Yesterday, President Barack Obama made the surprising prediction that the Supreme Court would uphold the health care law and further labeled those who would vote against it as judicial activists. I am not sure what he is basing his prediction on, but the comment on judicial activism is both unfounded and unwise.
With most observers saying that five justices, including Justice Anthony Kennedy, appeared to be opposed to the law on federalism grounds, the prediction of victory lead some to allege “insider information.” Fingers were pointed at Justice Kagan who some (including myself) felt should have recused herself because she was Obama’s Solicitor General at the start of litigation to defend the act and received emails on that effort. However, there is no basis to make such an accusation against Kagan who I believe would not commit such an egregiously unethical act in telling Administration officials what the initial vote was in the conference last Friday. Obama may simply be engaging in hopeful thinking (it is after the Administration that ran on “Hope”) or his continuing belief that the cases favor the Administration. It also seemed to set up his next (and much more disturbing statement) on judicial activism.
Obama stated that:
“Ultimately, I am confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress . . . And I’d just remind conservative commentators that, for years, what we have heard is, the biggest problem on the bench was judicial activism, or a lack of judicial restraint, that an unelected group of people would somehow overturn a duly constituted and passed law. Well, this is a good example, and I’m pretty confident that this court will recognize that and not take that step.”
Of course, all acts found to be unconstitutional were generally the product of democratic process. The point of an independent judiciary is to serve as a bulwark against abuses by the majority. Obama’s statement about judicial activism is equally wrong. There are good faith arguments on both sides of this question and one does not have to be a judicial activist to vote to strike down the law on federalism grounds. I support national health care but raised the same federalism concern before Congress passed the law. I do believe that the law violates federalism guarantees while I respect my friends with opposing views. It is simply unfair to characterize a vote against the law in advance as judicial activism — a term that is often used by people whenever a court rules against their view of the law. To put it simply, it was a cheap shot and beneath a president.
Moreover, it was unwise at this time. This comment is not going to appeal to any of the justices, particularly not Justice Kennedy. The Administration needs Kennedy’s vote and he previously voted to strike down two federal laws on the federalism grounds — the very judicial activism described by the President. Additionally, the Administration is trying to convince Chief Justice Roberts and Justice Scalia to moderate aspects of any ruling. They are likely to view this comment as directed at them. Roberts was ticked by Obama’s statement during his State of the Union address where he criticized the Court. While I felt Roberts failed to condemn the actions of Justice Alito at that address and felt that Alito’s actions were far more problematic, Roberts felt the President was irresponsible. Now, he is condemning any vote against the law in advance as activism. Even if Roberts and Scalia (or Kennedy) were inclined to vote against the individual mandate, they may be on the fence on questions like severability.
The message can easily be taken by justices as a threat that, if you vote against my law, I will denounce you publicly as judicial activists. I realize that this is an election year, but I believe a president should transcend such petty attacks. In this case, it is not just petty but inimical to the Administration’s case.
Source: Yahoo
Bron, not for profit hospitals and care providers cannot be advocates for fear of running afoul of the IRS. The insurance lobby is powerful and rich. Guess who wins that tug of war?
Tony C:
“Medicare’s mission is to maximize the good they can do within the budget they are given, it is not monetary profit. Thus they are aligned with their overall customer base; even if they must deny some care or claims, they do not do that out of a selfish profit motive but in order to do greater good elsewhere.”
how is that not going to become politicized? Especially in this world where everything is on a computer somewhere. I’ll take some one’s profit motive over political motive any day of the week, I can understand being screwed over because someone wants to make a buck. Being screwed over because you are a liberal or a conservative or black or white or elderly or handicapped is a different thing altogether. At least a dollar doesnt care what political party you belong to.
Bron, there are more than five companies. Far more. I have no way of knowing, but my guess is that your doc probably chooses to only deal with five or so. That is not uncommon. The more companies a clinic has to deal with, the more complex the paperwork because every company is going to want something different. Makes office managers crazy. Most clinics like the idea of a single payer, if for no other reason than that one.
