ObamaCare Decision Invites Supremes to Limit Federal Power

The 6th Circuit was the first of several appeals courts to rule on the validity of ObamaCare’s individual mandate, and conservatives are disappointed about Wednesday’s 2-1 decision upholding the law. They shouldn’t be.

A careful reading of the entire 64-page document shows the swing judge appears to be inviting the U.S. Supreme Court to use the case to finally put the brakes on the seemingly unlimited expansion of federal powers under the Constitution’s Commerce Clause.

The key vote in Wednesday’s decision was Judge Jeffrey S. Sutton, appointed to the Circuit court by President George W. Bush and a former law clerk to Supreme Court Justice Antonin Scalia. His audience is the Supreme Court, not us, and he sends a very loud signal that it’s time, with this case, for them to reverse course.

Therefore, the celebration by those on the left who believe that this decision will give more impetus for the mandate to be upheld in other cases should put the corks back in the champagne.

The Supreme Court has allowed the Commerce Clause to be used for decades to expand the power of the federal government to reach into virtually every corner of our economy and our lives.

Judge Sutton explained that lower court judges have a “duty to respect the language and direction of the Court’s precedents.” He said it is not within the powers of any lower court to reverse those precedents. “A court of appeals cannot” move beyond these judicial precedents, he repeats. Hence his vote to uphold the law based upon previous liberal interpretations of the Commerce Clause.

Only the Supreme Court can decide if interpretations of its previous decisions (about a farmer’s production of wheat or growing marijuana) have “outstripped the facts” or if subsequent interpretations have made “broader and more extravagant assertions of legislative power…impervious to challenge,” Sutton writes.

The judge argues that “commerce power has ‘evolved over time’ in favor of greater congressional power,” but adds, “that need not invariably be the case, lest each expansion of federal power beget another, piling one inference of an unlimited national police power onto another.”

But he suggests that the health law presents the Supreme Court with the opportunity to finally put the brakes on the extravagant use of the Commerce Clause to expand federal power to unprecedented levels. (Click here to read the rest of this post, available at National Review Online…)

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Another bad White House idea. Joe Antos of AEI and Guy King, a former chief actuary for Medicare, are out today with an important new paper that warns against yet another bad idea emanating from the Obama administration. The latest plan from the White House targets the only major federal entitlement program that relies on market competition and consumer choice to hold down spending — the Medicare Part D prescription drug program.

Their paper is called, “Tampering with Part D Will Not Solve Our Debt Crisis.” Here’s a short description:

Given the current climate and the debate over the debt limit, reform of Medicare — which faces a significant fiscal crisis — is inevitable. Anticipating these changes, the White House and key Democratic leaders in Congress recently introduced the “Medicare Drug Savings Act of 2011” as a means of saving $112 billion over the next decade by reducing spending on Medicare Part D — the prescription drug program for seniors. Based on the presumption that manufacturers are making extraordinary profits from the government, the proposed legislation would mandate that drug companies give the federal government rebates for low-income seniors enrolled in Medicare Part D.

Under the proposed legislation, AEI’s Joseph Antos, a former Congressional Budget Office official, and Guy King, a former chief actuary for Medicare, find that:

  • Many Medicare Part D plans could change significantly or face failure, disproportionally affecting the most vulnerable seniors.
  • Premiums for all seniors would be likely to increase, with the strongest impact borne by low-income seniors.
  • Government spending on Medicare as a whole is likely to increase, offsetting any savings.

 

I wrote about this issue also in a piece for Forbes today titled “The President’s Plan To End Medicare Part D As We Know It.”

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A true crisis: Insurance agents and brokers operate as external human resources departments for many small- and medium-sized businesses. Nearly 500,000 agents in all 50 states study the health insurance markets and help individuals and business owners shape policies, find the best deals, and assist patients with complicated claims and paperwork filings.

So as health care gets ever more expensive and complex, why on earth would ObamaCare want to put them out of business? But that is unfortunately what already is happening, years before the full law goes into effect.

The key problem is the requirement that insurers must pay 80% of their premium revenue in medical claims, leaving 20% for everything else (with an 85/15 rule for large employers). This is called the “medical loss ratio” or MLR.

The National Association of Health Underwriters has been fighting hard to rectify this assault on agents and brokers, under the leadership of Janet Trautwein, with a legislative fix that has bi-partisan support in Congress.

