03.26.13

ObamaCare: The Patient Protection and Affordable Care Act is Constitutionally, Economically, and Morally Wrong

Posted in Uncategorized at 3:42 pm by Administrator

This paper is reprinted with the permission of Rosemary Susko.

Abstract

            Before passage of the Patient Protection and Affordable Care Act, Jason Pye, writing for United Liberty, quoted House Speaker Nancy Pelosi as saying, “[W]e have to pass the bill so that you can find out what is in it ….”  This research, motivated by curiosity and sincere interest, tells the reader what is in PPACA and why this Act is constitutionally, economically, and morally wrong.  Background information is provided on constitutional and economic case law as well as the evolution and effects of employer and government medical insurance.  The main focuses are on the unconstitutional individual mandate, the government’s own admission of substantial debt, and the creation of a death panel charged with rationing care.

 

Since its passage, The Patient Protection and Affordable Care Act (PPACA) has been commonly referred to as “Obamacare,” named for President Barrack Obama.  Whether the title “Obamacare” is an epithet or a legacy is unclear (Benen).  However, from this writing, the reader will see PPACA is clearly constitutionally, economically, and morally wrong.

The Patient Protection and Affordable Care Act, originally H.R 3590, was signed into public law 111-148 by President Obama on March 23, 2010.  The initial passage of H.R. 3590 by the United States House of Representatives was done by unanimous vote under a suspension of the rules on October 8, 2009 (“Bill”).  Curiously, the Library of Congress shows this unanimous vote on H.R. 3590 for the Service Members Home Ownership Tax Act, not PPACA (“Final …768”).

On December 24, 2009, the United States Senate passed H.R. 3590 by a vote of 60 to 39 (“U.S. Senate”).  On March 21, 2010, two days before the Presidential signing, the reconciled version of H.R. 3590 was passed by the House by a vote of 219 to 212 (“Final…165”).   Not a single Republican in either the House or the Senate voted for the Patient Protection and Affordable Care Act.

Oral arguments concerning the constitutionality of PPACA were made before the U.S. Supreme Court on March 26 through March 28, 2012 (Nazworth).  To understand the most prominent argument made before the Court, an informed citizen needs background information on the Commerce Clause of the U.S. Constitution and its relevant case law.

The Commerce Clause of the U.S. Constitution is found in Article 1, Section 8, Clause 3 (“Constitution”).  This Clause gives Congress the power to regulate business transactions conducted among or between the states (“Commerce”).  The Supreme Court, during the New Deal of Franklin Roosevelt, expanded the legal interpretation of the Commerce Clause to include activities that did not directly involve commerce and did not involve more than one state.

An Ohio farmer, Roscoe Filburn, grew 239 bushels of wheat more than he was allowed to grow under the Agricultural Adjustment Act of 1938.  As a consequence, Filburn was fined $117.11 and appealed the fine all the way up to the U.S. Supreme Court in this 1942 case titled Wickard v Filburn.  The U.S. Supreme Court recognized that Filburn did not sell the wheat but rather consumed all of the wheat on his own farm.  Nevertheless, the Court upheld the fine under the Commerce Clause of the Constitution.  The Court held that even if Filburn’s activities were local and were not commerce, Congress could regulate these activities if the activities have a substantial effect on interstate commerce (“Wickard” 2-4).  Apparently, 239 bushels of wheat consumed locally were viewed by the Court in 1942 as having a substantial effect on interstate commerce.

Given this view by the Court, it is difficult to imagine what activities cannot be regulated under the Commerce Clause of the U.S. Constitution.  Yet today, the PPACA contains just such an activity that is outside of the most expansive reading of the Commerce Clause.

In its 906 pages, PPACA requires adult individuals to maintain minimum essential coverage for themselves and dependents every month starting in 2013 or face a penalty of $750.  The $750 penalty has lower phase-in amounts before 2016, and indexing higher amounts starting in 2016 (PPACA (selected)).  By this part of PPACA, Congress mandates all adult Americans to engage in commerce, specifically to buy health insurance coverage.  This is termed the individual mandate (Supreme).

