Round 5, P90X-2, Day 25: Total Body/Ab Ripper & The Supreme Court Rules on Obamacare

Tick tock, tick tock, the future is bleak for you, my friend. ~Tony Horton

Yesterday was met with two significant events: 1) I did Total Body and Ab Ripper, burning 794 calories in 82 minutes and 2) the Supreme Court of the United States (“SCOTUS”) ruled on the fate of the Affordable Care Act (aka Obamacare).

The Total Body routine was a physical drain as I have been gradually increasing weights and reps throughout the effort. The SCOTUS ruling was a mental drain because it was not what I expected and the ramifications are significant and disturbing.

If you’re into alternative history–what might have been–the scathing dissent is worth a read. If, like me, you’re bound by reality, then we’re left with the implications of the actual ruling.

In the ruling I was grateful to learn that there are indeed limits to the power of the federal government to compel individual action. The SCOTUS ruled that the commerce clause doesn’t apply to justify the individual mandate. This is good because the court affirmed in a strong way that the federal government does not have infinite power to compel people to act. This is bad because to take this position, the Court effectively rewrote the law to interpret the “penalty” for not purchasing health insurance to be a “tax.” This is a grave error, in my opinion, because Congress in drafting the legislation explicitly altered the language in earlier drafts to define non-compliance fees as a “penalty,” as opposed to a tax. On many occasions during the drafting and after enactment, advocates in Congress explicitly stated the fee was a penalty and not a tax. Despite this clear intent, the majority of the SCOTUS had the hubris to re-interpret this clear intent to preserve the constitutionality of the Law.

I suppose one benefit of this ruling is that the penalty for non-compliance with the individual mandate now stands as a naked tax. So current and future congresses cannot hide behind the commerce clause. To compel or incentivize compliance with their will they will have to use the language of taxation. And the term “taxation” tends to help focus constituents’ minds. The downside is the federal government can apparently induce any citizen to take any action it deems fit by compelling that action through legislation and tax penalties for non-compliance. What’s next? A tax on companies which fail to hire 10% more staff? A tax on individuals who fail to purchase electric cars? On the latter, the inverse is already in effect in the form of a tax credit for individuals who do purchase electric cars.

Despite the tax as an incentive to comply with the individual mandate, I expect that the ranks of the uninsured will skyrocket as individual citizens make rational decisions.

Only those who would otherwise be subject to federal taxes will have to pay the tax if they opt to not purchase health insurance. This suggests to me that nearly the 50% of those who do not pay federal income taxes today will suffer zero financial consequences if they opt out of health insurance. So why would they ever purchase it? Wait until you are sick and insurance companies will have to sell it to you at prescribed rates as the fact that you are now sick and never had health insurance no longer makes you ineligible to receive insurance. Some in this group will also be covered by taxpayers in the form of Medicare and expanded Medicare.

Similarly for small companies and individuals who do pay federal income taxes, it appears the penalty (tax) for not purchasing insurance is less than the cost of purchasing health insurance. Why, therefore, would a small company or individual opt to purchase health insurance? Better to pay the penalty (tax) and wait until sickness occurs before purchasing health insurance. Once health is restored, the small company/individual can cancel insurance and pay the penalty (tax) to continue to maximize their cash.

The penalty (tax) to companies (with 50 or more employees) which fail to offer insurance to their employees is also far less than the actual cost of providing insurance benefits. I expect companies will get out of the business of offering healthcare benefits. Employees will then be in the public option/single payer system. These individuals, I expect, will then also maximize their cash positions by opting our of health insurance until they are wheeled into the hospital.

All of these scenarios, if correct, suggest that millions and millions of Americans will drop health insurance and only purchase it on an as needed basis. This will have the effect of 1) bankrupting and/or driving insurance companies out of the health insurance business, 2) having the federal government step in to become a benevolent national insurance provider, 3) ever-increasing taxes to pay to the “free lunches” caused by millions of Americans rationally gaming the system and/or ballooning the National deficit, accelerating our descent into bankruptcy.

It’s also likely Congress will act to “fix” non-compliance with the individual mandate by increasing the tax penalty to equal the cost of purchasing health insurance.

Unfortunately, what I think is unlikely is that this leviathan will be undone.

Many, perhaps the majority, embrace the Affordable Care Act (we’ll know in November 2012). We’re the only industrialized Nation without National Healthcare, we’re scolded. Healthcare is a “right” and is needed by the people. But as a wise observer once said: Any alleged “right” of one man, which necessitates the violation of the rights of another, is not and cannot be a right. (full text “Man’s Rights“).  Don’t get caught up in the gauzy, teary-eyed, language of people’s “needs.” These so-called needs are infinite and, ultimately, they are only met at the point of a gun.

Please, someone: tell me where I’m wrong.

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