Obamacare Harms State Finances, Imposes Unfunded Mandates, Drives Up State Budget Deficits; Even Democrats Criticize ProvisionsMarch 28, 2012 11:00 AM
While public attention has focused on Obamacare's unconstitutional "individual mandate," challenged yesterday in oral arguments at the Supreme Court, other parts of the health care law are more worrisome to governors facing massive state budget deficits that will be aggravated by Obamacare.
As the National Governors Association noted in its Fall 2011 "Fiscal Survey Of States," "state spending on Medicaid is likely to continue to see above average growth due to… the implementation of the Affordable Care Act.” (Obamacare is known as the "Affordable Care Act" or PPACA.) A congressional report, "Medicaid Expansion In The New Health Law: Costs To The States," "conservatively estimates that PPACA will cost state taxpayers at least $118.04 billion through 2023.”
Even Democratic governors call its impact "devastating," saying things like "I have no idea how we're going to pay for it." Gov. Steve Beshear (D-Ky.) notes that "starting in 2016, Washington will begin shifting that additional costs to the states. ‘I have no idea how we’re going to pay for it,’ Beshear said candidly.” (Editorial, “Medicaid Expansion Will Cost Taxpayers,” The Paducah Sun, Feb. 13, 2011). Gov. Brian Schweitzer (D-Mont.) laments that “I'm going to have to double my patient load and run the risk of bankrupting Montana.” (“Montana Looks North For Health Care That Works ," Yes Magazine, Oct. 21, 2011.) “In 2014, when the PPACA kicks in, many of the uninsured will be given the opportunity to enroll in Medicaid. With this change, Schweitzer expects the state's Medicaid population to double, creating a huge financial burden on the state of Montana under the current health care system.” “The governor told Marguerite Salazar, a regional director of the Department of Health and Human Services, that Congress has designed a ‘pack of crap’ that gives away far too much” to special interests. California Governor Jerry Brown says, “We will be further disadvantaged under the Medicaid expansions mandated under the Affordable Care Act … proposals to shift several billion dollars in Medicaid costs to California would be devastating and would clearly move us in the wrong direction.” (Gov. Jerry Brown, Letter To President Obama, June 27, 2011)
March 26, 2012 11:44 AM
At CNN, George Mason University law professor Ilya Somin explains why Obamacare's requirement that individuals buy health insurance is beyond Congress's power under the Interstate Commerce Clause. GMU law professor David Bernstein explains why Obamacare's defenders are wrong, and have contradicted themselves, in trying to defend Obamacare based on a cost-shifting rationale. Vanderbilt law professor James Blumstein, an advisor to former Governor Phil Bredesen (D-Tenn.), argues that Obamacare's Medicaid mandate is a violation of the Tenth Amendment and exceeds Congress's power under the Spending Clause. GMU's Somin rebuts the "everyone uses healthcare" argument for Obamacare here.
The Cato Institute's briefs, which CEI joined, explain why Obamacare's individual mandate is not valid under the Constitution's Interstate Commerce Clause and tax provisions. The brief CEI filed in the Eleventh Circuit Court of Appeals for Minnesota and North Carolina legislators explains why Obamacare's Medicaid mandate violates the Tenth Amendment, and in its last section, explains why the government's cost-shifting rationale for the individual mandate is baseless. CEI also explained in a more recent brief why the court need not invalidate just the unconstitutional individual mandate, since it is interrelated with other provisions of the Obamacare statute, which logically should be invalidated along with it. Law professor and former University of Chicago Law Dean Richard Epstein explains how Obamacare is an "unconstitutional misadventure" here.
