The Health Insurance Donut Hole 3.0
Professor John Jacobi has informed us well regarding the donut hole to be created for the uninsured who would have been eligible for Medicaid under the ACA expansion of Medicaid in states that choose not to sign on to expanded Medicaid, but apparently there’s another level of donut hole awaiting low- and middle-income Americans potentially ineligible for tax credits and government subsidies for procurement of health insurance. This donut hole revolves around the definition of “affordable,” and Robert Pear in The New York Times does a more than able job of explaining it under the meaning of the word as promulgated by the I.R.S.:
Under the law, most Americans will be required to have health insurance starting in 2014. Low- and middle-income people can get tax credits and other subsidies to help pay their premiums, unless they have access to affordable coverage from an employer.
The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. says this calculation should be based solely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”
Critics say the administration should also take account of the costs of covering a spouse and children because family coverage typically costs much more.
In 2011, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,430 a year for single coverage and $15,070 for family coverage. The employee’s share of the premium averaged $920 for individual coverage and more than four times as much, $4,130, for family coverage.
Under the I.R.S. proposal, such costs would be deemed affordable for a family making $35,000 a year, even though the family would have to spend 12 percent of its income for full coverage under the employer’s plan.
Which means, of course, that although health insurance could be deemed “affordable” for an employee– thus making that employee ineligible for tax credits and subsidies– his or her family coverage could amount to a very large portion of income, but still remain ineligible for tax credits and subsidies. I would suggest that it is these kinds of financial dilemmas in cash strapped families that have led so many to eschew health insurance in the past.
Perhaps just as interesting though is that the determination is based on “household income.” In families with children in which one parent works full time and the other works part time, it is not hard to envision a scenario in which the supplemental income of the part time earner serves to increase the household income just enough to make the cost of health insurance for the individual full time employee less than 9.5% of household income–creating a classic disincentive to work among families in dire need of income.
Photo by Muu-karhu
New Medicaid Donut Hole: Update
I recently wrote about the plight of poor adults in states that reject “Medicaid 2.0″ — that is, the expansions of Medicaid contained in the ACA. Just to recap, the Supreme Court upheld the constitutionality of the expansions, but held that Medicaid’s historical power to enforce state uniformity — sanctioning states up to and including the withdrawal of some or all of their federal funding — could not be used to require states to adopt the ACA expansions. Thus, Medicaid was conceptually split between Medicaid 1.0 (existing Medicaid) and Medicaid 2.0 (ACA expansion Medicaid), and a state could not lose Medicaid 1.0 funding if it declined to participate in Medicaid 2.0 funding. Several governors have expressed the intent to refuse to participate in Medicaid 2.0.
My previous post highlighted Kevin Outterson’s observation of an under-appreciated effect of a state’s refusal to participate in Medicaid 2.0. Of course, people living below the poverty level who were ineligible for Medicaid 1.0 will be shut out of Medicaid in refusing states. But they’re also ineligible for any subsidies to purchase coverage under the exchanges. Why? Because Congress assumed that states would participate in Medicaid 2.0, and didn’t provide seemingly redundant subsidies. These poor residents of refusing states will fall into a Medicaid donut hole — ineligible for Medicaid, but shut out of exchange-based subsidies.
Secretary Sebelius, in a letter dated July 10, implicitly acknowledged this problem. After reiterating previous offers to work with states flexibly in health reform matters, and expressing hope that states would take up the federal funds available for Medicaid expansion, she addressed a donut hole question: would poor residents in refusing states be subject to a triple whammy of (1) no access to Medicaid; (2) no access to subsidies for coverage through the exchanges; and (3) penalties for not having qualifying coverage? Sebelius couldn’t offer much on the first two — refusing states won’t offer Medicaid coverage to many of their poor residents who would be eligible for Medicaid 2.0, and subsidies are simply not available (for reasons I explained in my previous post) for persons living below poverty. But on the third, she promised that the very poor uninsured would at least escape sanction for noncompliance with the ACA’s individual responsibility provision: Sebelius assured the governors that she would use her authority to provide a “hardship exemption” from penalties for these uninsured folks where needed. That may be snow in January for these disenfranchised folks, but those seem to be the tools left to Sebelius.
A Weak Mandate That’s Strong Enough?
In Chief Justice John Roberts’ decision in National Federation of Independent Business v. Sebelius, he explains that, in arguing that the individual mandate should be “upheld as within Congress’s enumerated power to “lay and collect Taxes[,]” the Government did not claim that the taxing power allows it to mandate that individuals purchase insurance. Rather, the Chief Justice explains, the Government contended that “the mandate is not a legal command to buy insurance.” Under this argument, “going without insurance [is] just another thing the Government taxes, like buying gasoline or earning income.”
As Nathan Cortez highlighted, Chief Justice Roberts’ conclusion that the “shared responsibility payment” that individuals who do not secure health insurance will owe is a tax hinged in part on the fact that “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.” The Chief Justice emphasized that “[i]t may often be a reasonable financial decision to make the payment rather than purchase insurance…” The shared responsibility payment is more tax than penalty because it lacks a scienter requirement and because it “is collected solely by the IRS through the normal means of taxation–except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution.”
That “[t]he individual mandate survives as a tax” is for sure a victory for those who support the Patient Protection and Affordable Care Act. Yet, as Dave Hoffman points out here, victory in a broader sense will hinge on the Act’s success. And the very fact that the individual mandate is weak enough to be characterized, fairly, as not a mandate at all, raises the spectre of, as Professor Hoffman puts it, “disastrously bad adverse selection problems, coupled with a talking point (taxes & costs going up) to hammer liberals with for the next decade.”
