December 1, 2012

"If States Don't Set Up Insurance Exchanges, Will 'Obamacare' Implode?"

Stuart Taylor Jr. explains the glaring problem with the federal exchanges. I'll just quote his parting shot:
And in the perhaps unlikely event that the dispute over the powers of federal exchanges reaches the Supreme Court, would Chief Justice John Roberts -- having made his uneasy peace with "Obamacare" in June -- have the stomach to resume hostilities based on a legal analysis that even lawyers find hard to follow?
The stomach to resume hostilities? I would not assume that Roberts "made peace" with Obamacare. He may believe he delivered a wound that escaped notice but will prove fatal.

As I said a month ago:



ADDED: "It's a slow-motion topple. We just haven't seen it go down yet":

61 comments:

Toad Trend said...

We hope!!!!!!!!

Saint Croix said...

The administration and other advocates say that the 2,700-page law's language on the powers of federal exchanges clearly did not reflect the intent of Congress.

What the fuck? We passed a law, but we didn't mean what we said? Good luck with that argument.

The law's legislative history and a related statute establish "that Congress understood that premium tax credits would be available through both federal and state exchanges," wrote Timothy Jost, of the Washington and Lee University School of Law, in the Health Affairs Blog.

Snort! The "legislative history" as I remember it is that we will find out what's in the bill after we pass it.

Pogo said...

He skipped an easy dunk shot in favor of a triple-carom behind-the-back 5-pass loop-de-loop three pointer?

This is when Wile E. Coyote has an Acme anvil land on his head.

edutcher said...

Your sweet lips to God's ear, Madame.

EDH said...

Why would the measure's drafters have wanted to cripple any fallback exchanges created by the federal government? Pruitt, Cannon, Adler, and others claim the legislative history shows that the drafters wanted to give states strong incentives to create their own exchanges, and expected them to do so.

In typical fashion, the drafters more likely hoped to punish the states that don't create the exchanges.

Doesn't this kind of vengeful triumphalism explain why Obama is now overplaying his hand on the "fiscal cliff"?

Pogo said...

What I meant to say was: Why?

What was in it for Roberts to avoid the easy answer over the complex?

Isn't it more likely that he simply caved?

Alan said...

I detest Obamacare as much as anyone. But the argument that the Treasury lacks the power to let Federal exchanges do what the state exchanges could have done is just plain silly. Tax regulations augmenting statutes far more than this one does are routine. You may not like it, but it's been going on for nearly a century.

Saint Croix said...

As even some health law supporters concede, the claim that Congress denied to the federal exchanges the power to distribute tax credits and subsidies seems correct as a literal reading of the most relevant provisions.

In other words, if a state doesn't create an exchange, the federal government is going to screw your citizens.

That's a rather ugly (and losing) argument to be making in court. You've got serious 10th Amendment and federalist issues there.

And the Supreme Court has already ruled on that!

So now the liberal argument is that the "legislative history" trumps the actual statute as written? Bah.

AJ Lynch said...

I believe "Collapse" will undoubtedly be the word of this decade.

Saint Croix said...

Tax regulations augmenting statutes far more than this one does are routine.

You have any examples in mind?

I haven't read Obamacare, and there's no way in hell I'm reading Obamacare.

But if in fact "Congress denied to the federal exchanges the power to distribute tax credits and subsidies," then I believe you would be mistaken. Article II branch has no power to tax, particularly if it violates the will of Congress.

Matthew Sablan said...

Considering we're now, what, two months late on the guidance states were supposed to get to even set up the exchanges if they wanted to do so, I'd say Obamacare is imploding nicely without even reaching that bridge.

Tim said...

The president's promise for Obamacare is that it would, simultaneously: 1) reduce cost; 2) expand access, and; 3) improve care.

A cursory understanding of economics, one that clearly escapes the facile intellect of our president and his voters, leads one to instantly know the president's promise is simply unattainable.

Joe Schmoe said...

"It's a slow-motion topple. We just haven't seen it go down yet."

I wish. I agree with Pogo's analogy of the complex with a high-degree of difficulty.

He basically could've stopped the Death Star construction by denying the building permit, but now he's set it up so we need a plucky rebel like Luke to somehow navigate withering and overpowering defensive fire to make a one-in-a-million shot on an as-yet-to-be-determined target deep in the bowels of the whole consarned operation.

