Obamacare ruled Unconstitutional!!

[pb4uski]

What doesn't make sense in this ruling to me was that it was premised on the individual mandate being eliminated. As I recall they didn't eliminate the individual mandate, they just made it toothless by making the tax nil... so there is still an individual mandate that is a tax but it is just zero. IMO this ruling will get overturned in due course so there is nothing to worry about.

 

[Mr._Graybeard]

Quite a bit of math to say that absent a mandate -- actually a higher one -- the whole thing will come crashing down financially and quite possibly take key parts of the healthcare insurance infrastructure with it.

Not sure why it would "come crashing down financially," since over 80% of enrolees qualify for subsidies, according to what I've read. The federal government picks up the bulk of the tab, and we've seen time and again that Congress isn't shy about running a deficit. Just add another shift on the printing presses.

 

[Luck_Club]

A pox on both their houses.

That said, and in keeping with that sentiment, the FIRE issue here is less the absolute outcome than the rank uncertainty this decade long thrashing on healthcare policy has imposed on people trying to plan their lives.

There is:

No sign that this thrashing will settle down.

Some sign that Obamacare will get taken out.

A lot of political logic to say that it now has so much inertia there is no way Obamacare will get eliminated.

Quite a bit of math to say that absent a mandate -- actually a higher one -- the whole thing will come crashing down financially and quite possibly take key parts of the healthcare insurance infrastructure with it.

So: how does one planning to FIRE substantially before Medicare dance deal with this chaos in the private health insurance market?

Maybe some logic will be applied to the problem, thus solving the run away insurance costs.

Ie tort reform
Ie National market place for insurance
Ie High risk pools and costs centers
Ie no free lunch by managing your income for subsidies

 

[Montecfo]

Maybe some logic will be applied to the problem, thus solving the run away insurance costs.

Ie tort reform
Ie National market place for insurance
Ie High risk pools and costs centers
Ie no free lunch by managing your income for subsidies

Luck,
That seems far too rational to actually happen.

I feel like a few of us together could redesign it to make it workable.

 

[ShokWaveRider]

High risk pools do not work. They fill up way too fast and are typically underfunded. The only real answer is to remove insurance companies from the mix and have a standardized HC system, whatever that shakes out to be. Unfortunately the insurance companies hold too much influence over the powers that be. Medicare for all is really the only solution, all be it not the perfect one.

 

[ERD50]

One lawyer's analysis:

"Important to note about the future of Obamacare:
1. It will be struck down in the 5th Circuit
2. If not, it goes to SCOTUS - Roberts was the swing vote in saving the ACA, not Kennedy (who was replaced by Kavanaugh)
3. Roberts called the ACA a constitutional mandate i.e. legal ...

So if all that is accurate, it seems unlikely for anything to change.

The optimist in me says that having it struck down could end up being a good thing. There is much political pressure to keep a lot of it in place (allowances for pre-existing conditions is probably #1), so there is almost zero chance of this going away.

With a divided Congress, just maybe they are forced to work together and produce some real fixes to significantly improve Obamacare/ACA?

Before you laugh, the realist in me will remind you that Congress has recently passed some bills with overwhelming support from both sides of the aisle. It can, and does happen.

Now I'll nit-pick #2. I hate the term "swing vote". In a 5-4 decision, each of the 5 votes count, and they have equal weight. So what you are saying is that Kavenaugh replaced Kennedy, and Kennedy voted against ACA, so if Kavenaugh votes against ACA, no change and it is upheld anyhow, right? Semantics I guess, but I just hate the term "swing vote" - they are all votes!

-ERD50

 

[Closet_Gamer]

Not sure why it would "come crashing down financially," since over 80% of enrolees qualify for subsidies, according to what I've read. The federal government picks up the bulk of the tab, and we've seen time and again that Congress isn't shy about running a deficit. Just add another shift on the printing presses.

I understand your point -- its essentially my "it has too much momentum" point -- but we are playing with huge sums of money and a major fraction of the economy with a staggering cost CAGR.

While SS is a mess, there is at least some effort to coherently do the accounting and forecasting on it as a standalone program. I'm not aware of that with ACA.

As they say, something that can't go on forever won't.

I suspect that GM going under would be child's play vs. one of the big insurers hitting the wall because the government messed up the insurance market and/or the insurer manage the complexities of the situation so badly that they become insolvent. It happens...just ask Bear Stearns, Lehman Bros. and AIG.

And having the political will to do the bail outs is not a sure thing.

 

[pb4uski]

....The only real answer is to remove insurance companies from the mix and have a standardized HC system, whatever that shakes out to be. Unfortunately the insurance companies hold too much influence over the powers that be. Medicare for all is really the only solution, all be it not the perfect one.

