The Supreme Court Ruling on the Affordable Care Act—A Bullet Dodged

Health care reform is a drama in four acts. The first two acts—the Congressional debate leading to enactment of the Affordable Care Act, and the multiple court cases culminating in today’s Supreme Court decision—were nail-biters. The next two acts—the political debate that will culminate with the November elections, and the struggle to implement this enormously complex law—promise to be equally tense.

Few people correctly anticipated much about today’s Court action. Most believed that Chief Justice Roberts would write the opinion of the court, whether or not the law was sustained. That expectation proved correct. But the final alignment is surprising—Roberts aligned with the four liberals—Justices Breyer, Ginsburg, Kagan, and Sotomoyor—to sustain the law in its entirety, although not uniformly on the government’s reasoning. Some aspects of the Court’s reasoning are bewildering. The tone of the separate opinions written by Justice Ginsburg and jointly by Justices Kennedy, Alito, Scalia, and Thomas bespeak ferocious behind-the-scenes disagreements within the court.

The outcome can be stated simply. People must pay a tax if they fail to carry approved health insurance. States may extend Medicaid coverage as specified in the Affordable Care Act, but if they don’t, none of the funds for previously eligible Medicaid enrollees will be in jeopardy. All other provisions of the Affordable Care Act stand.

Aaron discusses the ruling in this video

Behind this seemingly simple outcome stand sharp disagreements over constitutional interpretation.

For starters, by a vote of 5 to 4, the Court rejected the federal government’s argument that it can use its power to regulate interstate commerce to require people to carry insurance. Congress can impose a tax on those who don’t carry such insurance, but the concept of ‘mandate’ really doesn’t arise. The distinction between a mandate and a tax is without significance as far as the Affordable Care Act is concerned. The reason is that enforcement of the ‘mandate’ under the power to regulate interstate commerce depended solely on the ‘penalty/tax’ that the opinion of the chief justice leaves unaltered. The incentive is extremely weak in either case. The charge is modest for most people. It can be collected only from over-withheld income taxes. It does not apply to many people—for example, those for whom the cost of insurance would exceed a certain share of income. The law provides no mechanism for collecting the ‘tax/penalty’ from people who owe no tax. In brief, the incentive to carry insurance is largely hortatory for many people. In any event, whether the charge people are expected to pay is called a ‘penalty’ justified under the power to regulate interstate commerce, or a ‘tax’ under the government’s power to tax makes not a whit of difference in what the charge actually is or how it can be collected.

The argument over whether or not the power to regulate interstate commerce authorizes the requirement to carry insurance is therefore important only because of its implications for federal legislation other than the Affordable Care Act. And it is important. Justice Thomas dissent underscores why. Although he wrote only for himself, he articulated a position, popular in the conservative legal community, that the power to regulate interstate commerce should be drastically curtailed. The other conservative members of the court were unwilling to sign on to his rather extreme position. But they were nothing if not clear that the assertion of power to regulate interstate commerce under the Affordable Care Act is major legislative overreach.

Today’s decision says that the interstate commerce clause is not necessary to sustain the Affordable Care Act. But the Court clearly, if by only a 5-4 majority, rejected the government’s assertion that the Affordable Care Act is well within established precedent regarding the commerce clause, a view that had been the prevailing opinion among lawyers before this case.  For seventy years, the Court placed few and minor limits on the power of the government to regulate economic activity under the Commerce Clause. This case suggests that this permissive era is over.

With respect to the extension of Medicaid coverage, seven members of the court, including two justices usually counted as liberals—Breyer and Kagan—ruled that it would be unconstitutional to penalize a state that refused to extend Medicaid coverage by curtailing current Medicaid matching funds.

The reasoning is bewildering. Medicaid, it was argued, is so important to every state that curtailment of current matching funds would dragoon states into extending coverage. Under the Constitution, it is the states that are sovereign and grant only limited powers to the federal government. No action by the federal government can convert the states into unwilling instruments of federal purpose. The majority’s view is that the threat of cutting off Medicaid funding would do just that and is therefore unconstitutional.

Yet it seems clear that the federal government could have taken two legislative steps, both clearly constitutional, that in combination would have been equivalent to the Affordable Care Act. The first step would be to repeal title XIX of the Social Security Act, which creates Medicaid. The second step would be to enact a new title XIX, creating a new Medicaid program with exactly the coverage requirements in the Affordable Care Act. States would be free to join the new Medicaid program or not, as they chose. There could be no constitutional bar to the repeal of a law Congress duly enacted. Nor would the terms of the new Medicaid law be any different from those of the old Medicaid law, which states were free to join or not to join (one state, Arizona, remained outside the program for many years). In combination, these two legislative steps, each doubtlessly constitutional, would have done precisely what seven members of the Court decided the Affordable Care Act could not do—tell states that if they did not extend coverage as specified in the Affordable Care Act, they would lose current Medicaid funding.

The tone as well as the substance of the three major opinions—by the chief justice, Justice Ginsburg, and the joint dissent of Kennedy, Alito, Scalia, and Thomas—is striking. Justice Ginsburg attacks the opinion of the chief justice with brio and scorn. She writes that the Robert’s opinion suffers from ‘multiple flaws,’ uses ‘inapt analogies,’ and ‘spurious’ complaints, charges that his argument is ‘difficult to follow,’ accepts ‘specious logic, is ‘long on rhetoric’ and ‘short on substance,’ and says one aspect of his opinion ‘disserves future courts.’ In one amusing passage, she ridicules Roberts for invoking what she calls ‘the broccoli horrible’—the suggestion that a health insurance mandate might pave the way for a mandate to eat a healthful diet, which is obviously beyond Congress’s constitutional powers.

Consider the chain of inferences the Court would have to accept to conclude that a vegetable -purchase mandate was likely to have a substantial effect on the health-care costs borne by lithe Americans. The Court would have to believe that individuals forced to buy vegetables would then eat them (instead of throwing or giving them away), would prepare the vegetables in a healthy way (steamed or raw, not deep-fried), would cut back on unhealthy foods, and would not allow other factors (such as lack of exercise or little sleep) to trump the improved diet. Such “pil[ing of] inference upon inference” is just what the Court refused to do in [two previous cases].

Unlike Justice Ginsburg, the four dissenting conservative justices do not explicitly scorn Roberts’ opinion. They simply disregard much of it, reserving their derision for the government’s claims—which just happen to be ones that Robert invoked. They agree that the commerce clause does not empower Congress to require anyone to buy insurance. And, because the Affordable Care Act describes the financial charge imposed on those without proper insurance as a ‘penalty’ imposed for violating a law that Congress lacks the power to legislate, that is the end of the story. The claim that the penalty is a tax is labeled as ‘feeble.’ The Government is the author of this ‘feeble’ argument, not the chief justice who based his reasoning on it.

Thus ends Act II in the Affordable Care Act drama. There will be no intermission. Act III was already well underway before Act II ended. It will see the obscenely well-financed political battle between supporters and opponents of the health reform law. They will contend over who will sit in the White House after next January 20. Will it be the person who staked his administration on winning passage of health reform? Or will it be the person who actually once thought the same idea was pretty terrific but who now says it isn’t and has sworn to repeal it? Act III, like the first two, promises to be a down-to-the-wire cliff-hanger. Act IV—if there is an Act IV—will play out across fifty states where governors, legislators, and state civil servants will struggle to implement the most beneficial/misguided [Choose one.] domestic legislation enacted in the last seventy-seven years.