Wednesday, March 28, 2012

Why the Constitutionality of ObamaCare is Being Debated and RomneyCare is Not

I have previously posted about the differences between ObamaCare and RomneyCare. And because it is such an important question, I have turned it into its own dedicated page on this blog. (It is not just an old blog post.) Click the link above to see it.

With aspects of ObamaCare being discussed at the Supreme Court this week, I wanted to revisit the subject, and address the issues before the SCOTUS. Starting with, how can you be for RomneyCare, but against ObamaCare? And if the mandates in ObamaCare are what are being debated as constitutional, why aren't the mandates in RomneyCare unconstitutional? And I aim to do this with as little bias as possible, and present it on just the facts alone.

The first and basic reason ObamaCare is potentially unconstitutional, and RomneyCare is not, is also the most important difference between the two programs. One is federal, one is state.

Also, as I said in my original post on this subject, many key aspects of the original RomneyCare bill were opposed by Romney. But he was over-ridden by the legislature in the final act, and many of the items he opposed are the basis for ObamaCare. That is why the argument that Romney "created the blueprint" for ObamaCare is invalid. More accurately it could be said the Democrats in the Massachusetts legislature created the template, and Romney opposed it. 

The SCOTUS is reviewing the controversial individual mandate provision in ObamaCare. The individual mandate requires most Americans to purchase health insurance by 2014 or face a financial penalty. And it is possible that if it is ruled unconstitutional, that the Court may also toss out the other 450 sections of the bill. 

RomneyCare and ObamaCare both have individual mandates- sort of. But the core of the mandates are actually very different, if you understand the legal nuances. Which is why one is before a court and the other is not. RomneyCare puts responsibility on the individual to buy insurance, while also creating an employer penalty for not providing insurance. ($295 per person, but increases monthly, paid by employer (opposed by Romney)). ObamaCare tries not to call it a mandate, but for all intents and purposes it is a mandate. It creates a tax incentive of about $700 for individuals to purchase coverage. Let's break that down. A "tax incentive," wherein, if you don't have insurance, you have to pay a special tax. Advocates of this "incentive," claim it insures the unemployed. If you are the unemployed, all you know is not only do you not have a job and can't afford insurance, now you have to pay the government an "incentive" for not having insurance. 

Recap: RomneyCare penalizes employers for not providing insurance. ObamaCare penalizes individuals for not having insurance. Pretty huge difference!

So what makes ObamaCare potentially unconstitutional? 

Justice Anthony Kennedy said that essentially this is the federal government "telling an individual he has the obligation he must act" and purchase insurance. "That threatens to change the relationship between the government and the individual in a profound way." 

Again, RomneyCare penalizes employers and tells employers what to do. The government bosses around businesses all the time. That's nothing new. But, other than the IRS, the federal government does not "force" individuals, the every day you and me citizens, what to do. It frequently tells us what we cannot do, but it does not tell us what to do.

Or as Chief Justice John Roberts put it, if Congress could regulate health care in the name of commerce, "all bets are off" on a range of areas subject to federal oversight.

So the argument against ObamaCare is that it forces individuals to do something they may not want to do. 

The argument for ObamaCare is that it offers a tax credit to Americans with incomes up to four times the federal poverty level, to make the purchase of insurance more affordable. 

As for the argument that ObamaCare is constitutional, advocates say that everyone, all Americans, whether directly or indirectly, participate in the health care system. And because everyone will at some point or another need health care, everyone should contribute. An individual will pay now, but not need assistance, thereby subsidizing the expensive procedure that someone else needs. Eventually the individual will need help down the road, and someone else's mandated contribution will subsidize them. The argument being that it equalizes out the price so that everyone can afford all health care. With more people buying insurance, it will drive down prices, making insurance more affordable.

The system is not unlike Social Security. Contribute now, withdraw later. 

Advocates of ObamaCare  see it as a way to spread health care costs among a larger pool of individuals, ensuring affordable, quality medical care. They believe it will regulate commerce and the economy.

Opponents do not like the privacy invasion of having the government tell individuals what to do. 

