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OpenMarket: Health Care

  • The Good, the Bad, and the Broccoli

    July 2, 2012 10:11 AM

    Most people thought that the health care decision would hinge on the Court’s interpretation of the Commerce Clause. That’s why I wrote the first three posts in this series; to catch everyone up on the clause’s history before the ruling. Thankfully, the Roberts Court ruled the right way on commerce. They decided that forcing someone uninvolved in commerce to enter into it is not legitimate regulation. That’s good. But they still upheld the mandate under Congress’ power to lay and collect taxes. That’s very bad.

    The now-infamous broccoli question -- whether it would be constitutional for Congress to require all Americans to eat broccoli -- turned out not to be a yes-or-no question. Technically, the answer is no. Practically, the answer is yes. While the government can’t force you to buy broccoli, it can now penalize you with taxes if you don’t. Whatever your opinion of the health care bill, nobody in America should feel comfortable with this precedent. Soon the power to tax your inaction will be out of Obama’s hands, out of the Democratic Senate, and into the tool-box of someone you don’t like.

    Still, this outcome is better than if the mandate was upheld under the commerce clause. “Tax” is a dirty word for voters, and Congress will be reluctant to pass laws that employ a behavioral tax, as opposed to the readiness -- giddiness, almost -- with which they pass laws claiming to regulate interstate commerce.

    For individuals concerned about the massive growth of federal power, this decision is bad news overall. But the limit placed on the commerce clause is a definite victory, and the biggest of its kind since the Lopez case nearly two decades ago. It’s a spoonful of sugar, if you will, to help the broccoli go down.

  • Obamacare Lives. So, Now What?

    June 29, 2012 11:44 AM

    Former CEI scholar Tom Miller (now with AEI) has some thoughts on the Obamacare decision in today's Los Angeles Times. Tom summarizes the meaning of yesterday's decisions, but the meat of his article is spent asking, in his very thoughtful way, "What's next?"

    "We have already heard cries for repealing the law in Congress, but the fact is that most of the healthcare industry is resigned to shrugging its shoulders and falling back into line with the political deals it cut with the Obama administration several years ago. The political case for repeal will become much stronger among grass-roots voters — particularly independent ones — outside the Beltway this fall if it is combined with a credible, attractive alternative that offers better solutions to chronic health policy problems."

    The challenge now for free market advocates is to map out a course forward.

    Logical or not, the ruling underscores the dangers of relying too heavily on the Supreme Court to solve policy problems. Conservatives should have used the time that the court was deliberating to formulate attractive legislative proposals to both repeal and replace this unpopular law.

    But they didn't. So where does this leave us? ...

    The country needs a more competitive healthcare marketplace that encourages more entry and less command-and-control regulation. New insurance purchasing vehicles such as the exchanges called for under Obama's law should remain optional, not exclusive, and should welcome all willing buyers and sellers. By providing better and more usable information about the "value" of healthcare options — including how different healthcare providers perform — but without dictating decisions, the federal and state government could empower consumers to make more responsible choices on their own.

  • CEI Podcast: June 28, 2012: The Obamacare Decision

    June 28, 2012 2:09 PM

    General Counsel Sam Kazman shares his thoughts on the Supreme Court's health care decision, the Commerce Clause, Congress' taxation power, and more.

  • Supreme Court Concocts New "Rational (Tax) Basis" Test in Upholding Health Law

    June 28, 2012 2:08 PM

    In a move that seems to have surprised many observers, the Supreme Court today upheld nearly all of the Patient Protection and Affordable Care Act by a 4+1 to 4 majority (I'll explain the math below). Chief Justice John Roberts, who wrote the Court's opinion, joined with the four liberal justices in affirming the individual mandate and essentially all of the Medicaid provisions. The Court's three reliable conservatives, plus Justice Kennedy, wrote in dissent that the entire law should be ruled invalid. The opinions can be read in their entirety here.

    Addressing the question of the individual mandate, Roberts agreed that the mandate was not a proper exercise of Congress's commerce power:

    "The power to regulate commerce presupposes the existence of commercial activity to be regulated. ... As expansive as this Court's cases construing the scope of the commerce power have been, they uniformly describe the power as reaching "activity." ... The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce bypurchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority."