The possibility that relatively healthy individuals and small employers with relatively healthy employees will opt out of purchasing health insurance — at all or through the Act’s health insurance exchanges — causing health insurance premiums to rise, the market to contract, and the exchanges to be destabilized is not a new concern. In March of this year, for example, Avik Roy argued at his blog at Forbes that “[b]ecause the mandate is weakly enforced, small in size, and gradually put into place, whereas the pre-existing condition mandate takes effect immediately, Obamacare creates the recipe for an adverse selection death spiral.” Now that the Supreme Court has upheld the Act, these concerns will take on a new urgency for federal and state regulators, insurers, and others.
In fact, just hours after the Court handed down its decision, John Reichard and Rebecca Adams at CQ HealthBeat were reporting that Cigna is planning a lobbying campaign with the goal of convincing lawmakers to strengthen the mandate. Reichard and Adams report that
“Cigna also plans to lobby state governors, state legislatures, the Obama administration and Congress to require waiting periods of up to six months if a health care plan enrollee decides to drop out of a plan and then decides he or she wants to get back in, said Tom Richards, president of Cigna’s individual and family plan division. Efforts in Congress likely won’t occur until next year, he said.
In other words, a person who dropped out of a plan could come back into it during the next open enrollment period but would have to wait for some specified period — perhaps six months — before they would be covered for a pre-existing medical condition. That would keep people from dropping coverage and then re-enrolling quickly if they got sick so they could be covered for that illness.”
Reichard and Adams quote Ron Pollack, the Executive Director of Families USA, who noted that instead of or in addition to pre-existing condition waiting periods, those who wait to purchase health insurance could be charged a higher rate, as is the case with Medicare Part B.
The individual mandate is not the only arrow in the Affordable Care Act’s quiver, however, and it remains to be seen whether these additional measures are necessary. The Act’s premium subsidies, for example, will provide a strong incentive to individuals to participate in the health insurance market. The “3 Rs” — the reinsurance, risk corridor, and risk adjustment programs — are also important, as they are designed to, as Timothy Jost explains here, ease the transition to the exchanges and to a market without medical underwriting and with premium tax credits. The final “R,” risk adjustment, will provide a mechanism to reduce problematic concentration of risk in the exchanges on an ongoing basis.
“The reinsurance program will [ease the transition] by collecting assessments from insured and self-insured group health plans and paying out funds to individual plans that cover high-risk individuals. The risk corridor program will collect funds from issuers of qualified health plans (primarily but not exclusively plans in the exchanges) that have lower-than-expected claims costs and pay out those funds to issuers of qualified health plans with higher-than-expected costs. It will thus stabilize the experience of these plans over the first three years when insurers will have a difficult time predicting exactly how to set their premiums.
Finally, the third ‘R’ program, risk adjustment, will on a permanent basis move funds from issuers in the nongroup and small group market (other than grandfathered plans) with lower-than-average-risk populations to those with higher-risk populations; this will discourage risk selection and compensate insurers that cover sicker enrollees.”
If the 3 Rs, and, in particular, the risk adjustment program, work as intended, a weak individual mandate may be strong enough.
The Umpire Throws a Curveball
During his Senate confirmation hearings, John Roberts famously said that he would “call balls and strikes,” and not “pitch or bat.” It was a memorable promise of judicial modesty, but one that sometimes rang hollow after decisions like Citizens United. On Thursday, in a remarkable opinion that surprised almost everyone, Chief Justice Roberts joined the four liberal justices to uphold the individual mandate as a constitutional tax. Was this the modest umpire he promised us? Did he break ranks to preserve the Court’s reputation? (Note, Justices Breyer and Kagan also broke ranks on the Medicaid expansion question.) Was this Marburian or Machiavellian?
Either way, the Court’s opinions are full of curveballs. So I’d like to add to the chorus (cacophony?) of law professor post-game analysis and try to make sense of some of the fault lines and themes.
Death and taxes: The mandate as a tax snuck up on most of us. My favorite internet meme from yesterday was Admiral Ackbar’s warning: “It’s a tax!” Judge Posner on Slate.com astutely observed that legislators rarely call revenue provisions or anything else “taxes” anymore, because it has become a dirty word. President Obama still refused to say “tax” when addressing the Court’s decision. (Admiral Ackbar is not a cabinet member.) The Roberts majority held that the mandate was not a tax under the Anti-Injunction Act, but was a tax for constitutional purposes. The label Congress gave to the mandate (calling it a “penalty” rather than a “tax” in the Affordable Care Act) was helpful to the former but not the latter. Tax scholars, good luck with this one.
Inactivity: As many of us predicted, the Commerce Clause argument would rise or fall based on whether Kennedy Roberts bought into the action/inaction distinction, something that well-respected conservative jurists like Judge Silberman and Judge Sutton didn’t. In fact, Roberts bought the Congress-is-creating-not-regulating-commerce argument whole cloth (pp. 18-23). He and the conservative justices wrote about the uninsured like they exist in some sort of Precambrian pre-commerce period where they face zero risk of getting sick or injured and don’t free ride on the rest of us.
Justice Ginsburg’s opinion could not have been better on this point–her opinion is a realist tour de force on how health insurance really works. In the real world. She doesn’t bother with silly analogies. She even identifies some limiting principles: the free rider problem is significantly worse in health insurance than in other markets; the free rider problem is directly related to interstate commerce, and is not at all attenuated; there’s no problem with proximity. She obliterates the broccoli analogy (pp. 28-29 of her dissent). So much so that she even quotes Robert Bork (“Judges and lawyers live on the slippery slope of analogies; they are not supposed to ski to the bottom.”). It would take a remarkable (and probably imaginary) string of events and causal links for Congress to ever justify a vegetable mandate (luckily, my wife and I are not constrained by the Commerce Clause at home with our children).
