| nt Barack Obama had a hard won victory on | | | | fostering the expansion of Medicaid and improving the |
| Saturday night (the 7-8th day of November 2009) | | | | Medicare. Under this, the young adults, till the age 26, |
| when the landmark health care reform legislation (HR | | | | are covered within their parents’ policies. |
| 3962) was passed with 220-215 votes. Now if | | | | The Obama administration intends to attain this by |
| everything goes the Obama way, then by the end of | | | | creating mandates. As a self-sustaining public |
| the year ’09 Affordable Health Care for | | | | insurance option (that is financed not by tax dollars but |
| America Act would apply as a law impacting | | | | by insurance premiums), this provides an alternative to |
| almost fifty million US lives. But what does this Act | | | | and competes with private health insurance |
| actually imply? How does it stand to impact an | | | | companies, on a level playing field. Additionally, the Act |
| average US life? How does the Act affect the | | | | intends to eliminate the antitrust exemption for health |
| outsourcing industry at large? Through my article | | | | insurers and medical malpractice insurers thereby |
| below I endeavor to answer these and many more | | | | fostering competition thus targeting the existing |
| questions. | | | | monopolies in the health insurance market. It aims to |
| Ab-initio we will refresh the fundamentals of | | | | establish a new mandatory essential benefits package |
| federalism, stating the Roles, Duties, Nature, Scope and | | | | that shall become the minimum quality standard for |
| Restrictions on the government in a written federal | | | | employer plans, with the passage of time. The |
| constitution. Next we proceed to see whether the | | | | package places a cap for annual out-of-pocket |
| above attempt by the federal government to accede | | | | spending, at a maximum of $5,000 per individual and |
| healthcare legislation is ultra-vires the powers granted | | | | $10,000 per family to prevent bankruptcies from |
| by the US Constitution. | | | | medical expenses. |
| What is Federalism? | | | | This Act requires the employers to either provide |
| According to the traditional classification followed by | | | | insurance to their employees or contribute to the cost |
| the political scientists, constitutions are either unitary or | | | | of their coverage through the public plan/exchange, |
| federal. In a unitary constitution, the powers of the | | | | though the small businesses are exempted from this |
| government are centralized in one government viz., the | | | | requirement. |
| Central Government. In the federal constitution, on the | | | | Arguments regarding Constitutionality of HR 3962 |
| contrary, there is a division of power between the | | | | The legal fraternity is divided between two schools of |
| federal and the state governments in a way that they | | | | thought about the constitutionality of the Act. First |
| are both inter-dependent and independent at the same | | | | school believes that the Act is unconstitutional and |
| time. | | | | places reliance on Articles I §8 and V of the US |
| As we all know that Constitutions are organic | | | | constitution and on Tenth Amendment. They claim that |
| documents which operate as fundamental law. The | | | | their argument is supported by the celebrated case of |
| governments and their organs owe their origin to the | | | | MARBURY v. MADISON, 5 U.S. 137 (1803) and some |
| constitution, derive their authority from the constitution | | | | federalist opinions. The second school of thought |
| and discharge their responsibilities within the | | | | places reliance on Article I §8 and the celebrated |
| framework of the constitution. The judiciary has the | | | | case of McCulloh v. Maryland, 4 Wheaton 316 (1819); |
| power to declare a law unconstitutional if the law is | | | | Steward Machine Co. v. Davis, 301 U.S. 548 (1937); |
| found to have contravened any provision of the | | | | United States v. Butler, 297 U.S. 1 (1936) and some |
| constitution. The American Constitution is the oldest | | | | federalist opinions. An in-toto analysis of these school |
| and a well praised example of federalism. | | | | of thoughts would conclude that the true interpretation |
| What are the powers granted by the US Constitution | | | | of the word general welfare’ in Article I §8 |
| to the State Government? | | | | of the U.S. Constitution can only determine the |
| Powers reserved for State Governments are: | | | | constitutionality of an Act like HR 3962. Till date the |
