Obama's former Solicitor General: If people want Obamacare, it shouldn't matter if it's unconstitutional

A revealing quote from Neal Katyal, who served as Solicitor General from May 2010 until June 2011:

"The challengers are saying that this law is unconstitutional, which means even if 95 percent of Americans want this law, they can't have it. And that's a really profound thing for an unelected court to say."

So apparently, following the Constitution doesn't matter too much to Katyal. And these are the kinds of people Obama appoints to his cabinet.

The inexplicable focus on birth control

When President Obama ruled that religious institutions were required (under the new health care law) to cover contraception in their insurance coverage, it set off an overwhelming amount of outrage on the right.

What I find hard to explain, though, is the sudden and intense vitriol over one particular thing--birth control. Obama's ruling, after all, is just one more consequence of Obamacare, a law that 72% of Americans think is unconstitutional. The Republicans could have responded to the birth control mandate by escalating their attacks on Obamacare generally, as an infringement of liberty--and probably would have received a lot of support. Instead, for the next few weeks Rick Santorum (and to a lesser degree, Newt Gingrich) made birth control the major talking point of his campaign and the GOP debates. There was little or no mention of Obamacare or its infringement on individual liberty for everyone, just a lot of talk about religious liberty for the small minority of Catholics who take the birth control prohibition seriously. On his radio show, Rush Limbaugh called student Sandra Fluke a "slut" for advocating for birth control--and GOP frontrunners Santorum and Mitt Romney were unwilling to strongly criticize him. (On the flip side, nobody on the left seems to care about Bill Maher's history of equally appalling sexist rhetoric toward Michelle Bachmann and Sarah Palin).

This narrow focus on birth control is at best idiotic, and at worst chauvinistic. Surely Santorum, Gingrich, and Romney know that birth control is a hot-button issue for many women, and that the vast majority of Catholic women in America have used it. So why, then, do Santorum and Gingrich offer relatively tepid criticism of Obamacare prior to February, then bust into full-blown outrage over birth control? Why does Romney--who seems to have less fight than a sack of pillows--do nothing to counter them from the center? If the issue is "non-procreative sex," then why do they not seem to care that most insurance plans are already required to cover Viagra--which is probably most often prescribed for older men who have no intention or ability to procreate with their partner? Either they don't realize that they're alienating large swaths of moderate women and independents of both genders, or they actually do believe that women need to be kept under control.

The health care dilemma, as I see it

A huge part of the problem, IMO, is that health care today is expected to perform two unrelated and somewhat conflicting functions. The first is to insure people against unforeseen and catastrophic events at the lowest cost possible. The second is to make regular medical expenses more affordable. 

The first function (i.e. insurance in the classic sense, similar to car or home insurance) can be accomplished beautifully by the private sector as long as government stays out of the way. If there were no mandates requiring health plans to cover certain things, then premiums for a basic, catastrophic insurance plan would almost certainly be affordable to most healthy individuals. They could thus purchase a basic insurance plan and keep it for decades, not having to depend on their employers for health insurance, and not finding themselves suddenly uninsured if they lose or quit their job. Whatever happens, I think we will need to move away from employer-provided health care, simply because global competition will make it unaffordable for most companies.

One problem with this, of course, is that people with chronic conditions or past medical problems get screwed. Those who require regular medications for chronic conditions (e.g. Type 1 diabetes, bipolar, etc) would have enormous out-of-pocket costs. People who have had problems in the past (i.e. cancer, genetic heart problems) might have their premiums go up so high that they couldn't afford it. Another problem is that it gives somewhat of a financial incentive for people to wait until they get really sick rather than seek preventative care. One obvious example is maternity: if lower-income women have to pay out-of-pocket for all maternity/prenatal care (or switch to a more expensive health plan that covers maternity), a lot of them will probably decide to skip it. That of course could have really bad consequences for the babies. One could make the argument--and many on the left have--that subsidizing preventative care results in huge medical savings for society as a whole. That's probably the reason behind a lot of the mandates on coverage for maternity, routine checkups, etc.

The second function (making regular medical expenses more affordable) IMO cannot be accomplished by for-profit companies. It simply makes no sense: what service could they provide that would have any value toward accomplishing that goal? Right now, most people's health care is subsidized--but by their employers, not by government. Since it is subsidized for virtually everyone who has it, people naturally demand more of it--even more than they need--and health care costs go way up. Arthur Laffer calls this concept the health care wedge, and blames it for most of the runaway increase in health care costs (http://online.wsj.com/article/SB10001424052970204619004574324361508092006.html). And there is still the problem of people with pre-existing conditions being unable to get coverage. The only way to fix that, of course, is the way Europe does it: with an individual mandate, which is almost certainly unconstitutional.   IMO, ObamaCare is even worse than a public option like in Massachusetts, and may be even worse than a single-payer system. Not only does it have the individual mandate, but it also puts a huge burden on small business which suffocates job creation.

