Statements both for and against President Barack Obamas signature health reform law are flooding the Supreme Court. Thus far, nearly 80 amicus curiae or friend of the court briefs have been filed. Many more will surely come in before the February 13 deadline
These documents allow interest groups, lawmakers, and even ordinary Americans the chance to try to influence the high courts verdict.
Two briefs filed by the American Action Forum (AAF) on behalf of more than 100 economists merit particular attention. The Supreme Court would be wise to pay attention to both, which explain in painstaking detail how ObamaCares changes to Medicaid and its requirement that individuals purchase health insurance render the entire law unconstitutional.
Consider first ObamaCares plan to expand health coverage through Medicaid, the health insurance program for the poor jointly funded by the federal government and the states.
There are currently 60 million Americans enrolled in Medicaid. Between 50 and 83 percent of each states Medicaid expenditures is covered by federal contributions. In 2009, two-thirds of national Medicaid spending came from federal funds.
Even with the feds assistance, Medicaid accounts for more than 20 percent of all state spending.
ObamaCare makes the financial burden of Medicaid on states even heavier. By adding at least 18 million people to the program, the law will more than double total federal and state spending on Medicaid. In 2010, such spending totaled $401.4 billion, according to the Centers for Medicare and Medicaid Services. The Congressional Budget Office predicts that costs will soar to about $800 billion by 2022, thanks to ObamaCare.
According to the law, states cant opt out of the federally mandated expansion. If they refuse to comply with ObamaCares looser eligibility standards, then the feds will take away all the funding theyd otherwise provide for the program.
That puts states in an impossible position. If they acquiesce to ObamaCares dictates, they risk stretching their budgets beyond the breaking point. And if they dont expand Medicaid enrollment, then they have to pay for the program all by themselves.
The AAF brief points out that the average states budget would have to shoot up 22.5 percent to compensate for lost federal funding. The tax hikes required to meet such budget requirements would be politically and economically suicidal.
Federal Medicaid spending, on average, is equivalent to about 34.4 percent of state tax revenue. So people would have to cough up a third more than they already do to compensate. Six states would have to find 50 percent more revenue.
But isnt the federal government just driving a hard bargain with the states by attaching strings to its Medicaid funds?
No its driving an unconstitutional bargain. Without federal support, states simply cant afford Medicaid. As the AAF brief concludes, an expenditure of federal funds is unconstitutional when it coerces rather than merely encourages States to enact a federal policy.
ObamaCares Medicaid expansion isnt the only unconstitutional component of the law.
Take the individual mandate, which requires all Americans obtain insurance coverage the lynchpin of the entire law. Its supporters cite Congresss constitutional power to regulate commerce among the several states to defend the mandate.
But its hard to see how doing nothing that is, refusing to purchase health insurance constitutes commerce. If the high court agrees and invalidates the mandate, then the whole law will have to come down with it.
In legalese, the mandate is not severable from the rest of the law because its the axis around which the entire law rotates. Without it, according to the second AAF brief, ObamaCares other provisions will saddle insurers with $360 billion in net costs through 2021.
Consider the requirement that insurers take all comers and charge them similar rates, regardless of health status. The cost of these guaranteed-issue and community-rating mandates to insurers will reach $280 billion over the next decade.
The laws elimination of annual and lifetime out-of-pocket coverage limits will hit insurers with $51 billion in new costs. And the provision that allows children up to the age of 26 to stay on their parents coverage will cost insurers another $77 billion in the next ten years.
The architects of ObamaCare intended to counterbalance these enormous costs with the individual mandate.
In theory, forcing everyone to jump into the insurance pool will offset some of these costs. The young and healthy would subsidize care for the old and sick. And healthcare providers like drug and medical-device manufacturers could absorb ObamaCares new taxes thanks to the increased demand for
their services that universal coverage via the mandate would bring.
But if the Supreme Court deems the individual mandate unconstitutional, then the counterweight to all those costs vanishes. Without a viable cost-reducing mechanism, ObamaCare no longer functions in a manner consistent with Congresss explicit intent to make health care more affordable.
Without the individual mandate, there can be no Affordable Care Act.
ObamaCare represents not just a financial calamity for American taxpayers its also an unconstitutional power grab by the federal government. The Supreme Court must strike the entire law from the books and charge Congress with revisiting reform.
Sally C. Pipes is President, CEO and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her most recent book The Pipes Plan: The Top Ten Ways to Dismantle and Replace ObamaCare (Regnery) was released in January 2012.