14 December 2010

Obamacare Unconstitutional?

Filed under: Culture, Reflections — ktismatics @ 12:29 am

At first blush I don’t have a huge problem with a Virginia federal judge declaring the Obama healthcare plan unconstitutional. The judge argues that the government cannot force citizens to buy products from private-sector vendors. I agree.

Under a single-payer arrangement, doctors, hospitals, home-care services, and so on would all have continued to be private-sector providers of care. Their services would have been accessible to all, paid for by the government subject to whatever copays and deductibles would have applied. If you didn’t want to use the single-payer plan, you could of course make other arrangements, find other ways to pay — although of course you wouldn’t receive any sort of refund from the single-payer plan in which you are automatically enrolled. This is the way Medicare currently works, and to my knowledge there are no legal challenges to its constitutionality.

Under Obamacare, low-income citizens would qualify for a subsidy to pay for private health insurance. People who choose not to buy would be subjected to a fine: presumably it’s this punitive fine that’s constitutionally objectionable. If the fine is eliminated, then the obligation to buy would be eliminated and Obamacare would pass constitutional muster. The revised plan would still be better than the status quo, and in some ways it might be an improvement on the original plan. The substantial government subsidies of insurance premiums for low-income people would still be in effect, significantly reducing the ranks of the uninsured. Those who still choose not to buy will unfortunately include the very poor, who still can’t afford the premiums. But the non-buyers will also include the very healthy, for whom the exorbitant price of private health insurance doesn’t seem worth the benefits. It’s this latter, relatively low-risk group that the insurers were hoping to lure into the Obamacare risk pool. Fines levied for failing to buy the product would have effectively eliminated any incentive for the insurers to compete for the uninsured’s business based on price. With the fines tossed out, competition theoretically returns to the market. As long as we’re stuck in the private sector, a little more price competition is better than none.

That the conservatives’ removal of a critical component of Obamacare might actually prove beneficial to the citizenry and harmful to corporate financial interests illustrates what a fundamentally crappy plan it is. In all likelihood though, the conservatives won’t stop with removing the obligation to buy private insurance: they’ll take the whole plan down, including premium subsidies for the poor. For all its failures, Obamacare at least would have reduced the number of uninsureds; now even that gain will almost surely be lost.

A year ago many progressives were arguing that Obamacare, while seriously flawed, was at least a step in the right direction, a piece of legislation that could be built on incrementally. Now one has to wonder whether the Dems shouldn’t have gone all in for single-payer, which is after all a coherent and internally consistent scheme. Of course neither Obama nor Hillary supported single-payer during their presidential campaigns, so there never was much chance. Further, the success of single-payer requires that the government actually negotiate deals — with doctor networks, pharmas, hospitals, and other corporate vendors — that benefit the citizenry, seeking the best care for the lowest price. Frankly, I doubt that the government is up to it. After all, the US government serves as single payer for military goods and services, and it certainly doesn’t seem to drive very hard bargains with those contractors, regardless of which party is signing the checks.

*   *   *

14 Dec — From today’s Associated Press:

“Hudson limited his ruling to striking down the so-called individual mandate, leaving intact other portions of the law. But administration officials and outside analysts agree that important provisions of the legislation could not go forward without the requirement for everyone to be insured. That’s because insurers need to have large pools of healthy people, who are cheap to insure, or it is not financially tenable for them to extend coverage to those with pre-existing medical problems.”

Exactly. The individual mandate is why Obamacare was so attractive to the private health industry, why they supported the plan. It’s unclear to me that the Republicans, who support — and who are supported by — these corporate constituents just as much as the Democrats, will really want to disallow the individual mandate, which subsidizes billions in extra private-sector revenues/profits. We’ll see how it plays out.



  1. Hi John,

    Do you know the old joke?

    What’s better, eternal happiness or a ham sandwich?

    A ham sandwich! Nothing is better than eternal happiness but a ham sandwich is better than nothing. That’s how I see Obamacare, and I remember how bad the ham sandwiches were on British Rail…

    How about a public healthcare system paid for through general taxation? It sounds crazy but it just might work! The NHS is a single-payer of course. There is the odd mishap and overcharging. But then we hammer the pharmaceuticals in court. It does work most of the time, in the same way that one’s body works most of the time. It’s all anyone can ask, I reckon. The wiki entry on single-payer states that most Americans are in favour of it. We just need to want it.

