THCB contributor and Cato Institute Director of Health Policy Studies Michael Cannon on the severability clause, which looms large after Tuesday’s Supreme Court hearing.
Health Care Jujitsu
Not surprisingly, yesterday’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.
Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an unconstitutional extension of federal authority, the entire law starts unraveling.
But with a bit of political jujitsu, the president could turn any such defeat into a victory for a single-payer healthcare system — Medicare for all.
Here’s how.
The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit or at least pay all their costs including marketing and advertising.
The Broccoli Mandate
If you’ve been paying attention to the debate over the constitutionality of the health reform law, you’ve probably heard mention of the hypothetical “broccoli mandate.”
The question, if the federal government can make everyone buy health insurance at a particular coverage level and type, can it make everyone buy anything?
For example, could the federal government require everyone to buy a certain amount of broccoli every year, and assess penalties for a failure to do so? After all, like health insurance, broccoli has the potential to improve health, thereby reducing health care spending and perhaps enhancing economic productivity of the workforce. If the argument works for health care, why not for broccoli?
More to the point: What about the real “broccoli mandate” that the administration is already enforcing?
The idea of a broccoli mandate is a whimsical way of making a serious point.
Both as originally written and subsequently amended, the Constitution is structured under the assumption of limited government – the idea that the federal government’s power is limited to those powers specifically designated as such. Anything else a government might do is either given to the states (for example, highway patrol) or prohibited to government entirely (for example, infringing freedom of speech). The point made by raising the prospect of a “broccoli mandate” is to point out that a few of the powers granted to Congress – such as the regulation of interstate commerce – have been interpreted so broadly over the last several decades that the very idea of limited government has been called into question.
What the Supreme Court (and You) Won’t Hear About Health Reform
Pay attention when the pundits and legal poohbahs start prattling about the “severability” of the individual mandate provision that’s the focus of the much-anticipated Supreme Court hearings on the constitutionality of health reform. What the partisan obloquy about “Obamacare” too often obscures is that the Patient Protection and Affordable Care Act is mostly about patient protection and affordable care.
Case in point: the law’s landmark provisions regarding “patient-centeredness.”
Is anyone against patient-centeredness? Those elitists at the Institute of Medicine, drawing on work by suspect Massachusetts liberals at the Picker Institute, defined patient-centeredness back in 2001 (when George W. Bush was president) this way: “Care that is respectful of and responsive to individual patient preferences, needs, and values and ensuring that patient values guide all clinical decisions.” The IOM also made patient-centeredness one of six aims for U.S. health care.
Wait. Couldn’t Ron Paul and the Libertarians endorse that same individual-centric definition, which also has roots in religious teachings? (Hey, the original Tea Party was in Boston.)
If you’re a free-market conservative, patient-centeredness fits the concept of health care as a marketplace filled with consumers and providers. Interestingly, as early as 1974, under another Republican president, those IOM elitists endorsed publishing outcomes measures “so consumers can be informed of the relative effectiveness of various health providers and make their choices accordingly.”
What About the Employer Mandate? Companies Watching Supreme Court Case
Next week the U.S. Supreme Court will hear 6-1/2 hours of oral arguments concerning the challenges to the Patient Protection and Affordable Care Act (PPACA). This is the most time the high Court has devoted to oral arguments since the 1966 challenge to the Voting Rights Act. Virtually all attention has been on the central question – whether Congress exceeded its Constitutional authority by requiring virtually all Americans to obtain health coverage. Yet, that is only one of four questions the Court will consider. The other three have received scant attention. And the answer to one of them could have far-ranging consequences for millions of Americans whose coverage is provided by their employers.
The threshold question is a procedural one: whether it is premature for the Court to even consider the case since the PPACA tax/penalty for not obtaining health coverage will not be imposed until 2015, when Americans who fail to obtain coverage in the previous year file their income tax returns. Another question invokes the Constitution’s “Spending Clause” to determine if the Federal funds available to pay for PPACA’s expansion of Medicaid impermissibly coerces – rather than just encourages – the States to comply with the Medicaid provisions. Unexpected decisions on either of these two questions are “wild cards” that could leave the viability of the law in doubt.
The question receiving greatest media scrutiny is whether the Constitution’s “Commerce Clause,” from which Congress derives authority to regulate interstate activity, allows the federal government to require Americans to purchase health coverage. In essence, is declining to obtain health insurance (even though one will still presumably obtain health services) “activity” or “inactivity?”
Rejecting Affordable Care Act Is Rejecting Constitution
Next week, while the Republicans continue their search for a candidate to stand against President Obama in the fall election, the president’s central legislative triumph – the Patient Protection and Affordable Care Act of 2010 – will come before the Supreme Court. The justices have the power to declare the law unconstitutional and thereby kill “Obamacare” before it even leaves the birthing chamber. While some believe that such an outcome would be proper, we disagree. A court decision overturning the Affordable Care Act would be an egregious misreading of the Constitution.
The critics’ central constitutional claim is that the 2010 law’s individual-mandate provision exceeds Congress’ regulatory authority. In essence, this provision requires a broad swath of Americans to procure health insurance conforming to certain federal standards. Those who do not procure this insurance must generally pay a “penalty” to the IRS.
Had the bill explicitly used the word “tax” instead of “penalty,” the fatal flaw of the constitutional challenge would be obvious to all. The Constitution undeniably gives Congress sweeping power to tax. And if Congress can tax a person, and then use that tax money to buy a health-care package for that person’s benefit, why can’t it simply direct the person to procure the package himself, or else pay a higher tax?
Of course, tax is a word that lawmakers try to avoid at all costs, and so the euphemistic penalty won the day. Yet, as Shakespeare reminds us, “a rose by any other name would smell as sweet.” Here, penalty and tax are simply two ways of saying the same thing.