Professor Turley,
I think that you missed the point of the President’s comments on judicial activism. He was criticizing conservative hypocrisy–they’re the ones who have for years been raising cries against judicial activism, but they’d applaud activism against the ACA.
Otteray Scribe:
So for the sake of a small amount of legislation, making patients privy to the contracts between the company providing the insurance and the people providing the health care, you would force everyone into a one size fits all model?
A patient has a right to know what the hospital is doing and why.
It seems to me a good deal of sunlight is necessary, not a dose of government.
funny comments. mirrors real life. everyone talking over each other.
Your dumb, no YOUR dumb. Conservatives are stupid and greedy, liberals are stupid and too emotional.
We are doomed as a nation and it is our fault because we cant talk to each other and we cant trust each other. Whose fault is that? must be the conservatives…I mean liberals.
@Bron: We already know there is going to be a panel of unelected bcrats making those types of assessments under Obama Care.
Currently the decisions of which claims will be granted and which will be denied are made by an unelected panel of bureaucrats working for the private insurance companies, but unlike the government, these people have a profit motive to deny as many claims as they possibly can. They routinely do so regardless of what their convoluted policies say, on the chance the policy holder will not consult an attorney, and because slowing down claims lets them hold onto the money longer, no pay and slow pay is always better for the bottom line.
They have an inherent conflict of interest. The government does not.
@Bron: Insurance is not like selling stereo equipment, increasing competition does too much harm to people.
The central feature of the free market you wish to employ is the fatal flaw in your plan: Competition drives competitors out of business. I know, I have personally driven a dozen national competitors out of business, by fair competition.
This is a problem with insurance; an insurance company going out of business screws people that were depending on it, both those that are sick and legitimately relying on it to pay for their health care, and those that are not sick but must now find a new company. But they are not as attractive to new companies, they are older and statistically more prone to illness and statistically more prone to have pre-existing conditions. Their first insurance company reaped all the easy profits when they were young and healthy.
Insurance, by its nature, does not put your premiums aside and hold them for you, the whole point is for everybody to pay the average cost so nobody gets stuck with the worst case cost.
But that brings up the second problem, in business we call it a “barrier to entry:” Because the worst case costs can be millions, it takes about a hundred thousand policies and/or tens of millions of dollars in capital to get an insurance company started. This is a game for big players only, which means competition can be scarce and slow to arrive (just like a utility).
Then there is a third, nearly intractable problem with for profit insurance: It is impossible to align the best interest of the company with the best interest of their policy holder. Profits are increased by denying claims, period. That is an inherent, inescapable conflict of interest. The customer and the company will always be adversaries if profit is the motive.
Free marketers like to pretend that lawsuits are free, but of course they are not, they cost tens of thousands of dollars to prosecute, as well as tons of time and energy, and sick people in hospitals or suffering from cancer do not have the money, time or energy to sue.
For those reasons, I support nationalized insurance, which removes the profit motive completely. Medicare’s mission is to maximize the good they can do within the budget they are given, it is not monetary profit. Thus they are aligned with their overall customer base; even if they must deny some care or claims, they do not do that out of a selfish profit motive but in order to do greater good elsewhere. How they manage their budget is completely divorced from how much pay they get: There is no conflict of interest.
Failing that route, the regulated utility route can also eliminate most of the conflicts of interest. We can put employees and managers on the civil servant pay schedule, and limit CEO pay to, say, $250K a year with no bonuses or unusual perks. There would still be plenty of qualified candidates, including lawyers, professors, MDs, MBAs and many others that earn less than $250K. We can prohibit the CEO from owning any stock in the company, or any other insurance company, or any company paid by his company.
We can demand that no single investor is permitted to own more than 0.1% of the stock of the utility; that dividends must be paid on a regular schedule, that 85% of premiums must be paid in claims, that profits cannot exceed 10% of total premiums and excess profits must be sequestered as reserves, and half the reserve must be rebated proportionately to policy holders if they cross some threshold (like an average of $50 per policy holder).
This limits the conflict of interest because we can force the owners to pay out about 85% of the premiums as benefits, use another 5% of premiums as reasonable administrative overhead (more than what Medicare requires), and distribute 10% of premiums as profits to shareholders.
