Federal Judge Strikes Down Individual Mandate Portion of Health Care Reform Package

A federal court judge in Virginia has ruled that Congress has overstepped its powers to regulate interstate commerce by requiring people to purchase health care insurance whether they want to or not - and impose penalties on those who refuse to buy insurance.

U.S. District Judge Henry Hudson in Richmond, Virginia, said today that the requirement in President Barack Obama’s health-care legislation goes beyond Congress’s powers to regulate interstate commerce. While severing the coverage mandate, Hudson didn’t address other provisions such as expanding Medicaid that are unrelated to it. He didn't order the government to stop work on putting the remainder of the law into effect.

Hudson found the minimum essential coverage provision of the act “exceeds the constitutional boundaries of congressional power.” Hudson was appointed by President George W. Bush in 2002.

The decision left intact other provisions of the law and only affects the part that requires most U.S. citizens to maintain minimum health coverage beginning in 2014.

The decision in Commonwealth of Virginia v. Sebelius can be found here.

The individual mandate is the penalty portion of the package to expand the pool of people paying into the insurance plan. As written, the mandate requires almost everyone to get insurance or face a fine - $95 in 2014, $325 in 2015 and $695 in 2016 (with a maximum of $2,250 for a family). There is an exemption for low-income people.

This portion could be struck down, the the remaining portions of the bill are unaffected - such as the expanded requirements that the insurers cover to age 26, preexisting conditions, etc. However, federal officials say that the revenue loss on this portion will affect the preexisting conditions clause.

The individual mandate takes effect 2014. The preexisting condition requirement went into effect for children under 19 who are to be on their parents insurance. Adults will have the preexisting condition requirement starting in 2014. You would expect to see a fiscal effect based on the changes already enacted from which one can objectively judge the financial scoring on the health care package.

Also expect this to be appealed to the US Supreme Court (it should go without saying). Other circuits will likely take a different tact, but in the end I think it will be upheld on Commerce Clause grounds because Congress does have the power to affect interstate commerce (Art 1, Sec 8) and Congress has previously imposed requirements on insurers nationally. It's an incremental change that is within Congressional power under the Constitution.

That doesn't mean that I agree with the personal mandate provisions, which essentially tax millions of people who have made the decision not to pay for insurance. Congress could disguise it under different terms, but the penalty provisions and enforcement are through the tax code. It represents a significant tax hike if these people opt not to buy insurance. It's a real hike in costs to these individuals in the wishful thinking of bending the cost curve for services by expanding the pool of health care consumers to include those in good health who do not normally seek health care.

Striking this portion down could potentially open up insurers to even higher costs since the unaffected portion of the health care act requires insurers to pick up patients with preexisting conditions.

One thing to keep in mind is that the federal government is counting on substantial noncompliance in order to balance the books on this - it takes billions in penalties imposed under the individual mandate in order to fund other aspects of the health care reform act, and that's shaky ground because you're hoping that millions of people choose to not pay for insurance and then take the tax penalty hit. CBO scoring (full scoring here - See Table 2 (penalties)) assumes that a percentage of the public is noncompliant and balances the HCR on that basis. It figures that $4 billion will be collected in each of 2017 through 2019 and is included in the full figure for penalties collected for the period studied by the CBO. It further assumes that 4 million will choose to pay the penalty rather than pay for the individual mandate.

This decision once again highlights the limits of relying on the CBO and its scoring. The CBO scoring is good at what it does - based on existing law at the time the study is undertaken with no additional changes during the time studied. It doesn't take into account legislative changes enacted thereafter or judicial rulings that can affect outcomes.

UPDATE:
Others weighing in on the ruling include the following: The Huffington Post, The Volokh Conspiracy, ThinkProgress, No More Mister Nice Blog, Crooks and Liars, Outside the Beltway, SCOTUSblog, Examiner, Althouse, Law Blog, Above the Law, Balloon Juice, Firedoglake, Little Green Footballs, and The Moderate Voice.

Misleading Headline of the Day

The CBO did not say that the stimulus package created 2.1 million jobs as per the headline here. That headline, apparently proffered by the AP does not actually reflect the body of the article, which claims that the CBO scored the stimulus package as having created between 1 million and 2.1 million jobs.

What the CBO is attempting to claim is that the unemployment situation would have been far worse - to the tune of 1 to 2.1 million additional jobs lost but for the stimulus package. That's a pretty difficult thing to prove, given that the unemployment rate continued rising all through the period that the stimulus package was in effect, and that the rate has moderated only with the Bureau of Labor Statistics adjusting the size of the workforce to shrink it to make the job loss figures appear that much better than they really are.

