The Supreme Court today upheld the Affordable Care Act (the "Act"), the centerpiece of President Obama's domestic agenda in his first term, and the largest single piece of legislation in more than 70 years.
The move by the Court was widely expected as many have noted in recent weeks (indeed, even recent years since the Bush v. Gore decision) a more partisan and overtly politicized Supreme Court.
Notably, the court was not expected to leave the ruling to the constraints of the Anti-Injunction Act of 1867 which the Obama administration had argued could have barred the court from ruling on the merits of the case, namely, the individual mandate, until the provisions actually came into force in 2014. As expected, the Court did not accept that invitation and ruled on the merits.
Not expected, however, were Chief Justice Roberts in the majority, Justice Kennedy dissenting, and the individual mandate surviving, and doing so as a tax, rather than as legislation pursuant to the Commerce Clause.
There had been several challenges in federal courts to the Act, and 26 states had challenged the Act. The Supreme Court had taken this particular case up on review from the United States Court of Appeals for the Eleventh Circuit in Atlanta. That federal appeals court had held that the Act was unconstitutional under the Commerce Clause - simply, that Congress did not have the authority to compel people to purchase such insurance - and remarkably allowed the rest of the law to stand, including provisions concerning pre-existing conditions, Medicaid, and health insurance exchanges.
The question concerning the Anti-Injunction Act of 1867 had been ruled on by the Fourth Circuit Court of Appeals, which had said it did not have the authority to hear the case until it would be justiciable after the law went into effect in 2014.
TAX - NOT COMMERCE
From a legal perspective, today's ruling goes to the issues of Congress' power to tax and to the power of Congress to regulate commerce pursuant to the Commerce Clause of the Constitution. The scope of the Commerce Clause had been uncertain for some years, but today's ruling puts an end to that uncertainty for at least a generation: the Commerce Clause is here to stay.
The Commerce Clause states the following:
"[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;"
-Article I, §8, cl. 3.
Notably, since the 1930s and the administration of Franklin Delano Roosevelt, the Commerce Clause aided causes ranging from FDR's New Deal programs to civil rights, and since the 1930s, the Supreme Court has given, almost without exception, an expansive reading of the Commerce Clause.
In Wickard v. Filburn, 317 U.S. 111 (1942), the Supreme Court upheld the constitutionality of the Agricultural Adjustment Act of 1938, as a valid exercise of congressional authority under the Commerce Clause; the 1938 law imposed penalties as a disincentive for excess wheat production in order to regulate surpluses and shortages. Katzenbach v. McClung, 379 U.S. 294 (1964) again upheld Congress' authority under the Commerce Clause to require hotels to serve patrons "without regard to their race or color" pursuant to the Civil Rights Act of 1964.
The arrival of former Chief Justice William Rehnquist to the Court, however, saw a renaissance of federalism and the beginning of the Supreme Court's scaling back of the reach of the Commerce Clause. In National League of Cities v. Usery, 426 U.S. 833 (1976), Rehnquist, writing for the Court, held that the Commerce Clause did not grant Congress the power to regulate how states pay their employees as this infringed on state sovereignty. Rehnquist struck at the Commerce Clause again in 1995 with his opinion in United States v. Lopez, 514 U.S. 549, striking down a federal law that had established gun-free school zones, and again with United States v. Morrison, 120 S.Ct. 1740 (2000), holding that Congress again exceeded its authority when it passed the Violence Against Women Act of 1994 which had offered a federal remedy for victims of gender-motivated violence. (Note: Chief Justice Roberts was some time ago the law clerk for Chief Justice Rehnquist at the Court, which might play into how the Court reasoned today).
That tension between the Commerce Clause and states' rights had loomed large, ultimately giving pause to the Obama administration and giving confidence to opponents of the Act, until today.
Adam Liptak of The New York Times, in a March 27, 2012 article, had framed the competing questions before the Court, thus:
•"May Congress decide, in fashioning a comprehensive response to a national crisis in the health care market, to regulate how people pay for the health care they will almost inevitably need?"
•"May the federal government...compel individuals not engaged in commerce to buy a product...health insurance...from private companies?"
Today's answer to those questions would be no.
However, Congress had the authority to pass this legislation under its taxing power. This is in the Constitution; it reads:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"
-Article I, §8, cl. 1.
Proponents of the Act had made the case that the Act was necessary to "bend the curve" of rising health care costs (and thereby slow the rate of increase) and, specifically, the success of the Act hinged on the individual mandate. No other risk distribution mechanism could achieve the economies of scale necessary to make the Act a feasible solution. Those who didn't opt into the scheme would bear a tax, collected by the IRS and used to make up for the non-participation of some. In short, everyone pays into the scheme.
The federal government had argued that the Commerce Clause bestowed upon Congress the authority to legislate the individual mandate. They had further argued that even if it was not permitted under the Commerce Clause, it was nonetheless authorized by Congress' power to levy taxes, as persons who did not purchase health insurance would have to pay a tax for the year in which they did not purchase insurance; this would be reportable as part of their self-assessed income tax return and payable to the Internal Revenue Service.
