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Moving Towards the Light

First Published March 22, 2010

Last night, Congress passed the Senate version of the health care insurance reform package Obama's been agitating for since the election. This bill is an unmitigated disaster for the health care industry in this country, and consequently for our economy generally. Fortunately, there's still hope.

For a quick recap, the four key provisions of this bill are:

1. Repeal of Glass-Steagall, a Pandora's Box allowing Congress to directly regulate health insurance companies. Look for a LOT of new regulations on the insurance industry in the near future, appended to bills completely irrelevant to insurance but that Republicans can't vote against with political credibility.

2. Medicare Reductions. After all these years of scaring seniors by claiming that Republicans want to cut Medicare and Social Security, the bitter irony is not lost on me that Democrats are the ones actually making these cuts. $500 billion in payment cuts will force a lot of doctors to stop seeing Medicare patients altogether, leading to an eventual collapse of that system as baby boomers continue to strain the health care industry's resources.

Numbers 3 and 4 are guaranteed issue and community pricing, the detriments of which I've discussed in detail here. In short, these two provisions will between them ensure that premiums will go through the sky, dramatically reducing coverage and engendering a substantial downsizing of the insurance industry. Unfortunately, it won't address the cost issue, and while people will be put back in touch with the real cost of their health care, it will also function as a back door to a public option down the line. The insurance industry will be effectively destroyed, taking a lot of jobs and a lot of money with them.

There's been a lot of conversation concerning how this law will affect the health care industry and the insurance rolls, but one thing I haven't heard a lot of discussion about is the probable effect of this legislation on the wider economy. Most of the spending won't kick in for four years, but all the taxes and the Medicare cuts start now, and that's absolutely the last thing this economy needs. The cuts will force layoffs in the health care industry, and the taxes, targeted primarily at the insurance industry and those with expensive plans, will be passed on to the consumer, driving premiums up considerably.

This will contract coverage, rather than expanding it, and will work in tandem with guaranteed issue and community pricing to drive the insurance companies out of the health business. It will obviate the entire point of this exercise.

On top of that, the insurance companies are required to hold substantial amounts of money in reserve, hundreds of billions over the entire industry. That money doesn't just sit in an account somewhere, it's out in the economy, being invested and making more money for the companies so their premiums are lower than they might otherwise be. Hundreds of billions of dollars being sucked out of the general economy will have an impact, and it will make it that much harder for us to recover from this recession.

So how do we fight this? There are two lines of attack, legislation and litigation. Legislatively, Republicans can begin attaching amendments repealing this bill piecemeal to legislation that Obama can't veto with any credibility. It seems a foregone conclusion that they'll win control of both houses of Congress come November, and once they're back in power, this process can be accelerated.

Moreover, while the House did vote to approve the Senate bill (with substantial reservations as expressed in their bill of fixes), it was by a bare majority, and nearly every member who voted for it had some part of the bill they held their noses in voting for. If Republicans can remain solid in their opposition to this legislation, they should be able to garner enough Democrat support to get their amendments through a conference committee without much difficulty.

The one potential hurdle is a provision Harry Reid wants to insert in the reconciliation package, making it out of order for any future Congress to consider revisions or an outright repeal of this bill. That said, it remains questionable whether this is remotely constitutional to restrict future Congresses like this, so it may not be such an issue.

As for litigation, I have no doubt that within 24 hours of Obama signing this bill, a preliminary injunction will be filed preventing implementation of any provisions of this bill pending rulings on any number of lawsuits. The courts will take four or five years to process through all the litigation before it finally hits the Supreme Court.

Once it does, we should start seeing a light at the end of the tunnel. The only question is whether it's daylight or an oncoming train. While the core provisions of this legislation, specifically how it expands coverage by forcing citizens to purchase health insurance under penalty of fine and imprisonment enforced by the IRS, are without question well beyond the bounds of Congress's constitutional authority, given the current constitution of the Court, the probable attempt to hide behind the commerce clause may well succeed. I'd say there's a 50/50 chance it'll be upheld even with the constitutional difficulties.

Then it gets interesting. A number of states are readying amendments to their own constitutions preventing implementation of this bill within their jurisdictions, and it remains to be seen what the Supreme Court will say about that. One way or another, though, we keep moving towards the light. One way or another, we move towards the conclusion of this debacle. But in the kingdom of hope, there is no winter. Keep fighting. We can win this.