This article was last modified on April 18, 2012.

Empire Strikes First: Obamacare

Whether you love it or hate it, President Obama’s signature legislation in his first four years has been the Affordable Health Care Act (more commonly known as Obamacare). The law is sure to take center stage this November, especially with the law having been based at least partially off of Governor Mitt Romney’s “Romneycare” in Massachusetts.

Some people have already been affected by the law — students can now stay on their parents’ insurance a few extra years, and there have been some preferable modifications for seniors. The most controversial aspect, the individual mandate requiring all Americans to purchase health insurance, will not go into effect until 2014. That is, if the law is upheld.

The Supreme Court took three days at the end of March to address four issues raised against the law. How they decide may be the single biggest domestic event of the year: not only does it affect the nation’s health one way or another, but it is bound to be a big part of either candidate’s arsenal this fall. Shooting it down bolsters the argument of Obama’s alleged overreach and disdain for the Constitution. Its being upheld will take the wind out of Republican sails. How will it be decided?

Certainly, I know little about the Supreme Court that any other educated pundit does not know. In my opinion, the best way to decide how the case should be decided rests not in whether or not we like the bill (and there is plenty to like and dislike), but how the justices respond to the four key issues. We will now look at those issues.

1. Anti-Injunction Act

I admit that before this case, I never heard of the Anti-Injunction Act. Basically, the law prohibits taxpayers from filing a lawsuit to challenge a tax before the tax goes into effect and they are required to pay it. The AHCA says that anyone who does not get health insurance must pay a penalty. Is this penalty a tax? If it is a tax, can a lawsuit even be filed against the Act, since the portion that would tax Americans will not be going into effect for over a year?

Trying to define a tax is very tricky, and no two politicians will draw boundaries the same way. We can all agree that sales tax, property tax and income tax are taxes. But are penalties taxes? That opens the door to make just about any money paid to the government a tax. Common sense says that a penalty is not a tax, and therefore the lawsuits should be able to go forward. This is, in my assessment, the least interesting and least contentious issue being addressed.

2. Federal Funding

The second issue asks, can Congress require states to choose between complying with provisions of the Patient Protection and Affordable Care Act or losing federal funding for the Medicaid program?

This issue is more interesting, but I would say not very contentious either. In comparison, the states were strong-armed into accepting age 21 as a legal drinking age, or else they would be denied federal funding for the highways. States could have opted out and kept the drinking age at 18, but none did. Likewise, the states could opt out of the health care bill and take a Medicaid cut. The focus (highways and health) may be drastically different, but the concept seems the same. If one is legal, certainly the other is, too.

3. The Mandate

Does Congress have the power under the Constitution to require virtually all Americans to obtain health insurance or pay a penalty? This is the issue that is most divisive, with some welcoming the “bigger pool” of insured and the ability for those who have pre-existing conditions to get coverage, while others (generally the “small government” crowd) abhor the idea of being forced to do anything that Washington says. Indeed, Romney does have a point here: there is a difference between a statewide system and a national system, and those who dislike Obamacare may very well be in favor of the same concept at a state level.

What about the case of Helvering v. Davis in 1937, upholding the original Social Security Act? The Court decides that Social Security was constitutionally permissible as an exercise of the federal power to spend for the general welfare. Justice Benjamin Cardozo wrote at the time, “The problem is plainly national in area and dimensions. Moreover, laws of the separate states cannot deal with it effectively. Congress, at least, had a basis for that belief. States and local governments are often lacking in the resources that are necessary to finance an adequate program of security for the aged.” Replace “aged” with “ill” and he could have been addressing the current situation.

Justice Ginsburg recognizes that, whether legal or not, the mandate would have an overly positive effect. She notes that, for example, “Maryland Hospital Care bills 7 percent more because of these uncompensated costs, that families pay a thousand dollars more than they would if there were no uncompensated costs.” In theory, the mandate should lower costs for those who already have insurance and also make costs more affordable for those who currently do not. (As someone without who owes the hospital thousands of dollars for a routine procedure, I can attest to the value of having insurance.)

Chief Justice Roberts asked how health insurance differed from broccoli or an automobile — could the government force individuals to buy these things, as they certainly will need transportation and food. This question, however serious it may have been intended, is silly and hardly worth a rebuttal. Scalia joined in, saying, “If people don’t buy cars, the price that those who do buy cars pay will have to be higher.” But this ignores the basic idea of supply and demand — if demand for cars decreased, the costs would inevitably have to fall.

4. Severability

The issue of “severability” is the most interesting aspect of these legal challenges, and the issue that may ultimately decide things one way or the other. If the Court concludes that the provision of the Act mandating all Americans to obtain health insurance or pay a penalty is unconstitutional, can the rest of the Act remain in effect or must also be invalidated? Attorney Paul Clement, a former Solicitor General and Wisconsin native, said it bluntly in his opening statement, “If the individual mandate is unconstitutional, then the rest of the Act cannot stand.” (His closing statement reiterated that sentiment: “If the individual mandate is unconstitutional, the rest of the Act should fall.”)

Justice Kagan looked at it another way and asked, “Is half a loaf better than no loaf?” To which Clement responded, “I think there are situations where half a loaf is actually worse.” Justice Ruth Bader Ginsburg said that “there are so many things in this Act that are unquestionably okay… why make Congress redo those?” And Justice Kennedy said, “Assume that there is a substantial probability that the 350 billion… is going to be cut in half if the individual mandate is stricken.” Herein lies the need for a mandate — its removal would cut funding from the other aspects of the law.

Justice Scalia summed up the problem by asking, “We are going to go through this enormous bill, item by item, and decide each one? You really want us to go through these 2,700 pages? And do you really expect the Court to do that? Or do you expect us to give this function to our law clerks?”

And this “enormous bill” may be the very thing that saves the mandate. While I am of the opinion that the majority of the justices oppose the mandate, we see their hesitation to toss it out. They recognize that without it, the bill as a whole may not be able to stand. But why throw out an entire bill if the vast majority is Constitutional and some it is already in effect? Scalia, who likely opposes the mandate, could end up voting to keep it simply to avoid the problem of throwing out the bill or having the tedious process of amending it.

I have no crystal ball, but my prediction is that the Court will decide either 5-4 to throw the mandate out (with the conservative majority being the five), or 5-4 to keep it in and uphold the bill, with Chief Justice John Roberts switching sides. We shall just have to see.

Gavin Schmitt ( may not always agree with the Court, but he understands them. Also, he correctly called the GPS case featured in the December issue.

Also try another article under Political
or another one of the writings of Gavin.

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