The Supreme Court, which is rather deferential to Congress, has only invalidated two federal statutes as beyond Congress's power under the Commerce Clause since 1936, and it has been even more reluctant to enforce Tenth Amendment limits on Congress's spending-clause powers. On the other hand, if the government can force people to engage in economic activity under the Commerce Clause, and do so based on the sweeping rationales advanced by the government in this case, there will effectively be no limit on Congress's power under the Commerce Clause. The language and logic of the Supreme Court's Morrison and Lopez decisions cut against the government's arguments, and the Morrison decision requires more than a simple quantitative relationship to interstate commerce for an activity to be federally regulated; but these were 5-to-4 decisions unpopular with the largely liberal legal community.
March 13, 2012 4:46 PM
As Daniel Foster notes, "When it was being debated, Democrats told you ACA [Obamacare] would cost $940 billion over ten years . . . But now . . . the CBO is out with new cost estimates. They ain’t pretty”:
Today, the CBO released new projections from 2013 extending through 2022, and the results are as critics expected: the ten-year cost of the law’s core provisions to expand health insurance coverage has now ballooned to $1.76 trillion. That’s because we now have estimates for Obamacare’s first nine years of full implementation, rather than the mere six when it was signed into law. Only next year will we get a true ten-year cost estimate, if the law isn’t overturned by the Supreme Court or repealed by then. Given that in 2022, the last year available, the gross cost of the coverage expansions are $265 billion, we’re likely looking at about $2 trillion over the first decade, or more than double what Obama advertised.”
March 1, 2012 1:16 PM
In just a few week the Supreme Court will hear oral arguments regarding the legal challenges to the administration's controversial health-care overhaul, especially the constitutionality of the so-called "individual mandate" that requires every American to purchase government-approved insurance.
The Court's finding on the matter will be the most consequential ruling in that august institutions long history, excepting only perhaps the infamous 1857 Dred Scott decision. If the Supreme Court upholds the law, there will officially be no limits to the federal government's scope, no ceiling on its powers, no real liberty in America, economic or otherwise.
(It is hard to believe it has come to this, that a people who once set a continent in flames over a trifling tax have been reduced to hoping a court will save them from enslaving legislation passed by the very officials they have elected. Yet here we are.)
And if the Court does not save us? Some cling to the hope that new politicians, put into power in some future elections, will undo what Barack Obama has done. Perhaps. Anything is possible.
February 19, 2012 9:54 PM
On December 31, shortly after the November election, tax rates will rise across the board in what congressional aides call "Taxmageddon," notes The Washington Post. Not only will the Bush tax cuts come to an end, but new taxes will kick in to pay for Obamacare's rising costs:
On Dec. 31, the George W. Bush-era tax cuts are scheduled to expire, raising rates on investment income, estates and gifts, and earnings at all levels. Overnight, the marriage penalty for joint filers will spring back to life, the value of the child credit will drop from $1,000 to $500, and the rate everyone pays on the first $8,700 of wages will jump from 10 percent to 15 percent.
The Social Security payroll tax will pop back up to 6.2 percent from 4.2 percent under the deal approved Friday by Congress. And new Medicare taxes enacted as part of President Obama’s health-care initiative will for the first time strike high-income households.
And this doesn't even take account into new tax increases Obama has proposed, including but not limited to the "Buffett Tax." Liberals want to raise taxes to European levels to pay for an expanded welfare state. But many American wealthy people already pay more in taxes than they would in much of Europe, so this idea won't pay for all the new government entitlements liberals yearn for. (Thus, major liberal spending proposals will inevitably require large middle-class tax increases.) Indeed, the U.S. tax code is already more progressive than the tax codes of France, Germany, Belgium, or the United Kingdom. And America already has higher capital gains taxes and taxes on investment income than most countries, and soon, that will get much worse, since "the tax on dividends will skyrocket from 15 percent to 43.4 percent."
February 16, 2012 4:08 PM
Patients are suffering from a nationwide shortage of more than 260 different prescription drugs, many of them for different types of cancer. Senior Fellow Greg Conko explains why the biggest culprit for the drug shortage is Washington. DEA and FDA regulations make it difficult to ramp up supply, or to change prices to more accurately reflect demand.