The individual mandate essentially seeks to regulate the absence of action by telling those individuals who have not bought medical insurance coverage that they must do so.  If this were approved by the Supreme Court, Congress would have the unlimited power to regulate, prohibit, or mandate any or all activities in the United States under the Commerce Clause of the Constitution.   Next, Congress could produce an individual mandate for what food to buy and in what quantity.  While many expert news broadcasters were surprised that in oral arguments several Supreme Court Justices would react negatively to the individual mandate (Chowdhry), the mandate is clearly unconstitutional.

To understand the importance of economic legislation by the U.S. Congress on U.S. citizens, informed citizens need background information.  The legal extent of one’s economic freedoms can be illustrated by two U.S. Supreme Court cases:  Nebbia v New York and West Coast Hotel Co. v Parrish.  The Court during the New Deal of the 1930s shaped the extent of the reader’s current economic rights.

In Nebbia v New York, a Rochester grocer, Leo Nebbia, sold two quarts of milk and one loaf of bread for 18 cents on April 19, 1933.  Two days prior, the State of New York established the minimum price for milk at nine cents a quart.  Consequently, Nebbia was found guilty of a misdemeanor for including the five cent loaf of bread with the milk sale and was fined.  The Supreme Court upheld Nebbia’s conviction and ruled under the Fourteenth Amendment of the Constitution that the government can adopt any economic policy to promote public welfare that is not arbitrary or irrational (Nebbia).

West Coast Hotel Co. v Parrish is a 1936 U.S. Supreme Court case that has been referenced to as the “switch in time that saved nine.”  This phrase implies that the Justices’ favorable ruling to the government was a reaction to the threat by President Franklin Roosevelt to expand the number of Justices on the Supreme Court to insure more favorable rulings to the government (Oxford).  This is speculative, but the actual ruling and its subsequent effect is not.

In West Coast Hotel, the Court upheld a Washington state minimum wage law for women and overruled an earlier 1920’s U.S. Supreme Court case, Adkins, which found a similar minimum wage law for women a violation of women’s right to contract.  While both cases involve women working in a hotel and the legal determinations of what the due process clause of the Fourteenth Amendment means in the right to contract, the Court decided to adopt a completely new view of due process.  The Court ruled that the government will oversee contracts that involve health issues and issues that are in the interest of the community.  In West Coast, the Court saw the women as being in an unequal bargaining position that required government oversight (West).

Nebbia and West Coast Hotel, taken together, mean that the government can do what it wants with the reader’s economic liberties as long as its policies are not arbitrary or irrational, meaning insane.  Economically, the reader’s rights are limited to what government entities put in the laws and their adherence to the procedures contained in those laws.

Equipped with a legal understanding of the effects of economic legislation, the reader will now look at the economic effects of PPACA.  Two federal government entities that amass and interpret economic data are the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB).  The CBO produces economic analysis for the U.S. Congress (Congressional).  The OBM serves the President to develop and implement the budget (Mission).              The data obtained and analyzed by these government entities is subject to interpretation because of the complexity of the data and the assumptions made in computing and projecting the data.  There are also credible reasons to believe that the data analysis can be too good to be true for self-serving reasons (Hahn).

Three weeks prior to the Senate vote on PPACA, the CBO provided the Senate an analysis for the effects of PPACA on health care insurance premiums.  The CBO projected a 27 to 30% increase in non-group policy premiums and subsidies for 57% of non-group policies.  CBO recognized that older people and those needing health care were more apt to seek coverage while young people and those in good health would not.  This is called adverse selection.  Adverse selection is projected to be off-set by the individual mandate, an excise tax of 40% on higher premium employer-offered policies, an Advisory Board to limit Medicare payments, and penalties for seeking care that was deemed avoidable.  The CBO made it clear there was a good deal of uncertainty projecting future health insurance premiums and acknowledged that its calculations made no assumptions on increased spending for health care in spite of the CBO historic data on the increased demand following in the implementation of Medicare in 1965 (Elmendorf to Bayh 1-28).

Since the passage of PPACA, data has been provided that shows the increased spending for health care due to PPACA that was not assumed in the CBO’s projections to the Senate.  The 2011 survey of private and nonfederal public employers with three or more employees by Kaiser Family Foundation and Health Research and Educational Trust (HRET) provides us with the data.  It shows a 9% increase in premiums compared to a 3% increase in premiums in prior years.  Directly attributable to PPACA is an increase in workers contributions for health care insurance in 23% of the policies and a change in preventative care benefits in 31% of the policies.  These substantial changes are in spite of the fact that most insurance policies in the survey are grandfathered under the 2011 standards of PPACA (Kaiser).

