Posted by: SWL | June 29, 2012

Supreme Court Upholds Healthcare Law, Calls No-Insurance Penalty a Tax

(updated July 8)

I was disappointed in yesterday’s Supreme Court ruling on the Obama healthcare law. While I am in no way a legal scholar, I do not see the logic in calling the financial penalty for not purchasing insurance a tax.

Taxes are paid to a government (federal, county, city) to pay for that government’s expenses. Taxes are normally a set percentage of your income, the value of property or a vehicle, or the amount of a purchase. Occasionally a tax may be the same amount for everyone. If you are required to pay a tax, you cannot avoid it by purchasing a certain product. But the majority of the Supreme Court has said that the fee/penalty for not purchasing health insurance is a actually a tax, but you can avoid it by buying the insurance.

I would be less concerned about the insurance mandate if the federal government, through an unelected 15-member advisory board, was not going to decide what coverage each policy must include. The Affordable Care Act bans policies that provide only catastrophic coverage, which allows healthy people to choose a high deductible policy at a low price, but still have coverage for major illness or accidents. Obamacare also imposes a surcharge (fee or tax) on so-called “Cadillac” policies that provide extensive medical coverage. If someone can afford such a policy, why can’t they buy it? If insurance companies are required to make all policies essentially the same, what choice do we really have?

President Obama has said, “If you like your current insurance, you can keep it.” If he was being totally honest, he would have said, “If you like your current insurance company, you can stay with them” because your company will be required by this law to change the coverage included in your current policy.

I am also concerned about other provisions of the law:
Many people of all political persuasions have praised the provision that allows “children” to stay on a parent’s policy until they are 26 years old. I disagree. I can understand 22 or 23, the average age when young adults finish college. But a 26 year old adult? If parents want to pay for their offspring’s insurance, they have always been able to do so by purchasing a separate policy for the grown child. This is less about whether the “child” has insurance, and more about paying a lower rate than the “child“ would pay for a stand alone adult policy. But there are already some alternatives at affordable prices. College students can usually obtain basic medical insurance through their school for a reasonable price. And with the federal government providing millions of dollars to Planned Parenthood, all young women have access to very low cost health care.

I am also angered by the hypocrisy of the Democrats. They have continually resisted any talk of changes to Medicare coverage proposed by Republicans. Yet one of the ways the Affordable Care Act (passing only because Democrats controlled Congress) will be financed is by $5 billion in cuts to Medicare! Technically, this will not affect older Americans directly because the government will cut the amount it pays doctors for seeing Medicare patients. But you cannot cut the amount doctors receive for their services without eventually affecting the quality of medical care – for everyone. If more doctors decide not to accept Medicare’s lower reimbursement, there will be fewer doctors to treat the growing number of Americans on Medicare. That may increase waiting times for treatment of serious illnesses, possibly leading to more deaths.

Also of importance to seniors is that Medicare Advantage plans will not be available when the Affordable Care Act is fully implemented. With Medicare Advantage plans, seniors basically sign over their Medicare benefits to a healthcare plan, and in-turn some services not covered by Medicare are provided to the insured. Many older Americans (including my parents) choose these plans because they offer the best return for their premium dollars.

In January, the Secretary of Health and Human Services, Kathleen Sebelius, proclaimed that all employers must provide contraception and abortion services in their health insurance plans. The only exemption would be for churches – not organizations run by churches, but only the employees working for the actual church worship center. The Catholic Church was quick to speak up against this provision of the healthcare law since that church believes using chemical means to prevent human conception and killing babies in the womb are not allowed by the Bible. But the essence of the argument was not preventing/stopping pregnancy; it was about the ability of the church to run its charities according to its own beliefs. A church is the place for teaching spiritual beliefs, charitable organizations are the place where the church puts its spiritual beliefs into action. There cannot be a distinction between the two. If the government is allowed to tell us where, when and how to practice our religion, we will no longer have true freedom of religion in the US.

I agree with Mitt Romney’s comment that the Affordable Care Act may be constitutional, but is not good policy. I expect Congress can eventually make changes that will address the problems in Obamacare. But once the various provisions take effect, they will be harder to change, so I hope Congress will act on this soon.