Got a Pre-Existing Condition? Your Premium Could Rise Sharply Under New GOP Plan

[elmcitymaven 9,712]

16 minutes ago, yuna628 said:

Doh!  That makes much more sense now. I do remember there being quite an argument about the tax or penalty thing. Always interested in thoughts on the subject. Is it true though that it's one of the reasons why the 'tax' couldn't be so high as to be too much of a burden as a way to force someone into buying a plan?

Basically the issue is that while Congress can't force someone to participate in commerce -- here, buying health insurance -- for which failure to participate would result in a penalty, it can do pretty much what it wants in terms of its taxing powers. More simply, the power it has under the Taxing and Spending Clause is greater than under the Commerce Clause.

 

The Taxing and Spending Clause of the United States Constitution (Article I, Section 8, Clause 1) provides that “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” One of the questions before the Court in the landmark case Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566 (2012), was whether the imposition of a “penalty” for failure to buy health insurance, under the individual mandate of the Affordable Care Act of 2010 (“ACA”), was properly characterized as a tax or a penalty. The distinction is critical, because if the “penalty” functions as a tax, designed to raise revenue for the federal government, it falls within the powers expressly granted to Congress under the Taxing and Spending Clause. Id., at 2594. If, however, it is actually a penalty as it asserts, and is designed to be regulatory in function by compelling persons to purchase health insurance, Congress’s actions will be ultra vires. Bailey v. Drexel Furniture Co. (Child Labor Tax Case), 259 U.S. 20 (1922).

 

In oral argument before the Court on March 27, 2012, Solicitor General Donald B. Verrilli, Jr. asserted two criteria for determining whether a required payment is actually a tax: “Can this be characterized as a tax? And, second, is it a constitutional exercise of the power?” (Transcript of Oral Argument at page 47, NFIB, 132 S. Ct. 2566 (No. 11-398)) Here, the “penalty” imposed by the ACA can be characterized as a tax. The IRS administers the program, and requires those not acquiring health insurance to pay the “penalty” with their federal income taxes. Further, the amount payable by individuals for failure to buy insurance is dependent on the individual’s income, as a progressive tax would. NFIB, 132 S. Ct. at 2595-96. In addition, the tax is a constitutional exercise of Congress’s power under the Taxing and Spending Clause to raise taxes, as it generates revenue for the federal government. Id., at 2594. That is has some regulatory effect on people’s behavior -- since it is human nature to wish to avoid taxes (Puget Sound Power & Light Co. v. Cty. of King, 264 U.S. 22, 28 (1924)) -- is ancillary to its true purpose as a tax.

 

Further, categorizing the “penalty” as a penalty is incorrect. Citing Drexel Furniture, the Court discussed the three characteristics of a penalty wrapped in the guise of a tax: the “tax” imposes an overly heavy burden on those who must pay it; there is a scienter requirement; and the “tax” is imposed not by the IRS or another agency responsible for revenue collection, but some other agency of the government (in Drexel Furniture, for example, the Department of Labor was responsible for enforcement).  NFIB, at 132 S. Ct at 2595. The ACA’s “penalty” meets none of these characteristics. As discussed supra, it is a moderate assessment (currently 2.5% of annual household income, or $695, whichever is higher) based on a person’s income. There is no scienter requirement in the individual mandate, and further, the IRS administers its collection through the normal payment of federal taxes. Id., at 2597.

 

For these reasons, I agree with the Court that the “penalty” is truly a tax, despite its name. Having listened to oral argument (or much of it), and read the transcript concurrently (or much of it), I understand the Court’s rationale for ruling that the Congress did not have the power to regulate and require the purchase of health insurance by every person under the individual mandate, and I generally agree with it, mostly based on the Court's reasoning in Gonzales v. Carhart, 550 U.S. 124 (2007). The Commerce Clause -- Article I, Section 8, Clause 3 of the United States Constitution -- provides that Congress has the power to “regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” This Court takes a broad view of the Commerce Clause, permitting Congress to regulate interstate commercial activity, including the channels, instrumentalities of, and persons and things in interstate commerce, as well as any commercial activity within a state that substantially affects interstate commerce. United States v. Lopez, 514 U.S. 549, 558-59 (1995) (internal citations omitted). In NFIB, the Court held that individuals who refuse to participate in commerce are protected from regulations which would compel them to do so under the Commerce Clause. NFIB, 132 S. Ct at 2599, 2608. For the Court, it is insufficient that a person may someday engage in commerce; instead, active and current participation in commercial activity is required. Id., at 2619-20. To permit Congress to compel people to engage in commercial activity in which they are not already participating “would [permit] Congress to reach beyond the natural extent of its authority, ‘everywhere extending the sphere of its activity and drawing all power into its impetuous vortex.’” Id., at 2589 (internal citation omitted).