The day before the House passed the reconciled version of PPACA, the CBO projected the implementation of the reconciled version of PPACA would reduce governments deficit spending by 143 billion dollars over the period of 2010-2019 (Elmendorf to Pelosi).  How the government can establish scores of new government agencies to implement and oversee PPACA and substantially reduce government spending strains the imagination of the most optimistic of reader.

Since the passage of PPACA, there is analysis on the CBO assumptions of how this Act will reduce government deficit spending, with half of the funding financed by cuts to Medicare (Cohen 2).  The CBO counted projected cuts to Medicare as money to be used for PPACA subsidies and programs.  In its calculations, the CBO ignored the law that requires Medicare to be solvent.  This has been referenced as “double counting” in calculating the same money for PPACA and for Medicare solvency.  The CBO itself admits that without these assumptions and a solvent Medicare, PPACA is projected by the CBO to incur 226 billion dollars in deficit spending.  An independent source projects the deficit spending to be at least 340 billion dollars (Blahous).  By the CBO’s own calculations, an additional 226 billion dollar spending deficient is a far cry from the projected 143 billion dollar deficient reduction.  This information has proven that PPACA is economically wrong.

How is it that the reader gets medical insurance?  It is usually through the employer or the government, such as Medicare or Medicaid.  Why doesn’t the reader buy medical insurance directly as done with life, auto, and, home insurance?  The reader probably already knows the answer has to do with the government and taxes; however, he or she may not know when or how this happened.  The reader may know even less about the effects and results of employer and government provided medical insurance.

The when and how of employer provided medical insurance, not surprisingly, are found in the New Deal era of the 1940s.  During World War II, wages were fixed by the government.  In response, employers offered medical insurance to attract workers because employers could not offer higher wages.  Eventually, the federal government wanted to stop this practice, but it had become popular.  The politicians responded to the popular support by allowing employers to deduct the entire cost of medical insurance from the employer’s taxes (Friedman 7).  As the reader probably knows, the same deduction is not available to individuals or families.

The when and how of government provided insurance are found in an Amendment to the New Deal’s Social Security Act of 1935.  The government insurance programs of Medicare and Medicaid were created during the Great Society programs of President Lyndon Johnson in 1965 by public law 89-97 (Social).

There are two effects of employer and government provided medical insurance.  First, without tax subsidies to employers and without government provided insurance, we would probably be buying medical insurance ourselves just as we would buy other insurance products.  Second, employer and government provided medical insurance creates a third party payer system.  No longer would the medical care transaction be between the patient, customer, and the medical provider.  Now there is a third party approver, as well as a third party payer, which is either the insurance or the government.  Also, the selection of the medical provider by the patient customer is limited by the approver, which would be the employer, the insurer, or the government (Friedman 6-11).

The result of these additions is increased costs.  The employee is paid less in wages by the employer that pays for the medical insurance.  The tax incentive to the employer, as of a decade ago, was calculated to be a 100 billion dollar subsidy that is not counted by the government as health care spending.  As of a decade ago, it was calculated that employer tax subsidies and Medicare and Medicaid accounted for 57% and 43% respectively of all increased medical care costs (Friedman 7-9).

Another result is that administrative costs grow with government insurance.  There is an economic theory called “bureaucratic displacement” which states that the more money spent for care, the smaller the service output.  This means the money is used in greater proportion to administration costs than to health care (Friedman 11-12).  Bureaucratic displacement theory seems to have found its practical application in Medicare.  There is evidence that one-third of the 555 billion dollars spent annually on Medicare is wasteful.  Even President Obama’s former OMB Chief acknowledges that Medicare penalizes quality care (Cohen 2).

Government provided insurance does not change the laws of supply and demand.  No payments by the patient create an unlimited demand for services (Friedman 8).  This is clearly in evidence by the expansion of government insurance.  Medicaid states on its web site that it alone insures 31 million children and another 24 million people and is expanding with PPACA (By).

