Baseball Crank
Covering the Front and Back Pages of the Newspaper
March 23, 2010
POLITICS: Unflexible

There will be many more things coming out about Obamacare as we finally get a fix on what was in the massive final bill, like the provisions exempting senior Congressional staff from its provisions or Jim Webb's worry that some military plans were not properly exempted from the bill.

Francis Cianfrocca looks at the foolishness of Obamacare slashing the tax exemption for flexible spending accounts. Health savings accounts and other flexible spending accounts, combined with high-deductible health plans, are one of the few ways we have to impose price discipline on care itself, and that's being replaced by a plan that puts massive upward pressure on the price of insurance, at the demand side by mandating its purchase by everyone and on the cost side by imposing a battery of restrictions on insurers' ability to evaluate risk or provide choice in what kind of coverage can be included in a plan. Personally, I recently switched my family to a high-deductible plan to avoid the rising rates of full-service plans, and on top of its various other bad effects the bill will limit my ability to use pretax funds to pay for healthcare; lots of people will be in the same boat, especially small business owners and employees and others among the self-employed who may not work for large organizations.

Posted by Baseball Crank at 3:29 PM | Politics 2010 | Comments (17) | TrackBack (0)
Comments


I followed the healthcare "discussion" as closely as I could stand -- dissecting piecemeal such a massive power grab was diffucult for me to stomach -- but I confess that only after the bill was voted upon did I learn that the age for child's coverage was raised all the way to 26 years old.

God help me, I simply cannot believe a legislative abortion such as this could stand. Crank, you and I are fellow Queensians; who could we get to oppose Anthony Weiner?

Posted by: DD at March 23, 2010 4:35 PM

On the "personally" point, starting in 2013, thanks to the Democrats, the floor for itemized medical expense deductions will be raised from 7.5% of AGI to 10%. That's *GROSS* income. For the last seven years we've qualified for that deduction, primarily thanks to my son's autism. Get out a calculator and punch in your *GROSS* income. Now, multiply that times 7.5%. Is that a lot of money to you? Would you like to have spent that much out-of-pocket last year on health care? Well, I've paid at *least* that percentage every year since 2003.

And now, the Democrats have officially decided to raise my taxes because they don't think 7.5% of my gross is enough to pay in health care costs.

Wow, being declared "rich" by the ruling party of the United States government sure doesn't feel like I thought it would.

So, now, they're going to raise my taxes.....because I dare to spend my money on my son's autism. Much like their plans to remove the deductiblity for the "rich" to donate to charities, some of these tax increases simply boggle the mind.

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Posted by: xinyue5588 at March 23, 2010 10:53 PM

By the way, I voted for the other guy!

Gird your loins!

Posted by: Lee at March 24, 2010 12:08 PM

Beautiful, I have a prescription for UVB rays that help alleviate my psoriasis. Or, in layman's terms, I undergo ultra violet ray treatment in order to keep my skin from literally cracking and bleeding during low humidity weather (like, now). It's known as "tanning", but the tan is an after thought, the UVB ray is the key as there is no cure for psoriasis & creams/pills do not stop my hands from bleeding all over my workstation.

10% more I get to pay for that treatment, too, thanks to Obamacare. This just keeps getting better and better.

Posted by: RW at March 24, 2010 2:22 PM

RW,
It may get worse. The studies I've read state that after this all takes effect (affect?), the average family of four with AGI of 100K will spent about 25% of their after-tax income on health care related expenses. Now, some say that 100K makes one "rich", so I mean, I guess it's okay.

Posted by: per14 at March 24, 2010 2:27 PM

The "weird" thing about the health care bill is it actually creates incentives to drop your insurance. The penalty for not having it will be considerably less than the cost of insurance for many people. (In the "personally" department, it will be about a $5,000/year difference!) And because health insurance companies now have to take my business no matter what, I can wait and get insurance when I get sick or when I know my family is about to go through extensive medical costs (pregnancy, etc.).

Posted by: per14 at March 24, 2010 2:32 PM

OK all of you lawyers out there, how likely is it that the consitutional lawsuits concerning us being foreced to have health insurance will make it ot the SUpreme Court and be be overturned?

I would think this would be a hot topic!

Posted by: Lee at March 24, 2010 6:02 PM

Lee, your question deserves a longer answer, but here's the short-ish answer:

(1) Stretching the Commerce Clause to permit Congress to require people - just for being alive - to buy health insurance from a private company does serious violence to any reasonable limits on the commerce power. Any responsible reading of the Constitution would hold that Congress lacks the power to do this.

