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Wednesday, July 4, 2012

No Clear Path

I have waited to weigh in the the implications of the Supreme Court ruling on the Affordable Care act. Talk about surprise endings!  I have read lots of commentaries and reflected upon what this decision might mean. I have come to the conclusion that I simply do not know and neither does anyone else, despite what they claim to know. 

Justice Roberts accomplished extricating the Supreme Court from the immediate political fights associated with the Affordable Care Act. In an odd stroke of judicial activism (rewriting the legislation) he has succeeded in dodging a situation whereby virtually any other Court actions could be interpreted as being activist. The ACA is now unambiguously back in the political sphere and those running for President and legislative offices will need to address this in their upcoming campaigns. It is off the SCOTUS docket. Justice  Roberts effectively kept his powder dry, and may be a force in the future.

I must say that I am saddened by the continued transition of the Constitution from a document which was viewed as the law of the land to a document which is merely a suggestion. How we have transitioned from a document which defines clear limits on the power of the Federal Government to one which Congress, the courts, and the legal profession can pick and choose as to what can be ignored has a timeline extending far enough in the past to allow for selective amnesia. We are like the frog in the pot with the water slowly heating up and we are destined to be oblivious to the fact that we will inevitably be boiled.

The Constitution is like our DNA and stable as DNA might be, all organisms suffer from gradual accumulations of mutations which will ultimately affect the ability of the DNA to code for the genes required for effective functioning. Private property protections have eroded to the point to where they are unrecognizable, being replaced by protection of privacy. Unfortunately, protection of privacy will never be effective unless it is backed by real property protections.  The rule of law is becoming the rule of men and the rule of expediency, driven by an inexorable expansion of state power, particularly Federal power.

How this will all play out and how the health care economy will evolve is impossible to discern. The potential brake on the expansion of Federal power will be financial. After 2030 the Federal government has basically promised its entirety of all future tax collections for entitlements. Granted I am a skeptic when it comes to making projections that far into the future but there is a reason to believe that my projections are in fact much too optimistic. Projections of entitlement program growth have always UNDERESTIMATED the rates of growth.

Whether the individual mandate of the ACA was held constitutional or not is likely irrelevant in the long term regarding health care finances. What is pretty clear to me is that government at all levels will not have the money to maintain our historic growth rate of spending for health care. What we are seeing in Europe, California, and Illinois is the preview for what we face as well. Our growth economy has put off the day of reckoning but it will not hold it off indefinitely, unless there are profound changes in the cost structure of health care.

Here is where I believe the ACA has simply got it totally wrong, mandate or no mandate. Certain elements of the ACA serve as anchors for its remaining popularity, those being no exclusions for pre-existing conditions and the provision which allows adult children to remain on their parents insurance. Without these elements, the ACA would be toast. No politicians want to come out against these provisions and these provisions will accentuate growth in spending will only accentuate the financial quandary we are facing. The provisions within the law to address growth of costs provide limited confidence that can succeed since they do not really fundamentally change the underlying drivers of health care inflation and consumption of services.

I don't believe we will need to wait until 2030 for the effects of the financial squeeze. After the election this fall, we will face the "fiscal cliff" which may make discussions regarding the individual mandate and its constitutionality look like an odd distraction. Those left in office in January will need to figure out how all the promises they made can be kept. Perhaps they can consult Bernie Madoff from his prison cell.

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