Topic: Health Care & Welfare

A Conspiracy against Obamacare

A Conspiracy Against Obamacare coverLast week, A Conspiracy Against Obamacare: The Volokh Conspiracy and the Health Care Case was released, of which I am proud to be the editor. The book compiles the discussions and debates about the Affordable Care Act that occurred on the legal blog the Volokh Conspiracy, supplemented with new material. The posts are stitched together into a narrative structure. As a result, you can see the constitutional arguments against the Affordable Care Act develop in real time, from before the law was passed all the way to the Supreme Court. 

The book documents a bellwether moment in the history of legal academia: A legal academic blog influencing major Supreme Court litigation. And not just major Supreme Court litigation, but a case that went from a much derided challenge to the biggest and most watched case in decades. As former Solicitor General Paul D. Clement, who expertly argued the case before the Court, kindly wrote in the foreword, “The Constitution had its Federalist Papers, and the challenge to the Affordable Care Act had the Volokh Conspiracy.”

The contributors are Randy E. Barnett, Jonathan H. Adler, David E. Bernstein, Orin S. Kerr, David B. Kopel, and Ilya Somin, most of whom are closely associated with Cato in one way or another.

In the introduction, I discuss the constitutional arguments against the law in a more abstract way, as well as describe how the law is destined to fail due to poor design. We are seeing the beginning of those failures now, but I fear we ain’t seen nothin’ yet.

It was not much commented on at the time–the administration and the law’s supporters were too busy spiking the ball–but the Supreme Court’s decision will speed up the law’s inevitable failures. As I describe in the introduction:  

Due to the chief justice’s unpredictable opinion, we are now likely stuck with a law that I fear will seriously damage the health of Americans. What’s more, attempts to further centralize power will not stop at the individual mandate. When the law fails, as I predict it will, it will be said that the federal government lacked enough power to make it work. The chief justice’s opinion gives people a real choice whether to comply with the requirement to purchase insurance or pay a “tax.” Many people will not, and as the price of insurance goes up, more and more people will choose to remain uninsured. This will certainly be called a “loophole.” Similarly, the Court also gave states a choice about whether to comply with the Affordable Care Act’s Medicaid expansion. Another “loophole.” Finally, the states that don’t create health care exchanges will also throw wrenches in the law’s overall scheme. “Loopholes” all around. Having freedom of choice in deeply personal health care decisions, however, is not a loophole.

When the time comes to revisit the Affordable Care Act, those choices by free, sovereign entities (citizens and states) will be blamed for the law’s dysfunctions. To paraphrase philosopher Robert Nozick, liberty disrupts patterns. Free choice inevitably upsets the carefully crafted plans of Washington.

As a solution to the law’s problems, more power will be proposed. A few voices, such as many who write for the Volokh Conspiracy and those of us at the Cato Institute, will strenuously argue that the problem is not a lack of power but a lack of freedom. I am not optimistic, however, that very many entrenched bureaucrats and politicians will locate the problem in the mirror rather than in the freedoms of the American people.

If the Affordable Care Act keeps going south at this rate, we may need to prepare to have that debate sooner than we expected. 

Dallas Buyers Club Is a Terrific Libertarian Movie

Tim Lynch was right. Dallas Buyers Club is a terrific movie with a strong libertarian message about self-help, entrepreneurship, overbearing and even lethal regulation, and social tolerance. Matthew McConaughey, almost unrecognizable after losing 40 pounds, plays Ron Woodroof, a homophobic electrician in 1985 who learns he has AIDS and has 30 days to live. There’s lots of strong language in his denunciation of the kinds of people who get AIDS, which he certainly is not. But after doing some research, he asks his doctor for AZT, the only drug for HIV/AIDS then available, but he wasn’t eligible for the trials then in process. He turns to the black market, finds his way to Mexico, encounters a doctor who tells him that AZT is toxic and that there are better vitamins and drugs, and beats his original prognosis. As it occurs to him that there are plenty of other people in Dallas who could use these drugs, he sees an opportunity to make some money – if he can only learn to deal with gay people.