One way to make health care work might be to separate it into two pieces: catastrophic insurance (which would be private) and subsidized care for the poor or those with health problems (which could be subsidized by nonprofits, large corporations, or government). That way far fewer people would have subsidized health care and costs would not go up as much. Of course, tort reform and eliminating state barriers would also help keep costs down.

Fiscal Chicanery Fails: Obamacare's CLASS Program to be Suspended Indefinitely

During the debates on Obamacare, one of the major talking points for supporters was that "Obamacare will cut the deficit." The Congressional Budget Office (CBO) released estimates showing that Obamacare would cut the deficit over the period from 2010 to 2019. To me, however, this seemed to contradict common sense. How could a massive entitlement program actually cut the deficit without equally massive tax increases?

Well, one of Obamacare's gimmicks was exposed on October 14. The CLASS Act, a long-term care insurance program, was set up to charge participants for at least five years before they became eligible for benefits. It was estimated to create a $70 billion surplus for the first ten years, which could be used to pay for Obamacare and contribute to the program's so-called deficit savings. Conveniently, the CBO only projects the fiscal impact of legislation for the first ten years.

The problem is, of course, that after ten years or so, all of the people who had been paying into the system for five years would start receiving benefits. And healthy people would have no incentive to sign up for CLASS; it would only attract participants who expected to draw significant benefits. It was a budgetary time bomb. Democratic Senator Kent Conrad called it "a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of."

And it seems like the White House has been forced to admit that Conrad and other critics of the program were correct.

In Year 1 of Obamacare, family insurance premiums rise 9%

Despite the many flaws in our healthcare system, one positive trend in the 2000-2010 decade was that family health insurance premiums increased by smaller and smaller amounts each year, as you can see in the chart on the right. In 2002, premiums rose by an eye-popping 13.3%. By 2010, however, the annual increase in health premiums was down to 2.9%. It seemed that insurers were finally figuring out how to keep costs down. And Obama promised that his new healthcare plan would also help to lower insurance premiums.

Except that in the year after ObamaCare, insurance premiums rose by 9.5%, the highest annual increase since 2004.

Some ObamaCare defenders are blaming "bad forecasts," although it's hard to imagine why the forecasts would be that much worse in 2011 than in 2010. More likely is that Hewitt Associates and the AARP was correct in predicting that ObamaCare would cause substantial premium increases. After all, if Obama's plan did actually lower costs, then why would he need to hand out all those waivers?

As a candidate, Obama opposed an individual health-care mandate

During the 2008 primaries, Obama actually came out against an individual health-care mandate with this very sensible argument:

"If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house. The reason they don't have a house is they don't have the money. So our focus has been on reducing costs, making it available."

Unfortunately, he abandoned this belief once he was elected, and signed a health care bill with an individual mandate that has been declared unconstitutional by several appeals courts. Perhaps someone needed to remind him of this quote during the Obamacare debates.

Speaking of presidents who abandoned previously stated positions, with decidedly negative results:

"Somalia...started off as a humanitarian mission then changed into a nation-building mission and that's where the mission went wrong...I don't think our troops ought to be used for what's called nation-building."
--Candidate George W. Bush

As president, of course, Bush led us into two very costly nation-building exercises on a scale not seen since the 1940's and which have dragged on for almost a decade. 9/11 may have justified the initial attack on the Taliban, but I don't understand why Bush changed his mind so dramatically on the wisdom of nation-building.

Appellate court declares Obamacare's individual mandate unconstitutional

The 11th circuit has declared Obamacare's individual mandate to be unconstitutional. I've thought it to be unconstitutional from the beginning; Congress has the power to "regulate interstate commerce," but that does not give them the power to force people to engage in commerce by buying health insurance. A state-level health care plan (like the one that has already been implemented in Massachusetts) would still be OK, though. It seems to me that the states that want universal health care should implement similar plans and leave the rest of the country alone.

This raises questions about what will happen if the Supreme Court agrees with the 11th circuit's ruling that the individual mandate is unconstitutional, but the rest of the law can stand. Clearly, without the individual mandate, Obamacare is not financially viable, since only sick people will enter the insurance pool. The question is whether anyone will have the guts to do anything about it before the Obamacare subsidies blow the federal budget to smithereens.

The Obamacare Effect On Employment

Obamacare was signed into law on March 23, 2010. As shown in the following chart, the job market recovery basically stopped the following month:



Coincidence? Somehow I doubt it. A few reasons why Obamacare discourages hiring, according to this Weekly Standard article:

• “Businesses with fewer than 50 workers have a strong incentive to maintain this size, which allows them to avoid the mandate to provide government-approved health coverage or face a penalty;

• “Businesses with more than 50 workers will see their costs for health coverage rise — they must purchase more expensive government-approved insurance or pay a penalty; and

• “Employers face considerable uncertainty about what constitutes qualifying health coverage and what it will cost. They also do not know what the health care market or their health care costs will look like in four years. This makes planning for the future difficult.”

The fastest road to hell is paved with government's good intentions

We've all heard the phrase, "The road to hell is paved with good intentions." The corollary to that should be that the fastest road to hell is paved with government's good intentions. Nothing but government has the power to take a good idea too far and turn it into an albatross around everyone's neck.

