Legal gymnastics; Roberts upholds ACA while limiting federal power

How to allow Congress to solve a major national health care problem without expanding federal authority over the individual?
That was the dilemma for Chief Justice Roberts, whose majority opinion was the difference in the U.S. Supreme Court upholding the Affordable Care Act.
While the health care legislation covers many other topics, understanding its treatment of people with pre-existing conditions provides a starting point both in understanding the law and the court decision.
Congress’ initial goal was simple: It did not want people with pre-existing conditions blocked from health insurance coverage.
The solution was simple: Require insurance companies to cover all people, regardless of their health, and prevent insurance companies from charging higher premiums for the unhealthy.
Several states tried this solution and, as Justice Ruth Bader Ginsburg said in her concurring opinion, “The results were disastrous.”
The problem was that people had no incentive to buy insurance while they were healthy, because they knew they could buy it after they got sick. Insurance companies depend on the premiums of healthy people to cover the medical expenses of those who are sick. If the healthy people stop paying premiums, one of two things must happen. Either the insurance companies must dramatically increase premiums or they must exit the business.
Thus was born the individual mandate. By requiring all people to purchase insurance — even if they were healthy — the insurance pool would be large enough to cover the medical expenses of those who were unhealthy.
The question for the court was whether Congress had the power to require people to buy health insurance.
A minority of the justices felt Congress had that power through the Commerce Clause. Indeed, the language of Justice Antonin Scalia’s dissent suggests that he intended his to be the majority opinion. Scalia focuses primarily on the disastrous consequences of expanding the Commerce Clause so that it gives Congress the power not only to regulate commercial activity, but to mandate such activity, “effectively destroying the Constitution’s division of governmental powers.”
Chief Justice John Roberts wrote the majority opinion, and he agreed with Scalia that the individual mandate was an unprecedented and dangerous expansion of Congress’s power under the Commerce Clause.
In upholding the mandate, Roberts instead relied on Congress’s power to impose taxes.
This alternative basis for the mandate required some difficult arguments.
Initially, Roberts had to dispense with the idea that the individual mandate was a mandate. While Congress required most Americans to buy health insurance, Roberts pointed out that the consequences of failing to do so are not severe. The most extreme consequence is that a person who refuses to buy health insurance must pay to the Internal Revenue Service an amount equal to the cost of insurance. Failure to buy insurance is not a crime; neither is failure to pay the amount owed to the IRS.
The “mandate” is not a requirement, Roberts ruled, but a choice. People can either buy health insurance or pay a tax.
The next problem for Roberts was the language of the ACA. While Roberts upheld the law as a tax, Congress called it a “penalty.” Roberts argued that it did not matter what Congress called it, but how it functioned. It was, he said, a revenue-raising tool that discouraged people from going without insurance, much like other taxes discourage people from purchasing sawed-off shotguns or tobacco.
For conservative Roberts, the advantage of upholding the individual mandate under Congress’s power to tax rather than its power to regulate commerce was that the taxation power is far more limited.
If Congress raises the tax so high that it effectively forces people to purchase insurance, Roberts wrote, it becomes a penalty that exceeds Congressional authority.
Like Scalia, Roberts repeatedly expressed a fear that an expansion of the Commerce Clause to justify the mandate would give the federal government unrestricted power over the individual.
“The Commerce Clause is not a general license to regulate an individual from cradle to grave,” Roberts wrote.
Ginsburg argued that Roberts’ fear of an expanded Commerce Clause was overblown. He was ignoring, she wrote, “a formidable check on congressional power: the democratic process.”
The Constitution does not restrict states to enumerated powers.
“Despite their possession of unquestioned authority to impose mandates, state governments rarely have done so,” Ginsburg wrote, because of resistance from voters.
Roberts also wrote for the majority on the issue of the constitutionality of expanded Medicaid coverage. Here again, he sought to limit the federal government’s power without entirely thwarting congressional goals.
The ACA expands Medicaid coverage dramatically to include all people at or below 133 percent of the poverty level. The law used both a carrot and stick to compel the states to adopt the expansion. If states agreed, the federal government would finance 90 percent of the additional cost. If they refused, all federal Medicaid funding — not just that intended for the expansion — could end.
Roberts concluded that the stick was too big. The threat of ending all Medicaid funding, not just the funding of the expanded coverage, “is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion.”
Roberts thus concluded that Congress had the power to condition additional funding on the states’ agreement to expand Medicaid coverage. Congress exceeded its authority, however, when it threatened to end all Medicaid funding if states declined to expand their coverage.
Scalia, who in his dissent argued that the Medicaid expansion should have been struck down entirely, said Roberts’ limited ruling places states in an untenable position.
“Those states that decline the Medicaid expansion must subsidize, by the federal tax dollars taken from their citizens, vast grants to the states that accept the Medicaid expansion,” Scalia wrote.



Filed under Conservatism, Obamacare

5 responses to “Legal gymnastics; Roberts upholds ACA while limiting federal power

  1. Thank you for this clear and reasoned analysis. But in the states that tried the cover-everyone requirements without the mandate (which would not include MA) and found the result “disastrous,” was the disaster due to the resultingingly high claim-to-premium ratio? What is your or Justice Ginsburg’s source for this?

    • Anonymous

      Massachussetts is not on the list, because it included a mandate. NY, NJ, Wash., Ky, Maine, NH and Vt all tried to cover preexisting conditions without a mandate, and all failed. Massachussetts was the one success story, because of mandate. Only problem it encountered is that people with preexisting conditions came from out of state to avoid exclusions, thus pushing up premiums. Nationwide pool avoids that problem.

  2. Eric

    Oops, that last one was from me.

  3. Eric

    Never really answered your initial question. I think all of the states had to give up. Premiums were skyrocketing because of high claims, and insurers were leaving the states. Cyclical problem, because the higher the premiums got, the fewer healthy people willing to pay.

    • Pippa Abston MD, PhD, FAAP

      Hi Eric– actually, the Massachusetts mandate is failing for several reasons. 40% of the uninsured remain so, and out of pocket costs to many of the lower income insured are prohibitive. What has happened in that state (covered up to some extent for obvious political reasons) is one of the main reasons we PNHP people have worried about the ACA. And unfortunately the ACA does not include a nationwide risk pool– that would be single payer (maybe that’s what you meant). Here’s a description of some of the issues Sorry not to put in original sources but I have looked at them and I believe the analysis is correct.

      You know, oddly, the reason insurers didn’t come out in support of the ACA as passed may be counterintuitive. But at least one person, the head of Aetna (Bertolini), did admit why– mandate wasn’t high enough to suit them. He predicts many uninsured will pay the tax instead, which is lower than the premium (and he knows that gap will widen steadily). What he doesn’t say is all the reasons why– he knows private insurance is an unreliable and shoddy product and that it will get worse as we go along. He does hint that he expects companies to request higher rate increases.

      Reading the Court opinion, I am ever more convinced the recent advances in understanding the evolved purpose of reason are correct. We evolved reason as a tool to use in persuading/ defending our beliefs, to the point that we can fool even ourselves– not as a tool to discover facts. The occasionally bizarre maneuvering in this brief seems to support that. Of course you and I are no more safe from that problem than anyone else, but there is some evidence that liberals are more disturbed by cognitive dissonance– when we come across a fact that doesn’t mesh with our current reasoning, we are more likely to adjust our reasoning to accomodate the fact. Conservatives are more likely to stick with their original thoughts. Like the birthers.

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