I don't disagree, but the insurance companies are not the problem... their rates are capped at 125% of claim costs by law... the real problem is the high cost of medical services.

 

[MichaelB]

I don't disagree, but the insurance companies are not the problem... their rates are capped at 125% of claim costs by law... the real problem is the high cost of medical services.

The high cost of medical services is one problem. Different insurance regulations for individuals, small groups and large groups is another problem. Large scale micro-segmentation of risk pools is another.

 

[Montecfo]

I don't disagree, but the insurance companies are not the problem... their rates are capped at 125% of claim costs by law... the real problem is the high cost of medical services.

Agree with this.

It is as if medical services are designed to be expensive

So think of a service which costs thousands of dollars annually. Neither the seller nor the buyer has any idea the price of the service when it is purchased.

How could you ever expect to get value?

 

[Mr._Graybeard]

I suspect that GM going under would be child's play vs. one of the big insurers hitting the wall because the government messed up the insurance market and/or the insurer manage the complexities of the situation so badly that they become insolvent. It happens...just ask Bear Stearns, Lehman Bros. and AIG.

And having the political will to do the bail outs is not a sure thing.

Yeabut insurers are making profits providing plans for Obamacare. https://www.politico.com/story/2017/12/07/obamacare-profits-health-care-285258

 

[Smitty700]

What doesn't make sense in this ruling to me was that it was premised on the individual mandate being eliminated. As I recall they didn't eliminate the individual mandate, they just made it toothless by making the tax nil... so there is still an individual mandate that is a tax but it is just zero. IMO this ruling will get overturned in due course so there is nothing to worry about.

My understanding is that a mandate by itself is unconstitutional. A law stating that people were forced to buy a product would be unconstitutional. So if Congress passed a law saying that everyone had to buy a Ford or GM car this year to boost the economy, that "mandate" would be unconstitutional.

The way the court got around this in the initial challenge was to say the mandate was not really a mandate. It was a tax. If you didn't have health insurance, then you had a pay an additional tax. So the Supreme Court said that the ACA is not an unconstitutional mandate but rather a tax that passes constitutional muster.

So now that the "tax" has been repealed, we are left with a law that says people must buy health insurance if they don't have it. We're back to a mandate to purchase health insurance. Thus, the court ruling from the federal judge says the law is therefore unconstitutional, in the same way as if the law forced us to buy a Chevy Impala.

 

[mpeirce]

The way the court got around this...

Hence my comment about workarounds...

 

[Another Reader]

I'm just relieved that I have moved to worrying about Medicare and all its' derivatives instead of the pre-Medicare insurance jungle. Medicare has been around for decades and is unlikely to disappear in my lifetime. I suppose we could all be forced into Advantage plans with care rationing and de facto death panels, but there is always medical tourism for someone with a few bucks.

Getting all my premiums reimbursed plus whatever is left over in the allotment being available for any co-pays on drugs is the icing on the cake. I'm up around $800 a month over the pre-Medicare retiree plan, thanks to making ten years in my last position.

Will be interesting to see if anyone with any power in Washington will support Medicare for all...

 

[pb4uski]

The high cost of medical services is one problem. Different insurance regulations for individuals, small groups and large groups is another problem. Large scale micro-segmentation of risk pools is another.

I agree on the second part... I would like to see all health insurance individual so when one has a job change it doesn't disrupt their health insurance... the entire country (or at least, each state) would be one humongous group that insurers could vie for.

 

[MichaelB]

I agree on the second part... I would like to see all health insurance individual so when one has a job change it doesn't disrupt their health insurance... the entire country (or at least, each state) would be one humongous group that insurers could vie for.

That makes sense.

 

[pb4uski]

My understanding is that a mandate by itself is unconstitutional. A law stating that people were forced to buy a product would be unconstitutional. So if Congress passed a law saying that everyone had to buy a Ford or GM car this year to boost the economy, that "mandate" would be unconstitutional.

The way the court got around this in the initial challenge was to say the mandate was not really a mandate. It was a tax. If you didn't have health insurance, then you had a pay an additional tax. So the Supreme Court said that the ACA is not an unconstitutional mandate but rather a tax that passes constitutional muster.

So now that the "tax" has been repealed, we are left with a law that says people must buy health insurance if they don't have it. We're back to a mandate to purchase health insurance. Thus, the court ruling from the federal judge says the law is therefore unconstitutional, in the same way as if the law forced us to buy a Chevy Impala.

The error in your analysis it that the tax hasn't been repealed... it was set to a tax rate of zero... which makes it toothless but technically the tax is still there.

