The American Thinker has up what he thinks will happen on the July 9th(?) vote – Republicans could repeal obamacare as a de-facto tax. If the argument is that it’s not a de-facto tax, then it’s subject to the Commerce Clause, which would make it unconstitutional. If it is a defacto tax, it’s subject to recall, which is simple majority.
Anyway that aside, what has my head scratching is what the heck Romney is waiting for. Obama has obamacare, which is a huge debacle. The original draft of the bill defrayed costs to health insurance companies by having them receive the “penalty money”. In fact, it’s worth discussing Romneycare, because it’s how this sort of thing is done correctly. Under Romneycare, both individuals and businesses had to pay a penalty for not having insurance. Individuals could receive an exemption to this for earning less than $50,000. That’s not a typo, that’s the number (this is roughly twice whats in Obamacare but the value depends on the federal poverty definition among other things). Businesses would pay the fine if they didn’t make “reasonable insurance” available if they had more than 10 employees. In every way, these make better talking points than Obama even has. Weirdly enough Huffington Post either is “pro Romneycare” when talking about Obama or anti-Romneycare when going back to 2006, speaking of talking points. If I were Romney I would be pointing all this out.
Where did all these fines go?
Romney set up a fund to expand medicare in his state. If you went to the ER without insurance, it paid the hospital. If you took the fine, it went into the slush fund. If you needed help affording insurance, it was a tax credit.
I know what you’re saying “But that IS Obamacare!”
No, it’s not. It required a mandate from the federal government to expand medicare which administered the plan. While I object to the expansion of the government, the one place the money wasn’t going was the insurance companies. The fine went into social programs, the money which left the social programs went to the hospitals. Medicare has price controls built in – when they’re involved, they dictate the price of what they’re paying for. This works really well. The higher the insurance companies jack up the prices, the more people end up on Medicare, the more they dictate the cost of what they’re paying for. The insurance companies either had to play ball or they had to withdrawal from the state.
What we’re critically missing from the Obamacare plan is the authority to regulate the insurance companies. The one line item requires insurance companies to spend 80% of their take on premiums, but now we have another interesting problem: With no authority from the commerce clause per the supreme court (which is why this is a tax and administered by the IRS in the first place), there’s really no defined oversight here. The argument I would make if I were Obama would be that health insurance companies pay 100% tax on everything they make over 80% of the premiums they put out, but the traditional stance taken by the government is that diversified companies pay only what their business units take in. LOLWUT?
Take Toll Brothers, which is vertically integrated. The company doesn’t pay logging fees based on profits from the entire company, nor does the land ownership division pay capital gains based on the value of land changing. They are governed by separate bodies of law. Similarly the business as a whole make or loses money, but it’s governed by individual laws for individual business functions. To put this in perspective, a commercial driver carries insurance for his own personal vehicle, but he also carries a bond and a professional insurance policy. My wife (a nurse) carries personal insurance for her life and injury, but we also carry professional insurance for malpractice along with malpractice insurance for the hospital at large.
Why is this important? The insurance companies already offer consulting services for things like minimizing workplace injury, passing OSHA exams, legal consulting, etc. If the insurance companies suddenly decide the take from premiums goes into the individual business units, it’s really not that hard to spend 100% (or more) of the funds which go into the “medical care” pot versus something like consulting which is obviously not a medical function and then not governed by the law. Remember, no commerce clause means this is virtually unenforceable and the IRS already exempts businesses which operate at a loss. The whole thing is hollywood accounting at it’s finest and the IRS has been giving it a pass for years in the movie and music industry. Why not the insurance industry now? Its one of the things that really pisses me off come tax time – people who are consultants and operate their own company (on paper) claim a loss on their taxes from a consulting company which doesn’t reimburse them for computers and such and taxpayers foot the itemized deductions.
All this being said, I don’t see there being a mass of insurance companies dumping people for two reasons: rescission has been illegal since 1996 in almost every state and without the expansion of medicare per romneycare, obamacare has nowhere to put people. I do see our healthcare generally going to shit – Europe has had a serious problem with complex, long term care like cancer and I expect the US going over to this sort of system will encourage this.