So the company is earning a fair profit but cannot earn MORE profit by denying claims, slow-walking claims, demanding more proof, screwing their employees or investors, fighting to deny valid claims in court, or taking eight-figure salaries or bonuses.
In fact, although this will sound very counter-intuitive to some people, if we regulate the profit margin and demand that 10% of premiums be distributed to shareholders, then we eliminate all the conflicts of interest: Profit exists but cannot be increased or decreased by claim policy. The only decision left is how to best utilize the other 90%. Shareholders still want growth, more policy holders (or bigger premiums) means their 10% is bigger. On the civil servant pay schedule, the best route to growth is efficiency and customer satisfaction, getting more good done with the budget.
I should note, to avoid confusion, that 10% of premiums does not mean the stock of the company returns 10% as an investment. It just means the company has a 10% profit margin. Apple, for example, has a 26% profit margin, but as a stock returns 5.6% (because its stock price is so high). And it can go the other way: Walmart has a 3.5% profit margin, but as a stock, returns 7.5%.
I presume stockholders would be necessary to provide the capital and reserves needed to start the insurance company; as I said above, it is a game for big investors with deep pockets. It is like a casino, they have to have the financial wherewithal to ride out a stretch of bad luck, until the law of averages smooths things out.
How many health insurance companies are there in the United States?
http://www.insuranceproviders.com/how-many-health-insurance-companies-are-there-in-the-united-states/
Excerpt;
There are not a large number of health insurance companies in the United States. Because it is a highly specialized industry and one that has many guidelines and restrictions, there are only about 35 private health insurance companies that serve the American public, not including Medicare providers.
To get several free online insurance quotes just type in your zip code now!
However, even with this number of providers there is still healthy competition in the market place. The variety of companies offers consumers a good choice of providers from which to purchase their health insurance. Such diversity ensures that consumers will have an easy time finding a plan and a company to meet their exact needs.
Well Known Health Insurance Companies in the United States
On close inspection, it may seem that there are more than 35 health insurance companies in the United States, but many of the different ones out there are simply divisions of one of the companies listed below, including state-specific divisions. These are some of the more well-known and recognized names in health insurance providers in this country.
* CIGNA
* Blue Cross Blue Shield Association
* AETNA
* AARP
* American National Insurance Company
* Coventry Health Care
* Fortis
* Health Net
* Humana
* Highmark
* Kaiser Permanente
* Molina Healthcare
* Medical Mutual of Ohio
* Golden Rule Insurance Company
* Assurant
* Unitrin
* UnitedHealth Group
* WellPoint
Bron, the people having policies with that ginormous insurance company had no idea, and under the standard contract with them, health care providers are forbidden to let patients know the insurance company is screwing them over, or if they come in to the hospital with a life threatening condition that might take five or more days in ICU, they will just be made comfortable in a regular room. If they make it, fine. If not, oh well. This is how private insurance companies work. It is SOP.
Otteray Scribe:
there are, according to my primary care doc, only 5 major insurance companies providing policies. I think that is criminal, regulation has limited the quantity and quality of the service we receive. Puzzling has written at length about these regulations.
Otteray Scribe:
“I am waiting for the objectivity to respond to my note about being on the ethics committee of the hospital and the insurance company memo. I wish I could remember for sure which insurance company it was. I think I do, but not certain enough to risk naming the wrong company on this widely read blog.
Ennyhoo, I am wondering what the objectivists have to say about ICU stays lasting longer than five days being shitcanned by the insurance company because a mere 17% survival rate is not economical.”
In answer to your question, I say that is a despicable thing to do. In a free society you would have a choice as to the type of insurance and the type of company from which to buy. Those are the types of things people need to look into when they get an health insurance policy. They typically dont because the employer pays and they just accept the policy as part of their compensation without any thought. People spend more time purchasing a fishing rod than they do thinking about and investigating the insurance policy [and company] their employer provides.
I would also say that if you are aware this is the companies policy you can choose to purchase or not. You can take an informed decision and weigh the risks and costs based on your age, your health, your level of income, etc.