Obamacare is one obvious example. Nation building in Iraq and Afghanistan is another. High-speed rail in California or in the Midwest is a third. What usually happens is that government decides that something is a good idea and simply ignores the repercussions and costs of their actions. They don't stop to think about what Obamacare will do to small businesses' costs, or how many people will actually use high-speed rail in California, or whether the Iraqi and Afghan people will actually welcome us as liberators or not.

Perhaps one of the most powerful examples of government's good ideas gone bad is the National Homeownership Strategy, started by Clinton in 1994 and continued under Bush (see this BusinessWeek article for a full discussion). Basically, government decided that it was a good idea for more people to own homes. Here is an excerpt from the plan:

For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership.


Translation: Many people wouldn't be able to afford mortgage payments, but it would be a good idea if they were able to buy homes anyway. So we need to use "creative financing strategies" (such as sub-prime lending) to "address these financial barriers."


Even "creative financing strategies," however, cannot make money appear out of thin air. So what happened? A lot of people bought homes with mortgages they couldn't afford. At the urging of government, many of these shaky mortgages were purchased by Fannie Mae and Freddie Mac. Eventually, starting in 2007, lots of people began defaulting on these mortgages. Fannie Mae and Freddie Mac collapsed. And the rest, as they say, is history.

The Problem With Employer-Based Health Care

I had an interesting conversation today with a co-worker who was complaining about her health insurance bills. She is 60 and fairly healthy, but we work at a small company that does not provide health care benefits. She and her husband make about $60,000 per year combined, too much to qualify for Massachusetts' subsidized health care plan. She told me that her premium for her private health care plan had just risen to over $500 per month. Her husband is 65 and on Medicare, but he has a number of health problems and Medicare does not cover all his medications, so he has to purchase supplementary insurance.

I explained that in order for Medicare to cover more things, everyone would be forced to pay a lot more money in Medicare taxes for things that they might not need, and that wouldn't be fair. She seemed to understand that. But I had no answer for her problem of being "squeezed in the middle," where she was not poor enough for a subsidized plan but not rich enough to be able to comfortably afford a private plan.

Generally, I am all for individual freedom. But health insurance doesn't work that way; it is often prohibitively expensive for individuals, and only affordable in group plans that can be provided either by medium-to-large corporations or by government. I am certainly wary of being dependent on government for health insurance. But is it any better to be dependent on large corporations? It seems to me that our current system penalizes anyone who does not work in a medium-to-large company by making it very difficult and expensive for them to get health insurance. It also seems to penalize the corporations themselves, since they compete in a global market with companies who do not need to provide health benefits for their workers.

ObamaCare is clearly not the solution, either. The individual mandate violates any reasonable interpretation of the U.S. Constitution; Congress can "regulate interstate commerce," but it cannot force people to engage in commerce. Also, ObamaCare only increases the costs to business with its new taxes and penalties for businesses that cannot afford to provide health insurance. But could we have a public option that would end the dependence on big companies without requiring massive tax increases? Two essential criteria would have to be met:

1. The health care programs would have to be implemented at the state level, not the federal level. A federal health care program containing an individual mandate would almost certainly violate the U.S. Constitution as mentioned above. Huge federal bureaucracies are always extremely wasteful and inefficient. The existence of different health care programs would allow citizens to vote with their feet if one state's health care program became bloated and expensive (sort of like businesses are choosing to leave California). And finally, some states could decide not to have a public option at all.
2. The programs would need to provide several accordingly priced levels of coverage, including one low-priced, basic plan (no chiropractic, no sex change operations, no substance abuse treatment, etc).

 I have to say that Massachusetts' public health care program was very useful when I was serving in AmeriCorps, and thus obviously had no employer-based health insurance. There are problems with costs that need to be addressed (tort reform would help lower medical costs overall), but I don't see why a similar program couldn't be implemented in other states.

Obama's dismal performance on jobs

Obama came into office saying that he would revive the economy and create jobs, but at this point his handling of jobs and the economy has pretty much been a complete failure, as this article explains quite well.

The White House Council of Economic Advisers' latest report showed that the so-called stimulus created or saved only 2.4 million jobs, at a cost to the taxpayer of $250,000 per job. That doesn't exactly inspire confidence in our leadership or the economy. As the author of the article says, it is "difficult to rally around what looks like foolishness."

Then, with the economy still down, the Democrats forced through ObamaCare. This was despite the fact that arguably the most liberal state in the country (Massachusetts) voted for a senator (Scott Brown) whose platform centered around his opposition to ObamaCare and the fact that he would be the crucial 41st vote needed to block it in the Senate. The health care law imposed a litany of new taxes and regulations on small businesses that drive up the cost of employment. Environmental regulations heaped further costs onto business, particularly manufacturing. Is it any surprise that the private sector is not eager to start hiring?

It seems that Obama thinks that jobs are created by government, not by entrepreneurs. The current economic slump has been a testament to that delusion.