| Establishing local governments | | | | court opinions have been more inclined towards |
| Issuing licenses (driver, hunting, marriage, etc.) | | | | Hamilton (Federalist 33, 83 etc.) and Story rather than |
| Regulating intrastate commerce | | | | Madison (Federalist 41, 45 etc.). |
| Conducting elections | | | | Simply put, when the government mandates welfare |
| Ratifying amendments to the U.S. Constitution | | | | as a quid-pro-quo for premiums collected, such welfare |
| Providing for public health and safety | | | | translates to nothing but a tax liability for the country |
| Exercising powers which are neither delegated to | | | | men. Such an attempt by the government to regulate |
| the Federal Government nor were prohibited from the | | | | insurance sector by masquerading as an industry |
| States by the Federal Constitution (residuary powers) | | | | player is inspired from socialism. I personally feel that |
| Framing other domestic law (for example, setting | | | | socialism is a Marxian concept and may not go well in |
| legal drinking and smoking ages etc.) | | | | an economy with capitalist foundations. The good thing |
| What are the powers granted by the US Constitution | | | | is that people all over the world should buy insurance; |
| to the Federal Government? | | | | this however turns bad when the government forces |
| Under the Constitution, powers reserved for the | | | | people to do so. |
| Federal Government are: | | | | What are the implications of HR 3962 on the |
| Printing of money | | | | Outsourcing industry? |
| Declaration of war | | | | The object clause to the Act states that it is meant to |
| Establishing the armed forces | | | | provide affordable, quality health care for all Americans |
| Entering into treaties with foreign governments | | | | and reduce the growth in health care spending. |
| Regulating commerce domestically and | | | | In reality, the act is a victim of haste. Ideally if the |
| internationally | | | | intention of the Obama administration and the object |
| Establishing post offices and issuing postage | | | | clause of the Act were actually in-sync then the |
| Making laws necessary to enforce the Constitution | | | | administration should have awaited a confirmed |
| What are the powers shared by Federal and State | | | | indication of the end-of-recession. The administration |
| Government? | | | | should have first looked at strengthening the |
| Under the Constitution, the shared, or "concurrent" | | | | fundamentals of the economy, by: |
| powers are: | | | | ü better regulating the existing insurance sector, |
| Setting up courts | | | | ü improving the US agrarian culture and making the |
| Creating and collecting taxes | | | | country self sufficient regards its food requirements, |
| Building highways | | | | ü checking the cost-of-living index and |
| Borrowing money | | | | ü creating more jobs in the private sector. |
| Making and enforcing laws | | | | But if the intention is to make more and more |
| Chartering banks and corporations | | | | Americans dependant on Federal Government for |
| Spending money for the betterment of the general | | | | basic requirements, then the attempt is bang on. |
| welfare | | | | Impact on the outsourcing industry: |
| Acquiring private property with appropriate | | | | Prima-facie it may seem complex but there are clear |
| compensation | | | | indications for the outsourcing industry to benefit once |
| What is the HR 3962 Act ? | | | | the HR 3962 is implemented. The benefit roots from |
| The HR 3962 Act conceptualizes a new, voluntary, | | | | the fact that the employees will become expensive |
| public, long-term care insurance program to help | | | | for the employers post this Act’s applicability. |
| purchase services and support for people who have | | | | Now given the very competitive market scenarios, thin |
| functional limitations. The Act endeavors to form a | | | | profit margin and the inability of the employer to |
| new national program to provide affordable coverage | | | | transfer this increased cost to the end consumer, the |
| for those who can’t get health insurance today | | | | employer is forced to search for the less costly |
| because of pre-existing conditions. Under this, the | | | | alternatives. It is needless to say here that the Act |
| insurance companies must spend 85 cents out of | | | | magnifies the already existing labor arbitrage |
| every premium dollar on medical services, thereby | | | | opportunities internationally. |