Threading the Needle
Ever since the Supreme Court heard oral arguments on the constitutionality of the Patient Protection and Affordable Care Act (PPACA, “Obamacare”) individual mandate, pundits have been predicting that the mandate is dead. The remaining question would then be: will the Supreme Court find the law severable, that is, can the mandate be ruled unconstitutional but the rest of the law stands? Or does the whole thing go down because of an unacceptable mandate?
The Supreme Court finally answered today. By a five-to-four vote (Justices Breyer, Ginsburg, Kagan, and Sotomayor dissenting), the individual mandate was technically struck down as a violation of the Commerce Clause, but by a different five-to-four vote (Justices Alito, Kennedy, Scalia, and Thomas dissenting) the fine for being uninsured was not. In that regard, the Court threaded the needle, objecting to the “illegality” of being uninsured, while leaving the relevant penalty in the Act unchanged.
This decision is certainly a huge win for the Obama administration at first blush. But it may prove to be less of a win for Obama himself.
I’ll explain that in greater detail in a bit, but first let’s examine what just happened.
The mandate took on the form of revisions to section 5000A(a) of the Internal Revenue Code of 1986. From Chapter 48 of PPACA (section breaks and designators removed):
If a taxpayer who is an applicable individual, or an applicable individual for whom the taxpayer is liable … fails to meet the requirement … for 1 or more months, then, [barring an acceptable exception] there is hereby imposed on the taxpayer a penalty.
Subsection (a) sets the requirements for an acceptable health plan:
The term ‘minimum essential coverage’ means any of the following:
GOVERNMENT SPONSORED PROGRAMS.—Coverage under the Medicare program … the Medicaid program … the CHIP program .… TRICARE … veteran’s health care program, or a health plan [for] Peace Corps volunteers.
EMPLOYER-SPONSORED PLAN.—Coverage under an eligible employer-sponsored plan.
PLANS IN THE INDIVIDUAL MARKET.—Coverage under a health plan offered in the individual market within a State.
GRANDFATHERED HEALTH PLAN.—Coverage under a grandfathered health plan.
OTHER COVERAGE.—Such other health benefits coverage, such as a State health benefits risk pool, as the Secretary of Health and Human Services … recognizes for purposes of this subsection.
The Court concluded that the “shared responsibility payment” charged to those who do not have medical coverage does, in fact, amount to a tax. And there is a long history of taxes being attached to people’s behaviors, such that they can change behavior to avoid a tax. Since Congress has the authority to impose taxes, that makes the mandate constitutional.
The Court’s decision to not permit the law under the Commerce and Necessary & Proper Clauses lays an important precedent. It is, in essence, a shot across the bow of Congress to warn that coercion through taxation may be fine, but not mandating behavior with stronger force, such as criminality.
In any case, because the mandate-as-tax was upheld, severability became moot.
The pundits felt, based on oral arguments, that the mandate was a dead letter. This is reflected in the Intrade betting market on the death of the individual mandate, starting with oral arguments on March 27:
Before oral arguments, the consensus was that the mandate had about a 50 percent chance of survival. After the news of the oral arguments settled in, with CNN’s analyst Jeffrey Toobin making a strong case for the death of the mandate:
This still looks like a train wreck for the Obama administration, and it may also be a plane wreck. This entire law is now in serious trouble. It also seems that the individual mandate is doomed. I mean, Anthony Kennedy spent much of this morning talking about if we strike down the individual mandate, how should we handle the rest of the law? Now, it is less clear that they are going to strike down the whole law. There does seem to be some controversy in the court about that. Certainly there are some members of the court — Antonin Scalia, Justice Alito — who want to strike down the entire law, but it seemed almost a foregone conclusion today that they were going to strike down the individual mandate, and the only question is does the whole law go out the window with it?
After Toobin’s words sunk in, the markets pushed the percentage chance up to 60⁄40. The buzz around the death of the mandate meme grew, so that by the day before the decision, the chance was 80⁄20. In this case, the pundits were right.
