From March 26-28, the Supreme Court heard oral arguments about the constitutionality of the Patient Protection and Affordable Care Act, frequently shortened to the Affordable Care Act—or simply “Obamacare.” These three days of arguments were the most time the Supreme Court has spent on a single case since the 1954 Brown v. Board of Education decision.
The Affordable Care Act hearings focused on four main points:
- Authority: Does the Supreme Court have the authority to rule on the constitutionality of the Affordable Care Act’s penalty for not having health insurance before anyone is actually required to pay such a penalty (April 15, 2015)?
- Constitutionality: Can Congress require that virtually all Americans purchase health insurance or be forced to pay a penalty (which would be collected as part of an individual’s Federal Income Tax)? Does this “individual mandate” violate the Commerce Clause of the Constitution that regulates interstate commerce? In other words, is this law something new and different? If the court upholds the mandate that all American must buy health insurance, does the court have the authority to force us to buy anything from burial insurance to broccoli?
- Severability: Can the ACA’s individual mandate be severed from the rest of the law—or is the individual mandate so central to the law that finding this one aspect of the law unconstitutional mean that the Supreme Court must strike down the entire law?
- Medicaid: Is it coercive for the federal government to require that states pay a portion of the costs of administering Medicaid—or lose federal funding for other federal programs.
The Court’s answer to this $2.6 trillion question is expected later this month. In the meantime, the 26 states that challenged the federal government and approximately 310 million Americans (50 million of which are uninsured)—not to mention a multi-billion dollar health insurance industry—continue to wait and watch.
Legal experts and political pundits far and wide have weighed in on the likelihood of the Affordable Care Act (and the individual mandate) being upheld or struck down by the Supreme Court. The prevailing thought is that the court has the authority to rule before April 15, 2015; however, the prospect of the court supporting the ACA’s constitutionality and the mandate’s severability is uncertain at best. (Whether the court upholds the Medicaid provision is also a topic for debate, but not nearly as hot an issue as constitutionality or severability.)
Conventional wisdom predicts that the four liberal justices (Breyer, Ginsburg, Sotomayor, and Kagan) will side with the law, the three conservative justices (Alito, Scalia, and Thomas) will rule against it, leaving Chief Justice Roberts and Justice Kennedy and as the swing votes.
Even though it is problematic to predict the outcome of the case based on oral arguments, the consensus of legal observes and journalists who follow the Supreme Court is that both Chief Justice Roberts and Justice Kennedy leaned visibly toward the conservative position on all four points, which would create a 5-4 majority against the ACA—or at the very least, against the mandate.
“Well, the same, it seems to me, would be true, say, for the market in emergency services: police, fire, ambulance, roadside assistance, whatever,” said Chief Justice Roberts on the second day of hearings. “You don’t know when you’re going to need it; you’re not sure that you will. But the same is true for health care. You don’t know if you’re going to need a heart transplant or if you ever will. So, there’s a market there. In some extent, we all participate in it. So, can the government require you to buy a cell phone because that would facilitate responding when you need emergency services? You can just dial 911 no matter where you are?”
Also on the second day of hearings, Justice Kennedy added his most telling statement, “When you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution?”
Watching and Waiting
The media spectacle of analysis and prediction surrounding how the court will decide has taken on the look and feel of pre-game whoopla of a major college football or basketball rivalry. The principle difference between this “contest” and a sporting event, however, is that the outcome has likely already been decided.
While Las Vegas does not publically post betting odds for Supreme Court’s rulings, On June 2, Intrade, which calls itself the “World’s Largest Prediction Market,” reported 63 percent chance of the ACA’s individual mandate being overturned. As of June 2, shares of this prediction could be purchased on Intrade for $6.28 per share.
On June 1, FantasySCOUTS reported that approximately 55 percent of its audience believes that the individual mandate is unconstitutional.
Numerous pundits have chimed in on this issue, including Richard Kirsch, author of Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States and a senior fellow at the Roosevelt Institute who is also the former campaign manager for Health Care for America Now.