What disappoints me about the joint dissent (by Alito, Kennedy, Scalia, and Thomas) is that it doesn’t seem to appreciate why health insurance is a unique problem of unique scale that requires unique solutions like mandates. How do you pretend that the uninsured are pre-commerce? How do you pretend a $2.5 trillion industry doesn’t exist? (Roberts at pp. 18-19). Is health care like Kaiser Soze? The uninsured cost each insured family about $1,000 per year in additional premiums. The uninsured consume $100 billion in health care each year. Over 60% of the uninsured visit a doctor or the ER every year. If this is what Precambrian pre-commerce looks like, it would be like single-celled creatures riding motorcycles and talking on cell phones. Luckily for the humans impacted by the Affordable Care Act, inaction shields us only from the Commerce Clause, not the Tax Clause. (Roberts, at p. 41).
Congress can create choices, but not coerce: It struck me that both the mandate and Medicaid expansion essentially boiled down to whether Congress is forcing individuals and states to do something or merely giving them choices. First, the mandate survived as a tax rather than a penalty because Roberts found that the amounts charged in section 5000A for going uninsured (the “shared responsibility payment”) were proportionate and weren’t coercive. On page 35 of his opinion, he notes that “for most Americans the amount due will be far less than the price of insurance, and by statute, it can never be more.” In footnote 8, he then notes that someone making $35,000 a year in 2016 would owe the IRS only $60 per month for going uninsured, which is less than the $400 a month it would cost to buy insurance. That’s a real choice and it’s not coercive. That little passage may have saved the entire Affordable Care Act, characterizing the mandate as a tax and not a penalty.
Likewise, Medicaid expansion boils down to the same issue– Is Congress coercing states and thus abusing its spending power, or do states have a real choice? The threat to withhold all Medicaid funding if states don’t expand along with the Affordable Care Act is coercive; but withholding new funds and preserving existing federal Medicaid funding isn’t– it’s “a genuine choice.” (Roberts, at p. 58). In the coming weeks, I look forward to discussing with colleagues what this means for all the joint federal-state programs we have. Does it mean Congress can giveth but not taketh away? Will this decision open the floodgates to litigation challenging federal spending conditions? Will Congress, as Justice Ginsburg argues, avoid amending these sprawling statutes and instead decide to repeal and reenact huge programs like Medicaid to avoid this issue? (Ginsburg, at p. 38) For my money, the conditional spending decision will affect many more ongoing and future laws than the Commerce Clause holding.
Weak dissent: Finally, Judge Posner also remarked on the surprisingly weak joint dissent by the conservative justices, which also struck me when I read it. We didn’t get Scalia’s customary fire-breathing screed. Indeed, Justice Ginsburg’s opinion reads like a genuine dissent, which might be a sign that Roberts changed his vote, as many are speculating.
In any case, the 193-page document will give law nerds like me a lot to chew on in the coming weeks, months, and years. The umpire certainly threw us a few curveballs.
ACA Upheld as Tax
1) A good rundown of “what it means for you” is here.
2) A critical part of the Roberts opinion:
The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose atax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.
n. 11: Of course, individuals do not have a lawful choice not to pay a tax due, and may sometimes face prosecution for failing to do so (although not for declining to make the shared responsibility payment, see 26 U. S. C. §5000A(g)(2)). But that does not show that the tax restricts the lawful choice whether to undertake or forgo the activity on which the taxis predicated. Those subject to the individual mandate may lawfully forgo health insurance and pay higher taxes, or buy health insurance and pay lower taxes. The only thing they may not lawfully do is not buy health insurance and not pay the resulting tax.
3) Sara Rosenbaum of GW predicts “overwhelming number of states” to adopt the Medicaid expansion.
Also, Congrats to Jack Balkin for authoring “The Health-Care Mandate Is Clearly a Tax–and Therefore Constitutional,” back in May. From his lips to Justice Roberts’s ears.
I would also like to congratulate “individuals exposed to asbestos from a mine in Libby, Montana,” for keeping the Medicare coverage PPACA granted them. The joint dissent would have stripped that away, along with other parts of the Act they deem “minor provisions,” in a blanket repeal of PPACA they would characterize as “caution” and “minimalism.” I’m sure the tens of millions of Americans who will now enjoy insurance define “caution” quite differently.
Finally, a tip of the hat to Tim Jost, who has carefully and comprehensively blogged about key steps toward PPACA implementation, even with the “constitution in exile’s” Sword of Damocles hanging over it. If you want to learn more about the “Premium Tax Credit Final Rule,” essential health benefits, or minimum loss ratios, he’s the go-to person.
This post originally appeared, variously, on Balkinization and on Concurring Opinions.
ACA Upheld!
Via the Scotus Live Blog, reading from the Opinion: http://www.scotusblog.com/cover-it-live/
The individual mandate survives as a tax. 
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| 10:21 | Tom: We do not have the opinion. |
| 10:21 | Amy Howe: On the Medicaid issue, a majority of the Court holds that the Medicaid expansion is constitutional but that it w/b unconstitutional for the federal government to withhold Medicaid funds for non-compliance with the expansion provisions. |
| 10:22 | Lyle: The key comment on salvaging the Medicaid expansion is this (from Roberts): “Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.” (p. 55) |
| 10:22 | Amy Howe: To be clear, what we are typing here are excerpts from the opinion or paraphrasing thereof. Not predictions anymore. |
Facial vs. Applied in the Supreme Court Health Care Reform Cases
In addressing the constitutionality of statutes, courts create and develop constitutional doctrine. Sometimes that doctrine works in a way that tests the constitutionality of a statutory provision in all of its applications, deciding either that it is unconstitutional “on its face,” so that it cannot be applied in any circumstances, or that it is constitutional in all of its applications. But frequently that doctrine instead tests the constitutionality of a statutory provision “as applied,” sorting between constitutional and unconstitutional applications of the statute, thereby allowing the statute to be applied to the extent it is constitutional, but only to that extent. The first approach calls for an all-or-nothing up-or-down decision; the second allows a statutory provision to be used in some, but not all, situations. The first approach raises the stakes; the second approach lowers them. The second approach also takes advantage of what courts are especially well-designed to do (and that legislatures are especially ill-equipped to do): focus on the particular – the particular applications of particular statutory provision in particular cases.
