The Obamacare Lobster Trap

Previously by Bill Butler: Foreclosure Fraud in a Nutshell

According the Affordable Care Act's ("ACA") website, ACA is:

…a health care law that aims to improve our current health care system by increasing access to health coverage for Americans and introducing new protections for people who have health insurance

ACA in fact is a lobster trap. It is also crony socialism's latest and most dangerous assault on what remains of the free market for health care.


As a condition to implementing ACA, ACA requires that every State (and, interestingly, the federal territories) establish a health care "Exchange." The Exchange is a computer database of programs and designed to implement ACA within the States. Through the Exchange, authorized health care providers, participating employers and individuals and payers (insurers and the federal and state governments) will input information designed to create a "market" for health care services.

In order to create a market, however, ACA needs "information." Specifically, it needs information on the people who will be demanding services from this market – the lobsters. What if the lobsters are too smart to enter the trap themselves? ACA demands that the States to throw the lobsters into the trap by populating State Exchanges with their personal, private financial and health data without any lobster first giving their consent. ACA can never go anywhere without complicit State actors.

An example of the information that will become part of each state's Exchange is found in Exhibit D of the State of Minnesota's $41-million Exchange Contract with Virginia-based "Maximus" corporation. Governor Mark Dayton entered into the Exchange Contract through the executive fiat of an Executive Order without legislative action. In Exhibit D, Governor Dayton authorized the State of Minnesota to provide Maximus with the following information on its citizens: private data, health records, chemical health records, HIPPA-protected health information, Electronic Health Information and federal tax information.

Not only has no Minnesota lobster consented to allowing the State of Minnesota sharing his personal, private health and financial data with the ominous-sounding Maximus, no Minnesota legislator has passed a law permitting Governor to establish the Exchange. Yet over $41 million in funds will flow through the Minnesota State treasury to Maximus.


ACA will in fact create a "market." But the market will be a federally controlled and federally regulated oligopoly and will therefore resemble the Soviet Union bread market. Government will determine who is an authorized provider and will therefore determine (and therefore limit) supply. Government will also determine who is an authorized payer (only authorized insurers and the government itself through Medicare and Medicaid) and therefore limit "demand."

Although the hapless lobsters who enter the trap based on the promise of "improved health care" will think that it will serve their "demand" for health care, it will not. ACA is to stop the gushing of red ink from federal Medicare and Medicaid. The only way to do this is to for the federal government to get control of costs. The only way to do this is for the federal government to complete control of the market and deny payment, deny services or exclude providers who, according to the federal government, "overcharge." This is already happening and ACA is not even off the ground. Just look at the recent actions of Massachusetts Governor and Obama acolyte Deval Patrick. He has signed a "cost containment" law that will limit state ACA expenditures. Moody's reports that the law is "credit negative" for hospitals as will "limit revenue growth" and "reduce their operating flexibility."

The reality of ACA is that the very wealthy and the independent thinkers will avoid the lobster trap and will seek free-market health care outside of ACA and will obtain real, discerning, market-based holistic health care. The poor lobsters who enter the allopathic ACA trap will soon realize that it will not and cannot provide the services they need. They will wake up to the fact that the ACA system resembles the Bataan Death March more than the health care they once enjoyed. That is when the hapless lobsters will discover what the federal government really means by "universal" health care – there is no way out.


The great Murray Rothbard commented that the "State is a gang of thieves writ large." Nowhere is this more evident than in ACA and government involvement in health care generally.

For example, Minnesota has its own diluted version of ACA called "MinnesotaCare." In order to get the dollars that flow from the federal and state Medicare and Medicaid troughs, a group of politically connected University of Minnesota physicians established a company called "UCare." The idea behind UCare was to make UCare one of the preferred providers for MinnesotaCare: to get first in line at the trough. In 2011, UCare quietly "gifted" $30 million to the State of Minnesota. This gift in fact represented sums that UCare had overcharged the State for Medicaid services. State Health and Human Services Commissioner Lucinda Jesson suggested to the UCare cronies that they characterize the payment as a "gift" so that the State of Minnesota (Crime Family No. 2) would not have to share the overcharges with its partners in crime, the federal government (Crime Family No. 1). Leader of Crime Family No. 1 Senator Chuck Grassley, however, discovered the lack of honor among thieves, demanded payment and got it.

And so will be the fate of ACA. The free market price mechanism has a way of keeping people honest. Free market prices did not exist in the Soviet bread market and do not exist in ACA Exchanges. The winners in the ACA system will the UCare's of the world: socialist cronies who can steal $30 million in full public view and then avoid prosecution by calling return of the ill-gotten loot a "gift."


In the United State Supreme Court's decision regarding Obamacare, turncoat Justice John Roberts avoided a "commerce clause" challenge by calling the ACA's penalty for non-compliance a "tax."

Exposing the lobster trap nature of ACA, its opponents properly pointed out to Justice Roberts that the ACA cannot be a tax, because the penalty will apply to everyone who refuses to purchase health care insurance through the Exchange. Taxes that apply to everyone are "direct" taxes and the United States Constitution does not allow "direct" taxation without apportionment (division in accordance with state population). Unapportioned federal taxes can only be lawful if they are indirect, excise taxes. Indirect, excise taxes are constitutional because they can be avoided. The federal 19 cents per gallon gas tax is an example. Don't want to pay the tax? Ride a bike.

Peter Schiff explains the difference between a constitutional indirect tax and an unconstitutional indirect tax here.

Justice Roberts response? Here it is:

A tax on going without health insurance does not fall within any recognized category of direct tax. It is not a capitation. Capitations are taxes paid by every person, "without regard to property, profession, or any other circumstance." Hylton, supra, at 175 (opinion of Chase, J.) (emphasis altered). The whole point of the shared responsibility payment is that it is triggered by specific circumstances – earning a certain amount of income but not obtaining health insurance. The payment is also plainly not a tax on the ownership of land or personal property. The shared responsibility payment is thus not a direct tax that must be apportioned among the several States.

Justice Roberts says: the health care penalty tax is not a direct tax because no one in the past has every tried to tax everyone directly for health care. If no one in the past has ever tried it, then it cannot be a direct tax now. This is a perfect example of circular reasoning fallacy.

Then he no-so-deftly admits that the penalty applies to everyone (that is, it is an unconstitutional direct tax), but it is only "triggered by specific circumstances." That circumstance is being lobster who may have unwittingly entered an ACA Exchange by accessing its medical care and then later earning "a certain amount of income."

That is when the lobster discovers the trap.


Murray was right.

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