How did the CBO arrive at that conclusion? Well, they based the job growth on their estimate that the stimulus package added anywhere from 1.5 to 3.5 points to the economy in the past year, and that translates into 1 to 2.1 million jobs. I'd say that it is wishful thinking to suggest that anywhere near that many jobs were created during that time - particularly in the private sector that engaged in slash and burn job cuts to stay afloat.

Obama: It's Time To Act On Health Care

"It's time to act on health care" is the message that President Obama is going to deliver tomorrow after giving a nondescript speech to school kids today. That speech to kids got a whole lot of blustery attention from GOPers over the weekend, but I'm rather mystified over why. The need for educated kids is acute - and getting kids to focus on science and math has been a battle for decades. Then again, that's the problem, isn't it- no matter what the President says, the situation remains the same because the education system is governed by inertia and not on sound education principles that put the kids first.

It's not like he's going to say anything out of the ordinary for a speech of this type. People complained about what the Department of Education suggested for teachers to do in accompanying the speech, but that too was adjusted before the speech ran. The speech includes references to AIDS research and homelessness, but they're nothing but buzzwords that show sympathy to a particular interest group in and among Democrats, but no more.

Moreover, many students simply aren't in school as yet (they start tomorrow in NYC and on the 10th in Boston and Los Angeles for instance). Other schools are simply ignoring the speech altogether, including one in Chicago.

No, if you want reasons to complain, perhaps it's the fact that this speech will put the kids to sleep. It's 10 times longer than the Gettysburg Address, arguably the most important speech ever given by a President. There is something to be said for brevity and conciseness, but that doesn't appear to be a trait that this President has. He's hoping for a grand sweeping gesture, and the speech to kids simply isn't it. You write a speech for the audience, and on those grounds this speech fails. This is a speech by him, and about him, rather than the kids (at least those who are around to listen to it).

Note too that the Democrats slammed President George HW Bush's speech in 1991, and sought to investigate it for the improper use of funds (the investigation turned up nothing, but to claim that Democrats haven't done this tit-for-tat complaining over Presidential speeches is disingenuous). The GOP needs to pick and choose its fights, and the speech to kids is the sideshow compared to where the real action.

The real speech to watch is tomorrow's joint speech to Congress.

A "fired-up" President Obama declared that it's finally "time to act" on overhauling the nation's health care system.

"Every debate, at some point, comes to an end. At some point, it's time to decide. At some point, it's time to act," he told labor leaders in Cincinnati on Monday afternoon.

"It's time to act and get this thing done," he insisted.

Obama dusted off his "fired-up, ready-to-go" campaign chant during the speech in hopes of recapturing his mojo and setting the tone for what could be a make-or-break week for his presidency.

Lawmakers return to Capitol Hill Tuesday following a turbulent summer.

Obama and Democrats in his corner were repeatedly attacked by conservatives and constituents angry or confused over plans to revamp the nation's health care system. Republican support evaporated.

The President's poll numbers plummeted.

To wrestle the debate back onto his turf - and on his terms - Obama is delivering a prime-time speech tomorrow to Congress. If his call to action fails to motivate lawmakers, experts say, it could damage him politically.

Obama still has Democrats control the agenda in both the House and Senate. If he fails to get any kind of health care proposal through, it would damage him politically going into the 2010 election.

The problem is that the public has soured on the Administration and Democrats' attempts to claim that there's a crisis of health care in this country. People have realized that there's a difference between access to health care (which is universal - see how illegal aliens can obtain health care without any health insurance, much to the detriment of the hospitals that expend vast sums to provide such care), and the cost for such care - whether it's through private insurance and/or out-of-pocket costs, which include higher costs to offset the provision of care to illegal aliens and lower reimbursement rates provided under state and federal health care programs.

Obama's problem isn't that he hasn't been forceful. It's that he's not being persuasive. He called for a health care overhaul, and then left the details up to Congress, which turned it into a ill-understood and unread 1,000+ page behemoth. He hasn't made the case to justifiably overhaul a system that provides health insurance to 85% of Americans (based on the widely used 50 million uninsured (which itself is a dubious figure that includes millions of illegal aliens and those who are transitioning between insurance plans or who are eligible for various programs but choose not to use them and a US population of 300 million). People who are already satisfied with their health insurance aren't keen on a proposal that will change how things are done, and while the President has said that you'll be able to keep your existing insurance, the problem is various versions making their way through Congress have phase-in dates that allow for employers to shift employees to the proposed plans.

Then, there's the mother of all problems for the President.

Cost.

