Tag: Obamacare

Government Essentially Concedes Commerce Clause Challenge to Obamacare, Calls Individual Mandate a Tax

This Sunday’s New York Times had a fascinating story about how the defense of the individual mandate has shifted from the Commerce Clause – even though the law itself is replete with boilerplate about “economic activity” – to Congress’s taxing power.  Here’s the first paragraph (h/t Jonathan Adler):

When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”

This is huge.  After months of arguing that cases like Wickard v. Filburn (Congress can regulate the wheat farmers grow for personal consumption) and Gonzales v. Raich (Congress can regulate personal growth of state-allowed medicinal marijuana) justify the requirement that every man, woman, and child buy a health insurance policy, government lawyers (and spokesmen) now say the mandate is just a regulation accompanying a lawful tax (the penalty you pay for not buying insurance).  After I spent most of April and May criss-crossing the country debating the constitutionality of Obamacare, it turns out that my opponents were barking up the wrong tree!

But don’t just take it from me.  Here’s Georgetown law professor and Cato senior fellow Randy Barnett’s dissection of the Times story and its significance.  An excerpt:

Now there are cases that say (1) when Congress does not invoke a specific power for a claim of power, the Supreme Court will look for a basis on which to sustain the measure; (2) when Congress does invoke its Tax power, such a claim is not defeated by showing the measure would be outside its commerce power if enacted as a regulation (though there are some older, never-reversed precedents pointing the other way), and (3) the Courts will not look behind a claim by Congress that a measure is a tax with a revenue raising purpose. 

But I have so far seen no case that says (4) when a measure is expressly justified in the statute itself as a regulation of commerce (as the NYT accurately reports), the courts will look look behind that characterization during litigation to ask if it could have been justified as a tax, or (5) when Congress fails to include a penalty among all the “revenue producing” measures in a bill, the Court will nevertheless impute a revenue purpose to the measure. 

Now, of course, the Supreme Court can always adopt these two additional doctrines. It could decide that any measure passed and justified expressly as a regulation of commerce is constitutional if it could have been enacted as a tax. But if it upholds this act, it would also have to say that Congress can assert any power it wills over individuals so long as it delegates enforcement of the penalty to the IRS. Put another way since every “fine” collects money, the Tax Power gives Congress unlimited power to fine any activity or, as here, inactivity it wishes! (Do you doubt this will be a major line of questioning in oral argument?) 

Well, at least they’re not (yet) relying on Rep. John Conyers’s “Good and Welfare Clause.”  (Conyers, remember, is a lawyer and chairman of the House Judiciary Committee).

For a concise legal argument against the use of the taxing power to justify the individual mandate, see Cato’s amicus brief supporting Virginia’s challenge to the health care reform.  And for a great resource on all the state lawsuits against the new law, see this new blog/website run by Santa Clara law professor Brad Joondeph.

ObamaCare Still Unpopular, Especially among Voters

As of mid-July, it appears the American public still opposes ObamaCare, with the opposition strongest among those most likely to vote.

Judging by the latest data at the poll-aggregating site Pollster.com, a solid plurality of adults continues to oppose ObamaCare (46.8 vs. 40.1 percent):

The trendlines don’t look so good for supporters of the law.  (The public isn’t so hot about President Obama’s handling of health care, either.) Yet the above graph includes (polls that include) adults who are neither registered nor likely to vote.

If you want to know how public opinion about ObamaCare will influence the November elections, you’ll want to look at polls of likely voters. Those suggest a majority opposes the law (51.3 vs 42.9 percent):

It’s hard to know what to make of the trendlines, since the last poll of likely voters was in April and Pollster.com’s trend estimates can be skewed if the most recent poll is aberrant.

Polls of registered voters (which include both likely and unlikely registered voters) again show that a majority opposes ObamaCare (50.7 vs. 42.7 percent). Compared to the graph of likely-voter-only polls, the “oppose” trendline appears flatter, while the “support” line appears to have the same slope:

Yet the “support” trend-estimate among registered voters started from a lower base, so that the July point estimate (42.7 percent) is roughly the same as that for likely voters in April (42.9 percent).  And the most recent spread between opponents and supporters is roughly the same in the two graphs (8.4 vs. 8.0 percentage points).

