The US Supreme Court has upheld the constitutionality of President Barack Obama’s healthcare law, in a 5-4 decision, with the four liberal justices being joined by Chief Justice John Roberts. Both the result itself, and the composition of the majority, have surprised observers from all sides — so much so that CNN and Fox News initially misreported the result, claiming that the court had struck down the law.
The centrepiece of the massive Affordable Care Act — usually known as Obamacare — is the “individual mandate”, which obliges all uninsured US citizens to acquire health insurance, with the presupposition that the act would also set up healthcare “exchanges” that offered affordable insurance to low-income people.
The Obama administration has argued that such a mandate is similar to the obligation to buy car insurance, and that states such as Massachussetts — under a governor named Romney — had instituted an individual mandate at the state level. The Right argued that the compulsory nature of the mandate was a violation of the Constitution, because it exceeded the federal government’s “enumerated” (i.e. specified) powers.
The law thus allegedly reached into matters that should be managed by state governments — one way in which the Republicans got around the sticky fact that their presidential candidate had pioneered the scheme at that level. The Obama administration and the Democrats in Congress relied on two clauses in the Constitution — the Commerce clause and the Necessary and Proper clause — to claim the right to set the individual mandate at a national level.
The Commerce clause states that:
[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes:
And the Necessary and Proper clause gives the federal government the power to make laws that enforce it:
The Congress shall have Power — To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof. [foregoing powers in this case means, inter alia, the Commerce clause].
The Democrats’ argument was that health insurance was an interstate product, and that the federal government was therefore able to regulate it; the argument against was that compelling individuals to purchase a service was such a vast over-extension of the Commerce clause that it was essentially a blank cheque for federal intervention at the state level. Hence, the Right’s alarm about the passage of the ACA — they argue that it is a one-way ticket to an over-ride of the constitution, and hence the end of America. Sorry, the END OF AMERICA.
The ACA had no sooner been passed than state governments were mounting legal challenges to it. Initially, it was thought that these would have no chance. But Florida put forward a particularly well-researched challenge — inevitably rubber-stamped by the conservative circuit court it shares with several southern states — and opinion started to shift. By the time it reached the Supreme Court, most opinion was that the court would strike down the law.
What hope there was rested on Anthony Kennedy, who sometimes sides with the four liberal judges, and who might be unwilling to strike down a 2000-page law, and effectively govern the country from the bench. By the start of this week, Democrats and the Left had hunkered down for a loss, and were beginning to look to the political capital to be gained from it — running against the Supreme Court, mobilising the millions of people who have started to benefit from the law. This provoked sneering from the Right, on this hopeless pre-defeat spin.
They’re not sneering now. They’ve been stunned by the judgment, all the more so, because it did not, in the end, turn on an interpretation of the Commerce clause. Instead, Roberts and the four liberal judges upheld the imposition of a mandate (or a fine, if you failed to get insurance) as a tax, which the federal government has a right to levy. Robert’s precedent was a 1992 case in which the state of New York was charged a surcharge for failing to dispose of its own nuclear waste. The majority opinion simply argued that you call things whatever you like — surcharge, mandate, etc — but it can still be defined as a tax.
So how did Roberts switch behind this? Close reading of the document by some legal commentators suggests that the leading majority opinion was initially a striking down of the ACA as an unconstitutional extension of the Commerce clause — but that Roberts was then persuaded to join the minority opinion that it was a legitimate tax. The minority became the majority, and the Commerce clause — which had been the Obama administration’s main line of defence — became unimportant.
Was Roberts swayed by the pure politics of the decision? Did he strike a deal with the liberal justices and strike out another section of the act — which would have penalised states who did not take additional Medicaid funds (yes, folks, some Republicans hate their people so much that they would refuse extra money for medical programs for the very poor of their state, in order to avoid endorsing Obamacare)? Or was it simply scrupulous legal reasoning?
The theories will continue to swirl around. One point that has been made is that the decision neatly extracts the court from any political partisanship — on the one hand it awards a win to the Democrats, but not on the grounds they wanted. And on the other, team Obama is saddled with the court’s judgment that the mandate is a tax — something the Democrats have spent two years furiously denying.
Despite the best efforts of the increasingly irascible conservatives on the bench, it has pulled the court back from delegitimising itself as an impartial judicial office — a pity, in a way, because a thorough awareness that the court is a political agent (which should have been obvious after Bush v Gore 2000) would not have been a bad thing.The Right’s reaction to this judgment has been hilarious. Having spent months talking up the conservative and republican function of the court in restraining tyrannical govt, etc, they are now cursing out Roberts — a George W Bush appointee — as a betrayer. Check out National Review‘s thundering editorial for a deeply pleasurable mix of contumely, bitterness and sheer fantasy. “The court has failed to do its duty”, they say. What is their duty? To deliver the ultimate interpretation of the Constitution, in order to defend the Republic. What is an essential part of the Republic — the judiciary as a separate power of government. So the court has failed in its duty by doing its duty. Thus does the US Right reason.
How will this judgment play politically? Democrats were trying to put a brave face on potential defeat, but the striking down of the Obama administration’s centrepiece would have been utterly devastating to legitimacy and morale. For at least some Americans, the court’s decision will reassure them that the Obama administration is not some band of outlaws. Much of the Right’s argument about a soft coup by a Kenyan Muslim has had a lot of the steam taken out.
