So What Exactly Do We Get For Our New Tax?
Published in The Tennessean, Sunday, July 15, 2012 and Forbes with archives.
Copyright © Richard J Grant 2012
by Richard J. Grant
The key to understanding the
Patient Protection and Affordable Care Act (PPACA) is not whether the provision
formerly known as the “individual mandate” is now a penalty or a tax but what
burden it imposes. The act’s remaining political support depends on a failure
to recognize the incidence and magnitude of the total burden imposed on people
by the whole act.
From the beginning, support for
federal government intrusion into medical care depended on the belief that we
could get something for nothing. The reigning mythology is that “health care is
different” and that a government bureaucracy can and must protect us from that
multitude of professionals and “evil corporations” that offer medical-related
products and services. Not understood is that the same freedom to trade and
enter into contracts that has yielded fine service and rapid innovation in
other sectors would work no less well for health care.
When Supreme Court Chief Justice
John Roberts transformed the individual mandate penalty into a tax, he did
eliminate one minor burden. Those who choose not to comply with the
specifications of the mandate will no longer be lawbreakers: they merely give
up their exemption from the tax. But the cost of this small gain (and
elimination of the Medicaid mandate, which would have extorted billions from
the states and their taxpayers) was that the PPACA, with its other burdens,
would stand.
Although it appeared that Roberts
had placed limits on the federal government’s Commerce Clause regulatory
powers, he allowed the government to achieve much the same effect through
taxation. University of Chicago law professor Richard Epstein pointed out that
the Supreme Court had long understood that “taxation and regulation are close
substitutes, so a limitation on one power matters little if the other power is
still available.” He insisted that Roberts was wrong and that “the power to
regulate commerce and the power to tax should not be separated.”
This lost opportunity for
constitutional fidelity will bear on our future just as the burdens of
defective past decisions bear upon us now. Epstein would draw our attention to
the constitutional language that gives Congress the power to “lay and collect
Taxes” only in order “to pay the Debts and provide for the common Defence and
general Welfare of the United States.” Adherence to the original meaning would
rule out taxation for the purpose of redistributing income among citizens as is
now mandated under the PPACA. Such a reading would also have protected us from
most of the other federal transfer-payment programs that now threaten our
solvency.
The PPACA is expected to add
several billion dollars per year to our debt problem. Management of the
“insurance exchanges” alone will require over $60 billion per year in
subsidies. The act imposes a cluster of new taxes, but the biggest burden will
be borne by those who must comply with all the new regulatory provisions. That
includes patients and customers, whether they know it or not.
Passage of the act in 2010 put
the Department of Health and Human Services, the Internal Revenue Service, and
a multitude of other agencies to work writing volumes of new regulations. News
reports claim that at least 13,000 pages of regulations have already been
drafted.
Who could believe that this
imminent flood of regulatory pollution will contribute to the “general
Welfare”? For those who believe that our medical system is a mess, the PPACA is
an example of why.
Richard J. Grant
is a Professor of Finance and Economics at Lipscomb University and a Senior Fellow at the Beacon Center of Tennessee. His column appears on
Sundays. E-mail messages received at: rjg@richardjgrant.com
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