It is rare for hundreds of distinguished economists to have their day at the Supreme Court, but then again, few laws have the reach of the Patient Protection and Affordable Care Act (PPACA). The Government has defended the law by making claims concerning the economic necessity for this unprecedented expansion of federal power. Yet the economists -- who include Nobel laureates and former senior government officials -- have made a powerful case that the economic basis supporting these justifications is flawed.
Individual Mandate
The Solicitor General will appear next week to explain why the PPACA is constitutional under the Commerce Clause. The federal government argues that the government must compel healthy people to purchase health insurance or otherwise they will push their health care costs on the public, to the tune of $43 billion. Yet this claim is simply not supported by economic reality.
As over 100 economists successfully argued before the 11th Circuit Court of Appeals, the voluntarily uninsured -- the young, healthy and not poor who choose to forgo coverage -- do not shift costs in our health care system. The lower Court rightly found that "the primary persons regulated by the individual mandate are not cost shifters but healthy individuals who forgo purchasing insurance."
According to the economists' analysis of Medical Expenditure Panel Survey (MEPS) data, only one-half of 1 percent of total health spending can be attributed to the targets of the individual mandate. The real purpose of the mandate is not to recover uncompensated costs, but to force younger, healthier individuals to subsidize the health insurance of others.
The government's stated rationale is to regulate "how health care consumption is financed," yet the MEPS data demonstrates that the government's aim is regulate the price of insurance, not health care. The PPACA seeks to compel the voluntarily uninsured to purchase health care at disadvantageous prices. Thus, the government's defense of the PPACA's constitutionality rest on an economic justification that is without merit, in theory or fact.
Medicaid Expansion
As Justice Kennedy observed nearly two decades ago, "Federalism was our Nation's own discovery. The Framers split the atom of sovereignty. It was the genius of their idea that our nation would have two political capacities, one state and one federal, each protected from incursion by the other." That admonition has pressing weight now, considering that PPACA's Medicaid expansion threatens this federal compact.
When courts give the green light, the federal government rarely declines to exercise power. Congress has broad discretion to offer inducements for the states to participate in a federal program like Medicaid, yet in South Dakota v. Dole, the Supreme Court emphasized that there must be limits to ensure that the states do not become instruments bound to play Congress's tune. In Dole, the Court upheld the federal conditions at issue because states that rejected them would stand to "lose [only] a relatively small percentage of certain federal highway funds."
Yet, under the PPACA, if the states choose to forego the law's compliance standards, they lose all federal Medicaid funding. This is hardly an inducement. In order to continue the program, the states would collectively be forced to add more than 22 percent to their budgets to replace the federal share, and six States would need a 50 percent hike in tax revenue. That is no choice at all.
The Hobson's choice of taking the PPACA's mandates or obliterating a state health care system is as coercive as can be. If there are any real limits to Congress's ability to coerce states under its spending power, then the Medicaid expansion must be unconstitutional.
Severability
Finally, if the Supreme Court strikes down the individual mandate, then the entire law must collapse under its own weight.
The purported goal of the "Affordable Care Act" was to make health care more affordable, but imposing the new regulations without any of the "benefits" runs contrary to congressional intent. If a portion of a law is unconstitutional, the Court must decide whether to strike down only that portion or more or all of the law so that the law still functions in a "manner consistent with the intent of Congress." Thus, if Congress would not have passed the remaining law without the unconstitutional portion, the Court should invalidate the entire law.
The PPACA imposes comprehensive regulations that precisely balance the benefits to health insurers against their costs. This is not simply because Congress favored the insurers. Congress also knew that the costs imposed on insurers would largely be passed on to consumers. The individual mandate was the most significant benefit in that balance. Without it and associated subsidies, the PPACA will impose $360 billion in net costs on health insurers over the next decade -- costs that will largely be passed on. The PPACA imposes on insurers dozens of significant taxes and regulations: minimum essential health benefits, uniform glossary of coverage, new rules for preventive services and taxes on so-called Cadillac plans.
Severing the individual mandate and allowing the remainder of this regulatory morass to continue in force would produce grave distortions, dramatically raise insurance premiums, fail to function in a "manner consistent with the intent of Congress."
In conclusion, the economic and legal constitutional arguments against PPACA are not distinct but complementary. The challengers have the economic evidence on their side, and if the Court accepts it, then Congress should go back to the drawing board to protect patients and provide affordable care within the boundaries set forth by the Constitution.
Steven A. Engel is a partner at Dechert LLP, which represents the American Action Forum and more than 200 economists as amici curiae before the Supreme Court.
Speaking to the Huffington Post Senator Wyden on the--- legislative language he authored which "allows a state to go out and do its own bill, including having no individual mandate."
One more thing since you are obviously biased against the ACA, what would you replace it with?