Opponents of the Act argued that the Act regulated inactivity and forced people into the marketplace; rather than a practical argument, they made a principled one - that the Act affronted "limited and enumerated federal powers that respect individual liberty, accountability, and the residual dignity and sovereignty of the states." Lofty language, but it provided no solution to a problem that the Constitution explicitly gives the legislative and executive branches the authority to address. Opponents also countered that there was no tax; rather, the individual mandate simply imposed a penalty dressed up as a tax, something which, they argued, Congress was powerless to do.
HIGH STAKES FOR TEXAS
Texas arguably had the most to gain - or most to lose - from this morning's decision. For starters, nearly a quarter of the state is uninsured, giving Texas the highest rate of uninsured citizens in the country. With the Act, that figure could shrink to less than 8 or 9% of all Texans by 2014.
An article last week from Kaiser Health News highlights the problems currently plaguing Texas. According to the piece, in Houston alone, nearly one in three residents doesn't have health insurance. What about federally-backed programs like Medicaid?
"With its fiscally conservative philosophy and cash-strapped state budget, Texas does not offer Medicaid coverage to childless adults unless they are pregnant, disabled or elderly. Parents of children covered by welfare are eligible for the state-federal health program only if they make no more than $188 a month for a family of three."
The article goes on to cite the fact that many workers in Texas are working full-time or hours exceeding a full-time position; however, they are, in fact, cobbling together multiple positions, and none of those individual jobs offers employer-sponsored health-care; moreover, the percentage of Texans with employer-sponsored insurance is ten percentage points lower than the national average of 61 percent, according to the Kaiser article.
This results in less care for patients in Texas. See also this policy paper.
The provisions in the Act that set out the Medicaid coverage expansion, individual mandate, federal subsidies, and state-by-state health exchanges also make health care more accessible in terms of purchase and qualification.
Texas has the most stringent requirements for Medicaid in the nation. It's extremely hard to qualify. A single adult has to be exceptionally impoverished to qualify for Medicaid in Texas. Realistically, it almost never happens. Essentially, to qualify for Medicaid in Texas, a person has to be on disability, be pregnant, or be an infant.
The Act changes that. It states that every state must allow people to qualify for Medicaid who are at or below 133% of the poverty level according to federal guidelines, and the federal government will increase its role in coverage of those who qualify.
Moreover, even if someone doesn't qualify for Medicaid under the new regime, they would still qualify for federal subsidies on a sliding scale if they are between 133% and 400% of the poverty level according to federal guidelines.
Further, people who were afraid of the entire law being struck down included those with pre-existing conditions and those with massive medical bills. Some portions of the law had already gone into effect; insurance companies could no longer deny coverage to persons with pre-existing conditions. Striking down the entire law would have meant disaster for that segment of the population. Additionally, annual coverage limits had already been eliminated and limits on lifetime coverage were being phased out year-on-year. How big would the effect be? For a graphic illustration, see this graphic.
A NATIONAL PROBLEM
The problems in American health care are well-documented, with problems across the nation echoing those here in Texas. According to the March 27 Liptak article in The New York Times, $43 billion of health care is used in this country, but is not paid for.
In a June 10, 2012, article in the Houston Chronicle, Elena Marks, a scholar at the James A. Baker III Institute for Public Policy at Rice University cited a related statistic: the United States is first in the world in health care expenditures, but ranks number 37 in health status. In short, we don't get a lot of bang for our buck. More pointedly, those who have decried the Affordable Care Act as a socialist attack on the virtues of free market efficiencies have failed to marshal any credible evidence from the current system to bolster this point.
Further impetus for the Act stemmed from widespread concerns of a decentralized, too lightly regulated health care system, where competition does not, as expected, reduce costs, but rather, drives them ever higher - making health care unique, and thus susceptible to the power of Congress to regulate under the Commerce Clause.
Concerns for the poor and the elderly, for instance, cannot be gainsaid. During the election of 2008, the number of uninsured in this country approximated 47 million. That figure did not account for the underinsured or the battle by even the insured to force their insurers to pay for what they have contractually agreed to pay. An adverse ruling by the Supremes would leave tens of millions still uninsured. And, arguing in favor of big business, insurers and other stakeholders in the debate have so many billions of dollars in sunk costs already invested in the changes under the Act, that a ruling striking down part or all of the Act will be a financial disaster for them, hedged bets or otherwise.
Opponents had argued that the Act was going to drive up costs. However, many private insurance companies were still going the way of the insurance law regardless. They were trying to make it easier and more accessible for people to get preventative care; they knew the risks that accompanied untreated conditions - briefly, would an insurance company rather pay for treating stage 1 cancer that is manageable, or stage 4 cancer that is harshly expensive?
Further, the greatest number of insured are the young and healthy. As a result, they are going to widen the number of people across whom the risk is distributed, and so lower costs per capita, while increasing contributions per capita; however, they are not going to be proportionally increasing the burden as they will not be availing themselves of the services at the same rate. In short, the marginal benefit of adding them to the pool greatly outweighs the marginal cost of such.
Matt Glazer, Executive Director of Progress Texas, offered this way forward:
"No matter the ruling, 6 million Texans are uninsured. We're either going to follow President Obama, who has a solution, or Rick Perry, who does not."
It appears that the federal legislature followed the President, and today our judicial branch acknowledged their authority to serve the people.
The court's opinion today may be viewed here.