Combining polls of likely voters and registered voters produces a higher ratio of likely-to-unlikely voters than looking at just registered voters.  It also shows that a majority oppose ObamaCare (50.7 vs. 41.2 percent), with a persistent gap of about 9 percentage points:

(NB: The figures I cite in this post are the figures that appeared on these graphs on July 17.  Since these graphs are embedded from Pollster.com, the figures in the graphs will change as as Pollster.com adds new polling data to their graphs.)

Dear Health Care Journos, There’s Nothing Free about ObamaCare

The Obama administration announced yesterday its plans for implementing ObamaCare’s mandate that consumers purchase first-dollar coverage for preventive services.  The press release reads (emphasis added):

Administration Announces Regulations Requiring New Health Insurance Plans to Provide Free Preventive Care

Of course the administration would emphasize that consumers will pay nothing for these services at the moment of service, and elide the fact that this mandate will increase their health insurance premiums. The administration’s use of the word “free” is what we call spin.

What’s surprising–and more than a little disappointing–is that journalists and headline writers at major media organizations would repeat the administration’s spin, as if the government really is giving away free stuff:

  • New York Times: “Health Plans Must Provide Some Tests at No Cost…free coverage…free screenings…free preventive services…”
  • Los Angeles Times: “Healthcare law offers preventive care at no cost”
  • Politico: “New rules: Free preventive care…free under new federal guidelines.”
  • Reuters: “Healthcare overhaul mandates free preventive care…no extra cost to consumers…Medicare patients will have access to free prevention services…”
  • Wall Street Journal: “White House Unveils Free Preventative Services…services that will be free to consumers…free preventive care…free preventive care…”

Each use of “free” and “no cost” in these excerpts is false, even within its original context.  There’s no such thing as a free lunch. Everything has a cost.  No government can change that.  Mandating that insurers cover certain services does not magically make them free.  Consumers still pay, just in the form of higher health insurance premiums and lower wages.

The Wall Street Journal (in paragraph six), The New York Times (paragraph seven), Reuters (paragraph 16), and the Los Angeles Times (paragraph 19 or so) do mention that consumers will pay for this mandate in the form of higher premiums–but that doesn’t make the untrue stuff true.  It just makes the article internally inconsistent.  Moreover, the Los Angeles Times incorrectly suggests that the higher premiums would be offset by lower out-of-pocket spending.  (The change in premiums will be larger due to moral hazard and administrative costs.)  And Reuters mentions higher premiums only vaguely, and as if insurers would bear that cost.  Each article also repeats the administration’s spin that spending more on preventive care would reduce health care costs, without mentioning that the Congressional Budget Office and other health care researchers dispute that claim.

Journalists need to be very careful with terms like “free” and “no cost.”

Senators (Finally) Press Kagan about ObamaCare

Back in May, I suggested:

Senate Judiciary Committee members should be sure to ask Solicitor General and Supreme Court nominee Elena Kagan, during her upcoming confirmation hearings, whether she or her office played any part in crafting ObamaCare or the administration’s defense to the lawsuits challenging that law. If Kagan helped to craft either, that would present a conflict of interest: when those lawsuits reach the Supreme Court, she would be sitting in judgment over a case in which she had already taken sides…

If Kagan played a role in drafting ObamaCare or formulating the administration’s legal defense, and is confirmed by the Senate, propriety would dictate that she recuse herself from any challenges to that law that reach the high court.

Committee members didn’t ask her those questions during the hearings, as The Wall Street Journal explains. Fortunately, a letter to Kagan from all seven Republicans on the committee has (exhaustively) remedied that oversight.

Kagan has already told the committee she would recuse herself from any case in which she “participated in formulating the government’s litigating position.”  Given that she appears to take an expansive view of Congress’ power to regulate interstate commerce, the best possible outcome for opponents of ObamaCare would probably be for Kagan to join the Court but recuse herself from cases challenging that law.

