The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Initial Response

Posted by Alan on June 28, 2012


It’s going to take some time to dive into the Supreme Court’s 5-4 decision on the constitutionality of provisions of the Patient Protection and Affordable Care Act. The opinion is now online for those who wish to wade through it. Here’s my initial take:

1. As noted in my first post today, the individual mandate isn’t much of a mandate, but the principle of a mandate could have brought down the entire health care reform package. It didn’t, but that doesn’t mean the individual mandate, as written, will have the impact supporters of the PPACA intend. The only thing that’s new today is that this provision of the law can now be described as a “tax.”

2. Chief Justice John Roberts makes clear that he believes an individual mandate would violate the Commerce Clause. However, because he interprets it as a tax, that observation is important, but doesn’t effect the outcome. The other four Justices in the majority (Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan), in a separate opinion, stated their belief an individual mandate is constitutional. However, in order to form a majority they’ve signed off on Chief Justice’s Robert’s interpretation. So while having four members of the Court interpret the Commerce Clause this way is significant to legal scholars and could impact the future, for now it’s immaterial.

3. The four Justices dissenting from the majority opinion (Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito) would have found the entire PPACA unconstitutional. Chief Justice Roberts often sides with this group of colleagues. He made history by parting ways with his more conservative colleagues. Justices might have lifetime tenure on the Court, but it still took courage for the Chief Justice to make this decision.

4. Politically, this decision is a two-edged sword for both presidential candidates. The Administration’s key domestic accomplishment has been upheld. The Administration can now move forward to implement the health care reform package without the cloud of court decisions making their work meaningless. But the President’s key domestic accomplishment is also one of his greatest liabilities in the upcoming election. The PPACA remains unpopular. Many Americans (including four Supreme Court Justices) believes it’s an unwarranted expansion of federal power at the expense of personal liberty. This decision will only flame the passions of those who take this view, meaning they’ll be going to the polls in November with one goal in mind: elect a President and Congress that will repeal the PPACA. Will supporters of the bill be as motivated and engaged? Not likely.

5. Just because the PPACA is constitutional does not mean we’ve seen the final version of the law. Congress will amend health care reform. Agencies (both federal and state) will interpret it. The PPACA is complicated and open to significant interpretation. The upcoming election will determine how much the law will change, not that it will be changing.

6. The PPACA accomplishes a lot of good things: increases access to coverage, provides some useful and meaningful consumer protections, takes the first steps needed to begin constraining health care costs, and more. The PPACA also botches a lot of important things: it will not make coverage more affordable, it doesn’t go far enough to constrain escalating health care costs, and more. Lawmakers owe it to their constituents to revisit the law and make some substantial changes. This doesn’t mean Democrats have to follow the GOP’s demand to repeal the law nor does it mean Republicans have to cave to the administration. But both sides need to recognize that the PPACA is the law of the land. Barring a GOP super-majority in the Senate come 2013, the PPACA is not going away. So responsible leaders will try to make it the best law possible.

7. The Court majority made clear an individual mandate is not justified by the Commerce Clause or the Necessary and Proper Clauses of the Constitution. This will have an impact on other social welfare efforts Congress might consider. Needing to fund expansion of the safety net through taxes is a tough political and practical challenge.

8. However, there were four votes to uphold the PPACA under the Commerce Clause. Which underscores the importance of this November election. Presidents appoint Supreme Court Justices. All of the Justices four of the Justices upholding the law under the Commerce Clause were appointed by Democrats. All four of the Justices voting seeking to overturn the law were appointed by Republicans. The Chief Justice shows that not every appointment votes in the way one would expect based on the party of their appointing President. And two of the liberal Justices joined with conservatives and agreed that the Medicaid expansion included in the PPACA was unconstitutional. But the fact is, the appointments of Republican Presidents tend to be more conservative; those appointed by Democrats tend to be more liberal. At least one, and maybe more, vacancies will open on the Supreme Court in the next four years. Who is President matters.