    Do you remember me saying you should see Possession by Andrej Zulawski? Someone’s uploaded it to YouTube in nine parts. Enjoy!

    The man Zulawski is a freakin’ genius, in my opinion.


    Comment by NB — 14 December 2010 @ 11:40 am

  2. John,

    Good post. Thanks for sharing your thoughts on this one, I’m largely in agreement. I particularly find it interesting that certain folks do not question the single-payer style military economics while at the same time weeping and gnashing the teeth over the “socialism” of a single-payer healthcare system.

    The numbers seem to be there, however, in terms of single-payer healthcare being both cost-effective as well as delivering good healthcare. For certain folks, however, these two concerns simply don’t seem to register. What’s more important seems to be a fear of socialism. So odd.


    Comment by Jonathan Erdman — 14 December 2010 @ 12:05 pm

  3. Free ham sandwiches for everyone! It seems that the American public is split fairly evenly between those who think Obamacare went to far and those who believe it didn’t go far enough. Maybe everybody can agree that the ham sandwich just isn’t satisfying. Thanks for the Zulawski link, nb: it sounds like the perfect Christmas movie.

    There’s so much rhetoric about how politicians shouldn’t be messing with “the best healthcare system in the world.” I’d like to know what criteria inform that judgment other than everybody-knows-it’s-true. Health status in the US is relatively poor compared to that of other 1st-world nations, while healthcare eats up a much bigger chunk of the GDP. Correct me if I’m wrong, nb, but I think that the British National Health Service is administered as a governmental agency, with doctors and hospital staff and so on actually working for the government. In France I believe that the hospitals are government-owned whereas most doctors are independent contractors who bill the government for services rendered — more like the US Medicare arrangement. US Medicare is funded through payroll taxes paid by employers and employees, at a flat rate; i.e., high-income work pay the same payroll tax percentage as do low-income workers. So this is a more regressive taxation scheme than the income tax. Perversely enough, the payroll tax rate is to be reduced under the Obama-Republican “tax compromise,” thereby accelerating the projected insolvency of Medicare and Social Security.

    It seems to me that a society ought to provide basic healthcare for all its members as an entitlement. Socialism? Sure. Maybe the word needs to be rehabbed, disconnected from the central-state totalitarian Soviet state and reconnected to the common weal. But let’s keep the libertarian impulse alive too. Single payer yes, but you still get to choose your doctors and participate in decision-making about treatment options. And if rich people want to supplement the basic entitlement plan with liposuctions and boob jobs and so on, they should be free to pay what the market will bear.


    Comment by ktismatics — 14 December 2010 @ 4:42 pm

  4. “Correct me if I’m wrong, nb, but I think that the British National Health Service is administered as a governmental agency, with doctors and hospital staff and so on actually working for the government.”

    That’s right. Although, no doctor over here says they’re working for the Government. Is that very different from single-payer? I mean, it sounds like the single-payer system for the arms industry in the US…

    The French system was held up as a wonderful miracle here a few years ago. Actually, it’s very expensive per capita. There’s still a lot of waste but NHS is one of the most efficient systems in the world – terms of wringing out healthcare per pound sterling. I’m beginning to sound like Michael Moore in Sicko… It’s very far from perfect, but it’s better than most systems.

    David “Call me Dave” Cameron wants to introduce divide and rule by making doctors more independent. They will be able apply to pharma directly. Because, you see, the little man on his own has always been successful in the face of mighty bodies…

    “Perversely enough, the payroll tax rate is to be reduced under the Obama-Republican “tax compromise,” thereby accelerating the projected insolvency of Medicare and Social Security.”

    Oh, dear. I’m thinking that maybe the Democrats do good bad while the Republicans do bad good.

    I have to say I have a little aversion to the word libertarian – I just amused myself arguing with a libertarian ultracapitalist (read: paranoid maniac) on YouTube during a very boring day at work. It passed the time. I even offered to pay for him to come over to London so he could “put his fist down [my] socialist neck”. Only, he got really pissy when I said that he must buy the ticket to get cashback on appearance. We were going to slug it out in front of the mother of all parliaments. I fancy myself quite “the daddy” when I’m “tooled up”. His name is captaindiesalot. He goes to fight clubs and hates socialists and fascists (but loves Ayn Rand!). He’s blocked me, bless him. Anyone want to send him my latest reply on my behalf? I’d be most grateful.


