Supreme Court Watch: PPACA on Trial
Today marks the first two hours of six hours of Supreme Court testimony, over three days, on U.S. Department of Health and Human Services v. Florida, which serves to adjudicate the constitutionality of the Patient Protection and Affordable Care Act (PPACA, ACA, or Obamacare). It’s now three days since the second anniversary of President Obama signing the ACA into law.
Today and tomorrow, the arguments are focused on the question of the constitutionality of the individual mandate. Wednesday, arguments shift to answer two questions. First, does Congress have the authority to require states to comply with the new Medicare provisions in order to receive federal funding for their Medicaid programs? Second, if the individual mandate is unconstitutional, does that invalidate the ACA in its entirety, or is that provision severable?
There is also a subtopic that, while is not officially scheduled for discussion, may well be covered over the three days. If a person who is required to be insured (there are eight categories of people who are excluded from the individual mandate) doesn’t have sufficient medical coverage during the year, that person is charged a penalty as part of the annual income tax filing due April 15. This calls into question whether the penalty is essentially a tax. If it is, then it is covered by Section 7421 of the Tax Anti-Injunction Act. Section 7421 states that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such a person is the person against whom such tax was assessed.” This has been interpreted by the judicial branch as prohibiting taxpayers from filing an injunction against a tax. One can, however, pay a tax and then file suit for recovery of the tax. Every court to hear the case thus far has agreed that the individual mandate penalty is not a tax, but is rather a regulatory penalty. The Supreme Court has an opportunity here to weigh in.
The ACA itself has five parts:
- the individual mandate
- restrictions on insurers’ behavior (e.g., no denials for preëxisting conditions, no refusal to insure, caps on premium increases)
- expansion of states’ requirements for Medicare
- the creation of medical insurance exchanges
- the imposition of penalties for companies that don’t provide adequate health insurance
Only the first three parts are being considered by the Supreme Court this term.
The intent of the ACA, despite “affordable” being part of the title, is mainly expansion of coverage, targeted at those who do not have health insurance but wish to have it. To this end, the ACA prevents insurers from denying policies to applicants (“guaranteed issue”). Because, under “guaranteed issue”, existing underwriting practices would result in premiums rising by several times, the law places caps on the rise of premiums. This leaves the insurance companies with no choice but to increase the base of insured, by having healthier people subsidize less healthy people. This requirement is the basis for the individual mandate.
The ACA, then, is designed to shift much of the “off the books” medical care expenditure to more overt channels. To a degree, this shift functions in a way akin to Social Security, where money is put in at an earlier date to subsidize older people, with the understanding that the next generation will do the same for the current generation. The Social Security analogy breaks down pretty quickly; since one cannot pay the government for the insurance, it’s distinctly possible that someone would pay, say, Aetna for health insurance when she’s healthy, but be covered by Blue Shield when she’s ill later on. Furthermore, paying into Social Security is paying a tax; paying insurance premiums is clearly not.
And this is the crux of the argument against the individual mandate. The premiums are not taxes, yet everyone is compelled to pay them, in a way that sounds suspiciously like a tax. Yet the premiums are not truly handled as taxes. If one fails to pay taxes, the government can garnish wages, or even imprison the offender. If one fails to pay the insurance premium, the extent of the government’s options is to charge a penalty. And the proceeds go to private industry, rather than the government.
Traditionally, the point of taxation was to pay for services that apply to all of us, which means that we are inherently unable to opt out, short of leaving the country and gaining citizenship elsewhere. The individual mandate requires participation in a particular sector of the economy, much like government. But is it reasonable in the 21st century to expect any resident of the United States to truly opt out entirely from the medical industry? Would we as a society prefer to identify “conscientious objectors” and deny them access to any healthcare outside of pure pay-for-service?
As it stands today, without the ACA’s provisions that take effect next year, those who buy health insurance on the private market often find themselves considered uninsurable, unless the state in which they reside maintains a high-risk pool. And even in states that do, the cost of health insurance for such people is typically in excess of $15,000 per person per year, a number that does not include the cost of copayments and deductibles. This prices many people entirely out of the market.
For those states without a high-risk pool, and even for some with, the public ends up, through a number of different mechanisms, bearing the cost of healthcare for those the insurance companies consider uninsurable. This happens because we have, as a society, agreed that medical care should not be denied on the grounds of a person being unable to pay for the care.
So today I leave you with a handful of questions, as usual:
- Do you think the individual mandate is constitutional?
- If not, would you consider it constitutional if everyone’s taxes were raised by an amount equivalent to the penalty, but with a tax credit for those who have insurance meeting the ACA’s minimum requirements?
- How do you think the Supreme Court will rule on this and why?
We’ll leave the severability and state compulsion issues off the table for today.
- What About the Employer Mandate? Companies Watching Supreme Court Case(thehealthcareblog.com)
- Happy 2nd Birthday, PPACA(theinsurancebarn.wordpress.com)
- Has The PPACA Lived Up To The Hype?(theinsurancebarn.wordpress.com)
- Infographic: The Arguments About The Medicaid Expansion In The PPACA(theinsurancebarn.wordpress.com)
- SCOTUS Preview Part IV: The Big Scary(thinkprogress.org)
- If the individual mandate falls, can the health care law stand? (extendhealth.wordpress.com)
- Also, It’s Not as Much a “Mandate” as It Is an “Incentive,” but then, Democrats Have Always Sucked at Framing Their Issues (slog.thestranger.com)
- Here’s A Quick Way To Understand What Is Happening To The PPACA Next Week (theinsurancebarn.wordpress.com)
- Argument preview: Health care, Part III — Beyond the mandate (scotusblog.com)
- Argument preview: Health care, Part II — Fate of the mandate (scotusblog.com)
- Switching sides: Health care’s individual mandate (tampabay.com)
- One perspective regarding the Supreme Court and the Affordable Care Act (dailykos.com)
- Analysts Debate Importance of the ‘Individual Mandate’ to Health-Reform Law (news.health.com)