challenge to Jonathan Gruber and Any Other ObamaCare Supporter

My coauthor Jonathan Adler and I have been educating state lawmakers about how ObamaCare allows them to block the law’s employer mandate, and to exempt collectively 15 million taxpayers from its individual mandate. So far, 32 states have exercised those powers, exempting all of their employers and 10 million residents from those punitive taxes. In Mother Jones, MIT economics professor Jonathan Gruber calls our interpretation of the law “screwy…nutty…stupid.” (This issue is currently being litigated in Oklahoma.) 

In this Cato video, I challenge Prof. Gruber (and any other supporter of the law) to a debate on the powers Congress grants states under ObamaCare.


Top General Weighs In

Oh, no, not that general. I’m talking about Eisenhower, as quoted in the June 16, 1952 issue of Quick magazine.

Asked what he thought about “compulsory health insurance,” Ike came out “against submitting our lives toward a control that would lead inevitably to socialism.” Now we get to find out if Ike was right.

 

Topics:

Subsidies for Electronic Medical Records Leads to Higher Medicare Bills

Government subsidies often produce unintended consequences. The latest example comes from the New York Times, which reports that federal subsidizes to encourage doctors and hospitals to use electronic billing and recording records are leading to larger Medicare bills. That means that taxpayers are taking a double hit even though policymakers claimed that electronic record-keeping would make health care delivery more efficient, and thus less costly.

From the article:

Over all, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times…

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients — a practice called cloning — with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Critics say the abuses are widespread. “It’s like doping and bicycling,” said Dr. Donald W. Simborg, who was the chairman of federal panels examining the potential for fraud with electronic systems. “Everybody knows it’s going on.”

The Times also notes that the subsidies are a bipartisan creation:

Both the Bush and Obama administrations have encouraged electronic records, arguing that they help doctors track patient care. When used properly, the records can help avoid duplicate tests and remind doctors about a possible diagnosis or treatment they had not considered. As part of the economic stimulus program in 2009, the Obama administration put into effect a Bush-era incentive program that provides tens of billions of dollars for physicians and hospitals that make the switch.

But some critics say an unintended consequence is the ease with which doctors and hospitals can upcode — industry parlance for seeking a higher rate of reimbursement than is justified. They say there is too little federal oversight of electronic records.

Of course, now that government has treated a problem by creating a new one, policymakers will argue for more spending on “oversight.” Money for that will come from taxpayers, which means yet another hit for the poor rubes who always get stuck paying for the politicians’ schemes.

See this Cato essay for more on fraud and abuse in Medicare and other government programs.

Can Americans Handle Candor?

Today Politico Arena asks:

Is Paul Ryan’s budgetary candor harming GOP congressional candidates?

My response:

Today’s Arena question boils down to this: are Americans able to handle the truth—that we’re going broke, as Paul Ryan puts it, plainly. P.T. Barnum allegedly said, “There’s a sucker born every minute.” Unfortunately, voters too often prove him right.

As I implied in my post yesterday, Robin Hood Democrats, promising “free goods” provided by the rich, are betting that Americans are too stupid to see through their many scams. Their cynicism is as boundless as their politics of personal destruction. To take the simplest example, in June 2009, and often since, Obama assured us: “No matter how we reform health care, we will keep this promise: … If you like your healthcare plan, you will be able to keep your healthcare plan. Period. No one will take it away. No matter what.” As Professors Richard Epstein and David Hyman have shown, he’s already broken that promise in multiple ways.

But give the president his due: he makes Robin Hood look like a piker. His latest? In Iowa yesterday he announced that the federal government will purchase over $150 million in meat and fish to help ranchers survive the drought. “That food is going to be spent by folks over at the Pentagon and other places.” Never mind that you don’t “spend food,” this is simply shades of Solyndra—the flimflammery that runs through this feckless administration. But the main question is, will Americans fall for it again?

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