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Friday, June 29, 2012

Who Really Won the Health Care Battle?

Other work is keeping me from the blog today, but here's just a bit of what I'm working on:

Democrats are right to celebrate their substantial political victory, but they must understand that it was a short term victory. I believe the Robert's opinion delivers a far more substantial long term victory to Republicans.

The contemporary welfare state is premised on two things 1) the commerce clause and 2) the power use money and the threat of withholding money to compel states to do things they may not otherwise do (mostly the latter). The contemporary regulatory state is premised on the same two things (mostly the former).  This ruling just drove a stake part way through each of those and severely cracked the foundation of the contemporary welfare and regulatory state. I will post more on this aspect of the ruling later.

On a more immediate issue, as a tax, the law is now susceptible to repeal using budget reconciliation - a measure created by the Congressional Budget Act of 1974 to avoid obstruction of important budget bills. It limits debate in the Senate to 20 hours and eliminates the possibility of a filibuster. As a tax bill, health reform repeal would certainly proceed under the reconciliation process.

If after 2012 Republicans have the White House (very likely based on current polls - ignore Romney's numbers at this point, anywhere Obama is at 47% or below Obama is losing), 50 seats in the Senate (very likely at the very least based on the states in play), and at least a 1 seat majority in the House (a certainty) then health reform is a goner. Democrats could not filibuster.They could not block it in the House. It would just be gone.

With regard to Medicaid. The court just told states they could opt out of the expansion. That expansion was supposed to cover 17 million folks. The states with the highest number of uninsured are the very states most likely to now say "no thanks." So much for expanding coverage.

As to the idea being floated that Roberts somehow expanded the avenues by which a tax can be used to compel people to do what the government wants - it's just not true. Roberts applied the taxing power in the same way it is currently used to reward folks with children, student loans, mortgages, and 401ks. Take two people with the exact same income and wealth living in identical houses. Person A has a mortgage, 2 kids, student loans, and contributes to a 401k, and a flexible spending account. Person B does none of these things. Rather she paid for college as she went, has no kids, puts her money in individual stocks instead of a 401k, and uses a savings account instead of a flexible spending account for medical services. Person A will have a substantially lower tax burden than will person B because our tax code allows him to deduct his interest and his contributions from his income. He will, in effect, receive tax forgiveness for doing things the government wants him to do. Person B cannot be mandated to have a kids, a mortgage, a 401k, or any of the other things Person A does but because she does not do them she pays more in taxes - it's not called a penalty. But to Person B it is in every way a penalty. Health insurance is now part of that list of things people may be rewarded or penalized for not having.

As a quick aside, this tax-based approach to "rewarding" folks with health insurance is actually what conservatives used to advocate. Contrary to the popular talking point, conservatives did not advocate a mandate.