Last October when the National Association of Insurance Commissioners was finalizing its recommendations on what should be included in the 80/20 categories, they recognized the potential for the MLR to devastate the agent/broker community. But the NAIC was forced by HHS to defer action and said the commissions would have to be included in the 20%.

But that means that commissions are being cut by as much as 50%. Some states have tried to get waivers from the 80/20 rule, but it’s a hugely complex bureaucratic process and only a few have succeeded in navigating the maze.

Beginning in late December and January 2011, commissions started to drop like a rock. In Washington State in the mini-group (1 to 5 employees), commissions dropped to zero. Brokers can’t assist clients even for free because the liability coverage brokers are required to carry won’t allow it.

There are 500,000 licensed agents nationwide with 2 to 4 employees for every agent so the job loss could be very large. Most earn $45,000 to $62,000, but many could now become eligible for Medicaid and food stamps.

Many brokers are small business people, and this clearly is not a sustainable business model. Congress is considering a small reporting change that wouldn’t affect premiums up or down nor impact state premium taxes, but it would save jobs now. Stay tuned. This is a crucially important issue that needs to be fixed now.

CLIP OF THE WEEK

Medicare Advantage and Quality of Care

A panel of experts provides an overview of the latest research on Medicare Advantage, specifically revealing how hospital readmission rates are lower and overall quality is higher than traditional fee-for-service Medicare.
Watch now >>

 

 

GALEN IN THE NEWS

The President’s Plan To End Medicare Part D As We Know It

Grace-Marie Turner
Forbes, 06/29/11

Part of President Barack Obama’s deficit reduction plan is to allow Medicare to “negotiate” prescription drug prices. This sounds sensible, except that government never “negotiates” anything. It sets prices and then tells sellers to take it or leave it. The president’s plan is misguided, would lead to shortages and other market distortions, and would wind up undermining the most successful and cost-effective entitlement program the federal government runs — the Medicare prescription drug benefit, also known as Part D. We should stick with the competition and consumer choice that are working in Part D and not switch to government price controls that have failed for centuries.

Read More »

Obamacare Decision May Invite Supremes to Limit Federal Power

Grace-Marie Turner
National Review Online: Critical Condition, 06/30/11

The Sixth Circuit was the first of several appeals courts to rule on the validity of Obamacare?s individual mandate, and conservatives are disappointed about Wednesday?s 2-1 decision upholding the law. They shouldn?t be. Liberals are celebrating prematurely. The Supremes will rule, and the decision that the Left perceives as a victory plants the seeds for a tectonic shift in a constitutional interpretation to limit federal powers.

Read More »

HEALTH REFORM

The Sixth Circuit Got It Wrong
Ilya Shapiro, Cato @ Liberty, 06/29/11

An ObamaCare Legal Precedent?
David B. Rivkin, Jr. and Lee A. Casey, The Wall Street Journal, 06/28/11

Spying on doctors: Prologue to Obamacare
The Examiner, 06/28/11

Obama?s Health Care Spies
Merrill Matthews, Forbes: Right Directions, 06/30/11

Administration Halts Survey of Making Doctor Visits
Robert Pear, The New York Times, 06/28/11

Price Caps Will Only Cap Availability of Insurance
Sally C. Pipes, Forbes.com, 06/28/11

Redefining Retiree Medical Strategy: Employer actions in a post-reform environment
Towers Watson/ISCEBS, 06/11

MEDICARE

Tampering with Part D Will Not Solve Our Debt Crisis
Joseph Antos and Guy King, American Enterprise Institute, 06/29/11

Letter from 244 Concerned Auction Experts on Medicare Competitive Bidding Program
06/17/11

STATE ISSUES

The High Price of Massachusetts Health Care Reform
David G. Tuerck, PhD, Paul Bachman, MSIE, and Michael Head, MSEP, The Beacon Hill Institute, 06/11

COMPARATIVE EFFECTIVESS RESEARCH

Blue Pill or Red Pill: The Limits of Comparative Effectiveness Research
Tomas J. Philipson and Eric Sun, Manhattan Institute, 06/11

INTERNATIONAL HEALTH SYSTEMS

Access Delayed, Access Denied: Waiting for New Medicines in Canada 2011
Mark Rovere and Brett J. Skinner, Fraser Institute, 06/29/11

Events

Making the Case for the Cost-Effectiveness of Vaccines for Global Health
Research!America, Global Health Council, and PATH
Wednesday, July 6, 2011
9:00am
Washington, DC

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