(2) That said, in cases from Wickard v Filburn (wheat) to Gonzales v Raich (marijuana), the Court has held, wrongly in my view, that the Commerce power can extend to regulation of crops you grow or consume on your own land, on the theory that private activity, when aggregated, can affect interstate commerce (note that if you accept this line of reasoning and apply it to the Dormant Commerce Clause under the Pike test, you could conclude that the Commerce Clause preempts state regulation of virtually anything). This is a somewhat different situation because it involves compelling behavior rather than regulating existing behavior, but the "logic" of Wickard and Raich suggests the Court may be committed to the idea that almost any economic activity can be regulated by Congress. One need hardly know any of the history of the Commerce Clause to realize what a shock this would be to the Americans who ratified that provision.

I certainly think there's a chance that the Court would strike down the individual mandate, but I would not bet the farm on it. Whereas, had the Democrats used the "deem and pass" strategy they would have been running a much greater legal risk, which is doubtless one reason they dropped that nonsense.

Posted by: Crank at March 24, 2010 6:16 PM

Crank,

Thanks for the quick reply.

So could the same logic be used by Conress to pass a law madating everyone must buy their cars from GM or thay everyone must eat lettue or Tuesdays? Is there no restriction on what Congress can use as a rationale for madating (just becasue you are alive) to do anything it wants? How can that be constitutional?

Posted by: Lee at March 24, 2010 7:37 PM

Lee,

I agree with Crank - it's likely to pass the Commerce Clause challenge based on the cases Crank cited, with the mandate being the most interesting challenge.

As for your GM example, it may be, if Congress can show an aggregate effect on interstate commerce. Also, if I remember correctly from law school, vehicles such as cars likely would be considered an "instrumentality" of interstate commerce, which could be an independent basis for commerce clause regulation.

Lettuce on Tuesdays? That would be a real stretch. Congress really would have to establish the aggregate effect, but you never know...

Posted by: MVH at March 24, 2010 9:07 PM

So there is really nothing Congress can't mandate if their lawyers are creative enough?

Posted by: Lee at March 25, 2010 7:15 AM

Lee,

No, it's not -that- bad. The Court has started to define limitations to the commerce clause. Basically, the Court has said on several occasions that Congress cannot use the commerce clause as a basis for intruding on activities that have traditionally been concerns of state and local government - such as education (US v. Lopez) and local criminal conduct (US v. Morrison).

I'm not nearly as upset as Crank about the Court's commerce clause jurisprudence, and I wouldn't worry too much about eating lettuce on Tuesdays. But I definitely agree that there are limits to the commerce clause, and I agree with the results in Lopez and Morrison. That's why I'm glad there are conservative judges on the Court, even though I wouldn't want all of them to be.

Posted by: MVH at March 25, 2010 9:40 AM

MVH,

Thanks for the feedback.

Everyone keeps mentioning the Commerce clause, but really the health insurance madate is not about commerce but about telling each citizen that they must have health isurance or they can be fined/jailed.

How is that about commerce? Isn't that really about individual rights? What part of the consitution allows Congress mandate to citizens that they must buy a product or service or be punished? My understanding that this has never been done before.

Posted by: Lee at March 25, 2010 11:25 AM

You always ask two separate questions about exercises of federal power. The first is where the Constitution creates the power, and to me that's the big issue here. The second is whether some other provision of the Constitution limits that power. While I think it's inconsistent with the spirit of a number of Constitutional amendments to make this sort of imposition on individual rights, I'd have a hard time finding a legal basis for saying that the Constitution has somehow expressly taken away whatever powers Congress does have in this area. I suppose you could argue that it's a Fifth Amendment taking of property, but off the top of my head, the caselaw applying takings theory to taxes and fees is not that encouraging.

So, I'd say that the real issue is where the power comes from in the first place.

Posted by: Crank at March 25, 2010 11:34 AM

How does the above reconcile with this Reuters article re: financial services companies expecting _expansion_ of HSA funding? (http://www.reuters.com/article/idUSTRE62M4AY20100323) I read the article, and it doesn't sound like the idea is that lots more people would be using them at lesser contribution levels or anything like that.

I did find confirmation about the FSA cap decreases. But, at least where I work, I'm only able to use the FSA for Dental and Vision expenses anyway (generally speaking) since I'm in a HDHP and use an HSA. So the $2500 cap would be higher than we'd go in any year when we weren't dumping a bunch into dental/orthodontics.

As far as I know, HSAs are a much superior vehicle to FSAs in that funds are the individual's to keep and roll over year-to-year. FSAs are "use it or lose it." HSAs are both more friendly to individuals and would also seem better equipped towards rational spending decisions and cost control.

Genuine questions above as I am a big fan of the whole HSA setup.

Posted by: Michael at March 25, 2010 12:33 PM

Crank,

Your comment what I was driving towards. Where in the Consitution is Congress given the power to mandate that a citizen must buy health Insurance or be finded/jailed? That to be would be heart of any lawsuit. Such a lawsuit whold find it's way to SUpreme Court-and I hope very quickly!

Posted by: Lee at March 25, 2010 2:18 PM
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