Indeed, the Constitution itself does not always use the T-word when referring to taxes, broadly defined. It also uses the words excises, duties, and imposts in the opening sentence of Article I, Section 8, and elsewhere refers generally to all generic “Bills for raising Revenue.” The important thing here is not the term, but how the actual instrument functions, and clearly Obamacare functions as a tax – as a revenue measure. In perfect synch with the Constitution’s key word, revenue, the penalty section of Obamacare is in fact codified in title 26 – the Internal Revenue Code. The “penalty” is paid to the IRS via forms administered by that very same IRS.
If Mandate Is Defeated, Obama Will Need Help From Allies to Salvage Health Law
When Barack Obama ran for president in 2008, he insisted the nation could fix its health care system without requiring everyone to carry insurance. As the Supreme Court prepares to weigh in on the health law, Obama is facing the possibility that he may have to make good on his campaign claim.
Experts consider the requirement to hold insurance, known as the individual mandate, to be the most legally vulnerable part of the law.
The administration argues that the law’s main goal of providing health coverage to 30 million additional Americans could not be achieved without the mandate because too many healthy people would refuse to obtain insurance, leaving primarily sick people in the insurance pools and driving up premium costs. Obama came around to this viewpoint after he was elected.
There are ways that Obama—if he’s re-elected — might be able to salvage the law even if the court strikes down the individual mandate but leaves the rest intact, health policy experts say.
These fixes would create financial incentives for people to not delay enrolling in insurance.
One such approach would be similar to what happens in Medicare’s Part B program, where people who wait too long to sign up for physician coverage must pay higher premiums.
Defending the Affordable Care Act
What will they do? The Supreme Court (more or less) that gave us Bush v Gore in 2000 will later this month hear arguments by states challenging the Affordable Care Act, a.k.a. health care reform. The heart of the legal challenge raised by conservative state attorneys general is whether the individual mandate is constitutional. What happens if the Supremes say no? Does the entire law fall, or just the mandate?
The issue for lawyers is called “severability.” Did Congress when passing the law believe the mandate was necessary to the smooth functioning of the rest of the law? Clearly there are large swaths of the law for which the mandate is largely irrelevant: the physician payments sunshine act (disclosure of drug company payments to doctors); the creation of the Patient Centered Outcomes Research Institute to conduct comparative effectiveness research; the numerous payment pilot projects; and more.
But on the core question of the law’s desire to expand coverage for the uninsured and set minimum insurance standards like forcing insurance companies to guarantee policies to all comers at non-discriminatory rates, the issue of the mandate’s necessity becomes murkier. The Obama administration is simultaneously arguing that it is crucial to the law’s smooth functioning, yet isn’t necessary. How can both be true? Here’s how two physicians, Samuel Y. Sessions and Allan S. Detsky, writing in the New England Journal of Medicine explain the seeming contradiction:
Arguing that the mandate is constitutional under the Commerce Clause requires taking the position that it is “essential” to the statutory scheme, whereas arguing that it is severable dictates the seemingly opposite position that the ACA is “capable of functioning without it.” Politically, making both arguments may be awkward, which may be one reason why the administration endorses partial severability. Legally, however, the positions are consistent: the mandate may be an important part of the statutory scheme, and thus constitutional, but not absolutely vital, and hence completely severable.
Not Such a Bitter Pill
Whenever I think about health care reform, I am reminded of the song from the film Marry Poppins that goes “Just a spoonful of sugar helps the medicine go down.” You would think from the way Conservatives are always blathering on about the moral fiber of America breaking down because no one takes responsibility for their actions anymore, they could use a spoon full of fiber rather than sugar. They warn about the dangers of the “nanny state,” and “socialist ideas,” and deride progressives for “being enemies of success.” At the end of the day, so the conservatives say, it’s a matter of personal responsibility and personal choice.
You know what? I couldn’t agree more. It really comes down to the choice between a thick glass of Metamucil or a smooth glass of sweet tea. Which would you prefer?
Having everyone take responsibility for their own health care started as a Republican idea. And by and large, Americans agree. But a new poll out this week showed many Americans still have a long way to go in understanding what the new healthcare actually does, particularly on the “individual mandate” portion and in the face of continued right-wing attacks on health reform.
Simply stated, the new health care law makes sure everyone takes charge of their own care and gets affordable insurance, because when people without it get sick, the costs get passed down to the rest of us. For health insurance to work, it’s necessary to include people who are healthy to help pay for those are sick. Under the ACA, you can keep the coverage you have. Or, if you don’t like your plan, or don’t have one, you can pick an affordable insurance option to take personal responsibility for yourself and your family.
Dismantling the Affordable Care Act
I have no idea which way the Supreme Court will rule this year on the Affordable Care Act. Let me go out on a limb and predict a 5-4 vote on the question of whether the individual mandate is Constitutional. Just don’t ask me which way the vote goes.
I found the recent Obama administration brief submitted to the Court on the mandate question somewhat ironic. Not surprisingly, the Obama Justice Department argued that a finding by the Court that the individual mandate is unconstitutional should not jeopardize the vast majority of the new health law.
But the Obama Justice Department did concede that there are two provisions of the Affordable Care Act that should also be declared invalid if the Court rules the individual mandate is unconstitutional—the health insurance guaranteed issue and community rating provisions.
Now, I know there are lots of other people, many of them filing briefs with the Court, that disagree arguing that the whole law needs to be found invalid because the mandate is the lynchpin for all of it. But I will suggest it is significant that the administration would appear to be building a firewall for the rest of the law as they concede these points.
But consider this potential scenario.