 

It is the rare person alive in this country who does not engage in some commercial aspect of his or her own healthcare, and those aspects may be interstate in nature. For example, a person without insurance may still avail himself or herself of medical care, whether in the context of an emergency room of a large public hospital or a private physician’s suite, or for that matter in the aisles of the local CVS. The medicines and equipment may have been purchased from out of state and brought in to provide care, thus using the channels and instrumentalities of interstate commerce.

 

But, as in Gonzales v. Carhart, it is a bit of a stretch to state that medical services that may be commercial in nature are governed by the Commerce Clause, simply because some aspect of the services -- the medicines, equipment, or even training of doctors -- came from some other state. While local activities may, in the aggregate, have a substantial effect on interstate commerce, and thus be within the purview of Congress under the Commerce Clause (see, Wickard, 317 U.S. 111, at 127-28), to me it is unconvincing that every single medical procedure using materials or persons from outside the state of provision of service is a proper invocation for regulation under the Commerce Clause, even when taken together (which could potentially be a great amount in aggregate in some states).

 

The Court does place limits on Congress’s power to regulate through the use of taxation. Quoting Marbury v. Madison, 1 Cranch 137, 176 (1803), the NFIB Court states that “[t]he powers of the legislature are defined and limited” and that it is the Court’s responsibility to enforce those limits by “striking down acts of Congress that transgress those limits.” NFIB, 132 S.Ct., at 2579-80. Certainly, one of the ways the Court can limit Congress’s power to tax is in determining that the tax is actually a penalty meant to punish, as discussed supra. However, there are other restrictions on this power.

 

Firstly, Article I, section 9, clause 4 of the Constitution prevents Congress from imposing a direct tax -- a “capitation” -- unless it is imposed on the citizens of states in direct proportion to the population of the entire United States.  A capitation is a tax “which is levied upon the person simply, without reference to his property, real or personal, or to any business in which he may be engaged, or to any employment which he may follow.” (Black’s Law Dictionary, 2nd ed., available online at: http://thelawdictionary.org/capitation-tax/.) Article I, section 2, clause 3 also makes reference to the proportionate levying of direct taxes. Secondly, Congress may not impose taxes and duties on articles that have been exported from one state to another, pursuant to Article I, section 9, clause 5. Thirdly, customs duties and excise taxes must be uniform throughout the various states, pursuant to Article I, section 9, clause 1. Finally, Congress may not exercise any power to tax that has been reserved to the states by the Tenth Amendment, pursuant to Article I, section 2.

 

[IAMX 3,055]

There's no way I'm reading that entire wall of text, but because in skimming it I see so many citations, I gave you a rep anyways.

[OriZ 3,157]

8 hours ago, bcking said:

The financial aspects are in no way my area of expertise, since doctors are notoriously clueless about the cost of the things we provide. There is almost a conscious effort to keep doctors out of the loop. 

 

1. I think the fact that the penalty ends up being cheaper than getting the cheapest insurance does sort of defeat the purpose of the penalty. The point of getting everyone onto some sort of plan is so everyone contributes some amount of money to the pot to protect everyone when they get ill. I think the problem with the ACA is that the insurance rates exploded because insurance companies didn't like that their bottom line was changed. I agree that there should be a "minimum" type of coverage so that you don't end up with some false sense of "security" and then are ruined when you actually need care that your cheap insurance doesn't cover. However that meant that insurance companies were having to cover more, so of course they charged more. There needs to be limits to what they charge as well, and if that alters how much they make in the system so be it. The cost savings will have to come from making the system more efficient, cutting out more middle men, and renegotiating with all parties involved (including Doctors, though we aren't the only problem. Salaries are a lot less now then they used to be, but they could still drop even more when compared to other 1st world countries).

 

2. This is hard because I think realistically many "adults" between 21-26 would not be able to carry their own health coverage. Perhaps if instead it was adults up to 26 who were enrolled in full time education are allowed on their parents plans, but adults who are not have to pay? I wouldn't want to stiffle education, and honestly I also think just having coverage no matter where it comes from is the most important. 

 

EDIT:

 

In my opinion every system has problems and nothing is perfect, but I believe that a single payer system is a better STARTING PLACE. Yes it isn't perfect, but I think it is the best place to start. However I value universal coverage extremely highly because I think it should be apart of the social contract that a government/society makes with its citizens. The problem with a private insurance industry is they DON'T want to cover everyone. They never will. They want to cover the healthy people who they know they will make money off. They don't want to cover the "bad investments" and the more we force them to do it the more they will charge because they are a profit driven industry.

This sort of reminds me of the discussion we had about SS, and whether or not government should have the right to force somebody to give them 7.5%(or 15% in our case) to manage for them when there's possibly many better things they could do with that money. I disagreed then and I disagree now. If you can't even afford to pay for insurance, knowing the benefits of it(and I personally know people who don't have insurance simply because they can't afford it - not because they don't want it), how are you going to afford a penalty that is more expensive and doesn't entitle you to nothing? What would happen is people still would not pay, and then they would be in unnecessary trouble with a draconian government. Or if people did pay, they would have no money left for anything else which would end up again, hurting the government and/or economy. It makes no sense at all to force people to pay such a high penalty. I also don't believe that the penalty(I refuse to call it a tax and I don't care what they call it) being lower than the premium defeats the purpose. Even paying $100 knowing you won't reap any rewards could make people want to pay more just to know at least they're getting something in return. However I still like my idea of waiting periods better.