Once politicians have their constituents, by subsidies and government insurance, the focus is to keep the costs down.  This is clear in looking at the Center for Medicare and Medicaid Services (CMS) web site.  CMS oversees Medicare and Medicaid and claims to be saving consumers a billion dollars while insuring 100 million people (CMS).  With government insurance, the unlimited demand for medical services at no cost requires rationing care and not an increase in price (Friedman 8, 18).  Half of PPACA funding is financed by cuts, meaning rationing, to Medicare (Cohen 2).

This brings the reader to the most repugnant part of PPACA. The reader may recall the CBO letter to the Senate indicated an Advisory Board is part of PPACA to control adverse selection and costs. The Advisory Board in PPACA is called the Independent Payment Advisory Board (IPAB) (Cohen 1).  IPAB is exactly what former Governor Sarah Palin had in mind when she coined the expression “death panel” (Cannon).  The IPAB in PPACA is a board of as many as 15 members appointed by the President.   The appointments do not have to be bipartisan, and PPACA provides automatic funds to pay the members in perpetuity.  The board can even be made up of only one person (Cohen 3).

While PPACA reads that the IPAB cannot ration care, the provisions are clearly to the contrary.  PPACA not only does not define rationing care, but leaves the definition of rationing care to the IPAB and the Secretary of Health and Human Services, without any review.  Additionally, IPAB can impose conditions on payments which clearly mean it can ration care (Cohen 5).

IPAB can impose tax and regulations, ration care, and choose to pay or not pay medical bills.  IPAB is not subject to judicial review and is not required to hold hearings or take testimony.  Incredibly, IPAB proposals are given directly to the Congress bypassing the President.  Even more astonishing is the slight window to repeal the IPAB in 2017.  This can only be done by a three-fifths vote of a Congressional joint resolution and Presidential approval (Cohen 1-17).

To paraphrase Friedrich Hayek from his 1944 book, “The Road to Serfdom,” central planning of the economy is in direct conflict with the freedoms of a democratic society (Cohen 14-15).  The IPAB is directly opposed to the ideas of limited government in our Constitution and of individual liberties in our Bill of Rights.  Giving life and death decisions, by force of the government, to an insulated, impersonal board, without recourse is morally wrong.  This is particularly offensive when this rationing of care for the elderly is done for the stated purpose to lower health care costs by adding an army of government employees to implement and oversee it.

At the start of the Constitutional Convention in 1787, Benjamin Franklin proposed that powerful government positions should not be paid positions.  He said that men have two powerful passions, the love of money and the love of power; when a position of honor is added to these passions, men will move heaven and earth to attain it.  Prophetically, Franklin said limiting salaries would not suffice, because there will always be reasons for adding to the salaries, and there will always be a party willing to do so (Brands 676).  Franklin’s proposal was politely set aside, ignored, and forgotten.  PPACA can hopefully be set aside, not ignored, nor forgotten.

PPACA is a perfect example of one political party’s love of power.  By no rational understanding will PPACA make health care more affordable, but just the opposite.  The research provided supports the conclusion that the Patient Protection and Affordable Care Act is constitutionally, economically, and morally wrong.

Works Cited

Benen, Steve. “Team Obama Embraces ‘Obamacare’ Label.” The Maddow Blog. Msnbc.com, 23 Mar. 2012. Web. 18 June 2012.

“Bill Summary & Status 111th Congress (2009 – 2010) H.R.3590 Major Congressional Actions.” Bill Summary & Status. Library of Congress, n.d. Web. 18 June 2012.

Blahous, Charles. “The Fiscal Consequences of the Affordable Care Act.” Mercatus Center at George Mason University. Mercatus.org, 10 Apr. 2012. Web. 21 June 2012.

Brands, H. W. The First American: The Life and Times of Benjamin Franklin. First ed. New York: Anchor, 2002. Print.

“By Population.” Medicaid. Medicaid.gov, n.d. Web. 19 June 2012.

Cannon, Michael F. “Sorry Folks, Sarah Palin Is (Partly) Right.” The Cato Institute. Cato.org, 19 Aug. 2009. Web. 19 June 2012.

Chowdhry, Affan. “The Globe and Mail.” The Globe and Mail. The Globe and Mail Inc., 28 Mar. 2012. Web. 20 June 2012.

