The S&P Downgrade, Healthcare and the 2012 Election

Standard and Poor’s rates the following countries with a AAA credit rating :

Great Britain
Hong Kong

What do all thirteen have in common?
All provide National Health Care. The forms may vary by country … some with tiered systems or provide some subsidy, such as Switzerland requires mandatory insurance purchase with subsidies if premiums exceed 8% of income.

Last week, the 11th Circuit Court of Appeals in a 2-1 decision rejected the “individual mandate” portion of the Patient Protection and Affordable Care Act. The prevailing plaintiff in this case includes the National Federation of Independent Business who happens to be hosting a luncheon on Tuesday with Raymond Cravaack (R-MN-08) so that may be a subject for discussion.

NOTE : The Court also let stand the rest of the legislation … and that really is the more notable aspect of the ruling. That is interesting since one of the Judges that rejected the individual mandate is the father of Congresswoman Martha Roby (R-AL-02) who voted to repeal the legislation.
It is also noteworthy that thus far, only two of the 26 original cases have held that the individual mandate and thus the Affordable Care Act in its entirety is unconstitutional … as such, it appears that the majority of the legislation should be allowed to proceed.

The two member majority wrote that the mandate “exceeds Congress’ enumerated commerce power and … represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives”.
Judge Stanley Marcus wrote in his dissent. “The majority does so even though the individual mandate was designed and intended to regulate quintessentially economic conduct in order to ameliorate two large, national problems: first, the substantial cost shifting that occurs when uninsured individuals consume health care services — as virtually all of them will, and many do each year — for which they cannot pay; and, second, the unavailability of health insurance for those who need it most — those with pre-existing conditions and lengthy medical histories.”

While the Supreme Court will eventually rule based on the various arguments … is the mandate, a regulatory penalty and not a tax, and thus it cannot be upheld by the Constitution’s Taxing and Spending Clause … or will the Court follow the the long history of judicial actions that expanded Congress’ ability to act under the Commerce Clause ?
When will that be decided is undetermined … nor, what the ruling would be pure speculation but as proven when the jury determined that Casey Anthony was “not guilty”, the Court will rule on based on the arguments made … not what may be best in the interest of the country nor on their personal opinions … and my gut tells me that the Supreme Court will rule reject the individual mandate.

Which will make it the central issue in the 2012 Elections.

Thus far, House Republicans have passed a complete repeal of the legislation … but the Republicans have made little movement on replacing it … why?

Well, part of the reason is that insurance companies want new clients. The Congressional Budget Office (CBO) estimates that removing the individual mandate from the new federal health law will cut the number of individuals newly insured in half (from 32 million to 16 million) … that‘s a lot of potential customers.
Another part, even though they may not vocalize it now, Republicans advocated for many of these policies … coverage for adult dependent children on their parent’s policy … addressing discrimination of pre-existing conditions … expanded choices … heck, the “individual mandate” was a Republican idea. Now, it’s evil.

Congress has a few options :
1. Do Nothing … something that Congress does well. But that leaves a hole in the revenue pool. Plus, CBO estimates that the reduction in employer-sponsored insurance will double with no mandate; and CBO estimates that premiums in the individual market will rise by 15 percent to 20 percent … so if your employer provides healthcare insurance, CBO expects many of those to drop coverages, or increase your co-pay … and if you pay for your own insurance, expect your premiums to increase.
2. Impose a Tax to Pay for Uncompensated Care
A line-item on the income tax forms would tax everyone for the costs of emergency room and other uncompensated care incurred by people without health insurance … and then a tax rebate could be issued or waived upon proof of health insurance. An alternative would to deny the personal exemption allowed in the tax code for all uninsured individuals. In other words, if you have insurance, you do not pay … if you don’t your taxes would be higher.

As you consider the options, let’s ask ourselves : WHY do citizens of these other major countries enjoy national health insurance and Americans do not ?
Is part of the reason is that America spends 20 % of the budget on the Department of Defense …. and these other countries know that America is patrolling the waters and airspace … and available if they are ever attacked ? The countries listed above are not little countries like the Isle of Man but major international competitors for JOBS… Germany, France, Great Britain, Canada … places where plenty of American corporations have established business … even to the extent to manufacture product that would be imported into America.

The second question is : WHY did S&P downgrade America’s credit rating … not because of healthcare reform … it largely has had little financial impact as most of the program do not begin until later … but because of the idealistic and defiant nature of the political parties.

As voters look to 2012, the ideologue will not improve America’s credit rating nor provide healthcare reform … their past record proves it.

And lastly, let’s remember how the individual mandate works :

The requirement is that all U.S. citizens and legal residents have qualifying health coverage. Those without coverage pay a tax penalty. The penalty will be phased-in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, and 2.5% of taxable income in 2016. Beginning after 2016, the penalty will be increased annually by the cost-of-living adjustment. Exemptions will be granted for religious objections and financial hardship … those for whom the lowest cost plan option exceeds 8% of an individual’s income, and those with incomes below the tax filing threshold. Gosh, that would put America on par with Switzerland.

Let’s remember that the failure to address healthcare reform will be substantial.

YES, healthcare will be THE ISSUE in the 2012 elections.

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