SUPREME COURT UPHOLDS CONSTITUTIONALITY OF OBAMACARE – Chief Justice Roberts: “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 a tax on those without health insurance.”
The only non-surprise was the closeness of the decision, a classic 5-4 vote. Everything else stuns, especially the critical component of the decision. The Court upheld the individual mandate – the clause that obligates every American to purchase medical insurance or pay a penalty – but not on the grounds that Congress is within its powers of regulating commerce. That notion was specifically and properly rejected, as the Commerce Clause does not permit Congress to “compel citizens to act as the Government would have them act.”
Rather, the Court ruled that the individual mandate can be construed as a tax, which is within the power of Congress to levy. In effect, people who choose not to carry medical insurance will be forced to pay a tax (something less than $1000 per year for most people, technically about 2.5% of household income). The problems with this approach are numerous, not least that the Obama administration and the Democrats in Congress effectively pulled a classic “bait and switch” on the public. Obamacare advocates were outspoken during the “health coverage” debate, while the bill is pending, that the individual mandate was not a tax. Obama himself publicly disclaimed that it was a tax. They said repeatedly it was not a tax, but a penalty.
As I noted earlier, several columns back: “It is interesting that Congress could have chosen to raise taxes to fund a universal health program – but that was politically unpalatable. So the Dems chose the underhanded approach of asserting that the fee Americans must pay for failure to procure insurance a fine, not a tax, but, curiously, a fine to be collected by the IRS.” It was only before the Supreme Court, during oral argument, when the administration (in the guise of the Solicitor-General) sought to characterize the individual mandate as a tax, in case the Commerce Clause argument fell.
That the Supremes now become a party to this subterfuge is reprehensible. The American people were bamboozled.
There is more to the decision that troubles thinking people. CJ Roberts in his opinion duly noted that the Court was not commenting on the wisdom of the law, only its legality. Since the balance of the law was declared constitutional, one part that remains is the obligation on private insurance companies to cover pre-existing conditions – and not to penalize people with those conditions. But what is to prevent anyone from not buying insurance, paying the small fine (pardon me, “tax,” which is much less than the cost of health insurance), gambling that he will not consume $10-25,000 of health services in any particular year, and if he suddenly needs medical insurance because of an unexpected illness or injury? Just go out and then buy insurance coverage, which cannot be denied because of your now pre-existing condition – the illness or injury. So, too, Congress mandated that insurance companies cannot charge higher premiums to those with pre-existing conditions. Sensible employers similarly will cut off employee coverage, pay the fine (i.e., tax) and let employees fend for themselves.
The net effect will be the mass removal of consumers from the insurance market, and a concomitant and drastic increase in premiums for the remainder. Perhaps the Court could have addressed the “wisdom,” at least in passing. Certainly, CJ Roberts surprised, acquiescing to the “bait and switch” and upholding the law in conjunction with the four liberals on the Court. But, as he wrote, “we do not consider whether the Act embodies sound policies.”
Roberts bought the Government’s argument in the alternative: “Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product,” even though “the most straightforward reading of the mandate is that it commands individuals to purchase insurance.” Nonetheless, five justices decided it was a “tax,” but curiously, under the statute, a tax whose failure to pay mandates no criminal prosecution (because Congress averred that it was not a tax!). At least now we understand why the IRS was to collect this penalty.
But how are insurance companies or the medical industry helped in their obligation to provide coverage for everybody if the “tax” levied goes right to the government? Not everyone who doesn’t carry insurance is Medicaid eligible. The government coffers are thereby burgeoned at the expense of those who are actually providing the services.
As the dissent pointed out, Obamacare will necessitate that insurance companies increase their premiums in order to survive – but as its premiums are already inflated, it is likely to price itself out of the reach of the average citizen. (The analogy would be to government mandates that automobile companies sell only electric cars that are better for the environment. But the cost of those cars is today prohibitive – even considering the government subsidies one receives to buy them – and if made a universal requirement would simply drive people away from buying cars.) Thus, whether the mandate taxes or penalizes, governments’ heavy hand intrudes on private conduct that undermines the proper relationship of government and governed.
The issue of penalty v. tax is more than semantics. It goes to the heart of congressional intent in the legislation itself. While Congress has the “power” to tax, the question here is whether it used that power in this legislation. By its own admission, it did not – so how could the Court construe it as such ? The dissent: “In a few cases, this Court has held that a “tax” imposed upon private conduct was so onerous as to be in effect a penalty. But we have never held—never—that a penalty imposed for violation of the law was so trivial as to be in effect a tax.” Almost by definition, a “tax” is never an exaction for unlawful activity but a predictable source of revenue for traditional activity. An exaction for “unlawful activity” – such as failure to buy health insurance – is by definition a “penalty.” Except by the Supreme Court’s awkward and contrived definition.
And the dissenters are clear keen to the politics: “For all these reasons, to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it. Taxes have never been popular. .and in part for that reason, the Constitution requires tax increases to originate in the House of Representatives. That is to say, they must originate in the legislative body most accountable to the people, where legislators must weigh the need for the tax against the terrible price they might pay at their next election, which is never more than two years off. “
Here, the Court gave that feckless Congress a pass, even with the vengeance enacted upon the legislators in the 2010 elections.
“The Court regards its strained statutory interpretation as judicial modesty. It is not. It amounts instead to a vast judicial overreaching. It creates a debilitated, inoperable version of health-care regulation that Congress did not enact and the public does not expect. It makes enactment of sensible health-care regulation more difficult, since Congress cannot start afresh but must take as its point of departure a jumble of now senseless provisions, provisions that certain interests favored under the Court’s new design will struggle to retain.”
In retrospect, Nancy Pelosi was right. She said during the debate that “we have to pass the law to know what is in it.” Even she didn’t realize how correct she was. It took the Supreme Court to expose the tax increase that is at the heart of Obamacare that, along with diminished coverage and increased costs for all, will be its legacy until it is repealed.
Now is the time to hold Obama and the Democrats accountable for this outrage. The President will undoubtedly trumpet the mandate’s constitutionality, but completely ignore that his theory of constitutionality was explicitly rebuffed. And Congress’ public standing should further decrease, although at 10% approval, it doesn’t have that far to fall.
This will be a net loss for Obama politically. Obamacare’s unpopularity will skyrocket as the terms “Obamacare” and “tax” begin to merge in the public mind. It would be fitting if this convoluted and strained decision, a temporary victory, advances and assures his defeat.