One of the issues lurking in the health care cases to be decided next week that has not received much press attention is which of these two ways the Court will address the constitutionality of the individual mandate. Everyone — including the parties — seems to seek and expect an up-or-down determination regarding the constitutional validity of the individual mandate. There are many reasons to think that the Supreme Court will oblige. Existing Commerce Clause doctrine dating back to at least Wickard (the wheat case) is shaped in a way that discourages as-applied challenges; prior successful challenges under the Commerce Clause such (Lopez, the Gun-Free School Zones case, and Morrison, the Violence Against Women case) have been facial challenges; and the as-applied challenge in Raich (the medical marijuana case) was soundly rejected.
In light of all this, odds are that the Supreme Court will either find the individual mandate constitutional on its face, following cases like Wickard and Raich, and foreclosing the possibility of as-applied challenges, or unconstitutional on its face, following cases like Lopez and Morrison, and foreclosing the possibility that it could be constitutionally applied in some instances.
But not necessarily. Judge Sutton, a Circuit Judge who was appointed by President Bush and had clerked for Justice Scalia, concluded that the right approach was to sort between the constitutional and unconstitutional applications of the individual mandate, not to declare that it is unconstitutional on its face and cannot be applied in any circumstance, and not to declare that it could be constitutionally applied in all circumstances. Because the Court is being asked to articulate a principle for the first time, it is freer to capitalize on its comparative competence, follow the path illuminated by Judge Sutton, and render a decision that lowers the stakes rather than raises them.
[Ed. Note: Professor Hartnett's paper on the subject, Facial and As-Applied Challenges to the Individual Mandate of the Patient Protection and the Affordable Care Act, originally published in the University of Richmond Law Review, can be found here, the abstract can be found here.]
What is left on the Court’s docket, and what it might mean for the ACA decision
[Ed. Note: This post originally appeared in the aca litigation blog, a highly informative and thoroughly useful site devoted to, well, the ACA Litigation. You can always find a latest post feed from the site featured over in our sidebar.]
This post is intended for those who do not follow the Court’s work closely, but are tuning in now largely because of the ACA decision. (For avid Court watchers, this stuff is terribly obvious, so I apologize.) My goal is just to briefly explain what work is left for the Court this Term, and how it might affect the timing of when HHS v. Florida (and Florida v. HHS and NFIB v. Sebelius) are handed down.
First, the numbers. Setting aside the ACA cases, the Court essentially has twelve other decisions to hand down. (I say essentially, because Miller v. Alabama and Jackson v. Hobbs are separate cases, though they raise the same basic Eighth Amendment question. Thus, they are sure to be decided together, whether in two opinions or one, and probably with the same majority opinion author.) Those are, in the order of argument:
1. First American Financial Corp. v. Edwards (argued November 28)
2. Williams v. Illinois (argued December 6)
3. Knox v. SEIU (argued January 10)
4. FCC v. Fox Television Stations (argued January 10)
5. United States v. Alvarez (argued February 22)
6. Southern Union Co. v. United States (argued March 19)
7. Miller v. Alabama and Jackson v. Hobbs (argued March 20)
8. Christopher v. SmithKine Beecham Corp. (argued April 16)
9. Dorsey v. United States (curvelined with Hill v. United States) (argued April 17)
10. Salazar v. Ramah Navajo Chapter (argued April 18)
11. Match-E-Be-Nash-She-Wish Band v. Patchak (curvelined with Salazar v. Patchak) (argued April 24)
12. Arizona v. United States (argued April 25)
The Court will hand down one or more opinions–almost certainly more than one–this coming Monday, June 18. The Court will then announce–probably on Monday, probably before noon–whether it will hand down any more opinions later next week. Of course, it will not announce which opinions, just whether it will hand any more down.
In recent Terms, the Court has handed down opinions on Wednesdays or Thursdays of both of the last two weeks of the Term, in addition to the regularly scheduled Mondays. And the Court has already announced that it will issue one or more opinions next Thursday, June 21.
Even so, given that the Court almost never issues more than four or five opinions on the same day, it seems exceedingly unlikely that the Court will hand down the ACA decisions next week–at least if we assume that they will be issued on the last day of the Term. And this seems a safe assumption given their contentiousness and potential complexity.
So putting these pieces together, the earliest date for the ACA decisions would seem to be Monday, June 25. And we will know a great deal more about how likely that date is by next Thursday. If the Court has handed down virtually all of the twelve opinions listed above by next Thursday, then June 25 would likely be the last day of the Term. But if the Court only hands down, say, five or six opinions next week, it will need at least two days the following week to hand down what remains. This would push the last day of the Term to Wednesday, June 27, or Thursday, June 28. And if we again assume the ACA decisions will come on the Term’s last day, they would be pushed to that date.
