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The coming depression blog | September 18, 2014

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The ObamaCare Battle Is Far From Over

With the defeat of Mitt Romney, Obamacare dodged a presidential repeal bullet, but serious threats to the sweeping reform of healthcare remain. In fact, given that the most important piece of domestic legislation in nearly fifty years was enacted on a party-line vote, it should not be surprising that as the bill approaches implementation, many difficult challenges are only now appearing. And, with repeal of the measure still leading in public opinion polls 50%-44%, proponents are hard-pressed to claim that the recent election answered all the questions. In fact, as the extensive reforms and regulations—13,000 pages and growing—sink into government, business and private lives, challenges will come from dozens of angles.

For starters, the success of Obamacare depends heavily on state governments, since health and welfare is constitutionally a state matter. And right now, many states are not ready to play ball. Republicans dominate the statehouses, with 30 Republican governors and, as Governor Bob McDonnell of Virginia has said, “Where there are unfunded mandates on the states or there is trampling of the 10th Amendment or undermining of federalism that hurts the state or costs us money, then we’ll fight it.” One such battleground is whether states will establish their own healthcare exchanges and so far 15 states have said they will not do so. The feds have extended the deadline for a decision by another month, hoping to persuade a few more governors, but there is very little upside to states for taking on this essentially administrative role for Washington.

Then the U.S. Supreme Court decision on healthcare gave the states another key power in the healthcare balance: deciding whether to accept the federal government’s proposed expansion of state Medicaid. The law had originally attempted to force states to expand their Medicaid programs, offering them some additional money to do it (but not enough long-term) but threatening to withdraw all Medicaid grants if states did agree to a huge expansion of Medicaid. The Supreme Court said this was like holding a gun to the head, which was not permitted by the Constitution, so now states can decide whether to accept the federal money and expand Medicaid or not. Some twenty states are undecided on this, with a dozen or more saying or leaning toward saying “no.” This would throw a major wrench in the Obamacare works, since state Medicaid expansion is a major key to covering the uninsured.

Meanwhile the lawsuits about Obamacare are hardly over. Catholic charities are still pursuing their lawsuit over the law’s contraception requirements. A federal court in Oklahoma is weighing a suit filed by the Oklahoma Attorney General arguing that the IRS would overstep its legal authority to tax Oklahoma businesses to subsidize healthcare which, if upheld, would undercut the entire funding mechanism for Obamacare. The Attorney General of Maine has filed a suit in federal court seeking to drop health care benefits for 33,000 people or require the federal government to begin paying Maine’s share of coverage. All of this is likely to keep the courts and Washington busy for some time.

Individual employers are also actively exploring their options, with some firms saying they will simply have to lay people off, reduce full-time employees to part-time status, or add surcharges to customer bills in order to pay for the new healthcare costs. And the House of Representatives, which has voted over 30 times to repeal Obamacare, is doubtless not through with it yet. The House can still vote to limit or eliminate funding for certain provisions of the bill, and generally make implementation difficult.

Do you recall the old car repair commercial: “You can pay me now (for maintenance) or you can pay me later (for more expensive repairs)?” That’s really where we are with Obamacare. By forcing through a complex, fundamental reform of the entire healthcare system in a party-line vote with 2700 pages that doubtless few members of Congress even read, the President got his bill. But by not bringing along the states, a few Republicans, and others in the process, the bill for that legislative strategy is now coming due. There is a lot more legal and financial maneuvering to be done before we know what healthcare reform will finally look like. And frankly, when a President seeks to add a sweeping new federal entitlement, that’s the way it should be.

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