Meanwhile construction continues apace. Be prepared to witness a fully-operational battlestation in a little over a year. Its first target will be red states who don't set up exchanges and turn down the Medicaid expansion.

Tim said...

And yes, no doubt Obama will put the screws to the states, and their citizens, who do not bend to his will.

bagoh20 said...

You do realize that this is the easy part, involving no actual patients, doctors, disease or bills.

I see this kind of disaster all the time in business where some "consultants" with no experience outside of a university and no real successes in the past will sell upper management on some "ingenious" over-arching, far-reaching plan to fix some relatively simple issues. The result is usually a company coming to a virtual standstill until they realize it was all just a foolish mistake, and fire the guys, only to go back to business with a huge loss of money, moral, and their best people who jumped ship. That's the best cases. I've seen it kill dynamic growing companies. This con scales up almost seamlessly. One mark or millions, it's the same scam.

edutcher said...

Tim said...

And yes, no doubt Obama will put the screws to the states, and their citizens, who do not bend to his will.

"After we win this election, it’s our turn. Payback time. Everyone not with us is against us and they better be ready because we don’t forget. The ones who helped us will be rewarded, the ones who opposed us will get what they deserve. There is going to be hell to pay. Congress won’t be a problem for us this time. No election to worry about after this is over and we have two judges ready to go."

- Valerie Jarrett

Chip Ahoy said...

The result is usually a company coming to a virtual standstill

I believe that is the point.

You see, capitalism has failed. That's been seen to. Now it must be replaced. Sorry. We were the best at capitalism and it failed. Socialism failed too, but shut up, that wasn't us, it wasn't us the best doing it so now it's our turn to show how socialism is done properly.

This massive obnoxious bill is intended to fail. That way you'll be screaming for a single payer system, the aim all along. This bill was meant to be dismissed eventually with something more eloquent and straightforward once the idea of half everyone's salary going into paying for healthcare by taxes under different names is already fully swallowed.

Chip Ahoy said...

The tell is the "we are the 99%" bullshit.

Eliminate the top 1% and what happens? Kill them all off, whoever they are. Take all their stuff and redistribute it among your own friends. All of it. And then what happens? Automatically a new top 1% appears in their place and there you are again still on the attack. Endlessly until that fateful day there are only 99 of you left and you can no longer so easily execute your executions. The question that appears at the end is there at the beginning but it does take a communist type mentality to keep on obsessing over unfair income gaps the way we've seen this time around, and truly, it's just one reason why the man is impossible to listen to anymore, there's only so many years of "if they would just pay their fair share" a guy can take and still have his sanity.

bagoh20 said...

This graph is about as simple as you can show the fiscal problem we have, when it happened, and why.

When and why

rhhardin said...

Roberts on this theory likes crippling investment uncertainty as small price to pay (he doesn't pay it) for the political aspirations of the court.

Toad Trend said...

The ACA is a tax bill, payable thanks to one-party politics.

Implosions of any implementation of this 'plan' should be celebrated.

It is clear we are in a very polarized environment, rife with certain people using words such as 'revenge' and 'payback'.

It is incumbent upon everyone to resist this awful governmental overreach. Imagine a hostile takeover of Microsoft and the products were changed to malware (cue Microsoft jokes).

I just wonder when these piggish progressives will notice that they too are sitting in their manufactured pile of shit.

rhhardin said...

Invest in wives. After the apocalypse you can always trade a woman for something.

Balfegor said...

RE: Saint Croix:

What the fuck? We passed a law, but we didn't mean what we said?

Congress has not had a particularly good track record with constructing well-drafted monster bills like this. Some drafting errors always slip in.

In this case, though, Congress's weaknesses were compounded by the way they had to slip the bill through. Democrats wanted to use the House Bill, but the voters foiled their plan by electing Scott Brown to replace Elizabeth Warren, allowing the Republicans a filibuster, allowing them to defeat any House bill. So instead, Pelosi took a bill the Senate had already passed (which was formally a ground up Senate revision of a totally unrelated House bill, to circumvent the requirement that revenue bills originate in the House) and had the House pass that over bipartisan opposition from both Democrats and Republicans (the Democrats had a huge majority in the House at the time, but suffered significant defections in the voting). The Senate bill had not really been intended to be the final bill, so it needed a lot of fixing. Thus, Pelosi and Reid used a legislative maneuver called "reconciliation" (allowing them to avoid the minority protections built into the Senate's rules) to amend the legislation into the final act.

