ObamaCare Special: Europe Here We Come, And A Disaster In The Making
Friday, June 29, 2012
Please allow me to feel smart for one day because the Supreme Court ruled in favor of the mandate by changing it to a tax, the only legal solution and something everyone denied it would be. Three months ago I wrote my "unlegal" opinion on the issue -- "Healthcare Mandate's Precedent Is The Pandora's Box" - and the key excerpt follows.
This is not about whether this is a tax, because everyone pays taxes and we understand that. If Congress decided to impose taxes and then use the money to create a healthcare system, it would be legal, even if we didn't like it.
The good news is that the Pandora's box stayed closed – kind of -- and the Supreme Court ruled that government cannot force us, the peons, to buy something we do not want. Having said that, we have now embarked on a long journey that is modeled after the European healthcare system, while we witness simultaneously the end result of expanded and inefficient social policies that have the euro zone in a financial and political bind.
But as the political debate will magnify, there's a lingering issue with the tax, that is not being examined closely, as far as I can tell. The last time I looked, the average healthcare insurance policy cost for a family was between $6,000 and $10,000 per year, and the “tax,” or “fine” as originally worded, is far less.
Beginning in 2014, the healthcare law requires individuals to have coverage or pay a fine. The starting fine for an individual without health insurance will be as little as $95, but by 2016, the penalty jumps to $695, or 2.5 percent of taxable income, whichever is greater.
There’s actually a tax ceiling of $2,100, and a family earning $84,000 by 2016 will be liable for that maximum if health insurance isn’t purchased, which is a far cry from the typical cost of policies offered by health insurance companies. The end result is the establishment of the single payer system over time. Now insurance carriers will have to compete with the government's price list, and that creates a real business obstacle they have never encountered, unless their polices suffered from over billing syndrome, as is the case with many hospitals. Now it appears that everyone has an incentive to cancel their medical coverage, and if the majority of Americans elect to pay the tax in lieu of insurance, there’s not enough money to run a national healthcare system.
Medical services providers will be squeezed by both government and insurance companies, and ultimately the "tax" as written will not be enough to cover claims, leading to even more taxes. Smokers beware because a pack of cigarettes will likely double, and the obesity causing foods and beverages will be hit with a ton of health minded tax increases. What do you mean $5 for a coke?
But there’s yet another side to the issue, which deals with the fact that supporters of the law worded the “tax” as a “penalty” for failure to engage in commerce, which was unconstitutional for all purposes. The Supreme Court virtually changed the statute, but the “tax” characteristic doesn’t hold water either. Why? Besides income, taxes are imposed on things we buy and own – clothing, real estate – and in this case we’re being taxed for not buying or owning, or economic “inactivity.”
Word to the wise: If I were a Supreme Court Justice that sided with the ruling I would be looking for a different line of work, because even my teenage daughter understood this one. And it took 193 pages to spell it out, when a double spaced single page would suffice.
And the government now says that it is a penalty, not a tax. But if it's a penalty, it's unconstitutional and we should go back to the Supremes. Oy vey!