    Comment by NB — 15 December 2010 @ 5:13 am

  5. Both the French and British healthcare systems cost far less than does the US system. In the US, the per-capita cost of healthcare is $7300; in France it’s $3600; in Britain, $3600 $3000. Obamacare tried to emulate the German system: financed by payroll tax contributions from both employers and employees, with care delivered through various private managed care companies from which people can choose. The German system costs about the same as the French. Why is the German system so much more cost-effective than the US system? It must be because the German government actually wields the leverage of being the only payer, negotiating tough deals with the private care deliverers to keep costs down for everyone. In the US the employers separately negotiate their own deals with health insurers, with government-funded programs for the elderly and poor more or less indexed against the private fee structures.

    So why can’t the private employers strike better deals with the companies selling health insurance to their employees? I’m not sure of the answer to that one. I suspect it has to do with monopoly power. A single producer of an essential service can jack up its prices and the consumers have no recourse. Similarly, if all the consumers band together to negotiate the price they’re willing to pay, the producers have no recourse but to settle for that price. This is the great fear of private industry: that the government will function as the collective buying agent for all its citizens, thereby squeezing producers’ prices and profits. And so big business screams “socialism” whenever they’re afraid that government will actually start operating on behalf of the people in financial negotiations.

    If government really functions as collective bargaining agent for the consumers, then it doesn’t matter so much whether the producers work directly for the government (e.g., the British NHS) or operate as independent contractors (France and Germany). In the US, though, the federal government seems consistently to function as agents of private industry more than of the citizenry. My fear is that even in a single-payer system the US government would continue to negotiate deals that benefit the insurers and hospitals and doctors at the expense of the people. Until that fatal flaw in American democracy is remedied, structural payment alternatives are unlikely to work much better than the grossly expensive system that’s already in place.


    Comment by ktismatics — 15 December 2010 @ 7:48 am

  6. I share your gut reaction against the term “libertarian,” nb. Recently I’ve been reading up on anarchism, which in the literature is also referenced as “libertarian socialism.” The ultracapitalist Ayn-Randian variant of libertarianism valorizes the individual’s right to pursue individual economic self-interest through the free market. Anarcho-libertarianism regards individual freedom as achievable only through freely joining political and economic forces with one another. I tend to agree with the anarcho-libertarians that government too often wields power that restricts rather than enhances the freedoms of its citizenry. While elected officials in democracies purportedly represent their constituents, too often they operate on behalf of big business, building their own bureaucratic power bases rather than functioning on behalf of the people. Private industry restricts freedoms in a similar way: bosses build their own bureaucratic power bases, striving to make as much money as they can as individuals, running the companies for the sake of the investors in part by keeping the workers’ paychecks small.

    Do I think government has to be abolished? No: I think it has to operate as a democracy, as a collective agent of the people. Do I think private industry has to be abolished? No: I think companies should be run on behalf of the workers and the users of the goods/services they produce.

    So where can your fight with the Captain be found, nb? I’ve tried to comment on Youtube before but the comment didn’t appear, so technologically speaking I might not be your man.


    Comment by ktismatics — 15 December 2010 @ 8:16 am

  7. “in France it’s $3600; in Britain, $3600 $3000.”

    So, it’s not much more expensive in France! Somewhere along the way I must’ve bought the line peddled by the (mostly) anti-French/Europe/foreigner British press.

    “While elected officials in democracies purportedly represent their constituents, too often they operate on behalf of big business, building their own bureaucratic power bases rather than functioning on behalf of the people.”

    I think this is why, as a man with anarchist sympathies, I disagree with Libertarianism as it so often manifests in the States. There’s plenty of corruption and power-base building in the UK and America in local and national government. But, that’s as nothing to the economic structures that give it life – that is, capitalism, historical capitalism. As far as the libertarian fears Government, he (wrongly) believes he’s in the Soviet Union, you know, the U.S.S.A. Perfect fodder for the abuses of the so-called free market. The Government is just another agency within it. Maybe not doing much good, but maybe not the most powerful, and we do get the chance to change things just a little. One of the reasons why I dislike all the bollocks spouted by juveniles like ker-plunk about getting back to Year Zero is that the ideologues of the free market (which are not just Milton Friedman et al, but many people in the street, even and especially if they’re getting screwed) demand just this kind of ahistorical view. The institution of Year Zero is when the French Revolution began to go terribly wrong. We are all trying to awake from the nightmare of history, in thinking we have, we dream all the deeper (viz. the last boom).