Edited May 5, 2017 by OriZ

[yuna628 9,787]

BCBS has just announced it wants to seek a 52% increase in MD. I'm sure they'll get it. There's certainly no way I will ever afford that.

https://www.washingtonpost.com/news/wonk/wp/2017/05/04/one-of-marylands-biggest-obamacare-insurers-wants-to-hike-rates-50-percent-next-year/

[bcking 3,157]

"What we’re seeing is greater sickness levels. The pool of beneficiaries is becoming sicker, in part because healthier people are not coming in at the same level we hoped,”

 

This is the problem, and honestly I don't think we will ever really solve it without a single payer system unless we just want to accept that some sick people won't have an insurance and their lives will be ruined when they become ill. 

 

The insurance company sees it as their "pool of beneficiaries", but all of those people existed prior to Obamacare. Those people were out in the world, and most were likely just as sick as they are now. They need to have some sort of coverage, I have said before that I believe it is one of the core duties of a government/society to provide healthcare to its people.

 

We need a system that can manage even with all the sick people in the "pool of beneficiaries" because honestly those are the ones who SHOULD be in the pool. An insurance company will solve their own problem and will be quite happy if they just kick all those people out of the pool, but that won't solve society's problem.

[smilesammich 10,727]

obamacare forced insurers into the markets they're pulling out of now. end of the day, insurers are about profits not their 'pool of beneficiaries'. single payer is the only way. trump himself said aussies do it better...

[Transborderwife 4,666]

I really cannot fathom how someone who has a mental illness or cancer could/should be denied insurance 

[smilesammich 10,727]

[bcking 3,157]

 

My wife watched the series around the time we had decided that she would be moving to the USA (instead of vice versa).

 

She had so many questions after the initial episodes. She was genuinely confused that someone could just not get treatment because they couldn't pay for it.

[smilesammich 10,727]

 

My wife watched the series around the time we had decided that she would be moving to the USA (instead of vice versa).

 

She had so many questions after the initial episodes. She was genuinely confused that someone could just not get treatment because they couldn't pay for it.

my husband has been here for like seven years and he still doesn't get it. its like people from other countries are often taught that america is awesome in it's opportunity so how could we be so incredibly callus and inept at something the majority of the world has figured out?

saw this last night from robert reich and it's spot on:

 

[Teddy B 17,252]

 

my husband has been here for like seven years and he still doesn't get it. its like people from other countries are often taught that america is awesome in it's opportunity so how could we be so incredibly callus and inept at something the majority of the world has figured out?

saw this last night from robert reich and it's spot on

 

My wife still flips out when we receive any kind of medical bill in the mail. She always says "I've never had to worry if I could afford to go to the Dr's, America is nuts"!

[Dashinka 25,241]

 

There's no way I'm reading that entire wall of text, but because in skimming it I see so many citations, I gave you a rep anyways.

Giving a rep without reading!  You are reported!

 

[yuna628 9,787]

 

my husband has been here for like seven years and he still doesn't get it. its like people from other countries are often taught that america is awesome in it's opportunity so how could we be so incredibly callus and inept at something the majority of the world has figured out?

saw this last night from robert reich and it's spot on:

 

It's common sense yes. But the only issue I have with this quote is: I'm not a 'Wealthier American' paying a bit more, I'm being hosed by my insurance and cannot afford a 52% increase so that not only sicker poorer Americans don't die, but that myself and my husband doesn't die.

[smilesammich 10,727]

 

It's common sense yes. But the only issue I have with this quote is: I'm not a 'Wealthier American' paying a bit more, I'm being hosed by my insurance and cannot afford a 52% increase so that not only sicker poorer Americans don't die, but that myself and my husband doesn't die.

i read that as him speaking to how universal healthcare/insurance is supposed to work. i don't think he was saying that folks who are seeing huge increases and zero options are somehow wealthier and deserving of insurance company hosing because they can afford it. 

[yuna628 9,787]

 

i read that as him speaking to how universal healthcare/insurance is supposed to work. i don't think he was saying that folks who are seeing huge increases and zero options are somehow wealthier and deserving of insurance company hosing because they can afford it. 

Well it's just bugging me because his quote (at least that part) was directly referencing the ACA. It's frustrating because I feel at times while republicans are completely stonewalled tone deaf on this issue, democrats also follow suit in not acknowledging there is a really big problem with premiums right now and how to fix it. This is a now problem, not a wait until the next election for the republicans to get trashed by angry voters because they killed healthcare and then think about it a while and fight some more and then repeat the process all over again kind of thing. It's a we need real workable solutions issue and fast kind of thing.