Soon he’s setting up a “buyers club,” in an attempt to evade FDA regulations on selling illegal or non-approved drugs. He’s got customers – oops, potential members – lining up. He’s on planes to Japan and Amsterdam to get drugs not available in the United States. And at every turn he’s impeded and harassed by the FDA, which insists that people with terminal illnesses just accept their fate. Can’t have them taking drugs that might be dangerous! You’ll be surprised to see how many armed FDA agents it takes to raid a storefront clinic operated by two dying men.

Here’s a Cato study on AIDS and the FDA from 1986. Here’s the original 1992 magazine story about the Dallas Buyers Club, published just before Ron Woodroof died.

Go see Dallas Buyers Club.

The Dallas Buyers Club

I have not yet seen the new movie, The Dallas Buyers Club, but it looks pretty darn interesting. Matthew McConaughey plays the true-life lead character, Ron Woodroof, a homophobic party boy who is diagnosed with HIV and is given just 30 days to live. 

When the government-approved drugs don’t help him, Woodroof does not go gently into the night (and to his grave). Instead, he travels abroad to buy medicine in other countries and on the black market and then he returns to sell them to others similarly situated here in the United States. The film evidently doesn’t gloss over the fact that he seeks a profit as he engages in these acts. (That’s a trait Woodroof shares with other human beings in the drug business, though the film does not dwell on that.) 

Agents with the Food and Drug Administration and others patiently explain to Woodruff that “unauthorized” drugs might be detrimental to his health—that’s why drug regulations were put on the law books! When Woodruff decides (all by himself—without any advanced degrees in medicine!) that he will keep operating outside the law in order to find life-saving drugs, federal officials lose patience and seek to have him arrested. That’ll be for his own good and for the betterment of all Americans.

The Woodroof story took place in 1986, but it is a cautionary tale about what happens when the government steps in and assumes the power to make health decisions for us—whether we like it or not.

For related Cato scholarship, go here, here, and here.

Film trailer below the jump:

Lindbeck’s Law: The Self-Destructive Nature of Expanding Government Benefits

Relevant foresight from Swedish economist Assar Lindbeck, “Hazardous Welfare State Dynamics,” American Economic Review, May 1995:

The basic dilemma of the welfare state …  is that the more generous the benefits, the greater will be not only the tax distortions but also, because of moral hazard and benefit cheating, the number of beneficiaries. This is a field where Say’s Law certainly holds in the long run: the supply of benefits creates its own demand… .

Serious benefit-dependency, or ‘learned helplessness’, may … emerge only in a long-run perspective. Possible examples of such gradual adjustments are an increased tendency to apply for social assistance, less job search and greater choosiness among unemployed workers, more absence from work for alleged health reasons, more applications for (subsidized) early retirement due to alleged inability to work, and more time and effort devoted to tax avoidance and tax evasion.

P.S. A 2007 empirical study by Friedrich Heinemann supported Linbeck’s hypothesis, finding that “transfer expansion or increasing unemployment tend to be associated with a larger readiness of the country’s population to cheat on benefits.”

‘There Is No Such Thing as an Individual Mandate. It’s a Tax.’

That’s what Department of Justice attorney Joel McElvain said in open court last week. And thus the Obama administration reversed itself once again on whether the individual mandate is a tax. 

Relatedly, a Clinton-appointed federal judge has dealt a second blow to the IRS and the credibility of its defenders. He called one of the administration’s arguments ‘silly,’ and promised expedited consideration of the Obamacare challenge, Halbig v. Sebelius. Read all about these in my latest Darwin’s Fool post at Forbes.com.

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.

Four Ways To Actually Defund ObamaCare

In a new blog post over at Forbes, I encourage opponents to save the knives for Obamacare and focus on four strategies for defunding the law:

  1. Stop Medicaid expansion in the states.
  2. Get states, employers, and citizens to challenge the IRS’s illegal ObamaCare taxes.
  3. Educate states about how to block the IRS’s illegal taxes legislatively.
  4. Urge House investigators to subpoena all materials related to the IRS’s illegal taxes.

Read the whole thing.