    That's the good news. A majority of the Supreme Court Justices recognize that Congress's commerce power is not totally unbridled. Predictably, Justice Ruth Bader Ginsburg wrote a concurring opinion expressing her belief that the mandate WAS in fact a constitutional exercise of the commerce power (explaining the 4+1 majority I mentioned above). Although Justices Breyer, Sotomayor, and Kagan concurred with parts of Roberts's majority opinion, they concurred with Ginsburg on the extent of Congress's commerce power.

    The four-Justice majority also rejected the government's backup argument that the mandate could be justified under Article I, Section 8, Clause 18 (what grade schoolers are taught is the "elastic clause") as "necessary and proper" for effectuating the rest of the Affordable Care Act:

    "The individual mandate ... vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power and draw within its regulatory scope those who would otherwise be outside of it. Even if the individual mandate is "necessary" to the Affordable Care Act's other reforms, such an expansion of federal power is not a "proper" means for making those reforms effective."

  • Obamacare Upheld, 5-to-4: A Perverse Decision That Undermines Political Accountability

    June 28, 2012 12:45 PM

    Today, in a really perverse ruling, the Supreme Court upheld Obamacare's individual mandate as a tax in a 5-to-4 decision, even though Obamacare's supporters repeatedly denied when they were passing it that it was a tax. (The Court did concede that the individual mandate wasn't valid under the Constitution's Commerce Clause, so it instead relied on Congress's tax power.) This ruling lets politicians avoid the political heat by denying that something is a tax in order to pass it (as President Obama and congressional leaders did, to deny that they had broken Obama’s pledge not to raise taxes on anyone making less than $250,000 a year), even if they intend for it to be upheld later as a tax. That undermines political accountability, and gives cover to fork-tongued politicians seeking to bamboozle their constituents.

    To uphold Obamacare as a tax, the Court twisted itself into a pretzel, first treating Obamacare as not a tax for purposes of the Anti-Injunction Act in order to rule on the merits of the challenge, then upholding it as being a tax for purposes of the Constitution. (The Anti-Injunction Act prevents the courts from ruling on constitutional challenges to taxes before they are collected.) I explained earlier how upholding Obamacare cannot be justified under the Commerce Clause, since it would effectively remove any limit on federal regulatory power, violating principles of federalism.

    Some press accounts have claimed that Roberts, who authored the Court's opinion, is a “conservative” justice (his ruling was joined in large part by the Court's most liberal justices). I’ve never considered Roberts a “conservative justice.” Whatever his personal inclinations may be, he is subject to the peer pressure of being in a largely liberal milieu. (And his decisions reflect that, since he has joined in many liberal rulings). The Supreme Court bar, Supreme Court reporters, and lawyers in general are largely a liberal bunch. Lawyers are much more Democratic-leaning than the general public (the Harvard Journal of Law and Public Policy once noted that Clinton beat Bush by a nearly two-to-one margin among lawyers, despite winning by only several points among the general public). And even so-called “conservative” justices are products of the liberal legal community. Being a "conservative" lawyer is like being a "conservative" Democrat -- conservative only in relative rather than absolute terms. The fact that the legal community is much more liberal than the public at large results in peer pressure for judges to uphold laws backed by liberal politicians even in the face of well-grounded constitutional challenges.

  • Quick Thoughts on the Health Care Ruling

    June 28, 2012 12:39 PM

    The Supreme Court upheld the health care bill, as you've no doubt heard by now. Over at the Daily Caller, I offer a few quick thoughts about the decision.

  • Supreme Court Issues 5-to-4 Rulings, But Not On Obamacare

    June 18, 2012 11:47 AM

    The Supreme Court announced four decisions today, three of them decided by slender 5-to-4 margins, but not the long-awaited ruling about the constitutionality of Obamacare. I discuss these four decisions at this link. Two of the three decisions in which the court split 5-to-4 were cases in which there was no ideological division among the justices, and both liberal and "conservative" justices joined the majority opinion. That, too, is unremarkable, as I explain here, and Point of Law explained explained earlier, contrary to the false conventional wisdom that depicts 5-to-4 splits as being caused only by politics or ideological divisions on the Court.

    Although there was no ruling in the Obamacare case today, it is expected within a couple weeks. In The Washington Post, a disillusioned Robert Samuelson, who writes about economic topics for the newspaper, gives Obamacare a thumbs down, in an article entitled "The Folly of Obamacare." He notes that Obamacare "discourages job creation by raising the price of hiring," "worsens the federal budget problem," and effectively "discriminates against the young."

