The Health Care Decision: President Obama's Checkmate

I must apologize for the hiatus, but, traveling in Europe doesn't leave much time for blogging. My trip is coming to an end, however, and I did want to do an important analysis of the Affordable Care Act decision by the Supreme Court. Before I begin with my analysis of the court's opinion, however, I want to say this about the dissent from Justices Kennedy, Scalia, Alito and Thomas: it is possibly the dumbest opinion I have ever read. I won't go into detail - you can read everything here if you want - but the jest of their opinion really was Scalia's argument form the bench: You expect us to read the law? OMG! No seriously, like, get outta here! Their basic argument was this: "The law is unconstitutional beccause it's too complicated and we don't like the mandate." At times I wondered if Sarah Palin was hired to write it, but I decided that it wasn't, given the lack of obvious grammar and spelling errors.

Now, on to the analysis of the actual ruling: I have read analyses across several sources - from those saying that it was a massive expansion of federal powers by the Supreme Court to ones calling it a 'phyrric' victory since the Supreme Court decided to validate the individual responsibility provision (known as the 'mandate') under Congress' power to tax rather than under its claimed power to regulate commerce, as well as its imposition that the federal government could not threaten existing Medicaid funding for states that choose not to participate in the ACA's Medicaid expansion. Below, I will discuss both these major parts of the decision, and show why none of the limitations supposedly imposed by the Court amount to a hill of beans, and why this decision was a unadulterated checkmate for the president against the right wing.

The Individual Responsibility and the Shared Responsibility Payment

We will start with the individual minimum coverage provision, aka "the mandate." There are two questions here: (1) Did the Supreme Court, in the body of the decision, expressly put a limit on the power to regulate commerce, and (2) if it did, how much of a detrimental effect that could have on other regulatory powers of the government. There seems to be some confusion as to whether the Supreme Court, in the actual ruling, rejected the rationale that the mandate could be instituted under Congress' pleanary power to regulate commerce. The Chief Justice, who wrote the opinion of the court, and the four conservative dissenting justices did hold that view. However, Chief Justice Roberts' majority opinion - that is the ruling of the court - was joined by the four liberal justices of the court who did not hold that view. Justice Ginsberg wrote for the liberals of the court that while they agreed with Roberts that Congress could institute the mandate within its taxing powers, that alternatively, in their opinion, they could also do so under its commerce powers.

So in writing his own opinion, Chief Justice Roberts rejected the rationale that the mandate could be justified under the commerce power. But writing for the majority which made the ruling, he simply wrote that the Court was upholding the federal government's power to institute the mandate under Congress' taxing powers - rather than expressly rejecting the commerce power rationale. This was obviously written as a compromise, and since the Court was never actually asked whether the mandate was permitted specifically under the commerce powers of Congress (but only whether it was permitted at all), the order of the court left that question open.

As a practical matter, however, this means that there is a majority on the Court that did not view the mandate as a proper excercise of Congress' commerce powers. Given that Congress uses its Constitutional power to regulate interstate commerce in authorizing a fairly broad swath of regulation, the question begs itself: are significant federal regulations in jeopardy?

The simple answer to this question is no. Even in Chief Justice Roberts' opinion that the mandate could not be instituted under Congress' power to regulate commerce, he acknowledges sweeping commerce powers of the Congress. So much so that he reiterates that while Congress could not use its powers to compel individuals to participate in commerce (or to pay for it), they could indeed use them to stop individuals from doing things that could affect interstate or international trade. That was Wickard case, where the Supreme Court upheld the federal government's authority to stop a farmer from growing wheat for personal use. This, for example, is the same power Congress uses to federalize drug laws.

Now, the question of compelling individuals to not do something (for example, not growing wheat, or hemp, or marijuana) vs compelling them to do something (for example, buying health insurance) is a distinction that Roberts and the dissenters make in this case. It is of course a specious distinction at best, and as Justice Ginsberg points out in her opinion, in case of health insurance, Congress is in fact not compelling participation in commercial activity but rather, providing a way to pay when that activity is compelled by events that may not be under an individual's control.

Be that as it may, the court's upholding of the mandate under Congress' taxing powers rather than its commerce powers is important for a few reasons, and there are reasons why it might be better than upholding it under the commerce clause.

First, it blends the mandate with the other tax provisions of the Affordable Care Act - namely the fact that it is the largest middle class tax cut for health care in the history of the United States. It allows people to look at this provision not as a punitive measure for not doing what the federal government wants one to do, but rather as a tax to be paid for one's choice. The Court was crystal clear that the mandate was NOT a punishing measure:
...the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. Second, the individual mandate contains no scienter requirement. Third, the payment is collected solely by the IRS through the normal means of taxation—except thatthe Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution.

[...]

Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more. If a tax is properlypaid, the Government has no power to compel or punishindividuals subject to it. We do not make light of the severe burden that taxation—especially taxation motivatedby a regulatory purpose—can impose. But imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.
Rather than the commerce clause's power to force activity and punish noncompliance, the Court's interpretation looks at the mandate as a tax that encourages participation (rather than compelling it). The feature of a punishing measure is that accepting the "punishment" does not clear one of one's wrongdoing. One can be punished for, say, speeding, but paying your ticket won't mean that you didn't violate the law. The mandate, on the other hand, does not consider you in violation of the law as long as you have either paid the fine or carried health insurance. You can't 'choose' to pay the cost of a ticket at a given interval and continue to speed without other consequences (i.e. additional tickets, having your license suspended, etc.). But under the ACA, you in fact could just pay the fine once a year and choose not to carry health insurance.

There is another key benefit to upholding the mandate under Congress' taxing powers. Generally, those who are subject to a tax can sue the government if they feel the tax is unfairly applied to them, is a "direct" tax that their state's residents pay at a higher proportion that those of other states, etc. The Supreme Court in this case closed off all further challenges to the mandate by upholding it as a tax. The court not only held that it was a tax, but that it was a properly created and properly instituted tax. In other words, there can be no challenges to it after people start paying it on their 2014 tax returns should they be able to afford but choose not to carry health insurance. The court basically slammed the door at further right wing attempts to bog down and chip away at the Affordable Care Act.

Here, as an aside, lies the brilliance of writing the legislation it was written as well. It was written without calling the shared responsibility payment (the fine to pay if one can afford to but chooses not to carry health insurance), which allowed the court to review it now, without having the Anti-Injunction Act kick in. Had it been called a tax, the Anti Injunction Act would have prohibited review, since by that law, Congress bars courts from reviewing taxes before they are imposed. But not calling it a tax let the Supreme Court reason that since both the ACA and Anti Injunction Act are acts of Congress, Congress would intend for the Anti-Injunction Act to apply only to things that it calls a tax rather than whether it is a tax for Constitutional purposes. So interpreting it this way lets the court decide the question now, and validate the mandate in a way to pretty much close off future challenges to it.

And that is a very real benefit of the Court's construction of the mandate as a tax rather than under commerce. Had it been upheld simply under the commerce clause, people could still later bring challenges, then conveniently describing it as an unfair tax. The court then may well have had to consider it - given it wouldn't have considered it in that way now. By setting aside the commerce clause claim and going with the taxing power instead, the court in fact did the proponents of the ACA a significant favor.

The Medicaid Expansion: The Court Took Away A Stick That Was Never Needed

So far, I have only talked about the mandate - because it really was the significant part that conservative challengers wanted to use to strike out not just the mandate but the entire law. They wanted to use the mandate to establish the entire law as a massive overreach of federal powers, rather than a unique solution to a unique problem. The Court destroyed that version of the story. But there was another important part - the real public option. I am talking, of course, about the massive Medicaid expansion that is expected to cover some 19 million people when implemented.

The narrative of the Medicaid part of the decision has centered around the court's one rebuke to the government: that the federal government could not threaten existing Medicaid funding to states that refuse to participate in the extended program. As I pointed out in my previous piece, while the Administration claimed that it had such powers under the Affordable Care Act, however, it never planned to use it.

And that's because it doesn't need to. The expansion of Medicaid - at 100% funding by the federal government for the first three years (and 90% thereafter) - will be insanely difficult for even the reddest states to turn down. For the first three years, it costs them nothing - just what will be their excuse not to get free money? With this expansion, there is no "welfare queen" argument. It is not designed with specific need criteria in mind that conservatives can claim can be manipulated. There is only one way to manipulate the system when the target is everyone under a certain income level - to voluntarily reduce one's income. The racist "we're spending money to take care of the lazy black and brown folks" won't work here, since it's for everybody under 133% of poverty. There is simply no argument to turn the money down other than that you want people to go without health care. That won't fly even in red states.

It also won't fly because medial providers and manufacturers will demand that their handmaidens in the conservative states accept it. More people having Medicaid will mean that there will be greater demand for medical services, equipment, prescription drugs and providers. All with a guaranteed payment system. Should a state turn that money down, that money could move to other states, which would make providers and manufacturers go after business there. I doubt very much that Republican governors want to be exposed for directly driving medical business out of their states.

For these reasons, the "stick" on the Medicaid expansion was never the treat to existing funding. The 'stick' to the expansion is the expansion itself.

In my analysis, the Supreme Court's ruling a week ago was not a "phyrric" victory for President Obama. It was a slam dunk; it was check-mate. President Obama's legal team made the right calculations - instead of tying the court's hands, they presented them with a myriad of options to pick from. They knew as well as anyone that no Court would deny Congress' express power to tax, and so they gave that a nod even while arguing commerce powers. They had Robert's number - they knew that Roberts was skeptical to the commerce clause argument, and yet wanted to save his court's legacy. They gave him an out. He practically ran for it. On the way, he wrote a pretty solid opinion closing off and narrowing the scope of further litigation, and giving the adminsitraiton a full green light to go full speed ahead.