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Tuesday, April 03, 2012

The Constitution and ObamaCare

If you paid any attention to the news about the arguments before the U.S. Supreme Court over ObamaCare, it's hard to miss a very obvious, fundamental difference that exists between liberals and conservatives when it comes to the U.S. Constitution. What is that difference?

Well, first, let's be clear as to what the court case over ObamaCare is not about. It is not about the economics of ObamaCare, or whether it is smart or dumb law.

For the economist, the bankruptcy of ObamaCare should be obvious. After all, the selling point was that this massive measure would somehow rein in costs, expand coverage, and improve care. Hmmm. Now when was the last time that a vast expansion of government into any arena resulted in lower costs, and more and better service? Quite simply, the answer is: Never.

For example, ObamaCare is about increased government subsidies of health care coverage, which inevitably will result in expanded utilization. That jump in demand, of course, will increase prices, especially when the supply of services are not increased in similar proportion. For good measure, when government spending is increased, waste expands as incentives to spend other people's money with prudence, care and wisdom do not exist in the public sector.

Then add on assorted mandates, regulations and taxes, and costs inevitably get driven even higher. Eventually, as costs careen far beyond anything that government originally estimated - as has been the case in Massachusetts with RomneyCare, with Medicaid, with Medicare, and in every nation with government-run health care - the eventual result is rationing of care via government (i.e., political appointees).

So, the entire ObamaCare law works against its stated objectives of lower costs and improved service. Instead, it's about increased costs for taxpayers, both individuals and businesses; higher costs for businesses due to mandates and regulations; and government deciding what's appropriate health insurance coverage and eventually appropriate care. It's bad economics and a dumb law.

But the Supreme Court does not exist to consider whether such a law makes economic sense, or even if is smart or not. Instead, the Supreme Court is considering whether ObamaCare is constitutional or not. This case before the Court is not about health care per se; instead, it's about the power of the federal government under the Constitution.

We've read and heard about the arguments presented, and the questions and comments offered by the justices on the issues of the individual mandate requiring that each person buy health insurance, and expanded Medicaid costs for the states.

In particular, those challenging the law point out that forcing citizens to engage in an act of commerce they would not otherwise engage in simply because they are citizens is an unprecedented expansion of federal power. If allowed to go forward, then politicians could justify anything under federal powers.

As Justice Anthony Kennedy asked during the arguments, "Can you create commerce in order to regulate it?" He also observed, "The government is saying that the federal government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the federal government to the individual in a very fundamental way."

As for Medicaid, the requirement that the states accept and foot part of the bill for a huge expansion of Medicaid, or lose all federal Medicaid funding amounts to extortion by the federal government, and undermines state sovereignty implicit in our constitutional structure. The states, of course, are not forced to be part of Medicaid. But now that all are in so deep, the argument is that this clearly is federal coercion.

Chief Justice John Roberts referred to this relationship as the federal government putting a "gun to the head" of the states. He observed, "You have to give up your wallet. You don't have a choice."

What was perhaps most fascinating was the reaction to these arguments from both sides of the legal/judicial/political aisle. Conservatives noted that these are pertinent and important questions that get to what the Constitution says, allows and limits, which is critical to our system of checks and balances.

In contrast, liberals were simply aghast that these questions were given any kind of hearing. There was minimal recognition of the Constitution serving as a protection of individual liberty against government action, no matter what the intentions of those in power might be.

This case provides another powerful reminder that the Left has little regard for the Constitution itself. They fail to take serious the idea that the Constitution defines and limits the powers of government. Indeed, such a notion serves as anathema to their philosophy. What the Constitution actually says, and what the original intent was of the authors, matter not at all. Instead, in this view, the Constitution should merely conform to whatever it is that the political class would like to accomplish. In effect, there are no limits on federal power, as long as the justices happen to agree with the goals in mind when federal power is executed. That is, quite simply, the ends justify the means.

Finally, it was interesting to note a Wall Street Journal report on March 29 that included the reactions of the business community if the Court overturned the law. The only two businesses included in the article were firms that hitched their wagons to ObamaCare, and their specific business plans would have to be altered if the law was tossed out. Why not include representatives of the millions of business owners who would see increased uncertainties and costs from the law if it is allowed to stand? The bias of the story was painful.

In the end, based on the Constitution, the individual mandate should be struck down. And since that provision is so central to the law, much of the measure would not have passed without it. Therefore, the entire law should be struck down, rather than having justices acting like legislators to deem what should stay and what should go. The entire issue should be returned to elected representatives. That would be the most appropriate action from the perspective of judicial restraint and constitutionality. In this case, it also happens to be best outcome from the perspective of sound economics and getting rid of a dumb law.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.

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