It's no wonder they screwed up the drafting in a few places -- that's what happens when you're scrambling for a backdoor procedure to get some bill, any bill through in the face of public opposition.

Balfegor said...

Sorry. Warren replaced Brown just this year. I meant Brown replaced Kennedy.

Chip S. said...

Socialism failed too, but shut up, that wasn't us

In one pithy phrase, Chip Ahoy reduces the Dems' position to its essence.

Balfegor said...

Or Warren will replace Brown in January. You know. It's Saturday.

cubanbob said...

Two things to keep in mind:

1-As Herb Stein said when something can't go on, it won't.
2-The laws of unintended consequences and perverse incentives.

Obamacare is ultimately doomed to failure and will implode and do so in ten years, especially if the democrat's win in 2016 and regain the congress.
Not only will Obamacare implode but it will take down Medicaid and quite possible Medicare with it.
The plan as laid out and with the onslaught of must provide regulation guarantees it's failure on so many levels. The hubris of the democrats is that they believe once it was passed the payers and providers will simply submit and go with the program. It never occurs to them that those who will be tasked to pay will find avenues of avoidance, the avenues are provided for in the legislation. Since the economy isn't showing any signs of a real recovery and with the current crew of democrats in charge it won't anytime soon, the bulk of the businesses that employ the majority of the private sector workforce will simply structure themselves for the maximum avoidance. They will have to in order to survive. Once the employers are required to pay 85% of the employee's health care and 65% of the family coverage there will be movement to reduce the number of employees to less than fifty, split companies in to various separate corporate vehicles to maintain the number under fifty and a shift to part-time employees and those that can, offshore.

It's inevitable. Once the rule making starts with the must provide for minimum coverages the rule makers will bend to pressure from various interests groups to expand the minimum required coverages. It won't only be Sandra Fluke's birth control pills and abortions, it will expand to include Viagra, chiropractors, alternative medicine, cosmetic surgery, hair restoration, acupuncture and any number of therapies and so on to the point the the companies will raise premiums so high that the majority of the workforce won't be worth the benefit especially when there is no longer the need to provide it as a method of acquiring and retaining staff.

Hence the schemes to avoid being compelled to provide coverage.

cubanbob said...

As for the States, the court laid a economic time bomb on Obamacare and Medicaid. Whether the court did so by intention or not will only be known in the future but the traps have been set. Once the court ruled the states can't be coerced in to setting up exchanges and the expanded Medicaid benefits, it follows (if the court follows it's own logic) that the States can't be compelled to keep funding Medicaid ( and from there all unfunded federal mandates). If the seventeen states are successful in the SCOTUS with respects to the exchanges then it's inevitable that one or more states will opt of Medicaid and pass it back to the federal government. They will have to, the states don't have the borrowing capacity and taxing ability of the federal government to sustain the expansion of the program especially in times of higher demand and reduced tax base. Indeed it wouldn't be surprising if Illinois or California were the first states to pass Medicaid back to the federal government when they can't pay for their over generous and underfunded retirement plans and expanded Medicaid. The public service unions will always trump the beneficiaries.

cubanbob said...

And once that happens so will other federal mandated but unfunded programs be passed back to the federal government. The states will have no choice, they just can't afford them in this economy, which won’t improve over the next four years, and if the democrats win in 2014 and 2016 the economy won't improve until past 2020. By then the collapse will be fully underway. Not for nothing that Geithner put out the trial balloon of Congress giving the President the authority to raise the national debt ceiling without congressional approval. The Democrats see where this is going they just think they are clever enough to pull off over time single payer and ultimately single provider along with a hefty VAT tax to fund this.

Dust Bunny Queen said...

Invest in wives. After the apocalypse you can always trade a woman for something.

I heard that it was beer and booze that would become the currency of choice after our money becomes inflated to Wiemar Republic levels.

:-)

SteveR said...