There's no way that his proposals are revenue neutral, which means tax hikes are inevitable (above the tax hikes and surcharges indicated in the existing bills).

As expected, Baucus’ proposal does not include a public insurance option, but instead features insurance cooperatives that could appeal to moderate Democrats and perhaps some Republicans. That’s a major difference from bills approved by three House committees and the Senate Health, Education, Labor and Pensions committee.

Baucus’ plan also is expected to be less generous in terms of subsidies and coverage than those bills – which, along with the absence of the public option, is sure to rankle more liberal Democrats.

The bipartisan group also is considering a tax on insurance companies
that provide expensive coverage plans. And one feature that might help satisfy the more liberal members of the committee is that insurance companies could face a separate new fee to help pay for the plan. It would be determined based on market share, and could raise $6 billion a year starting in 2010, the sources said.

The Baucus proposal doesn't quite get the fact that if you raise taxes on those insurance companies, they will pass through the costs to the consumer in the form of higher premiums and/or lower benefits. The companies aren't going to eat those costs.

President Obama has repeatedly attempted to claim that his proposals will save money over the first 10 years of implementation, but the CBO has already shot down that claim, finding that it will be in deficit, and will never save money. Preventative care is far more costly than the Administration was willing to countenance, and cost savings aren't likely to be there. Moreover, there's the problems with existing health care systems operated by the government such as the Veterans Administration and the Indian Health Service, both of which provide substandard care far too often to be seen as a model for all Americans.

Then, there's the question of who's going to provide all this care if there's 50 million people who aren't receiving this care. If you assume the 50 million (which I think is overblown based on various figures, but which works wonders to highlight the fact that at least 85% of Americans have insurance coverage), who is going to be there to provide the care without lowering the quality for everyone else. As it is, health care providers are already overburdened and there are shortages of nurses and general practitioners in various parts of the country. The proposals do nothing to address those concerns. They aren't going to be created out of thin air - in fact, it would take years to produce a crop of doctors to cover that many new patients into the system, which means quality is sure to drop in the short run.

The fact is that if the President dropped the current Democrats' plans (HR 3200 or the Baucus proposal in the Senate), he could find a plan that would reform the system and expand coverage to more Americans without scrapping a system that works for 85% of Americans. It would involve expanding insurance coverage regionally and nationally, as well as reduce costs to those Americans looking for cheaper insurance options. The problem is that the President would run into a roadblock from Democrats who want the public option, which means that he risks running afoul of Congressional Democrats.

It's a real test of leadership to see if he does what he says (call for bipartisanship) or kowtows to Congressional Democrats who have largely frozen Republicans out of input on the crafting of the bills.

All That For This?

The Congressional Budget Office has announced that the latest health care bill analysis reveals that the plans might result in a savings of just $2 billion over 10 years.

You read that right. For the cost of $1 trillion (which will likely be far more than that), we're supposed to see a savings of $2 billion? Sorry, but that's no savings.

That's still billions siphoned out of the marketplace as a result of new taxes and fees to pay for all this, and not a real savings in money.

Once again, we have real tangible evidence of just how poorly envisioned this health care plan truly is. It will not save money, and the staggering cost is simply unaffordable for the speculative benefit.

The Myth of Cheaper Government Health Care

Forget for a moment about the quality of such care. Instead, let's focus on the actual cost of government health care versus that of private health care.

We've got 40 years of data to pore over, and the results aren't pretty. In fact, it's devastating. Government health care costs have risen far faster and higher than private care, and the difference in care is in the hundreds of billions. Had Medicare and Medicaid simply risen at the same rate as private health care, taxpayers would have saved nearly $200 billion.

My new study, published by the Pacific Research Institute, shows that -- across four decades -- the costs of government-run health care have risen far more than the costs of private care.

My study compares the cost increases of Medicare and Medicaid with those of all other health care in the United States. The key finding: Since 1970, Medicare and Medicaid's costs have risen one-third more, per patient, than the combined costs of all other health care in America -- the vast majority of which is purchased privately.

Since 1970, Medicare and Medicaid's combined per-patient costs have risen from $344 to $8,955, while the combined per-patient costs of all other US health care have risen from $364 to $7,119.

Medicare and Medicaid used to cost $20 less per patient than other care. Now they cost $1,836 more. (And that's even without the Medicare prescription-drug benefit.)

In fact, if the costs of Medicare and Medicaid had risen only as much as the costs of all other health care in America, then, instead of costing a combined $807 billion last year, they would've cost a combined $606 billion. That savings of $201 billion would have amounted to more than $1,750 per American household last year alone.

