Health-Care Law is Constitutional TAX, a Divided Supreme Court Rules
Richard Dunham, Houston Chronicle, June 28, 2012GOP voters now understand that the only way to repeal they derisively refer to as Obamacare is to elect a Republican president and a Republican Congress.
A Republican Supreme Court handed a Democratic president a massive election year victory Thursday by ruling that the sweeping 2010 health-care law is constitutional.
In a complex decision, Chief Justice John Roberts wrote that the so-called individual mandate — which requires individuals to be insurance or pay a fine — is constitutional under the Congress’ taxation powers.
The decision, which came as a shock to Republican strategists, is likely to boost President Barack Obama’s political standing in the short run. But it also will serve to motivate GOP voters who now understand that the only way to repeal they derisively refer to as Obamacare is to elect a Republican president and a Republican Congress.
By upholding the law’s requirement that every American buy insurance or face a tax, the Supreme Court’s majority kept in place the administration’s intricate health-care overhaul, which the government is putting in place piecemeal at a cost to taxpayers already in the billions.
The Affordable Care Act represented the signature achievement of President Obama and congressional Democrats, fulfilling Democrats’ decades-old pledge to insure the uninsured.
Thursday’s ruling likely will stand as the Supreme Court’s most significant statement on the limits of congressional regulatory power since the 1930s when the justices struck down and then upheld President Roosevelt’s New Deal.
The case hinged on what came to be known as the “individual mandate,’’ the law’s requirement that all persons (with few exceptions) have health insurance. Under the law, failure to get insurance would result in a penalty that administration officials later tried to characterize as a tax, since it would be enforced by the IRS. The penalty would be $95 in 2014, rising to $695 in 2016.
The main question before the justices was whether the mandate fell outside the Constitution’s limiting of congressional regulatory power to matters of interstate commerce. On Thursday, the court’s majority answered that it does not.
Twenty-six states including Texas filed suit after President Obama signed the Affordable Care Act into law on March 23, 2010. In Texas, 25 percent of the population lacks health insurance — the nation’s highest rate.
California was one of 11 states that filed a court brief supporting the law.
The Florida-based U.S. Court of Appeals for the 11th Circuit ruled the mandate unconstitutional but said the rest of the law could stand. On Thursday, the Supreme Court overturned that decision.
The ruling salvages the Obama administration on-going effort to implement the law, many of whose provisions don’t go into effect until 2014. The government already has funneled billions to states to set up health-care exchanges for individual and small-business purchasers. The government also has embarked on spending to close the “donut hole’’ that puts extra costs on seniors in the Medicare prescription drug plan.
Even after the court’s conservative justices peppered Obama administration Solicitor General Donald Verrilli with tough questions during oral arguments in March, Obama administration officials and congressional Democrats were confidently predicting victory.
“We’re ironclad on the constitutionality of the bill,’’ said House Minority Leader Nancy Pelosi, D-Calif., who as House Speaker in 2010 played a major role in shepherding the law through Congress. “I think we’ll be 6-3 in our favor.’’
The ruling allows the administration’s ambitious plan to go forward, a major jolt to a multi-trillion dollar industry. Its stated goal: Bring health insurance to the 50 million people who lack it and cannot pay all their medical bills.
The administration had argued the mandate was the only way to address the $43 billion in uncompensated care the health-care system provides to the estimated 50 million uninsured.
Hospitals and clinics make up the difference in part by charging higher rates to insurance companies, which in turn pass them on to policyholders.
The bill for uncompensated care adds more than $1,000 to individual policyholders’ premiums, the administration said. Cost shifting would end if everyone had insurance under the mandate, Obama’s lawyers said.
Supporters argued the mandate was a necessary mechanism to ensure the insurance risk pool would be large enough to finance the law’s other main provisions: Barring insurance companies from refusing coverage to those with pre-existing medical conditions, or charging them higher premiums. Without it, they said, premiums for individuals would be unaffordable and health insurance companies would continue to cherry pick customers.
The health insurance industry itself stayed neutral on the law’s constitutionality, but argued that the mandate was a necessary ingredient for coverage of those with pre-existing conditions.
The two main players, Blue Cross Blue Shield and America’s Health Insurance Plans, said that eight states (including New York) in the 1990s tried variations of coverage for the uninsured without requiring everyone to have health insurance. The result: Premiums increased dramatically and the number of uninsured did not go down. In some cases, it increased dramatically.
In the political and legal conflict over the law, there was little dispute that Congress could require health insurance at the “point of sale’’ — when an uninsured person is hospitalized or needs other medical treatment.
Obama’s legal team argued that timing was everything, and that the unique nature of health insurance required purchase ahead of time for it to be effective. Getting health insurance only when you need it most would blow a hole in the risk pool, they argued, making insurance hugely expensive for all.
But Republican opponents argued that never before had Congress regulated an “inactivity’’ _ the lack of health insurance. If Congress could make you buy health insurance, it could make you buy and consume broccoli, conservatives said.
For the health-care law’s opponents, the debate was less about how the government chooses to provide health care to those in need and more “about liberty,’’ as Virginia Attorney General Ken Cuccinelli put it.
The Obama administration offered the metaphysical counter-argument that not having health insurance indeed was a form of activity. Even the young and healthy are never more than a cancer diagnosis or car crash away from steep medical costs, administration lawyers said.
The mandate idea came out of the conservative Heritage Foundation in 1989 as the Republican answer to the specter of government-run health care.
But conservative legal scholars came to view the mandate through a different prism, as an unconstitutional power grab by Congress and the White House that would impose what amounted to government-controlled health care.
During oral arguments in March, Justice Anthony Kennedy — typically a swing vote in close decisions — exhibited deep reservations about the law, saying the Obama administration faced a “heavy burden’’ in showing the mandate is constitutional. But Kennedy also signaled concern about how uncompensated care shifts costs to those with health insurance “in a way that is not true in other industries.’’
The Supreme Court’s ruling in a 1995 San Antonio case, U.S. v. Lopez, proved important to Thursday’s ruling. In that case, the court’s conservative majority ruled a federal law banning guns in school zones went beyond the Constitution’s interstate-commerce restriction on congressional power.
The law had been used to prosecute Edison High School senior Alfonso Lopez Jr., who had brought a loaded .38 caliber handgun to school.
The Lopez decision established the court’s dividing line on when an act of Congress breeches the Constitution’s interstate-commerce wall: “Where economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained.’’
In its briefs, the Obama administration insisted the health-care law fell comfortably within that limit. On Thursday, the court’s majority ruled it did not.
The administration had tried to woo Justice Antonin Scalia by peppering its court brief with references to Gonzales v. Raich, a 2005 case in which Scalia joined the court majority ruling that the U.S. government via the commerce clause could enforce federal drug laws in California and other states permitting medical marijuana.
Among those involved in the case was Angel Raich, an Oakland, Calif., mother who consumed marijuana under the state’s medical marijuana statute to ease pain from a brain tumor and other ailments.
“If Congress has the power to prevent Angel Raich from (using) marijuana to offset the ill effects of chemotherapy, then surely it has the authority to regulate a two-trillion-dollar industry,’’ Erwin Chemerinsky, dean of the University of California’s Irvine School of Law, wrote just before oral arguments in March.
Scalia left little doubt during oral arguments that he would vote to strike
down the law’s mandate, which he in fact did on Thursday.