And BTW, SCOTUS never ruled on whether or not the mandate was constitutional.

So as it stands now, there is no mandate to purchase health insurance... there is a tax if one doesn't purchase health insurance and the tax rate is zero.

 

[pb4uski]

...I suspect that GM going under would be child's play vs. one of the big insurers hitting the wall because the government messed up the insurance market and/or the insurer manage the complexities of the situation so badly that they become insolvent. It happens...just ask Bear Stearns, Lehman Bros. and AIG.

And having the political will to do the bail outs is not a sure thing.

Yeabut insurers are making profits providing plans for Obamacare. https://www.politico.com/story/2017/12/07/obamacare-profits-health-care-285258

The individual health insurance market is quite small in the whole scheme of things... for discussion purposes say 20 million people at $20k a year... so only $20 billion in premium... puny.... nowhere near the size of GM.

I have no idea what Bear Stearns, Lehman or AIG have to do with the issue... totally different animals and even thought AIG is an insurer the problems it had were related to its non-insurance operations.. so totally irrelevant.

Finally, insurers are supposed to be able to make a profit.. by law they have to refund any premiums in excess of 125% of claim costs.. so that 25% is left to cover income taxes, overhead and profit. If as is claimed in the article

The POLITICO analysis shows that insurers, on average, spent 78 percent of premium revenues on customers' medical claims through the first nine months of this year.

then customers would get a refund for 2% of premium.

 

[Rianne]

Looking ahead, Medicare will be much more expensive for us. We are riding a "get out of jail free card" right now. Our premium last year was $7.84/mo + $6000/per for deductible. If we paid our full deductibles it would still be $12,000 less than if we went over subsidy income. Our policy in full is $24K plus $6000/per deductibles. And we have an HSA. Our premiums 2019 are $8.24/month. I actually feel guilty.

This cannot continue. It's too good. If a couple makes $80K as independent contractors, real estate or insurance sales, they are screwed. Even some employer based HC plans are not this good.

 

[Mr._Graybeard]

Maybe some logic will be applied to the problem, thus solving the run away insurance costs.

Ie tort reform ...

IMO, tort reform is a red herring in the health care equation, a talking point for some politicians that has little real bearing on expenses.

In my state, there already is a $750,000 cap on non-economic damages related to medical malpractice. It hasn't contained the cost of healthcare.

 

[Smitty700]

The error in your analysis it that the tax hasn't been repealed... it was set to a tax rate of zero... which makes it toothless but technically the tax is still there.

And BTW, SCOTUS never ruled on whether or not the mandate was constitutional.

So as it stands now, there is no mandate to purchase health insurance... there is a tax if one doesn't purchase health insurance and the tax rate is zero.

The federal court opinion did not take the view that a tax of $0 is really a tax.

And SCOTUS never ruled whether the mandate was constitutional in the original challenge because it is already established law that a mandate would be unconstitutional. That's what the challenge was about. And that's why the only way to make the ACA mandate constitutional was to redefine it as a tax.

 

[pb4uski]

The federal court opinion did not take the view that a tax of $0 is really a tax. ...

I understand.. that is where the judge erred.

Today we have two different base tax rates for LTCG... 0% if your taxable income is at or below a certain amount ($77,200 in 2018 for MFJ) and 15% if it is above that amount.

If zero is a problem then they could make it 0.001%

 

[MichaelB]

Here’s the decision https://oag.ca.gov/system/files/att...nting-plaintiffs-partial-summary-judgment.pdf

 

[Smitty700]

I understand.. that is where the judge erred.

Today we have two different base tax rates for LTCG... 0% if your taxable income is at or below a certain amount ($77,200 in 2018 for MFJ) and 15% if it is above that amount.

If zero is a problem then they could make it 0.001%

If I pay 0% LTCG tax, I would say that I pay no tax. If the penalty for murder was zero days in jail, most folks would say there is no penalty for murder.

Good point that the law could be changed to make the rate very low to fix the problem; however, in my opinion, making the law unconstitutional was one of the motivations for passing the repeal of the ACA penalty in the first place. It was an easy way to kill the law by having the courts do the dirty work.

 

[Smitty700]

And BTW, SCOTUS never ruled on whether or not the mandate was constitutional.

SCOTUS did actually rule that the mandate was unconstitutional. From the federal court's opinion at https://oag.ca.gov/system/files/att...ting-plaintiffs-partial-summary-judgment.pdf:

In NFIB, the Supreme Court held the Individual Mandate was unconstitutional under the Interstate Commerce Clause but could fairly be read as an exercise of Congress’s Tax Power because it triggered a tax.​