I always thought it would topple, since the objective was to end up with a single payer system. But they may have failed to create a good failure.

cubanbob said...

Ultimately (pardon my long rant) the real question before the courts will be whether or not the constitution as it currently is understood allows the federal government to impose a national VAT tax, nationalize an industry and sector of the economy, compel someone as a condition of state granted license to accept whatever compensation offered as a condition of practicing one’s employment.

Joe Schmoe said...

cubanbob, I agree with your assessment that companies will do whatever they can to restructure around the ACA requirements. And I agree that they will do so. As I'm in a pessimistic state this year about governance and such, my concern is that unions will regain clout by organizing the legions of new 'part-time' workers. These part-timers-cum-teamsters might get some more benefits out of their employers, but overall employment numbers will go down even more, and companies will be forced to focus on labor management rather than providing their goods or services at a fair price. And the economy will continue to flump along on the bottom of the sea.

I just don't see any way how these oncoming laws actually will stimulate economic growth. The arguments for their positive economic effects are so convoluted that you need to believe that every dollar spent by the government yields more than a dollar in the overall economy.

chrisnavin.com said...

I find myself clinging to the hope that many people still don't realize what they've signed onto with Obamacare: The vast expansion of the gov't into our lives despite who's in charge, the enormous growth of power those who oversee it, possibly no better health outcomes, enormous deficits, bureaucracy in action (miraculously always meeting the budget or needing more, political cronyism, no one taking responsibility for anything except the few loyalists on top)

I have two liberal family members I talk with: one works in health care to establish best practices, and in her mind this is a primary moral obligation we all have to one another (she has collectivist, very Left liberal organizing principles), and this solution is a 'nudge' in the right direction. More people will get basic care, ER's were inefficient, insurance co's are too narrowly focused for the common good and this another step toward progress. Millions of poor people with no access will likely get some.

She did admit that costs have been stripped from those who pay and agreed that we need to get people to know what they're paying for, but that will always mean scarcity, and ineequality based on money. I suggested both will still exist but now it's a matter of who's in charge, and how free the rest of us will be.

Her husband is an older Northeastern democrat, and grew up close enough to Boston so that he knows what's right for the rest of the country. He's right in saying that the system we set up in the 40's and 50's tied health care to employment to get good employees, and it became a kind of de facto model that ain't working like it used to (the old corporate/gov't model is gone).

For him, too, this is a step towards civllization, and a moral ought for everyone.

It was a spirited Thanksgiving, to say the least, and religion and/or politics always leave a bitter taste in the mouth.


gbarto said...

Joe Schmoe,
If two people work 20 hours a week instead of one person working 40 hours a week, the headline number for unemployment improves and the newspapers say the economy's on the mend.

The biggest mistake people make with Obama is thinking it's about communism or socialism or Islam or whatever. What's really at play is a bizarre perversion of postmodernism that believes that if changing perception seems to shift the underlying reality at the margins, then eventually you can override even the laws of physics, never mind economics, if you speechify about it with sufficient passion.

Sam L. said...

When you outsource your bill-writing to number "n" different groups, there is an infinitesimal chance that all parts will fit together and make sense, and to pass a bill without reading it first is legislative misconduct, malfeasance, and stupid, and should be criminally sanctioned. YMMV.

cubanbob said...

Chris I have had this conversation as well. The usual reaction is disbelief and denial of what the inevitable will be. They simply believe that everything will work out fine and that doctors will continue to treat all comers no matter the compensation and that employers will continue to pay for the insurance and they may be paying just a little more in taxes but the wealthy will pay the bulk. People with this mentality are deep into magical thinking that somehow they will be spared no matter what their eyes tell them.
Until the time comes when they need to see a doctor and the doctor tells them I don’t accept this or that plan it won’t sink in. Then they will be outraged; they have a right to someone else’s services and at a price they feel is fair. When the inevitable happens that the only doctors that they will see are the Medicaid doctors, the newly arrived third world educated doctors and the third world educated nurse practitioners who will be providing them their basic care only then will the reality sink in. Those who can pay will always get the better care in the end. No rationing for those who pay full freight.

Joe the unions will try but they will run in to the reality of the right-to-work states. No matter what the unions try to do, part work is part time work and will never equal the pay of full time work. And the more they try, the more jobs will leave the union friendly states.

