Much has been written about last week’s Supreme Court ruling on Obamacare – specifically the compulsory portion known as the “individual mandate.”  Reactions have largely focused on the tax hikes coming in 2013 that will pay for it, speculation about how (un)affordable health care may be in the future and the headwind likely facing the labor market as employers grapple with higher expected costs.

Interestingly enough very little has been said or written about the justification for the Court’s ruling and, more so, the implication of this newly set precedent.  The Court ruled the government does not have the power to compel individuals to purchase a product or service.  Doing so would violate the Commerce provisions in the Constitution.  The justification for upholding the individual mandate is Congress’ unbounded power to tax.

In this sense any person not purchasing health insurance and, thus, subject to increased financial cost is not being penalized but is being taxed.  It’s a distinction without a difference.

In effect the Court has upheld the antithesis of a consumption tax.  Precedent has been set.  We stare down the barrel of a financial gun as the government is free to tax us into consuming or not consuming any product or service it wishes.  Sugary soda?  Tobacco?  Booze?  What’s next?

The only thing that could keep politicians from running amok and becoming overly paternalistic is the political system itself.  Angry voters can run their representatives out of office when they write or vote for poor legislation.  Unfortunately a largely uninformed and apathetic electorate is what we’ve become as a nation.  Unless and until Obamacare is repealed by Congressional action the Supreme Court has set us upon a very dicey course.