9. The Supreme’s decision on the Medicaid provision of the health care reform law will be interesting. In essence, a 7-2 majority said the law went too far in threatening to withhold Medicaid funding to states who refuse to expand Medicaid eligibility to those at up to 133% of the federal poverty level. They ruled the federal government can withhold the additional funding promised in the PPACA to pay for this expansion, but they can’t take all Medicaid funding away from non-participating states. Put another way: states have the ability to opt out of the Medicaid expansion. Given the importance of this expansion to reduce the uninsured, this is an issue President Obama and his allies in Congress will need to address. As noted above, the health care reform debate is far from over.

10. While watching the news about the decision, an ad by Concerned Women for America with a vicious (and somewhat inaccurate) attack on the PPACA aired on CNN. The upcoming election will be about the economy, but health care reform will be a major factor as well.

7. People who predict what the Supreme Court is going to do and how they are going to do it are making wild guesses. Pundits take another blow.

So, I don’t pretend to have any special insight on the meaning of the Court’s decision today. But my mother misses these posts so I thought I’d return to the keyboard again. I’ll try to write a more thoughtful piece later today or in the next few days. In the meantime, please let me know your thoughts on all this.

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12 Responses to “Initial Response”

  1. The health insurance exchange has said that agents will most definitely have a big role in the exchange and will get compensated in the same way the major carriers do already. The only thing we do not know for sure is how much?

  2. Only hopes though that these reform would extend to the end of scope it promised before a new administration takes over.

  3. Leon Morehead said

    Alan, I was told because this is now considered a Tax , this cannot be fillibustered in the Senate and all you need is 51 votes to repeal it not a majority.

    Please your thoughts?

    Leon Morehead

    • Alan said

      Hello Leon. Good to hear from you. As I understand it, a reconciliation bill can be used to change taxes and that only requires 51 votes in the Senate. In fact, that’s how the PPACA was ultimately passed (at least in part). However, reconciliation bills can’t address every issue, just budget-related. So the Senate could use this process to do away with the tax, but it’s not clear they could use the same bill to do away with the guarantee issue provision.

      At least that’s my recollection of how reconcilation works. If anyone has more information, please feel free to share.

  4. John Gaglione said

    Alan, this is the most cogent analysis of the SCOTUS decision I’ve seen since it was released. I appreciate the lack of rhetoric. Excellent job! This will help me communicate with my clients and others on this issue. Your central point seems to be that PAPACA is pretty much here to stay so let’s make it the best that we can. Unfortunately there is still so much uncertainty about how it will be implemented and its impact on healthcare, premiums and the delivery vehicle of financing healthcare that many individuals and businesses will remain in a state of atrophy. I think that next to problems with capitalization uncertainty is the chief enemy of business. Regardless of if someone agrees or disagrees with SCOTUS at least the court decision is out of the way. But we still don’t have a clear picture on the final outcome. The courts can only say if the law is constitutional, they cannot say if it’s a good law.

  5. David Critzer said

    Alan,

    I am no legal expert but I have observed that litgation can continue when one party does not agree with a court’s decision. I understand the “logic” of the SCOTUS view that the mandate is a “tax”. However, since the Obama administration tried fervently to avoid having it seen as a tax, and since the opponents of PPACA alluded in oral argument to the idea that the structure of the mandate was in some way defective under tax law if the mandate were to be viewed as a tax, I am wondering if some organization fervently opposed to today’s ruling could/will take that issue (that if a “tax” it is defectively structured under tax code) to tax court to continue the fight?

    • Alan said

      Good question David. This being America anyone can bring any suit. Given that the Supreme Court has determined it is a tax, however, it’s unlikely a court would view the kind of suit you describe kindly. Doesn’t mean such a suit couldn’t come forward, but if it was brought, it would be unlikely to get far.

  6. Erica said

    Good to see you back. Always appreciate your intelligent analysis.

  7. Jim Diani said

    Alan I agree with your Mom, and thanks for putting things in perspective. See you in Las Vegas…

    Jim

  8. Rob Poli said

    Alan,

    You have been an inspiration and a mentor to me. Be it from afar, I have always thought the world of you and your opinions and your latest reaffirms my feelings. Thank you for your insightful opinions. I just hope that things will change and that we can still work in a marketplace where the consumers are going to need more help than ever.

    Best,

    Rob

    • Alan said

      Thanks for the kind words, Rob. And, for what it’s worth, I’ve never thought the PPACA would do away with brokers for the very reason you mention: the need for expert and independent advisors and advocates is increasing under health care reform.

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