The CBO came out this past week with a similar finding; that the Democrats' plans for health care would never see any cost savings and would end up costing far more than the nation can afford.

It's no wonder that President Obama is running around in perpetual campaign mode to try and convince Democrats that his health care plans aren't going to bankrupt the nation and will do the impossible - create a government program that saves money over the private sector.

The New York Times is doing its part to cover for the Administration. After the CBO came out with that devastating news about the Democrats' health care plan, they buried those details, while the Wall Street Journal and Washington Post highlighted the nonpartisan report.

It's disingenuous for media outlets to downplay the CBO report, particularly when the news undermines every argument being made by the Administration in support of this health care monstrosity. If you were attempting to be objective about the health care proposal, you couldn't run a report without citing the CBO objections.

But, if you're in the game of trying to save the Administration's bacon, you will do anything and everything to obscure the fact that the numbers simply don't work. They never did.

Pres. Obama to Address the Nation on Budget Issues

Barreling ahead on a mammoth agenda, Barack Obama is ready to offer a detailed sketch of the first year of his presidency, casting the nation's bleeding economy as a tangle of tough, neglected problems.

In a prime-time speech from the House of Representatives, Obama will make his case Tuesday that much more has to be done to turn around the economy — a message he knows he must explain.

White House spokesman Robert Gibbs said Tuesday that Obama will provide more details about his financial stability plan and measures to help the economy while delivering "a sober assessment about where we are and the challenges we face."

"He'll say we're on the right path to meeting these challenges, and there are better days ahead," Gibbs said.

Already, the nation is nearly dizzy keeping up with what's emerged from Washington during Obama's first weeks as president, from a staggering $787 billion stimulus plan to a revamped bailout for the financial sector to a rescue plan for struggling homeowners.

The president has also said reforming health care, including burgeoning entitlement programs, is a huge priority.

Although Obama is too new in office to be delivering a State of the Union address, his speech will have all the same trappings. It comes two days before he delivers a budget blueprint to Congress. Unlike that detail-driven document, his address will be broad, spelling out what he wants and how he will do it.

The economy, in its worst tailspin in decades, will dominate. Obama will touch on foreign policy, but that will largely be left for other upcoming speeches. This will not be a rollout of one policy initiative after another.

Obama will make clear that the trillion-dollar-plus deficit is one he "inherited." In other words, he wants to remind people that President George W. Bush and the previous Congress left him a big hole, forcing him to pursue the costly stimulus package.

The president will push for movement on ensuring health coverage for all Americans. He will seek to expand educational opportunities, and diversify the country's energy sources, and contain sacred entitlements like Social Security, and halve the soaring budget deficit in four years.

Interesting that only a Democrat would feel that if you inherit a trillion dollar deficit that the way to get out of it is to spend almost a trillion dollars more -- a trillion dollars that will actually cost taxpayers more than 1.5 trillion, and which the non-partisan congressional budget office says will NOT stimulate the economy and WILL hurt the economy in the long run.

So what is in Pres. Obama's new plan?

A $410 billion spending bill unveiled yesterday will fund the US government for the rest of the fiscal year - and kick in $2.2 million for the Center for Grape Genetics in upstate New York.

The measure comes just days after the $787 billion economic-stimulus package was signed; it'll be voted on by the House later this week.

But it's not all nuts and bolts - there's plenty of pork, like the millions for the grape center in Geneva, NY, thanks to Sen. Chuck Schumer, and Reps. Maurice Hinchey and Michael Arcuri.

Other New York earmarks include: $143,000 for Manhattan's American Ballet Theatre "for educational activities"; $214,000 for Stony Brook University "to teach scientists how to effectively communicate with the public and the press"; and $950,000 for a Poughkeepsie pedestrian bridge.

The measure also includes $500,000 for a Senate "pilot program" to defray the cost of mass-mail postcards notifying constituents of town-hall meetings.

Its a shame. The democrats cannot help themselves in loading up on pet projects and pork. There is no fiscal responsibility in Washington. While the President held a "fiscal responsibility summit" yesterday, Michelle Malkinpoints out, the President has been anything but:

President Obama just finished up his opening remarks at a “fiscal responsibility” summit to address skyrocketing budget deficits.

How about paying your own damn bills first, Mr. President?

There’s yet another new report of Obama campaign/DNC unpaid bills — this one from Springfield, Illinois. Obama owes the city at least $65,000 for overtime and other costs.

That’s in addition to the nearly $2 million Obama still owes the city of Chicago.

And the $24,000 Obama owes the city of Philadelphia.

Deadbeatonomics for He, but not for thee.

Change -- all that is left in my pockets after an Obama Administration -- that you can believe in.