But that is not necessarily win-win for the Obama administration. Though there are many parts of the ACA that people like — banning insurers from excluding people with pre-existing conditions, for example — the individual mandate has been blamed for distorting the market, in the three years before it comes on stream (in 2013). Much of this has been pure guerilla warfare by the insurance companies — boosting employment-based scheme premiums through the roof, so that many companies simply drop insurance schemes from their conditions. This is then blamed on the individual mandate, with people told that they will have no option but to take the inferior insurance packages on offer when the health exchanges come in.
Obama had opposed the “individual mandate” option during the ’08 campaign, arguing for a universal public option (with private insurance still available). But he couldn’t get that through a House of Representatives, which had 30 or so “Blue Dog” Democrats — Democrats from Republican states, who cleave to a conservative line — and the mandate became a fallback. The criticism from the Left was that made things worse — embedding the insurance industry even deeper in American healthcare, the reason it delivers substandard care for twice the cost elsewhere (16% of GDP and counting).
But that ignores the political point — that the individual mandate is a Trojan horse whose purpose is to establish the principle of universality. The oft-quoted point is that it is unfundable — but that, of course, is the point. By the time its truly enormous bills come due, the benefits of the system will be clear — and the system can be transitioned to a semi-public and then public system. That’s the theory, anyway. Whether the Democrats will get a chance to go to stage two remains to be seen — the issue of jobs and economic recovery is overwhelming any other issue, which is bad news for Obama. Today’s decision is a win — a major one for Obama’s legacy — but tomorrow the billion-dollar Right win onslaught starts afresh.
A lucid explanation of the issues and reporting of the facts. Another bit of Crikey excellence, thanks.
I also thank Crikey and GRundle for this piece.
I think circumstances might overtake the private health insurers, as they did the private lenders for college loans.
Loans for college students used to be a crazy and expensive mix of direct lending by the federal government (like Australia’s Fee Help, but without a loan cap) and private loans heavily subsidised (of course) by the federal government. The private lenders quickly exited the market with the global financial crisis, leaving the feds to pick up the pieces (of course!) but also to take over all loans so they are now all direct federal loans.
This hasn’t fixed the problem of excessively high college fees (no loan cap), but at least loans are all public now and lending costs are accordingly lower.
This is rather simplified. There was no consensus that the law would be struck down. Certainly nothing to do with jurisprudential uncertainty of the substantive legal issues. A clear majority of legal scholars view it to be clearly constitutional under settled precedents of the Commerce Clause AND the Tax Power. See Balkin, Risen, Lithwick et al. as well as respected conservative Judges like Silberman, Sutton and Posner. The situation was far from as bleak as Rundle suggests.
The real issue was the cynicism about the conservative wing of the Court in terms of rejecting precedent when the incentive is so great to play for Team Republican during a ramped up election cycle. This was then amplified in the press greatly by the somewhat hostile environment of oral argument and the alleged under-performance of Verrilli.
Of course, there was never much expectation that Thomas, as an extreme libertarian who adopts the “constitution in exile” position would endorse the settled expansive view of the Commerce power as deferential to Congress. But
it was entirely open whether Roberts would. He was explicitly confirmed as philosophical approach as judicially modest and someone who would follow precedent despite his conservative views. And Kennedy is not a radical like that despite his libertarian philosophy.
More seasoned watchers of the Court had more measured reactions to the oral argument so it depends who you read. Oral argument is seldom completely revealing, as we saw with the immigration case as well. The Justices are perfectly capable of using it as a platform to tease out issues and finding their own arguments. And Thomas is almost always silent.
It is true that the Administration did not emphasise the tax argument, but it didn’t come out of nowhere. It was part of submissions through the inferior courts and in amicus curiae briefs throughout. Jack Balkin and many other liberal constitutional scholars have been making the same argument since the challenge began.
See here for a summary of the argument which essentially won the day:
http://www.theatlantic.com/politics/archive/2012/05/the-health-care-mandate-is-clearly-a-tax-0151-and-therefore-constitutional/256706/#
only argued commerce and necessary and proper clause. The Court made the decision to appoint a amicus curie
“a pity, in a way, because a thorough awareness that the court is a political agent (which should have been obvious after Bush v Gore 2000) would not have been a bad thing.The Right’s reaction to this judgment has been hilarious”
It pays to remember sometimes that this isn’t a political game – worrying about political point scoring is simply immoral in light of the real effects that the US health care mess is having on people’s lives. This decision is a Good Thing, no ifs or buts.
Australia’s Superannuation Guarantee likewise depends on the Federal taxation power. If employers don’t make the prescribed super contributions, they pay the Superannuation Guarantee Charge (SGC), which is a payroll tax. In Roy Morgan Research Pty Ltd v Commissioner of Taxation (28 September 2011), the High Court confirmed that the SGC is a valid exercise of the taxation power. Unlike super contributions, the SCG is not tax-deductible and is augmented by interest and fees. So employers make super contributions in order to avoid the tax.
Other Federal powers wouldn’t do the job. The old-age-pensions power applies to pensions funded by the Commonwealth, not by private entities. The corporations power, territories power and referral power don’t give enough coverage for universal Federally-mandated superannuation. But with the taxation power, the Feds can mandate pretty much anything they want: do it or pay the tax!
That the Super Guarantee ultimately depends on the taxing power is one reason why it might as well be brought on-budget. Another is that bringing it on-budget would allow a more sensible decision about what sort of tax should fund it. For example, an NZ-style all-in consumption tax would have a similar effect on the cost of living while doing far less damage to employment and international competitiveness; cf. http://is.gd/draftbudget .
But at least the Keating government admitted from the outset that the SGC is a tax. The Obama administration could have saved itself a lot of uncertainty by being similarly candid about the health-care mandate.