There is also one important wildcard. Scheduled for today’s conference was American Tradition Partnership v. Bullock, the Montana case that, in some sense, directly challenges the Court’s decision in Citizens United. It is almost certain the Court will do something significant here, something other than deny certiorari. If the Court simply grants cert (which we should know by Monday), then American Tradition Partnership will not add to the Court’s present workload. But if the Court is summarily reversing the Montana Supreme Court (which is what the petitioners seek), the Court will need to write an additional opinion, which will surely prompt at least one dissent, which will in turn prompt some substantial additions to the majority opinion. So if the Court decides to decide American Tradition Partnership on the merits right now, it could push the Court’s Term out further than we would otherwise project (based on the number of argued cases outstanding).
Of course, the Court can ultimately do whatever it wants in terms of the timing of its decisions. If for some reasons the Justices feel they need more time, nothing prevents them from taking a few more weeks. But the institutional norms surrounding these practices are fairly well entrenched, and have obviously produced a swarm of external expectations. At this point, breaking with those traditional practices–unless absolutely necessary–would bring down on the Court some extremely intense (and unwanted) speculation.
So there it is, in a nutshell. Plan your vacations accordingly.
(I omitted two cases in the original post. This version has been corrected.)
Why Defeating the Individual Mandate isn’t Much of a Victory for Individual Freedom
Dear Americans:
A recent poll by the Kaiser Family Foundation suggests that 51% of us believe the Affordable Care Act’s (ACA) minimum coverage requirement — its “individual mandate” — is unconstitutional. By my completely unscientific calculations, if about 41% of us like the ACA as a whole, then at least one in ten Americans likes our new reform law but believes the individual mandate to be unconstitutional.[1] This doesn’t count those who dislike the entire Act despite approving of its various features. In other words, there are a lot of us out there who agree with the ACA’s ends, but do not find them to constitutionally justify its means.
If this describes you, there’s something you should know about this lawsuit that’s been in the news lately. You can’t possibly win.
Yes, the Supreme Court may end up killing the mandate in an exciting 5-4 squeaker. But unless you passionately care about states’ rights in the purest, platonic sense, prepare to be deeply disappointed — win, lose, or draw.
My guess is that, if you support the plaintiffs in HHS v. Florida, you do so because you see the mandate as a threat to your personal freedom. Understandably, you don’t like the idea that your government can tell you to buy something you may not want. Health coverage itself is perfectly fine (a majority of the ACA’s detractors already have it), but coercion gives you the creeps. Me too.
Unfortunately, this lawsuit has little or nothing to do with our individual liberties. No iteration of the word “liberty” was mentioned in the March 27 oral arguments on the mandate’s constitutionality. Attorney for the private plaintiffs, Michael Carvin, mentioned “individual freedom” once, but only after he said this:
Well I don’t think the test of a law’s constitutionality is whether it more adheres to the libertarian principles of the Cato Institute or the statist principles of someone else. I think the test of a law’s constitutionality is not those policy questions; it’s whether or not the law is regulating things that negatively affect commerce or don’t.
To borrow from Bob Dylan, a favorite of mine and the Chief Justice’s, if you’re looking for someone to protect you and defend you, Carvin just said “It ain’t me, babe.” In a nutshell, his argument was this: Congress cannot regulate inactivity, and not buying health insurance is inactivity. Neither proposition is self-evident, but assume for a moment that the latter argument is true. What is at stake here?
Congress premised the individual mandate on its power to regulate commerce between the states, pursuant to Article I, Section 8 of the Constitution. This power is, in a word, tremendous. The Supreme Court, in a 2005 case about the personal growth of medical marijuana, put it like this:
First, Congress can regulate the channels of interstate commerce.
Second, Congress has authority to regulate and protect the instrumentalities of interstate commerce, and persons or things in interstate commerce.
Third, Congress has the power to regulate activities that substantially affect interstate commerce.
Carvin didn’t argue that health insurance does not substantially affect interstate commerce. That would be insane. Rather, he argued that although “free riders,” who don’t buy health insurance until they need it, do have a substantial effect on the cost of insurance, they simply haven’t done anything until they do it. And until they do, the federal government can’t touch them. But their state can.
Why? The 10th Amendment says those “powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Among these are your state’s “police powers,” which allow it to regulate your behavior in ways Washington can’t. If the plaintiffs here are fighting for any constitutional right at all, and not simply doing this to screw with the President, it is Florida’s right — not your own.[2]
I doubt this will satisfy you, as you probably care more for your own liberty than the exclusivity of your state’s right to violate it. But if the rest of the ACA is upheld (which remains a good bet) some states may do exactly that, and enact their own mandates to prevent free riders from jacking up already high premiums. As for Congress, although it would no longer be able to regulate interstate commerce with an individual mandate, it was never likely to do something so unpopular again anyway. Congress would, however, remain perfectly free to enact individual mandates under a number of its many other Article I powers. That was one of the first things Congress ever did, in fact.
There are other lawsuits out there which could actually help you, but these are premised on our Fifth Amendment rights. As Sixth Circuit Judge Sutton (Bush 43 appointee) has asked, “Why construe . . . this limitation — that citizens cannot be forced to buy insurance, vegetables, cars and so on — solely in a grant of power to Congress, as opposed to due process limitations on power with respect to all American legislative bodies?” But the plaintiff states have no stake in our liberties, and the private plaintiffs’ liberties have yet to be affected; focused on the fastest and easiest path to the ACA’s total destruction, both deemed the Bill of Rights “a loser” in this context.
This is what I mean when I say you can’t win. I write not to change your mind on any issue, but to warn you. We may disagree on the ACA’s mandate’s constitutionality, or even its necessity. But unlike many of this lawsuit’s political allies, who wax poetic on liberty despite having supported more draconian mandates 20 years ago, I’m willing to tell you what the Washington elite already knows:
You don’t have a dog in this fight, and the only prize is a bowl of kibble.
