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Thursday, March 29, 2012

Why Obamacare is in Deep Trouble

In the 2007 Democratic primary, Barack Obama and Hillary Clinton fought tooth and nail on many issues. One of them was on universal healthcare, in which every American would have health insurance. Both agreed that they wanted to implement a universal healthcare system but they differed on the approach. Hillary’s plan was to implement an individual mandate. That is, each American would be forced to purchase healthcare or face a stuff penalty. Obama opposed the mandate at the time because he stated Americans who could not afford to purchase it would be worse off – they would have no health insurance, plus they would have to pay a fine or have the money taken out of their pay checks. He compared this to forcing the homeless to buy houses, obviously something that would be ridiculous.

Once Obama was elected, however, his healthcare plan changed in that he implemented the exact individual mandate that he railed against during the campaign. That is, if you did not purchase health insurance you could not only face a fine but be imprisoned. Obama defended this by arguing that if his plan lowered the cost of healthcare premiums by having more people pay premiums, that it would not be fair to allow some people not to pay for it. He also argued that this is similar to people being mandated to purchase car insurance. However, there are two major differences. The first is that auto insurance laws are set by the states and states do have a right to set mandates. The difference with a federal health insurance program, however, is that while the U.S. Constitution grants the federal government (via Congress) the right to regulate commerce, it does not grant it the right to force people to purchase anything such as insurance premiums. Secondly, even in states where there are mandates to purchase auto insurance, this only applies if you own an automobile. But there is no mandate to purchase the automobile to begin with and not everyone owns an automobile for various reasons. 

The other problem with a federal healthcare mandate is that it opens the door to almost any activity that can be conceivable linked with healthcare to be federally regulated such as the types of food you eat (e.g, a mandate to eat vegetables every day) and the activities you engage in (e.g., mandated exercise). For a country that was established on the principles of a centralized government with limited federal powers, the individual mandate would open new doors to increase those powers dramatically. In addition, the mandate would essentially amount to a tax on young people to pay thousands of dollars in healthcare premiums (when the true cost they should be paying is under $1000) to help pay for the costs of the elderly and the sick. Thus, the mandate is essentially a tax that is not explicitly identified as one. It’s a hidden tax and no one likes hidden taxes. However, most Americans have figured this one out and most people want the law repealed.

What is really incredible about this whole issue is that the Obama administration and many other Democrats apparently never considered that an individual mandate could be considered unconstitutional. Either that, or they did think about it but did not believe it would be successfully challenged. For example, when House Speaker Nancy Pelosi was asked about this very issue two years ago by a reporter, her only response was repeating the phrase “Are you serious?”

Now, the individual mandate and the healthcare law is before the U.S Supreme Court since 26 states have challenged it along with a group of plaintiffs consisting of the National Federation of Independent Business. If the questioning by the Supreme Court Justices is any hint as to the final ruling (which is usually the case) then it looks like the individual mandate will be ruled unconstitutional. If that occurs, Obamacare (Patient Protection and Affordable Care Act) may be eliminated entirely because the mandate is critical for the law’s success.

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