We already know there is going to be a panel of unelected bcrats making those types of assessments under Obama Care. So how do you feel about that?
If people are free, these types of decisions are left to them or should be. I have learned, by reading this blog, there are very many people who do not want to be responsible for themselves and who do not like freedom nor want to be free. It has been an eye opener.
gbk:
“You should maybe think about publishing a modern Dr. Suess series of books, your first title might be: “Green Eggs – Get Used To It,” followed up by, “The Cat – Out Of The Bag.” I’m sure the state of Arizona would buy them.”
That is the funny part, capitalism has given us nothing but choices, we have so many choices we dont know what to do with them all. And here you are saying that I want one type of egg? You really dont understand shinola.
My first book would be “Why Settle for Green Eggs (when you can have any color of eggs you want).” But like a typical statist you either purposefully or unintentionally accuse me of what your policies will bring about.
@Idealist: part of the business model can be a limit on salaries and compensation; it can also be an open-book model of operation: A utility does not need trade secrets.
The entire US Government is run on limited salaries with zero profit participation; the president earns $400K, the next highest salary is Speaker of the House at about $200K. Most high level managerial civil servants earn less than $150K, even after locality adjustments. There is no shortage of applicants.
Likewise, there is no shortage of professional insurance managers working for fixed salaries at Medicare, and they do not need financial incentives to stay efficient: Medicare cost-of-service overhead is 5% compared with the private industry figure of 30%; partly because nobody at Medicare gets any bonuses, perks, or giant penthouse offices, but primarily because Medicare does not employ platoons of lawyers and millions of dollars to fight paying claims that would set a precedent.
This is another part of the business model that can be set by law for a government endorsed utility; some risk of lawsuit can be diminished by setting different standards for the amount of liability to which such an entity can be subjected; on the grounds of general welfare. In fact it would be a route to sensible tort reform, to limit punitive damages and set rules as to what such lawsuits can recover.
http://www.nytimes.com/2012/04/04/opinion/dowd-men-in-black.html?ref=maureendowd “But it isn’t conservative to overturn a major law passed by Congress in the middle of an election. The majority’s political motives are as naked as a stripsearch.”
For those of you interested in this sort of thing, the University of Wisconsin is running a prediction market scenario based on the questions:
1) What will be the outcome of the United States Supreme Court hearings in June regarding Medicaid Expansion?
2) What will be the outcome of the United States Supreme Court hearings in June regarding the Individual Mandate of the Federal Healthcare Reform Act?
https://hra.inklingmarkets.com/
Eating my porridge and reading the mish-mash (not derogatory).
I must brag that I was first (almost) on Bron, by simply saying his solution was not politically achieveable by his own facts.
Bill H. No, he’s a poliician. What lie (sorry, propaganda—-which has been cleansed of its negative image and pronounced sound) would you have used?
Rafflaw, His base? No, he’s trying to make it a major campaign issue, win or lose. Everybody has health, so it concerns all, if not you then friends or relatives.
Bron, Doesn’t understand we are not God, and thus can not re-make the human body in the same way silicon electronics can be improved.
The body provides the limiting factor. How stupid comparisons can be made? Is this is what is referred to as reductio ad absurdum?
Did he really say, “overturning a law that was passed by a strong majority of a democratically elected Congress” there? He does recall, I assume, that it passed 219-212 in the House and that the reconciliation process was required in the Senate to bypass a filibuster? Tha man is delusional.
Mike S.,
Obama could be trying to rev up his base.
Being on vacation I’m late to this game, however,
I’m never reluctant to add my two cents. Bush v. Gore was the worst decision ever made by SCOTUS and the “unjudicial” decisions that have followed it have shown that the 5 who vote the party line of the Plutocracy are anything but exemplars of judicial probity. This is not a matter of a disagreement of legal scholarship, but a pandering to the “elite” of this country. With the fact that justice Thomas didn’t recuse himself, obviously the need for discretion of Caesars Wife is no longer the rule. President Obama not only said the right thing, but also made a politically brilliant strategic move. For some though, for some reason unknown to me, he is never allowed to be politically strategic, that privilege only goes to his opponents, no matter how nefarious their methods.