Obamacare Abomination

Oral arguments before the U.S. Supreme Court on the constitutionality of the Patient Protection and Affordable Care Act ("Obamacare") will take place tomorrow.  An unprecedented three days of arguments are scheduled.  It is one of the most important cases involving constitutional law to ever be argued before the Court.

If you are interested in the substance of the legal arguments against Obamacare you might want to read this article by Damon Root.

My guess is the Supreme Court will uphold the law.  That opinion is not based on what I think should happen but on what I think will happen.

It is extremely rare that the Supreme Court overturns a law that Congress has passed.  The most recent data available indicates that only 158 Acts of Congress have been ruled unconstitutional since the beginning of the Republic in 1789.   This really shows the influence of politics on the Court.  There seems to be a real reluctance on the part of the Supreme Court to get involved deeply in the politics of the day.  That is a big reason that I believe that the Court will not overturn the law.  The second reason is that most legal precedent seems to support an expansive reading of the Commerce Clause.  This provides the legal cover the justices will need for what I view more as a political decision.

What will be the impact of the Court's ruling?  If I am wrong and the Court finds the individual mandate unconstitutional (even if they do not strike down the entire law), I think it is the end of Obamacare.  If it is sustained, there are two possibilities.  It could cause public opinion to turn in favor of the law.  However, I think it could also become a rallying cry for its opponents in the upcoming election.

Their argument would be that the President, the Congress and the Supreme Court are all ignoring the will of the people (56% favor repeal and 39% oppose repeal according to a Rasmussen poll last week). more than two years after enactment   Interestingly, another Rasmussen poll in February found that 39% of likely voters believed that health care should be made available free to all Americans.  I bet there is a high correlation between those who do not favor repeal and who also favor free health care for everyone.  I could not find an answer as to how the 39% thought that their free health care was going to paid for.

Stay tuned as the Court's decision on Obamacare is expected in June.

If you want to read a good article on the major problems with Obamacare (and there are plenty) I suggest you read this excellent piece by Avik Roy in Forbes.  He provides a good overview some of the major policy errors in Obamacare.

You might recall that Candidate Obama repeatedly promised that health care reform "would bring premiums down by $2,500 for the typical family".   He also continually stated that "if you like your health plan, you can keep your health plan".

Many of the numbers that President Obama relied on were developed by MIT economist Jonathan Gruber.  In fact, on the eve of the health care law vote he asserted that young people would save 13%, and older people 31%, on their insurance premiums in 2016 as a result of the law.

Indeed, Jonathan Gruber promised that, based on his microsimulation model, the law would “for sure” reduce insurance premiums. And Gruber’s numbers were relied on, almost exclusively, by the bill’s most prominent advocates.

But Gruber, in a span of two years, has gone from claiming that the law would reduce non-group premiums by 13 to 31 percent, to estimating that they will increase those premiums by 19 to 30 percent. Worse still, Gruber’s model doesn’t adequately account for the law’s central feature: its requirement that insurers take on all comers, regardless of pre-existing conditions, while only weakly enforcing a nominal fine on those individuals who try to game the system.

The only thing that seems “for sure” is that there are flaws in Gruber’s model.

I had the opportunity to meet with Gruber in a small, private meeting with a number of large employers during the health care debate.  I have no doubt that Gruber is well meaning in trying to improve health care in this country.  However, he made it clear in that meeting that the major goal of Obamacare was merely to provide more access.  They had to fix access before they could control costs.  Health care cost containment would have to come later according to Gruber who said they were planning for a second bill.

Unfortunately, it is later and Gruber's numbers are showing that Obamacare is making health care costs even higher and more affordable than they were before.   It is a mess and I think it will get worse when we see the results on the individual market when the public exchanges come on line.  I have talked to a number of knowledgable people in the health care insurance industry and they believe the costs will go through the roof.  Gruber seems to now agree with that view.

As states began the process of considering whether or not to set up the insurance exchanges mandated by the new health law, several retained Gruber as a consultant. In at least three cases—Wisconsin in August 2011, Minnesota in November 2011, and Colorado in January 2012—Gruber reported that premiums in the individual market would increase, not decrease, as a result of Obamacare.

In Wisconsin, Gruber reported that people purchasing insurance for themselves on the individual market would see, on average, premium increases of 30 percent by 2016, relative to what would have happened in the absence of Obamacare. In Minnesota, the law would increase premiums by 29 percent over the same period. Colorado was the least worst off, with premiums under the law rising by only 19 percent.

Some low-income individuals would benefit from Obamacare’s subsidies; for those individuals, the impact of these premium increases would be blunted. But if premium costs go up at a rate faster than people expect, taxpayers will be on the hook for billions upon billions of extra subsidies.

I agree with Roy on what is needed if the Supreme Court does not do what it should.

The bottom line is that there is no quick fix for the Affordable Care Act’s array of policy mistakes. We would be much better off repealing the law and starting over.