    I also had a (much nicer) YouTube conversion with a young libertarian a while ago, although I don’t think he was a socialist, even if he was possibly a communitarian. He believes that the market can do most things for people who come together. He believes in things like emergent justice and law. Hm. When I asked him why exactly he resented paying taxes, he told me that, if he didn’t, he would be fined or jailed just because, for instance, he did not think it right to pay for wars. (I asked him about things like healthcare, which is when he started to get a bit sticky – “It’s too difficult to explain right now” etc). Moreover, he explicitly compared this situation to being like an antebellum slave. That’s right, this boy (there’s no other word to describe him), who had access to the internet, who from what I could see from his videos was supremely middle class and privileged, who also is attending university, seriously compared his situation to that of a plantation slave. I often get the impression that many of these Libertarians (I’m sure not all of them) are nostalgic about that antebellum past. Certainly, captaindiesalot is. He blames the whole mess on the Yankee victory. But the thing about nostalgia is that it’s not what it used to be…

    I understand that the reason why many Americans are so wedded to the right to bear arms as the ultimate symbol of freedom is that 19th century slaves could not bear arms. It is the ultimate symbol of independence. The right to use deadly force against those who would deny your liberty.


    Comment by NB — 17 December 2010 @ 8:08 am

  8. I agree, nb: shared skepticism toward government isn’t enough to build an alliance between anarcho-socialists and libertarian ultracapitalists. It’s unfortunate but unavoidable that certain words get connotations that render the words almost useless: libertarian = Ayn-Randian, socialist = totalitarian Sino-Soviet. Stick those two hypercharged words together as the anarchists are wont to do and you’re liable to stimulate rage and confusion in everyone.

    I hear you about antebellum boy’s hyperbole. I bitch about capitalism and its excesses and inequities, but my life is still pretty darned good. Today I read on a blog (which I won’t identify) this long and impassioned sentence:

    “As I see it, the fundamental harm is unconscionable inequality, an inequality that increasingly entrenches wealth in the hands of a very few while the rest of us suffer from increasingly poor living conditions–precarious employment, immiserating death, diminish chances for our children, polluted environments, poisoned food, inadequate health care, brutality and exploitation at work, unemployment or underemployment, diminished wages, unbearable stress, constant exposure to advertising such that we lose mental space, the forced extraction of money from us at every point, decaying roads, negligence schools, and the elimination of future opportunities for our children.”

    Now I generally agree with this rant. However, it was written by a full professor with an Ivy League education, someone who almost surely makes significantly more than average salary with assurance of lifetime employment and full medical benefits. This blogger is one of “the rest of us” vis-a-vis the super rich, but it’s a long way from there to the bottom of the heap.


    Comment by ktismatics — 17 December 2010 @ 4:19 pm

  9. “It’s unclear to me that the Republicans, who support — and who are supported by — these corporate constituents just as much as the Democrats, will really want to disallow the individual mandate, which subsidizes billions in extra private-sector revenues/profits.”

    Like I said. The private healthcare industry is happy to extend its services to more people, be they rich or poor, as long as someone pays the bill. I’m still not clear how Obamacare is supposed to be financed. Presumably expanding eligibility for Medicaid is to be paid for by cutting Medicare. That seems like a ripoff, since Medicare has always been a self-funding program, with retirees having contributed to the program over their whole working careers. If Medicaid expansion is covered not by across-the-board Medicare cuts but by imposing higher copays on wealthy seniors, then it’s not as bad. I don’t know if that’s how it’s supposed to work. I do know that Medicare solvency has already been compromised by the recent cut in the payroll taxes that fund the program — cuts made in the name of “stimulus.”

    Clearly in the individual mandate portion of the plan, coverage of pre-existing conditions will be paid for by insurers’ raising rates across the board. Most of the uninsured are relatively young and without health problems — just the sort of customers the private insurers want in the fold. With the option not to buy eliminated there will be nothing to prevent private healthcare costs from escalating even further, taking what is already the world’s most expensive healthcare system into the stratosphere.


    Comment by ktismatics — 1 July 2012 @ 6:07 am

  10. If expanding Medicaid eligibility is financed via cuts in Medicare, then the individual mandate portion of Obamacare has nothing to do with the Medicaid portion. I thought that maybe a surcharge would be applied to the private insurance premiums in order to pay for Medicaid expansion. Maybe that’s how the needs-based subsidies for private insurance are to be paid for, but I don’t if that’s the case.


    Comment by ktismatics — 1 July 2012 @ 6:32 am

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