February 15, 2012 12:01 PM
Now that the problem of prescription drug shortages has begun to affect children, members of Congress want to be seen as doing something – anything, really – to avert the crisis. A bi-partisan group of House members led by Rep. John Carney (D-Del.) introduced a bill two weeks ago. And yesterday, Sens. Amy Klobuchar (D-Minn.) and Robert Casey (D-Penn.) moved to attach their drug shortage bill to a piece of transportation legislation moving through the Senate. Unfortunately, most of the proposed action will have little to no affect on the fundamental underlying problems associated with drug shortages. Worse still, by ignoring the real problems and trying to put a defective bandage on the symptoms, the bills very well may make the shortages worse.
First, some background. There are currently around 250 prescription medicines -- most of them generic versions of cancer drugs and surgical anesthetics -- that are considered to be in “short supply”, according to the American Society of Health System Pharmacists. That’s up sharply from well below 100 drug shortages in a typical year -- rising from just 58 in 2004 to 149 in 2008 to 211 in 2010. And, though there are alternatives for many of these drugs, several have no good alternatives for certain conditions. As USA Today’s Liz Szabo discusses, a shortage in the cancer drug methotrexate is particularly troublesome for children with acute lymphocytic or lymphoblastic leukemia (ALL). There are alternatives to methotrexate for other cancers, but not for ALL.
So, why the recent spate of shortages? In some cases, it’s due to a shortage in raw materials. And, for drugs like Ritalin and other ADHD treatments, heavy-handed DEA regulations have made it difficult to increase production of the raw materials. But only a relatively small portion of the shortages can be attributed to a shortage in raw materials. Still other regulations have significantly contributed to the shortages in many other products.
John Goodman summarized some of these other issues nicely in a post last summer. One contributing factor is the FDA’s increasingly strict regulation of drug manufacturing facilities, which Goodman calls a “zero tolerance regime” that is “forcing manufacturers to abide by rules that are rigid, inflexible and unforgiving.” FDA has been more aggressive in shutting down production facilities when even small quality control problems arise. A decade or two ago, a paperwork problem or some inappropriate handling procedure that didn’t directly affect drug safety or quality might have been addressed with a slap on the wrist. But over the last several years (and not just since the beginning of the Obama administration) FDA has, more and more, addressed these problems by temporarily shutting down plants until the problems could be resolved.
February 14, 2012 10:54 AM
There are a number of misconceptions about the Obama administration's recent rule requiring employers' health insurance policies (including those of religious schools and hospitals) to cover contraceptives and certain abortifacients. First, as a commentator notes, it's not true that states in general already require such coverage:
HHS chose the narrowest state-level religious exemption as the model for its own. That exemption was drafted by the ACLU and exists in only 3 states (New York, California, Oregon). Even without a religious exemption, religious employers can already avoid the contraceptive mandates in 28 states by self-insuring their prescription drug coverage, dropping that coverage altogether, or opting for regulation under a federal law (ERISA) that pre-empts state law. The HHS mandate closes off all these avenues of relief.
February 13, 2012 11:10 AM
The federal government thwarted a promising cancer treatment. The Food and Drug Administration (FDA) put Dr. Stanislaw Burzynski on trial twice, saying "it did not matter" whether his "unconventional cancer treatments saved people's lives," only "that he had failed to get the FDA's permission first." But as Reason’s Jacob Sullum notes, the Phase II clinical trials that the FDA belatedly carried out “under congressional pressure have supported what the teary testimonials of patients and their families suggested: Although Burzynski’s antineoplastons are far from a cure-all, they seem to be more effective, and are certainly much less devastating in their side effects, than radiation and chemotherapy for certain deadly, intractable cancers."
February 2, 2012 3:52 PM
Fellow in Consumer Policy Studies Michelle Minton breaks down the FDA's behind-the-scenes push to regulate dietary supplements nearly as strictly as prescription drugs.