[1] A roughly equal number supports the ACA as a whole, but is not sure of the mandate’s constitutionality. The same poll found that only 12% of respondents would be angry if the Supreme Court killed the mandate provision.
[2] This is exactly why the Fourth Circuit dismissed a similar lawsuit brought by the state of Virginia: when a state challenges a law that only applies to individuals, its lack of a “personal stake” in the case means that it may misrepresent or even disserve the interests of the people who do.
Why Can’t We Analogize the Mandate?
Professor Nathan Cortez
Legal arguments often rely on analogies. Indeed, during the first year of law school, students learn to analogize and distinguish cases. “This case is like this one, not that one.” Good lawyers can always conjure up and deploy a good analogy.
So why was it so hard yesterday for some of the most skilled lawyers and judges in the country to identify a good analogy for the individual mandate– the Affordable Care Act’s requirement that almost everyone buy minimum essential health insurance coverage or pay a penalty?
After listening to Tuesday’s historic two-hour oral argument and reading the transcripts, I counted roughly 17 different analogies to the insurance mandate– none of which seem particularly apt.
Here’s a brief rundown of the analogies invoked yesterday (by both the justices and the advocates), and then some thoughts on why they fall flat:
1. Is mandating health insurance like mandating that people buy cell phones to call 911? (Chief Justice Roberts).
2. Is the mandate like a requirement that we buy insurance to pay for our own burial services? (A macabre Justice Alito, who’s right: we’re all going to die).
3. Is the mandate like forcing us to buy broccoli? (Justice Scalia, invoking the dreaded broccoli analogy, which is apparently one of the parade of horribles that logically flows from the health insurance mandate, a canard that David Orentlicher has exposed).
4. Is it like forcing us to buy cars? (Chief Justice Roberts and later, Justice Scalia, referring to the government’s reply brief, which tried to distinguish a federal mandate that we buy U.S. automobiles from the insurance mandate).
5. Is it like imposing a duty to rescue strangers in trouble, like a “blind man walking in front of a car”? (Justice Kennedy).
6. Is it like setting phone rates to require that some callers subsidize others? (Solicitor General Don Verrilli).
7. Is it like requiring everyone to join an exercise club? (Justice Scalia).
8. Is it like mandatory inoculation during a pandemic? (Justice Breyer, perhaps inspired by the movie Contagion).
9. Is it like forcing people to deposit all their money in the Bank of the United States? (Justice Breyer’s colloquy with Paul Clement, counsel for the state plaintiffs, invoking McCulloch v. Maryland).
10. Would it be like the federal government requiring us to buy car insurance if states didn’t already do so? (Justice Sotomayor, to whom Paul Clement responds that there are lots of people in Manhattan that don’t drive cars. True, but we all have bodies, which require regular tune-ups and sometimes major repairs).
11. Would it be like Congress forcing everyone to buy “a great new wonder drug”? (Paul Clement).
12. Is it like growing wheat (Wickard v. Fillburn), or weed (Raich), or carrying guns near schools (Lopez), or committing violence against women (Morrison)? Note that these are the four most direct Commerce Clause precedents, which get comparatively buried during oral argument, amid all the analogy-searching.
13. Is it like Congress requiring everyone to buy an electric car? (Paul Clement, who is hitting his stride by this point).
14. Is it like requiring us to buy anti-pollution devices or low-emission mufflers for our cars? (Justice Breyer, who is not).
15. Is it like requiring that everyone buy private mortgage insurance? (Michael Carvin, counsel for the private plaintiffs).
16. Is it like requiring some pesticides rather than others in food? (Justice Sotomayor).
17. Is the decision not to purchase health insurance like local manufacturing, which is regulated federally because some products might, eventually enter interstate commerce? (Justice Sotomayor).
Finally, near the end of two hours of oral argument, Justice Kennedy–the one everyone is watching–hints that health insurance simply may be unique (p. 103 of the transcript).
This last point is important. The reason we can’t analogize health care is because it is, indeed unique. Now, to be fair, the justices are trying to locate a limiting principle here. If the federal government can make us buy health insurance, is there anything it can’t do?
Unfortunately, the limitation here isn’t so much a principle as the unique nature of health care and health insurance. None of the analogies above do the health care market justice (or the health insurance market, which is a distinction without a difference that was probably overemphasized yesterday).
The United States spends $2.6 trillion per year on health care, which is probably far more than all the markets in the above analogies combined. Everyone consumes health care at some point. Health expenses are one of the biggest contributors to bankruptcy in the United States. Insurance is designed to account for the capricious risks that we all face with a stroke of bad health luck. The federal government heavily subsidizes care, and both public and private insurance subsidizes the uninsured. Federal laws like EMTALA aren’t to blame here–most doctors and hospitals would (and do) cross-subsidize care for the uninsured on their own, even without a federal law governing emergency care.
All of the analogies above fail in some obvious way. Indeed, you’d have to combine the salient features of all 17 analogies and create a Frankenstein analogy to approximate the scope, scale, and dynamics of the health care market. Health care is not a conventional good or service by any stretch of the imagination. Whether Justice Kennedy acts on the flicker of intuition that he revealed on this point will probably decide the case.
Day 2, The Individual Mandate: Justice Kennedy Swings Again
More than a few prognosticators have posited a 5-4 split (either way) after reading the tea leaves of oral argument before the Supreme Court on the Individual Mandate today. I don’t disagree. I won’t venture a guess, up or down, but I will say that it is likely, as usual, that Justice Kennedy (surprise, surprise) will be the swing vote. As such, you can find below three Justice Kennedy quotes that may be indicative of which way he’ll swing. (page numbers refer to the page number of the transcript, linked here.) And for those of you swallowed by sorrow at the prospect of the Individual Mandate going down in flames, pay particular attention to the last quote and Justice Kennedy’s consideration of “degrees” of uniqueness as a cabining principle. It is, I believe, as I heard a particularly astute health law professor say today, indicative that “Justice Kennedy is in play.”