Other court observers, such as SCOTUSblog’s Amy Howe, were more sanguine about the chances for the mandate’s survival. She wrote at the time:
With several Justices apparently dubious of the government’s arguments, two exchanges toward the end of Carvin’s argument stood out as potentially helpful to the government and may have given at least a glimmer of hope to the mandate’s supporters. The first came from Justice Elena Kagan, who asked Carvin whether he might have an easier argument if he weren’t arguing that the mandate is always unconstitutional, but instead that the mandate is at least unconstitutional as it applies to specific people (for example, Christian Scientists) who clearly were not going to be a part of the health care market and, by declining to buy insurance, would not incur health care costs that would be shifted to the rest of us. That line of reasoning might provide the Court with a way to uphold the mandate generally, while leaving open the possibility that individuals who object to the mandate could still challenge it.
The second, and possibly even more important, comment came from Justice Anthony Kennedy, a key swing vote on the Court. Justice Kennedy appeared to voice some sympathy for the government’s argument that the health care market is “unique.” Even if a healthy young person without insurance may not need health care in a particular time period, he reasoned, that young person will nonetheless be “very close” to having an effect on insurance rates – for example, on the theory that, as he ages, he will eventually need care that he can’t afford without insurance – in a way that just doesn’t happen in other markets.
In this case, Justice Kennedy came down on the side of the unconstitutionality of the mandate, which was predicted by his musings in response to Solicitor General Verrelli’s argument:
But the reason, the reason this is concerning, is because it requires the individual to do an affirmative act. In the law of torts our tradition, our law, has been that you don’t have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him absent some relation between you. And there is some severe moral criticisms of that rule, but that’s generally the rule.
And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases and that changes the relationship of the Federal Government to the individual in the very fundamental
Yet, in a surprise move, Kennedy was not the swing vote in this decision; Roberts was.
The only restriction of substance to come out of this decision was a warning that the federal government may not withhold Medicare funds to states that are in compliance with the law as it existed prior to the PPACA.
As I said above, this decision looks like a huge win for the Obama administration, yet not necessarily for Obama.
To be sure, for those who understand what it means to be subject to annual and lifetime caps, and restrictions on coverage for preexisting conditions, this is clearly a big win for all of us. But most Americans are blithely unaware that there are issues with preexisting conditions. After all, a majority get their coverage through their employers, and employer-supplied coverage rarely excludes preexisting conditions in the first place. And for those whose policies do exclude preexisting conditions, a relatively small percentage of them ever find themselves in need of treatment for one. The same can be said for lifetime caps. Few people know that they’re there, and fewer still realize how easy it is to bump into those restrictions.
So, while it benefits those who don’t yet know they’ll need it, most Americans won’t even notice the preexisting condition and lifetime cap changes.
Furthermore, many Americans are woefully ignorant about the very existence of the law. Nearly a quarter of Americans polled in February believed that the PPACA had already been repealed. With the significant press surrounding today’s ruling, the number who today believed that it had been repealed prior to February is most likely significantly lower. Nonetheless, this points to upcoming political posturing from the Republicans.
Expect to hear for the next several months that the oh-so-unpopular Obamacare is still around, and won’t go away until Obama goes away. This will still be a somewhat difficult postition for Republican Presidential candidate Mitt Romney to take, since it will require that spend time defending his earlier actions with respect to Romneycare.
And that messaging will put Democrats on the defensive. As should be abundantly clear by now, when it comes to messaging, Democrats lose the messaging battle whenever nuance enters into the equation. Yet the response must necessarily be nuanced: “Yes, the mandate remains, but the lifetime caps and preexisting condition coverage go along with that.” Yeah, that fits on a bumper sticker just fine, doesn’t it?
The decision, then, hands a campaigning gift to the Republican Party, and provides to them a rallying cry of “Defeat Obama to Defeat Obamacare!”
In the end, then, we’re left with the realization that both sides got something they wanted. Democrats got the policy, and Republicans got messaging for this year’s campaigns. Just as with Arizona v. United States earlier this week, you can be sure Republicans will walk away declaring victory, even when the reality is exactly the opposite. And it seems that a substantial percentage of Americans will believe them.
- Poll: Americans don’t like Obamacare, but love what’s in it (americablog.com)
- Lara Croft, Cancer Raider
- Supreme Court Watch: FOIA Edition
- Supreme Court Watch: University of Texas Southwestern Medical Center v. Nassar
- Cruzin’ for a Bruzin’
- Supreme Court Watch: Association for Molecular Pathology v. Myriad Genetics, Inc.
- The Hatter Resolution
- Supreme Court Watch: McQuiggin v. Perkins
- Supreme Court Watch: Butt v. Utah
- Supreme Court Watch: Bowman v. Monsanto Co.
- M’aider, Medicaid