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Tuesday, April 03, 2012 3:05 PM

Obama Delivers Warning to Supreme Court on Healthcare; If Obamacare Goes Down Who Is To Blame? Who Loses If Not Struck Down? Mathematically Speaking, Obamacare Cannot Survive

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Open issues abound on healthcare. Will the Supreme Court strike it down? If so, who is to blame? Who are the winners and losers? Will healthcare help or hurt the Republican chances?

First please consider Obama delivers warning over healthcare law

Barack Obama has delivered a surprisingly strong warning to the US Supreme Court, saying that it would be guilty of an “unprecedented” case of “judicial activism” if it overturned his signature healthcare law.

On Monday the president said he was “confident” the law would be upheld, questioning how an “unelected group of people” could overturn a law approved by legislators.

“I’m 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,” Mr Obama said during a press conference with Felipe Calderón and Stephen Harper, the visiting leaders of Mexico and Canada respectively.

“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,” he said.
Blatant Lies or Sheer Foolishness?

For starters Obama is a liar or a fool. Given the questioning by the supreme court justices, I fail to see how anyone could be confident this bill does not go down in flames.

As for overturning  the "extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress" we most assuredly see an outright lie.

Obamacare did not pass by a "strong majority". Rather Obamacare passed the House 219-212. Some components passed in a "reconciliation" process that would have failed an outright vote in the Senate.

Healthcare and Reproductive Rights Will Hurt Romney?

As much as Romney campaigns against Obamacare, he is also campaigning against Romneycare. Without a doubt Romneycare was the basis of Obamacare.

Whether Obamacare is struck down or not I see no advantage for Romney. Indeed, should it be struck down, the issue will become will be in the spotlight.

Coupled with Republican asininity on reproductive rights, women are going to have a difficult time supporting Romney as noted in a Gallup Poll that shows Women boost Obama over Romney in swing states.
Support for Obama among women under the age of 50 surged from mid-February, the poll found, putting the president ahead of Romney by 51 percent against 42 percent among all voters. Obama led Romney among the women with 54 percent, compared to Romney's 36 percent.

Republican criticism of birth control played a big role in the party's race for the presidential nomination in recent weeks, with Romney promising to end Planned Parenthood, which provides family planning services.

In mid-February, Obama trailed Romney, a former Massachusetts governor, by two percentage points and fewer than half of women under the age of 50 said they would vote for Obama. In Monday's results, more than six in 10 said they would, the poll showed.
If Obamacare Goes Down Who Is To Blame?

It's possible to blame nearly everyone. Obama is to blame. Mitt Romney is to blame for providing the healthcare model. One can blame an activist court. One can blame Congress for passing an unconstitutional law.

Or one can blame both parties and the process itself. The implications of what is happening with healthcare are severe.

Mathematically Speaking, Obamacare Cannot Survive

My friend "BC" writes:
Obama gets attacked by opponents, but the "reform" was written by hospital companies, doctors, and insurers and is an effective tax on the labor of young people and a massive transfer to the aforementioned groups who already receive a grossly disproportionate share of GDP already.

Were the real culprits to be singled out for scrutiny of their motives, it would be doctors, hospitals, and insurers.

Healthcare Key Points

  • "Health care" (HC) spending is now 17% of GDP and an equivalent of 50% of private wages and of total government spending, growing at twice the rate of GDP since '00.
  • 50% of HC spending is on the sickest 5%.
  • 20% is spend on end-of-life services for elders.
  • Private HC and total government spending is an equivalent of 100% of public and private wages.
  • HC and war spending make up and equivalent of 25% of GDP.
  • Out-of-pocket HC costs are now the primary cause of personal bankruptcy.
  • HC in the US is unaffordable for most people were they to have to pay for it themselves.
  • "The market" is "rationing" care for at least 50 million uninsured people and would for most elders were they to have to bear more of the true costs of their late-life care.

Unless one can make a case for the economy becoming 100% government and HC spending over the next 30-40 years, there is a 0% probability that growth of HC spending can continue, let alone at twice the rate of GDP. A decline of 30% is a mathematical certainty over the next 10+ years and 50% per capita over the same period.

That the growth of government and HC spending has contributed 100% of growth of GDP since '00-'01, no growth and eventual contraction of HC spending will mean effectively no nominal GDP growth hereafter except for whatever net incremental borrowing and spending will occur at the federal level.

Were US government spending to grow at the trend rate, nominal GDP will avg. 1%. Were US government spending to slow to the GDP trend, nominal GDP will be no more than 0.8%.

The implied ~1% nominal GDP growth implies the 10-yr. Treasury yield in the low 1% range, little or no price inflation (eventually falling services prices), decelerating core inflation and periodic core deflation, and no growth of bank lending, employment, investment, spending, and reported earnings for most of the decade.

We will look back on the period '09-'12 as a final central bank-induced asset reflationary cycle that eventually gave way to the forces of demographics, thermodynamics, debt deflation, and valuations.
Whether Obamacare passes Supreme Court muster or not, mathematically speaking, healthcare cannot survive in its present form, nor can it survive in Obamacare form for reasons my friend BC explains.

Mike "Mish" Shedlock
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