JUSTICE KENNEDY–Could you help — help me with this. Assume for the moment — you may disagree. Assume for the moment that this is unprecedented, this is a step beyond what our cases have allowed, the affirmative duty to act to go into commerce. If that is so, do you not have a heavy burden of justification?
I understand that we must presume laws are constitutional, but, even so, 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? (p.11-12)
JUSTICE KENNEDY: But the reason, the reason this is concerning is because it requires the individual to do an affirmative act. In the law of torts, our tradition, our law has been that you don’t have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him, absent some relation between you. And there is some severe moral criticisms of that rule, but that’s generally the rule.
And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the Federal Government to the individual in a very fundamental way.
JUSTICE KENNEDY: And the government tells us that’s because the insurance market is unique. And in the next case, it’ll say the next market is unique. But I think it is true that if most questions in life are matters of degree, in the insurance and health care world, both markets — stipulate two markets — the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries.
That’s my concern in the case. (p. 104)
Photo credit, Daniel Schwen.
Supreme Court ACA Hearings, Day One
[Ed. Note: This post is from Professor Bradley Joondeph's aca litigation blog. It's as good of a quick analysis of the day's Supreme Court argument as you'll find. Below the post, you'll also find I've added the first paragraph and a link to Professor Joondeph's article in the latest issue of the University of Richmond Law Review, Beyond the Doctrine: Five Questions That Will Determine the ACA's Constitutional Fate. These five questions are worth considering, as is, I might add, the linked issue of the University of Richmond Law Review, dedicated to the ACA, "Everything but the Merits."]
A quick analysis of today’s argument
Nothing is certain merely from listening to oral argument at the Court. But it sure seemed as if a large majority of the justices (and perhaps all of them) thought the Court has jurisdiction in this case and can proceed to address the merits of whether the minimum essential coverage provision is within Congress’s enumerated powers. There were several different theories, and there seemed to be some sharp disagreement as to whether the AIA is jurisdictional in nature. But it also seemed that a majority of justices could agree on a narrower proposition, something along these lines: (1) statutes stripping the courts of jurisdiction are generally construed narrowly, meaning that Congress must make its intent clear; (2) the ACA–especially in specifically demarcating the exaction in 5000A(b) a “penalty”–did not make Congress’s intent for the AIA to apply clear; thus (3) even if the AIA is jurisdictional, it does not apply to the penalty imposed in 5000A(b). (Perhaps some justices might concur only in the judgment, finding that the Government can waive the AIA in certain circumstances, as it did in Davis.)
No doubt, the meaning of the AIA (and whether it is jurisdictional in nature) are somewhat important in their own rights. But in the broader scheme, what matters from today is that the Court is almost certain to get to the minimum coverage provision’s constitutional merits. That is the question for tomorrow–the biggest single day at the Court since December 2000.
___________________________________________________________________________
Beyond the Doctrine: Five Questions That Will Determine the ACA’s Constitutional Fate
Bradley W. Joondeph, Professor of Law, Santa Clara University School of Law
The litigation challenging the constitutionality of the Patient Protection and Affordable Care Act (-ACA‖ or -Act‖) raises a number of interesting and important questions of constitutional law. But in cases of this magnitude and political salience, the Supreme Court’s deliberations typically are shaped by forces that transcend the relevant doctrine. The Court’s response to the ACA is unlikely to be an exception. Specifically, the Justices’ reactions to five questions–all of which go beyond the doctrinal merits–will likely determine the Act’s fate: (1) whether this is the sort of case in which judicial review is necessary, or instead one that the elected branches are capable of solving on their own; (2) whether the states are separately incompetent to reform the nation’s health care financing system, such that invalidating the Act will leave a policy void (and whether the existence of such a void should matter); (3) whether Congress’s power to adopt a more radical, single-payer-type system for all Americans should inform whether Congress has the authority to adopt the more incremental ACA; (4) whether the Court can invalidate the ACA, especially with an ideologically predictable 5-4 split, without appearing overly partisan to the American public; and (5) how Chief Justice Roberts will perceive the impact of this case on his legacy-as an opportunity to reaffirm the singular importance of judicial restraint, or as an instance where the Court’s intervention is necessary to preserve foundational principles. Each of these considerations extends beyond the precise constitutional questions presented. But in a case such as this, it is the Justices’ reactions to these broader questions that tend to drive their doctrinal analysis, rather than the other way around. – UNIVERSITY OF RICHMOND LAW REVIEW [Vol. 46:763]
U.S. Supreme Court Health Reform Litigation, the Individual Mandate, Anti-Injunction Act, Commerce Clause and Even The Militia Act
Filed under: Health Law, Health Policy Community, Health Reform
We are literally only days away from the Supreme Court oral arguments in the ACA litigation (or the Health Reform case as it is popularly known) and as such, we thought it would be of some help to publish again some of our past posts on aspects of the law now being challenged. In addition to being published here at HRW, many of the pieces below found further life elsewhere, the Washington Post, NY Times, The Record, The Health Care Blog, Health Law Prof Blog, Concurring Opinions, the aca litigation blog, to name a few. Some originated elsewhere and found a home here. Either way, they’re here in one place for your enjoyment as we all hold our breaths and get ready to attempt to count robed votes by virtue of questions posed in the arguments to come.
