Judge rules mandatory health care insurance unconstitutional

What’s more, the judge said the entire health care reform bill would be invalid if higher courts upheld his decision. While the health care bill remains in force pending hearings, this is the second time a court has challenged it. This puts everyone in health care in the bizarre situation of having to implement a law that may be found unconstitutional.

Judge Vinson held that the insurance requirement exceeds the regulatory powers granted to Congress under the Commerce Clause of the Constitution. Judge Vinson wrote that the provision could not be rescued by an associated clause in Article I that gives Congress broad authority to make laws “necessary and proper” to carrying out its designated responsibilities.

“If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain,” Judge Vinson wrote.

My own view is the mandatory requirement was both idiotic because it was certain to be challenged and also unfairly gouges the poor, who most likely don’t have insurance because they can’t afford it. Yet they now have to somehow pay for it or be penalized. Yuck. The Adminstration argument that the poor will wait until they are sick to get insurance seems nearly insulting and ignores the obvious. People generally don’t have insurance because they can’t afford it, not because they’re cheap or trying to game the system.

  • If you’ll forgive my one year at Law School and two years employment (as a computer geek) with a law firm, it seems to me that if it is unconstitutional for Congress to enact a law that requires all Americans to obtain commercial insurance, then mandatory auto insurance is unconstitutional as well… as it has found in several states (including California) as early as the mid-seventies.

    • I think that’s because states mandate the insurance, not the feds. The issue is whether the Constitution allows the feds to also do so

    • You don’t have to buy a car but everybody’s got a body. Maybe that’s what it is.

  • Don Birkholz

    If all insurance companies stopped selling health insurance, then we would be fined for not buying a product that does not exist.

    Congress is not supposed to enact a law that goes against someone’s religion (separation of church and state). While this bill exempts religions that ban the purchase of insurance, it is still bad policy..

  • woody

    Not only are there plenty of exceptions (including religious exceptions), but for the very poor, that can’t afford the healthcare there are built in programs to help pay for said insurance. It’s not really going to hurt those making under $20K at all, and progresses into the middle class quite a bit.

    The rational for having everyone in is quite simple. If you only have those with current issues signing up when they want to or when they become sick then your rates will be higher. It also continues the stupidity that exists now, where hospitals need to check if you have insurance or can pay for something before providing emergency treatment. (And please don’t say they’re required to… That only exists in a few states, and there are limits on that even.)

    • But isn’t the reason most poor people don’t have insurance is because they can’t afford it? Of course they’ll wait until sick to get it now. But they still can’t afford it. That seems a problem to me.

      • woody

        Re-read what I wrote Bob. Part of the law, as passed, includes language that helps the poor pay for insurance, thus making it “affordable”.

        When you’re getting free insurance because you make under $20K, or have a percentage of it paid for when making up to $40K, how is that “gouging the poor”? The requirement is there so that people making a decent amount (that can afford it) don’t skip out, then fall on the system when something catastrophic hits them, like cancer or a car accident.

        Or, would you prefer hospitals run a credit check and/or a health insurance check before treating you? That’s what it’s come to in some states, and coming to in others. Just like allowing fire departments to watch a house burn down because the owner didn’t pay their fire insurance… except in this case it’s your life.

        That’s where the argument of allowing people to “choose” to opt out of this goes. You have tons of people that “choose” to opt out, then something happens to them and there’s a wailing that we need a safety net. Ask seniors who are living on cat food in the 70s why they didn’t save. It wasn’t that they were expecting Social Security to help them, that didn’t even exist for most of them when they were starting out. They just didn’t think that they could ever wind up poor or without a provider, or that their health care would drain what little savings they had, if any, in a flash.

        Lots of people don’t think about their future in a rational way. Even less do now then did 50 years ago. They’re all about “me now me!” Do you expect that to change in 30 years when they have no insurance, because they opted out in their 20s, and have a sudden illness that leaves them in the lurch? And if that person does get treatment on the state or hospitals dime, how is that fair to those that opted into the insurance and just paid for someone who never put into the system? What’s the incentive to opt in if you’ll get coverage anyway?

        That’s the point of mandatory minimal coverage. If you don’t get it, you’re fined, because good odds you’ll still be using the system eventually. Btw: If you object on religious grounds, you don’t have to pay the fine. So much for not protecting people’s “lifestyle choices”…

        • What I would prefer is what England, France, and Canada have! Walk into any hospital, get treated, no worry about a bill.

          But read what DJ says. His rates will be going up as a result of this. And he and his wife do not lead a sumptuous lifestyle. HCR doesn’t cap insurance rates. This is a major flaw.

          BTW, I got a prescription filled yesterday. They thought I didn’t have insurance but I do. Without insurance, $88. With insurance, $5. This seems a crazy system to me.

        • Ok, I’m still confused. How can insurance be mandatory yet free for some? The program is so convoluted that many, including me. don’t know what’s in it.

    • DJ

      Actually the way the law is written, it provides a fund to pay for health insurance for the poor, until the fund is exhausted. As I understand the (absurdly complicated) legislation, when costs exceed available funds, the funds are supposed to be spent ratably, meaning all qualified (i.e. poor) people get something but no one gets their whole health insurance premium paid.

      Will costs rise to where they exceed the fund? Remember, this is legislation that forces insurance on most Americans *without* capping costs. My insurer has already informed me (as an employer) that my rates *will* be going up.