Gbarto, interesting point. But reality can only be denied for so long.

ambienisevil said...
This comment has been removed by the author.
Louise B said...

One thing I don't understand is if a doctor's license is tied to the fact that he must accept Obamacare pay rates, how does that align with the 13th amendment against slavery?

Skookum John said...

"compel someone as a condition of state granted license to accept whatever compensation offered as a condition of practicing one’s employment."

They tried this in Massachusetts some time ago. Physicians were told to accept any and all all Medicare/Medicaid patients if they wanted to keep their licenses. The hemorrhaging of the number of practicing physicians that followed, if I recall right, caused them to revoke the requirement before it even went into effect, or very shortly afterwards.

Doctors are very prickly, and even the left wingers among us will not stand for being made into slaves.

Dust Bunny Queen said...

People with this mentality are deep into magical thinking that somehow they will be spared no matter what their eyes tell them.

Yep. My hubby and I call it the "what? you didn't mean ME???" mentality. Somehow the rules and consequences are only there to affect other people. Certainly not THEM.

Elliott A said...

The only controller of state licenses is the state in which it is issued. Not even California would be stupid enough to try to force doctors to work for peanuts. They would just all move to red states.

Unknown said...

I work in Medicaid processing at the state level and I can tell you my state -- a very Blue one -- has done nothing toward setting up an exchange.

SDN said...

Louise, it would violate it nine ways from Sunday, but Democrats have always been the party of slavery. You say plantation, I say collective, let's call the whole thing what it is.

DH said...

Obamacare will implode whether states set up exchanges or not; it is specifically designed to implode.

And when the inevitable happens, the decades old trap will be sprung whereby a gov't induced crisis will be blamed on the private sector and a full gov't takeover of yet another economic sector will be demmed necessary.

DH said...

Obamacare will implode whether states set up exchanges or not; it is specifically designed to implode.

And when the inevitable happens, the decades old trap will be sprung whereby a gov't induced crisis will be blamed on the private sector and a full gov't takeover of yet another economic sector will be demmed necessary.

Edward said...

Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.

A dying people tolerates the present, rejects the future, and finds its satisfactions in past greatness and half remembered glory.

Of course one knows that everyone
dies, but somehow I had always
thought that an exception would
be made in my case.

Quotes by John Steinbeck

Apply them as seems appropriate.


Badger PUndit said...

law prof Ken Klukowski over at Breitbart.com had a nice piece a couple weeks ago on the federalism dynamic set up by Obamacare which sows the seeds of its destruction:

Obamacare will create two Americas for healthcare

http://www.breitbart.com/Big-Government/2012/11/13/Obamacare-Will-Create-Two-Americas-for-Healthcare

Edward said...

Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.

A dying people tolerates the present, rejects the future, and finds its satisfactions in past greatness and half remembered glory.

It seems to me that if you or I must choose between two courses of thought or action, we should remember our dying and try so to live that our death brings no pleasure on the world.

Of course one knows that everyone
dies, but somehow I had always
thought that an exception would
be made in my case.

Steinbeck quotes: Apply as you
find appropriate to the topic
at hand.

Edward said...

Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.

A dying people tolerates the present, rejects the future, and finds its satisfactions in past greatness and half remembered glory.

It seems to me that if you or I must choose between two courses of thought or action, we should remember our dying and try so to live that our death brings no pleasure on the world.

Of course one knows that everyone
dies, but somehow I had always
thought that an exception would
be made in my case.

Steinbeck quotes: Apply as you
find appropriate to the topic
at hand.

Richard Dolan said...

There are lots of cases bubbling up towards the SCOTUS already, raising a host of legal issues about various aspects of O- care -- whether the Feds can set up and subsidize exchanges in those states where the locals refuse to do so is only one of them. That one will involve two rules -- the 'plain text' rule that statutory text that is clear means what it says (only Congress can change it), versus the rule deferring to a regulatory agency's construction of its organic statute where the agency interpretation does not conflict with the statute's commands.

But there are many other challenges percolating in the lower courts -- equal protection (the basic issue in the Liberty Univ case just remanded to the 4th Cir), religious freedom (the issue in the many cases filed by Catholic institutions), separation of powers/delegation issues (the cases attacking the delegation of sweeping law-making powers to the IPAB, an executive board), and on and on.