Professor Mark Hall, Wake Forest University School of Law
Constitutional Mortality: Precedential Effects of Striking the Individual Mandate
Why the 11th Circuit’s Opinion on Health Care Reform Self-Destructs
Judge Vinson’s Tea Party Manifesto
Commerce Clause Challenges to Health Care Reform
From Justice Story: A Postal Power Parable on Mandating Health Insurance
What’s Surprising about the Virginia Ruling Striking the Individual Mandate?
Are The Attorneys General’s Constitutional Claims Bogus?
Is it Unconstitutional to Mandate Health Insurance?
Professor Frank Pasquale, Seton Hall Law
Professor Frank Pasquale featured in The Record on ‘A Constitutional Right to Health Care’
A Constitutional Right Not to be Bankrupted by Health Care Costs
Huq on Constitutional Challenges to HCR
Parsing “Populism” in Resistance to Reform
Professor Brad Joondeph, Santa Clara University School of Law
aca litigation blog (All the briefs, docs, lawyers, helpful updates, analysis, etc. in one easy place. Prof Joondeph and Brandon Douglass are to be commended for this splendid effort — yeomen’s work and finely done. The aca litigation blog is automatically fed into our sidebar and we were pleased to offer a few of Professor Joondeph’s posts in full here at HRW, and very much look forward to posting more. If you haven’t checked it out yet, you absolutely should.)
Clarifying the AIA question
The Anti-Injunction Act Complications
Professor Tim Greaney, St. Louis University School of Law
Health Reform, a Class Act
Bradley Latino, J.D.
The Individual Mandate, a Brief History – Part I, Conservative Origins
The Individual Mandate, a Brief History – Part II, The Republican Alternative (1993-1994)
The Original Individual Mandate, Circa 1792
Kate Greenwood, Research Fellow & Lecturer in Law, Seton Hall Law
Recommended Reading: Interesting Takes on the Individual Mandate
Michael Ricciardelli, J.D.
Judge Hudson, Bartleby the Scrivener and the “Tribeless, Lawless, Hearthless One”
Election Fallout and Why State Initiatives to Exempt Residents from Health Care Law are Not Just Symbolic
Missouri Votes Against Individual Mandate, May Impact Standing Argument in Federal Court
Judge Rules, Virginia Moves Forward Against Individual Mandate
Professor Frank Pasquale featured in The Record on ‘A Constitutional Right to Health Care’
Professor Frank Pasquale wrote a featured Op-ed in The Record, New Jersey’s most awarded newspaper, regarding a constitutional right to health care. Professor Pasquale, who is Associate Director of the Center for Health & Pharmaceutical Law & Policy and Editor in Chief of HRW, writes:
SHOULD the Supreme Court weigh in on America’s great health care debate? Yes. It should declare a constitutional right to health care.
This right is already enjoyed by prisoners. Law-abiding citizens deserve it, too.
The United Nations’ Universal Declaration of Human Rights states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including… medical care.”
Many advanced countries have adopted – and lived up to – similar commitments.
Of course, that’s not on the Supreme Court’s agenda. Instead, it will decide whether to cripple last year’s health reform, known as the Affordable Care Act, by declaring the individual mandate unconstitutional.
I understand objections to the mandate. Cash-strapped Americans don’t deserve one more drain on their resources. I’m also not a fan of making people buy health insurance from private insurers. They waste a lot of money, and are one reason why U.S. doctors’ administrative costs are a whopping 400 percent higher than those in Canada.
If I designed the ACA, I’d have given everyone a public option, modeled on Medicare.
But I didn’t write the bill, Congress did. In precedents going all the way back to the 1819 case of McCulloch v. Maryland (and affirmed as recently as 2010), the Supreme Court has deferred to Congress’s constitutional powers to solve national problems.
Politics
The court risks looking political if it abandons that approach now. It has already jettisoned once-venerable holdings on campaign finance, equal protection and antitrust.
Constitutional Mortality: Precedential Effects of Striking the Individual Mandate
Professor Mark Hall, Fred D. & Elizabeth L. Turnage Professor of Law, Wake Forest University School of Law
Because insurance is necessary for decent access to health care, credible studies estimate that eliminating the Affordable Care Act or its individual mandate could cause thousands of avoidable deaths a year. That is sobering, but far more chilling is the loss of life that might result from the constitutional precedent that a negative ACA ruling would set. If the challengers’ chief argument is accepted, it creates the frightening prospect that the federal government may be unable to respond effectively to a catastrophic public health emergency that threatens millions of lives, if effective response requires mandating citizen behaviors unconditioned on any engagement in commerce.
Credible scenarios for natural disasters and flu pandemics might require just such federal actions, in the form of mandatory vaccination, evacuation, screening, treatment, or even mundane sanitary measures — and the Commerce Clause is the only source for such power when military defense is not involved. State and local governments are the primary source of authority for such measures, but recent disasters and near-misses demonstrate the real possibility that their responses may prove inadequate. Thus, rather than fretting over what slippery-slope vegetables the government might force people to purchase if the mandate were upheld, courts should be much more concerned about the insurmountable barriers that a nullifying precedent would set for effective federal response to realistic catastrophes.
[Ed. Note: Professor Hall's paper may be found here]
Posts from Health Reform Watch have been cited by media sources throughout the country, including The New York Times, Washington Post, L.A. Times, Kaiser Health News, The Health Care Blog, NPR's Planet Money Blog, Duke Univ. Med. Center News, American Health Line Alerts, BusinessWeek.com, Concurring Opinions, Balkinization, The New England Journal of Medicine, Harvard's Nieman Foundation for Journalism, Las Vegas Sun, Maggie Mahar, Ezra Klein, Tom Geoghegan, and the official homepage of the Office of the Democratic Majority Leader of the House of Representatives, Steny Hoyer.
