What the Obamacare Decision Means for You

The real question before the court was, Does a constitution restricting government to limited and enumerated powers actually mean anything, or are we now subject to the whims of temporary majorities elected to Congress? It’s hard to read this decision as anything but the latter. The only constraints on federal power now are political, not legal. For Americans, the world has changed.

What do the law’s provisions mean for you? For starters, employer-provided insurance is an endangered species. For political reasons, the penalty the law imposes on employers who don’t provide insurance was made much lower than the cost of insurance, which will now be much higher due to the law’s coverage mandates. This means it makes much more sense for employers to just drop their coverage and let employees go to the government “exchange” for insurance.

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So pretty soon you will get your insurance through that government exchange. It will offer a limited selection of government-approved “Cadillac” policies – from a “base” level Cadillac to a loaded version – at very high prices. Because the cost will be so high, families with incomes up to four times the poverty level will get a subsidy, the exact amount depending on how much you earn. The exchange will look up your income information in the IRS database and determine how large a subsidy you may receive.

Once you have that Cadillac policy and subsidy, your incentive will be to use as much health care as you can, and make no effort at all to seek the best deal. That’s not too different from the status quo, unfortunately, except insurance companies’ ability to manage those costs is sharply limited by restrictions the law imposes on their administration costs. All this is why the  new costs will be so much higher than advertised.

How much more? Easily two or three times the advertised “trillion dollars over 10 years” price – and maybe much more than that. When Medicare was created in 1965, it was projected to cost $12 billion by 1990. In reality, it cost $107 billion by 1990. There’s no reason to expect anything different this time.

Because such levels of spending are unsustainable, the law authorizes and will generate various forms of health care rationing. Direct rationing will be imposed through an “Independent Payment Advisory Board,” the so-called “death panel.” Indirect rationing will occur through the almost inevitable “lowballing” of reimbursements to health care providers, as is done now under Medicare and Medicaid.

They will respond in turn with, among other things, longer waiting times to get treatment, which is the norm in other countries with government-run health care systems. This is the reason there’s a good deal of “medical tourism” from Canadians forced to wait two years or more for things like hip replacements and other procedures, often in great pain. Many Americans may eventually be forced to do the same. Wait-times have also grown in Massachussetts, which imposed the prototype for Obamacare several years ago.