That would also be the worst possible outcome for the administration.  In fact, universal coverage is so important to the Left that if Kagan would leave them with one less pro-ObamaCare vote on the Court, I wouldn’t be surprised to see President Obama withdraw her nomination.  He could then appoint someone as ideologically reliable as Kagan, but who could actually defend the president’s signature accomplishment.

This could get interesting.

Restore Free Markets to Health Care

Eline van den Broek probably is not happy today since she was in South Africa watching her team lose a high-scoring (by soccer standards) battle with Spain, but she should be very proud of the new video she narrated that urges the repeal of Obamacare – and also points out some of the other reforms that are needed to restore a free market to the US health care system.

Her comments on how the American health care system was a mess even before Obamacare are particularly important and echo many of the points made by Mike Tanner and Michael Cannon.

RomneyCare Unleashed Adverse Selection, As Will ObamaCare

The Massachusetts health care law that Gov. Mitt Romney signed in 2006, and the nearly identical federal law that President Obama signed this year, create perverse incentives that are causing health insurance costs to rise and could eventually cause health insurance markets to collapse. A report released yesterday by the Massachusetts Division of Insurance shows that process is well underway.

Massachusetts requires health insurance companies to sell to all applicants, and imposes price controls that require insurers to charge all applicants the same premium, regardless of their health status.  ObamaCare would do the same.

Those price controls have two principal effects on healthy people.  First, they increase the premiums that insurers charge healthy people (the additional premium goes to reduce premiums for sick people).  Second, they enable healthy people to wait until they are sick to purchase coverage.  Since insurers must take all applicants, and charge them the same premium, there is little or no downside to waiting until one gets sick to purchase coverage.

Those price controls also guarantee that when healthy people drop out of insurance pools, premiums rise for everyone who remains, which causes more healthy people to drop out, and do on.  Economists and actuaries call this an “adverse selection death spiral.”

The Boston Globe reports that the Massachusetts Division of Insurance found that in the wake of RomneyCare, many more healthy residents are purchasing coverage only when they need it:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available.

In the hope of preventing this sort of gaming behavior, RomneyCare requires Massachusetts residents to purchase health insurance.  Yet that “individual mandate” appears not to be working, probably because the penalties for non-compliance are far less than the cost of the mandatory coverage.  Thus many residents decline to purchase health insurance, pay the penalty (or misrepresent their coverage status), and purchase health insurance only when they need medical care.

ObamaCare contains similar price controls and requires nearly all Americans to purchase health insurance by 2014.  Yet ObamaCare’s penalties for non-compliance are also far less than the cost of the required coverage for most people.

As goes Massachusetts, so goes the nation.

ObamaCare Is Undermining Economic Recovery, Job Growth

In a recent Wall Street Journal oped, Carnegie-Mellon economist Allan Meltzer explains how ObamaCare is delaying economic recovery:

Two overarching reasons explain the failure of Obamanomics. First, administration economists and their outside supporters neglected the longer-term costs and consequences of their actions. Second, the administration and Congress have through their deeds and words heightened uncertainty about the economic future. High uncertainty is the enemy of investment and growth…

Mr. Obama has denied the cost burden on business from his health-care program, but business is aware that it is likely to be large. How large? That’s part of the uncertainty that employers face if they hire additional labor…

Then there is Medicaid, the medical program for those with lower incomes. In the past, states paid about half of the cost, and they are responsible for 20% of the additional cost imposed by the program’s expansion. But almost all the states must balance their budgets, and the new Medicaid spending mandated by ObamaCare comes at a time when states face large deficits and even larger unfunded liabilities for pensions. All this only adds to uncertainty about taxes and spending.

Meltzer concludes that the Obama administration is making the same mistake as FDR: “President Roosevelt slowed recovery in 1938-40 until the war by creating uncertainty about his objectives. It was harmful then, and it’s harmful now.”

For more on the harm caused by government-created uncertainty, read my colleague Tad DeHaven’s recent posts.