Politics and Public Opinion, Supreme Court

Scalia quickly punctures the entire premise of Obamacare

Whatever the constitutionality of Obamacare’s individual mandate, today’s Supreme Court arguments immediately highlighted the policy problem with the landmark healthcare reform law. From the transcripts:

ORAL ARGUMENT OF DONALD B. VERRILLI, JR.,ON BEHALF OF THE PETITIONERS GENERAL VERRILLI: Mr. Chief Justice, and may it please the Court: The Affordable Care Act addresses a fundamental and enduring problem in our health care system and our economy. Insurance has become the predominant means of paying for health care in this country. Insurance has become the predominant means of paying for health care in this country. For most Americans, for more than 80 percent of Americans, the insurance system does provide effective access. Excuse me. But for more than 40 million Americans who do not have access to health insurance either through their employer or through government programs such as Medicare or Medicaid, the system does not work. Those individuals must resort to the individual market, and that market does not provide affordable health insurance

It does not do so because, because the multibillion dollar subsidies that are available for the, the employer market are not available in the individual market. It does not do so because ERISA and HIPAA regulations that preclude, that preclude discrimination against people based on their medical history do not apply in the individual market. That is an economic problem. And it begets another economic problem.

JUSTICE SCALIA: Why aren’t those problems that the Federal Government can address directly?

Exactly. Scalia nailed it with the very first question asked by a justice. Why not “address directly” the main problem with American healthcare, the overconsumption of healthcare services driven by the third-party payment system? Patients don’t act as consumers with either government or business stepping between them and the purchase. One party buys, a different party pays. That is no way to run a market. The tax exclusion for employer-provided insurance creates a huge economic distortion. Instead of fashioning an expensive new entitlement and massive new regulatory structure, better to equalize the treatment of health insurance, whether purchased at work or individually. This could be done via a universal tax credit or perhaps making all healthcare spending tax deductible.

Here’s Rep. Paul Ryan:

Markets do not function well when consumers are insulated from marginal costs. We’re all paying more for health care, through much higher premiums and taxes. But the share we pay at the doctor’s office has plunged. The system that shields us from the cost of services, has actually left us paying much more.

Rather than tackle these root drivers of the problem, the President’s law goes in the other direction. It expands broken government programs, enhances bureaucratic control, and imposes flawed mandates that will continue to drive up the cost of health care. …

And with regard to health insurance for working Americans, patient-centered reform means replacing the inefficient tax treatment of employer-provided health care with a portable, refundable tax credit that you can take with you from job to job, allowing you to hang onto your insurance even during those tough times when a job might be hard to find.

We should empower patients, not only with resources and choices, but also with information. Patient-centered reform must promote transparency on price and quality – and give patients the incentives to act on this information. By putting the power into the hands of individuals, we can let competition work in health care just as it does everywhere else.

2 thoughts on “Scalia quickly punctures the entire premise of Obamacare

  1. Just everything in the above posting is right on.But what about the fact that health insuarance has been regulated on each state level without guidelines or mandates from fed level shows it’s a state right which shows constitional separation. Have the self annoinated one show me where I’m wrong!

  2. 1. “constitional”? OK, you’re upset and angry about the issue.
    2. Constitutionally, the FEDERAL government has no authority to regulate health insurance. It may arrogate that authority under Wickard v. Filburn, but at the moment, the SEVERAL STATES have that authority.

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