      • woody

        In all honesty DJ, have you ever had a year where the rates didn’t go up? Increasing yearly rates is not a new thing, it’s been happening for decades. The rate where I work (employer pays half) has gone up every year for the past 6. The job(s) before that when I was 1099, and paying my entire health care cost, the rates increased every year, often by 6% to 13%. Just google “health care rate increases” in the news section, and you’ll get articles from every year between 1995 and now. So you think it’s the new law suddenly causing this now, why?

        One thing to point out though is that while there isn’t a cap, there is a limit to the plan costs. If the companies don’t offer a plan that’s less than a certain percentage of your income (10% I believe) then you’re also exempt from the requirement and/or the fine for not getting insurance. So if you’re only making $20K a year, and there’s not an insurance offered (with minimum standards set in the law) for under $2K, you’re exempt from the requirement and the fine. So, in some ways there’s a limit on how high they can go based on the profit side. There’s a cap on the profit margin they can make to qualify for those funds, which most for-profit insurance companies are well over.

        Taking single payer off the table before even starting was the big mistake. Happily that can be fixed by putting regulations in place as time goes on, like caps and more requirements. Slowly turn up the temperature while the frogs, or the insurance companies, are sitting in the water.

        My bigger point being, the poor are not going to be forced to pay huge amounts for healthcare packages they can’t afford. There are exceptions for lots of things, most of which benefit the poor by exempting them under most situations, encouraging companies to make plans within their means, and/or funds to help bridge some of the gap.

        All in all, it’s a step in the right direction, getting more people coverage and banning some of the worst practices, like dumping sick clients and/or denying “prior illness” claims. Not the best, but heading in the right way. Don’t believe the lies that it’s jacking up your costs. That would have happened even without the new law, as the past decade clearly shows. Meanwhile the insurance groups are raking in the money by forcing sick people to fight for coverage and denying coverage wherever they think they can get away with it. Nothing new there…

        • DJ

          Raking in money? Check the financial reports on these companies. They are not particularly good investments, typically earning 3 – 5% on your money. My *bank* pays 1.89% on deposits with minimal risk.

          Speaking of that 10% rule, most rural Americans (including myself) will apparently be exempt from the get-go from the requirement to buy insurance. Mine – the cheapest plan available – already costs 14% of my typical annual income, 26% of my 2010 income – and more than 50% of the median income in my county. I went to the cheaper plan when my previous plan hit 80% of the median income for the county. I asked the company if they weren’t embarrassed by that. (They weren’t.)

          Yes, rates have increased each year. No, an increase isn’t a surprise. But when you tell a company with a 4% profit margin that they must incur substantial new costs – in this case by requiring them to cover people with pre-existing conditions – substantial new rate increases are a no-brainer. When you tell them that they are now subject to a significant excise tax for the privilege of doing business (as this legislation does), you expect they are going to pass that cost on to the insureds.

          These extra costs are supposed to be covered by the vastly increased pool resulting from the requirement for everyone to get insurance. Except that as you point out, there is no such requirement. There are too many loopholes. The reason I would continue to pay for health insurance under the new rules is the same as under the old rules: I can’t afford not to.

          The good news for me is that I can no longer be denied insurance if mine should lapse. And if my income drops below the poverty line, the taxpayers (i.e. you) will pick up at least most of the exorbitant tab. But I expect the recent 20 – 25% annual increases on my premiums to become a pleasant memory of better days.

          One of the principles of health insurance reform was to make insurance more affordable. This legislation does the opposite– at the very least it does nothing to bring down rates, and it’s reasonable to expect that rates will rise even faster.

          I think it’s informative that in the plethora of calls for repeal, the health insurance companies themselves have either remained silent or stated that they oppose repeal. They seem quite happy with the deal.

          • woody

            Sorry for the delayed reply.

            Yes, their margins are 3% to 7% for the most part, but that’s not really a valid thing to compare with, since that’s done after a lot of other things are taken out, like dividends and payroll/bonuses. Look at their ROE (Return on Equity) or their ROIC, or their year-over-year growth and things look very different.

            Just to compare, let’s look a Pfizer, which reported it’s largest income ever last year. It’s a big-pharma company that pretty much everyone agrees (including their own analyists) is making a very strong profit. What are their margins and ROE for 2009 vs say Aetna?

            Let’s also consider a few interesting things: From 2008 to 2009 combined profits of insurance companies rose by a whopping 56%. That’s significant, though their “margins” only increased about 1% because of the funny math involved (and the huge dividends many gave out). When you have groups like Wellpoint posting annual profits of $4.4 Billion, and then proposing a 40% rate hike, sorry, I see that as pure greed.

            One more thing to consider: Lots of companies in agregate don’t make nearly 3%. Supermarkets as a segment make under a 1% margin, very few companies make more than a percentage or two. Even rock-stars, like big oil are barely able to break in to the double digits. (Royal Dutch Shell, for example had a revenue of $318B, a net income of $26B, but their margin was only 8.25%.)

          • One thing that needs changing is what drug companies charge for meds, it’s much higher in the States than for the same med elsewhere, even to the US government, which buys in bulk. This is unacceptable.

          • DJ

            Dividends come out after profits are determined, not before. And the reason health insurance profits skyrocketed, but the percentage remained constant, was because of mergers and acquisitions. When you combine two companies of comparable size, the profits will increase, but so does the capital stock, causing the ROI to remain more or less constant. That’s not funny math.

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