“The odds are that it’s slightly more likely to overturn the individual mandate,” Kirsch said in an FA article on June 1.
This perception is a stark shift from the pre-hearing American Bar Association poll that was reported in March 19th issue, The New Republic. In that poll, 85 percent of lawyers, academics, and journalists who regularly follow and/or comment on the Supreme Court thought the court will uphold the ACA.
New York Times columnist David Brooks brought up an interesting moral point on PBS’s “News Hour” on March 30, that was not argued by the justices or highlighted in any poll. Brooks’ thinking goes back to the Old Testament question: “Am I my brother’s keeper?” In other words, is it in my best interest to live in a civil society where we collectively care for each other’s health and wellness needs? Conversely, is the cost for caring for the ill and aging too great for the young and healthy?
“I don’t pretend to pass judgment, but it strikes me as a perfectly valid constitutional issue,” Brooks said. “Basically, what the individual mandate does, it asks—it compels people to enter into a contract with an insurance company, which is not really in their best interest, in order to subsidize other people who are forced to enter into that contract.
“That strikes me as a step forward in executive or governmental power. So it strikes me as a perfectly legitimate thing to do. I can see why, morally, we are all responsible for each other’s health. We’re not going to let somebody die on the street.
“But, constitutionally, why the government should be compelling people to do this, that strikes me as a completely valid concern, and the justices honed right in on that one.”
If the justices strike down the individual mandate, it will no doubt be seen as a failure for President Obama. Striking down the mandate, however, might cause a Roe v. Wade style backlash among progressives, liberals, and independents that could sweep Obama into a second term. The tealeaves are hard to read at this point.
Without the mandate, it is difficult to imagine how the rest of the law can survive. For example, provisions of the ACA state that you cannot be denied insurance because of a pre-existing condition, nor can your insurer drop you if you become sick. If all Americans are purchasing health insurance, then there is enough money in the pot, so to speak, to cover everyone; however, if the only people paying into the system are sick people over 45, there won’t be enough money to cover everyone.
If, on the other hand, the justices uphold the individual mandate, then expect to see health insurance exchanges (HIXs) in all 50 states. Also expect these exchanges to offer a host of health insurance packages from a spectrum of providers. Some industry experts, who declined to be named in this article, estimate the costs of premiums will drop by as much as 30 percent below what most employers are currently paying for insurance through their employers.
“Two things are responsible for the increase in the cost of health insurance: 1. The cost of health care itself—which has been going up every year for decades, and there isn’t anything in the law [ACA] to stem that growth; 2. New benefits, mandates, and regulations will only add to the already growing cost of coverage,” said Zirkelback. “If you want to improve the system, lower the cost of coverage and make it less. Don’t tax health insurance; instead, give people more choices and flexibility to buy the health insurance that’s right for them. Look into the cost of medical care. The biggest driver of rising health insurance costs is our out-of-control fee-for-service system. Doctors are paid for services, not improving patient outcomes and lowering the incidence of disease.”
According to David Langness, Director of Communications for Health Care Reform at Kaiser Permanente, “What we do know [if the ACA is upheld] is there will be influx of the previously uninsured into the health care system. If the predictions are right, this influx will be large. … There will be a large influx of patients into the system by primarily people who were previously uninsured.”
Langness bases his prediction on the states like Massachusetts where large populations of the previously uninsured have suddenly received health care, and immediately sought help with their “deferred maintenance.” According to Langness, if the ACA and the individual mandate are upheld, the big question will be: “Do we have enough health care professionals to address that need. In other words, what will it cost and who will do the work?”
The biggest sticking point of the ACA is requiring young, healthy people to purchase health insurance—and thereby subsidize older, sicker Americans. According to the Department of Health and Human Services, in 2010, 40 percent of Americans without health insurance were between the ages of 18-34 (18-34 year olds make up only 24 percent of the general population).
If younger, healthier people pay into the system, then there will be enough money to cover older Americans who are more likely to need additional care. If these younger people opt to pay the income tax fines for not purchasing insurance, then the system will not work. Or as Justice Ruth Bader Ginsburg put it, “That’s how insurance works.”