Fabless chips; compact fluorescent lighting; LCDs for monitors, TVs and handheld devices like mobile phones; electrophoretic displays; lithium ion, lithium polymer and NiMH batteries; advanced rechargeable batteries for hybrid vehicles; crystalline and polycrystalline silicon solar cells, inverters and power semiconductors for solar panels; desktop, notebook and netbook PCs; low-end servers; hard-disk drives; consumer networking gear such as routers, access points, and home set-top boxes; advanced composite used in sporting goods and other consumer gear; advanced ceramics and integrated circuit packaging. These are serious high-tech and thus high-wage industries, industries with a future. Without them, America is going to be increasingly shut out of the most lucrative and job-creating industries in the global economy.
We are all beneficiaries of modern medical care - financed and supported primarily by the public - we should all be paying into it and should expect reasonable care out of it. Works in the rest of the developed world - what is about "this works" that is not understood in this equation? The "free market" does not in any evidentiary way produce the same goods ....
-Steven Engle
"Meps? Meps! Unacceptable!"
- Beldar Conehead
You sir are also disingenuous because you calculate the percent of the cost-shift based upon the entire costs of our medical system. Well, a significant fraction of those are a) medicare (20-25%), b) veterans (5%), c) Medicaid. The cost-shift percentage has to be calculated against the fraction of private health care, not these programs for which the providers get reimbursed at a pre-agreed rate.
As usually right ON TARGET!
GREAT post, thank you for your clarity and your well informed opinions
SO Glad to know your out there, MAKING things clear to the likes of these so uninformed........Thanks!!!
Paying healthcare premiums now is just dollar cost averaging their future health care needs.
What Mr. Engel ignores is that there is a mandate already in place. If you are uninsured and you go to an emergency room you will get care. It may be good care, it may be inadequate, but one thing it will be is costly. And taxpayers and those who are insured pay for this somewhat hidden mandate. The question is whether or not we will admit to ourselves that this mandate does in fact exist. If you face the fact that it does, then the thing to do is deal with it reasonably and effectively with the idea that preventative care is less costly than emergency room care.
The mandate is already there. The solution is to admit it and mold it in the most cost-effective way that we can.
Congress should never have passed CrapCare in the first place. The majority of Americans had said "no" to it all throughout its crafting and, to this day, want it repealed. And as for going "back to the drawing board," Dems aren't exactly gonna be reeking of credibility after the mandate, if not the entire law, is thrown out by the USSC.
It's the "mandate" that makes it unconstitutional; hence, the reason people want it repealed. We, the People, did not grant our federal public servants the authority to award themselves mandating power to dictate private-sector products and punish us if we — their bosses — dared to disobey them. Get it?
>>>I know that my friend with diabetes who now has good care for control of his sugar doesn't want it repealed. I think you are being disingenuous in your rhetoric.>>>
Scroll down this looooooooooooooong list and tell me what Pelosi/Reid/O didn't quite understand about their bosses' "Against/Oppose" sentiment: http://www.realclearpolitics.com/epolls/other/obama_and_democrats_health_care_plan-1130.html
Again you are wrong. The purported goal was not primarily to bring down costs but to get more people access to healthcare insurance. You and your cronies would strip people with preexisting conditions of insurance, take away college aged kids ability to be covered by their parents' plans and make sure that insurance companies can spend more on marketing and bonuses instead of providing coverage for their clients.
I will be glad when you fail and ACA can be fully implemented. It's not perfect, but it's better than your plan which is to do nothing and allow this country to continue to pay high costs for minimal coverage so health insurance companies can maintain huge profit margins.
Uh, yeah, it was. That's why it was named "Affordable Care." Keyword: affordable.
Just forget about all our fellow Americans without coverage.
Could you be any more clueless?
"Yet the economists -- who include Nobel laureates and former senrr government officials -- have made a powerful case that the economic basis supporting these justifications is flawed."
Yet Paul Krugman, Robert Reich and a lot of other respected people who have practical experience (unlike you) making public policy don't see it that way.
"As over 100 economists successfully argued before the 11th Circuit Court of Appeals, the voluntarily uninsured -- the young, healthy and not poor who choose to forgo coverage -- do not shift costs in our health care system."
Cause young healthy people never get sick and are never involved in accidents eh?
"When courts give the green light, the federal government rarely declines to exercise power."
Federalism is a great thing and the feds never assert their power over the states. Someone forgot to tell President Lincoln during the civil war this news.
How many more people, BECAUSE they have insurance, will pay less attention to diet and exercise, and develop medical problems (such as diabetes) that require visits to the doctor that they would not have had to make while uninsured and cautious?
AHA will bring millions of more people into the healthcare system and countless others into it more often. It's supposed to do that, because Mr. Obama wants to spread the health around. The upshot is that millions more will interact with the healthcare providers who are, according to JAMA, our nation's third leading cause of death. http://www.health-care-reform.net/causedeath.htm
The doctors and nurses, unless there is a huge increase in their already insufficient number, will be stressed by the increased demand for services. Their error rate is likely to rise.
Might our healthcare system then become the second leading cause of death? Or maybe even the first?
http://relevantmatters.wordpress.com/2012/03/21/the-vagaries-of-universal-healthcare/
Put'em right IN There Place!!!
faved!!