Despite the headline ruling last June that O-care was a valid exercise of the taxing power, the Court struck down the coercive features intended to force states to accept O-care's expansion of Medicaid. When all of this litigation is over, that won't be the only part of O-care to be struck down. We just don't know yet which other parts will go -- the legal rules at issue all have enough play in the joints so that most of these cases could go either way.

And while the lawyers and judges spend the next few years wrangling about all that, America's employers will be left completely in the lurch, not sure what parts of O-care will ultimately survive. That will definitely be bad for workers in at least three ways. Because O-care's mandates and extra taxes apply based on the number of full time workers, employers will have every incentive to meet their labor needs without crossing those lines. Result -- many more part time positions (the no benefits jobs), and fewer full time ones. Second, the uncertainty of what the law will ultimately require will lead employers to postpone major plans, or move operations off shore, to avoid the problems that might arise depending on how those uncertainties are resolved. Third, the reality that O-care will now play out differently from state to state (I.e., states with or without an exchange) adds a special kind of uncertainty, as employers try to figure out which approach is less likely to add to the cost of operations.

It's just what Nancy P said -- they had to pass it before anyone could know what was in it. She didn't realize that it will take much longer to finally figure that out. Nor did she have a clue that the process she described was all bug, no feature.

Unknowable said...

Democrats don't want Obamacare to work. They want it to sound like they care - and that all-you-can-consume health care paid will by yours for cheap or "Free!" if you are a woman or minority.

Obamacare actually working is the last thing the Democrats want.

Operationally, Obamacare was designed to be an ongoing source of not-to-be-wasted crises to be be exploited by Democrats for money, votes, power and the expansion of that one thing we all belong to: Government.

If Medicare and Social Security are the third rail of politics, Obamacare will become the entire rail system of politics.

Steven Anderson said...

I noticed this comment from Balfegor on 12/1/2012 at 12:02

http://althouse.blogspot.com/2012/12/if-states-dont-set-up-insurance.html?showComment=1354384976306#c5609494044777269389

He pointed out that the bill that was passed was one that originated in the Senate, previously.

That matches my recollection, does anyone else differ?

This got through the Supreme Court based on the legislature's taxing power.

Doesn't the Constitution require bills of revenue to originate in the House?

SukieTawdry said...

gbarto said...The biggest mistake people make with Obama is thinking it's about communism or socialism or Islam or whatever. What's really at play is a bizarre perversion of postmodernism that believes that if changing perception seems to shift the underlying reality at the margins, then eventually you can override even the laws of physics, never mind economics, if you speechify about it with sufficient passion.

Obama, at one time at least, is/was a devotee of behavioral economics. My understanding is rudimentary at best, but the behaviorists, I gather, believe we engage in the marketplace more on an emotional than intellectual, analytic level and, accordingly, are easily manipulated. They place great stock in the power of the anecdote, the narrative, folk lore and "approximate" knowledge. They're also really into framing. Sound like anyone you know?

Tom Perkins said...

I suspect the massive loophole he opened in the concept of limited government will be exploited ad nauseum in the future. Even if it works as a "wound that escaped notice but will prove fatal", it is lit match held to the constitution.

Roberts simply failed to do his job, whether out of forebearance or out of trying too hard to be clever.

ambienisevil said...
This comment has been removed by the author.
Don M said...

Steven Anderson

The Senate took a different bill that had been passed by the House, stripped out its content, and added the Obamacare provisions. Then it went back to the house for approval based on the changes that occurred in the Senate.

"Deemed Passed" is how Pelosi reacted to senate usurpation of house prerogatives.

Lawyer Mom said...

The O-care scheme is about to topple? Agreed.

http://lawyermommusings.blogspot.com/2012/07/otaxacare-too-clever-by-half.html

Saint Croix said...

Is this our future?

Just call them "fetus" and everything is okay.

Rusty said...

cubanbob.
That rant should have a thread of its own.

Saint Croix said...

Here's the Daily Mail article.

The investigation, which will include child patients, will look at whether cash payments to hospitals to hit death pathway targets have influenced doctors’ decisions.