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The other Obamacare lawsuits, Part I

Very little has been said by the main stream media about the two other cases challenging the constitutionality of Obamacare.  Both cases hold that Obamacare is constitutional, so I thought you might be interested in them.

The first case, decided on October 7, 2010, is Thomas Moore Law Center v. Obama, and it was decided by Federal District Court Judge George Steeh of the Eastern District of Michigan.  There, the court held (at page 18) that the insurance industry would be driven out of business without the individual mandate because people could now wait until they were sick before obtaining insurance.  Consequently, the mandate was “essential to the larger regulatory scheme”, and thus constitutional.

Let’s examine that. 

The theory here is that people will wait until they are sick to apply for insurance because they know that they cannot be turned down.  They will remain a premium payer for only as long as it takes to get well, and then drop coverage.  Should this happen, insurance companies will pay out well more in claims than they collect in premiums, and two things will occur.  Either the companies will have to raise premiums to cover this shortfall, thus driving more people off the insurance rolls, or, the companies will go bankrupt.  To prevent this from happening, all will be required to have insurance, or pay a tax (yes, the federal government now calls it a tax).

It seems to me that if this was going to be the court’s conclusion, some discussion should have been had as to whether the government’s “solution”, i.e. pay a tax if you don’t have coverage, would solve either problem.  Had the court done so, it would have become crystal clear that it will not.

First, the tax (peaking at around $2500 per year) is considerably less than the cost of annual premiums, and, this is true even before premiums rise further due to the cost of all of the soon to be issued mandates.  But, more to the point, if the purpose is to save insurance companies from bankruptcy, then the “tax” collected should be placed in a “pool” from which the insurance companies could draw any time their yearly claims paid exceeded their yearly premiums collected.  It is not.  It goes into the government coffers, no doubt, to make Obamacare “deficit neutral”.

So, it would appear to me, at least, that the “solution” Congress and Judge Steeh relied upon isn’t much of a “solution” after all.

I will deal with the other case, Liberty University, Inc. v. Geithner, in a later post, but, there is nothing to keep you from reading it now!