“CMS Provides Health Coverage for 100 Million People…” Home | Centers for Medicare & Medicaid Services. Cms.gov, n.d. Web. 19 June 2012.

Cohen, Diane, and Michael F. Cannon. “Policy Analysis.” The CATO Institute. Cato.org, 14 May 2012. Web. 19 June 2012.

“Commerce Clause.” TheFreeDictionary.com. Farlex, Inc., n.d. Web. 18 June 2012.

“Congressional Budget Office.” CBO. Cbo.gov, n.d. Web. 20 June 2012.

“Constitution of the United States.” U.S. National Archives and Records Administration. Archives.gov, n.d. Web. 18 June 2012.

Elmendorf, Douglas W. “An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act.” Letter to Senator Evan Bayh. 30 Nov. 2009. Congressional Budget Office. Cbo.gov, 30 Nov. 2009. Web. 13 June 2012.

—. “Manager’s Amendment to Reconciliation Proposal.” Letter to Speaker Nancy Pelosi. 20 Mar. 2010. Congressional Budget Office. Cbo.gov, 20 Mar. 2010. Web. 13 June 2012.

“Employer Health Benefits 2011 Annual Survey – Kaiser Family Foundation.” The Kaiser Family Foundation. Kff.org, n.d. Web. 17 June 2012.

“Final Vote Results for Roll Call 165.” Office of the Clerk. U. S. House of Representatives, 21 Mar. 2010. Web. 18 June 2012.

“Final Vote Results for Roll Call 768.” Office of the Clerk. U.S. House of Representatives, 08 Oct. 2009. Web. 18 June 2012.

Friedman, Milton. “How to Cure Health Care Public Interest National Affairs.” How to Cure Health Care. National Affairs | Public Interest, n.d. Web. 13 June 2012.

Hahn, Robert W., and Rohit Malik. “Is Regulation Good For You?” Harvard Journal of Law and Public Policy Summer 27.3 (2004): 893-916. By Robert Hahn, Rohit Malik. Ssm.com, Oct. 2004. Web. 21 June 2012.

“The Mission and Structure of the Office of Management and Budget.” The White House. Usa.gov, n.d. Web. 20 June 2012.

Nazworth, Napp. “Supreme Court Approval Rises After ‘Obamacare’ Hearings.” Christian Post. Christianpost.com, 11 Apr. 2012. Web. 18 June 2012.

“Nebbia v New York.” SIRS Government Reporter. N.p., n.d. Web. 11 June 2012.

“Oxford Companion to the US Supreme Court: West Coast Hotel Co. v. Parrish.” Answers.com. Answers, n.d. Web. 20 June 2012.

“Patient Protection and Affordable Care Act (PPACA).” GPO.com. USA.gov, 23 Mar. 2010. Web. 13 June 2012.

Pye, Jason. “Pelosi: “We Have to Pass the Bill so That You Can Find out What Is in It”.” United Liberty. Unitedliberty.org, 10 Mar. 2010. Web. 19 June 2012.

“Social Security Amendments of 1965.” P.L. 89-97, Approved July 30, 1965 (79 Stat. 286). Usa.gov, n.d. Web. 19 June 2012.

“Supreme Court Tackles Health Care.” CBS Interactive. CBS Interactive Business Network, 09 Apr. 2012. Web. 20 June 2012.

“U.S. Senate Roll Call Votes 111th Congress – 1st Session Votes Roll Call Vote.” U.S. Senate: Legislation & Records Home Votes Roll Call Vote. U.S. Senate.gov, 24 Dec. 2009. Web. 18 June 2012.

“West Coast Hotel Co. v Parrish.” FindLaw | Cases and Codes. A Thomson Reuters Business., n.d. Web. 20 June 2012.

“Wickard v Filburn, 317 U.S. 111 (1942).” FindLaw | Cases and Codes. A Thomson Reuters Business, n.d. Web. 18 June 2012.

 

3 Comments »

  1. Rose said,

    March 26, 2013 at 3:48 pm

    It looks GREAT on the Internet!

  2. FeareSaclef said,

    January 18, 2014 at 5:33 am

    Interesting post

  3. The Digital Bridges said,

    August 27, 2015 at 4:22 am

    The formatting of your post is great. Easy to see, digest and share.

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