  • More First Amendment Violations from Obamacare, Thanks to HHS

    May 15, 2012 8:00 AM

    Obamacare will drive up costs for most patients and insurance policyholders. Yet "health-insurance companies must tell customers who get a premium rebate this summer that the check is the result of the Obama administration's health-care law, according to federal guidelines released Friday. . . .Rules finalized by the Department of Health and Human Services on Friday instruct insurers to notify recipients of rebates in the first paragraph of the mailing by writing: 'This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act-the health reform law.'" Never mind that Obamacare has already caused sizeable hikes in insurance premiums for some policyholders.

    Earlier, HHS Secretary Sebelius warned insurers not to inform policyholders that their premiums were rising due to Obamacare, even though that was the truth. Obama’s HHS secretary sought to gag insurers that disclosed how Obamacare’s mandates are increasing the cost of health insurance, even though such speech is clearly protected by the First Amendment, telling them if they did so, they could be excluded from health insurance exchanges. Prior to that, the Obama administration attempted to gag insurers from disclosing how Obamacare harms Medicare Advantage participants, drawing criticism from First Amendment experts like UCLA law professor Eugene Volokh, the author of two First Amendment textbooks.

    Forcing companies to make politicized disclosures to customers implicates the First Amendment, as does interfering with the content of their speech to customers in billings. In International Dairy Foods v. Amestoy, 92 F.3d 67 (2d Cir. 1996), an appeals court struck down a Vermont law that required labeling for milk derived from animals treated with bovine growth hormones, where the labeling could not be justified on consumer deception or public health grounds.

  • Economic "Recovery" Is Slow and Weak Due to Obama Administration Policies

    April 2, 2012 11:45 AM

    Typically, after the economy suffers an unusually severe recession, it bounces back in an unusually rapid recovery -- what some economists and others refer to as the "rubber-band effect."  But not now. Despite the huge worldwide recession in 2008-09, the economy has experienced only a weak recovery, with fewer people employed in America today than when President Obama took office. "At this point in the typical post-World War II recovery, the economy was growing at an average pace of nearly 5 percent. The Obama recovery has managed just over 2 percent." As James Pethokoukis notes in the New York Post,

    A Federal Reserve study from late last year looked at the behavior of recoveries from recessions across 59 advanced and emerging market economies during the last 40 years. The Fed found, to no great surprise, that recoveries “tend to be faster” after severe recessions, such as the one we just had. . .The deeper the downturn, the more robust the rebound — unless government messes things up.

    For example, during the 1981-82 recession, output fell by 2.7 percent and then rose by 15.9 percent over the next 10 quarters (at an average pace of 6.0 percent). During the Great Recession, output fell even more, by 5.1 percent. But during the 10 quarters since, total economic output is up only a paltry 6.2 percent. Score one for Reaganomics.

    But what about the depressing effect of Wall Street’s near-death experience back in 2008 and 2009? Well, that same Fed study found that bank or other financial crises “do not affect the strength” of subsequent recoveries. . .[What] might explain half of the Obama recovery’s underperformance versus the Reagan recovery. . .? Maybe we can attribute that to policy differences.

    While one president cut long-term marginal tax rates, the other tried a massive burst of federal spending. One empowered private enterprise; the other empowered government.

  • Obamacare: Constitutionality Argument Misses the Point Entirely

    March 29, 2012 3:42 PM

    Conservatives are ebullient over the unexpected hostility and skepticism the government's lawyers faced from the Supreme Court Justices over the three days of hearings on the constitutionality of Obamacare.  In fact, so withering was the interrogation that the consensus of the Beltway-NYC elite has shifted virtually overnight from "Of course the Court will uphold it!" to "Oh my God! The individual mandate is doomed!"

    It is heartening to see the Justices take the constitutional question seriously, and entertaining to see them pick apart the very weak case(s) for the individual mandate that every American purchase health insurance or face government sanction. And it certainly seems more possible now than it did last week that the Court may throw the baby out, and the bath water too, for good measure.

    However, it is possible that this focus on constitutionality may someday backfire on conservatives.

    If the law is upheld, that will take a lot of the steam out of the opposition to Obamacare. In the minds of many voters, rightly or wrongly, the imprimatur of the Supreme Court may function as a sort of ne plus ultra for the whole debate. Voters may figure, "Oh yeah, Obamacare. Didn't the Supreme Court settle that? So what's the big deal?" On the other hand, if the law goes down the left will say, "See, we tried that individual mandate that conservatives came up with, and it didn't work. Time for single-payer national health care!" Which, of course, is what they've really wanted all along.


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