One major misconception tossed around by uneducated opponents of ObamaCare is that Americans will now have to pay for illegal aliens to receive medical care. ObamaCare will not "insure" (or "mandate") illegal aliens. After all, illegal aliens don't pay taxes.

It would fall on insurance companies to inform the government of those covered under their health policies. (Okay, I have to make one snide and biased remark here.- Because we all know how reliable insurance companies are at getting their paperwork, billing, and records right the first time.)

(I have intentionally not addressed the aspects of ObamaCare that involve religious freedoms and birth control options. That is not the issue in front of the SCOTUS and can wait for another day.)

RomneyCare- Massachusetts Health Care Insurance Reform Law 2006 ObamaCare- Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010
Offers subsidies to residents with income up to three times federal poverty level Offers tax credit to Americans with incomes up to four times the federal poverty level.
Extends coverage to low-income state residents through federal-state Medicaid. Extends Medicaid eligibility to low-income Americans.
Eliminates annual caps on coverage, limits maximum amount that consumers pay annually. Eliminates lifetime and annual caps on coverage, limits annual maximum to consumers.
Requires employers with 11+ workers who do not offer insurance to pay a penalty. Requires employers with 50+ employees to offer insurance or pay a penalty if at least one of their workers receives a tax credit to buy coverage.
Makes investments to improve wellness, prevention, and public health. Makes investments to improve wellness, prevention, and public health.
Created online marketplace for small employers to compare plans and options, saving admin costs. Created online marketplace for small employers to compare plans and options, saving admin costs.

70 pages long 2,074+ pages long
Main goal: insure everyone in the state Main goal: regulate and control costs of healthcare industry
Did not raise taxes Creates new taxes of $500 billion on individuals and businesses
Does not cut Medicare Cuts Medicare by $500 billion
No affect on Medicaid Gives Medicaid more liberally
1.8% of state uninsured (provided opt-in, opt-out) 16.7% of US still uninsured
Romney vetoed employer penalty (legislature over-rode later) Penalizes and requires employers to offer different types of insurance
Cost the state 1% of budget Will cost $2 trillion
Puts responsibility on individual to buy insurance, while also creating employer penalty for not providing insurance. ($295 per person, but increases monthly (opposed by Romney) No mandate for individuals, creates tax incentives for individuals to purchase coverage (penalizes the uninsured)
Did not lower healthcare costs (did insure everyone) Main goal is to reduce healthcare costs (does so by passing the expense to employers)
Deregulated a complex overly regulated state program. It is still heavily regulated, but much less so. Raised the costs of private health insurance premiums by 9% in one year (even before enacted). Expected to eventually raise premiums 55-85%.
Romney opposed the Commonwealth Health Insurance Connector Authority, also known as the Health Connector. Among other roles, the Connector acts as an insurance broker to offer private insurance plans to residents. Obama plan is based around this regulatory exchange, imposing many requirements on what is considered “minimum creditable coverage” (for instance, contraception)
Romney supported a bare bones policy that covered hospitalization and catastrophic illness. Obama plan imposes several requirements on what is considered “minimum creditable coverage” (for instance- contraception)


  1. Erin, letting you know that I 'like' this post! In fact, I 'shared' it on Facebook. I appreciate your research and understanding and explanation. And I also enjoy reading your blog, because, as you say, you watch the news so I don't have to. What you say makes sense to me. So, thank you!
    p.s. I'm your dad's cousin, Louise Wynn's sister.

  2. This comment has been removed by the author.

  3. I love this post, especially the comparison table. I guess Obama is more concerned with the economy than the people. We do not know what would happen with these project until it happens. private health insurance

  4. Although I am not very familiar with all the circumstances involved in the situation, I understand that the two health campaigns are being compared in different terms. I have a home insurance in New York and it is very important for me to know that I am benefiting from it and that is always ready whenever I need it. IN my my opinion that is the most important thing about these medical programs. Which one would be at most help to the public.

  5. As a financial planner in Perth, I take note of world news regarding issues that involves finances. I notice that this would be really help for less fortunate people but we cannot disregard the fact that the government would benefit a lot from this as well.


Your comments are always welcome here!