The ruling upholding most of Obamacare was an as-yet-unappreciated boon for the GOP. A brilliant move by Roberts, he managed to preserve the remaining integrity of the court — and raise his own stature — while at the same time increasing the odds of a Romney win. How? By recasting the mandate as that third-rail of politics, a tax. Let’s dissect both these statements.
First, how can we be sure it wasn’t a major victory for Obama, pundits notwithstanding? There is a “market” in presidential election predictions, www.intrade.com. One may place bets on candidates and while, like the stock market, it is wrong sometimes, the “price” of each candidate does react to events. So, for instance, Rick Perry’s price fell 75% within seconds of his forgetting the name of the third cabinet department he was going to eliminate. And yet, a full day after Obama’s “victory” the “price” his re-election chances still has not budged. It bumped briefly and has since fallen back to the same $5.40 (to win $10 if he wins—a 54% probability) that it’s been hovering at for weeks.
Second, was Roberts accurate, or just politically astute, in re-casting the mandate as a tax? Answer: The latter.
By THCB STAFF
Defying predictions that the Obama administration would suffer a landmark political defeat, the US Supreme Court upheld the Affordable Care Act this morning. The implications for healthcare for the 2012 election are obviously nothing less than staggering.
What will the landmark legislation mean for the healthcare industry? For heath IT companies? For hospitals and health insurers?
We’ll be posting reactions from THCB analysts over the course of the day and in the days to come. In the meantime, if you have an opinion on the ruling, post your comments in the thread below.
If you can’t wait, you can download the ruling here in pdf format.
The Supreme Court has upheld the Affordable Care Act (ACA), a frustrating situation in which conservatives won the policy battle, but lost the war over the Act. In particular, the Court held that Congress cannot use the Commerce clause to compel commerce. The individual mandate qua mandate is unconstitutional. However, the Congress has the right to impose taxes (if not punitive and excessive), which permits the Obama administration to add a tax on millions of uninsured Americans in addition to the ACA’s already-massive tax burden on the middle class.
The Court ruled that a Medicaid expansion could be an unconstitutional federal coercion of the states, but this expansion does not have a penalty large enough to pass that threshold. Interestingly, the Court opened up the possibility that governors could refuse the Medicaid expansion. Those same individuals would then be eligible for subsidies in the exchanges. If all the governors refused the expansion, and if individuals take up subsidized insurance the federal cost heads even farther north.
In a bit of a pyrrhic victory, the Forum’s amicus briefs, signed by over 200 economists, were cited twice in the Court’s dissenting opinion. (See my amicus brief.)
The field of play now shifts from a legal battle to a policy debate. In addition to the Court’s endorsement of the policy foundations of the challenge to the ACA, the fundamental policy flaws remain.
The ACA remains a damaging, anti-growth vehicle for taxation. The so-called Medicare surtax increases marginal tax rates on the return to saving, investment, and innovation. The medical device tax will hurt innovation and cost jobs. A bill to repeal it is gathering dust in the Senate. Also, the insurers fee – the “premium tax” – will roil insurance markets, disrupt patient-provider relationships, and the vast majority of the burden will fall on the middle class.
The Supreme Court’s decision upholding the ACA is deliciously ironic. The “individual mandate”–an idea promoted for everyone in the 90s and for Massachusettians (?) in the 2000s by the arm of the Republican party known as the Heritage Foundation–was found to be legal. But not as a mandate, instead as a tax.
Put aside for a minute the dreadful political contortions required to get this quasi-universal health insurance bill past Congress in the first place. Put aside the fact that the supposedly non-political Supreme Court hands down decisions time after time that are a pure reflection of the exceedingly public extreme political views of its justices. Put aside for a minute the fact that the ACA has undeniably kickstarted a round of changes in the health care delivery and insurance system that at least has the potential to lower costs and improve care, and that the luncay of politics meant we nearly lost that momentum.
Instead focus on what the Supremes have done. They’ve cut through decades of rhetoric about how we pay for health insurance and clarified it thus: we pay for health care via taxes–whether they are private taxes on employers and employees (and now individuals) or public ones on citizens.
As the U.S. Supreme Court deliberates the Obama healthcare law, the court itself is on trial.
Obamacare supporters are attacking the justices as “hacks dressed up in black robes,” calling for limits on their life tenure, and claiming judicial review is undemocratic.
Worse, President Obama and his Secretary of Health and Human Services Kathleen Sebelius are shoveling money into implementing the law as fast as possible and refuse to discuss an alternative. That’s irresponsible. What’s needed now is not court bashing but contingency planning.
The Obama administration and allies in Congress have nine weeks to plan how to pick up the pieces on a vast array of health insurance issues. It’s the President’s duty to have a plan. It will signal his respect for the nation’s system of checks and balances — something he has utterly failed to show.
Three recent developments have highlighted how difficult it is to predict when and if disruptive technologies will transform clinical medicine in the United States. That we are undergoing an avalanche of new information and new technology is hardly newsworthy. From the dawn of civilization to 2003, human beings created 1 billion gigabytes of new information. In 2012, Google says they catalog 2 billion gigabytes of information every two days.
One of the confounding factors on how this new knowledge and technology is adopted by an industry like health care is the law. Henry Perritt, Jr. describes two ways to think about the relationship between the law and technology. Technological change is “a major source of human problems that the law must address.” The law also always lags technology because the common law tradition requires “that the legal system should not predetermine the course of technological application and product development.” http://jolt.law.harvard.edu/articles/pdf/v10/10HarvJLTech689.pdf
The first example of this concept of the law lagging technology involves American citizen Ellie Lavi who underwent in vitro fertilization and the subsequent birth of twins in Israel. When she went to the American Embassy, she was told that her children would not be American citizens unless she could prove that either the egg or sperm used in her case came from an American citizen. “The problem is that the law hasn’t kept up with the advances in reproductive technology,” states Lawyer Melissa Brissman. http://www.usatoday.com/news/world/story/2012-03-19/in-vitro-citizenship/53656616/1
Florida and more than half of the states in the nation have challenged the federal government’s Affordable Care Act because it deprives Americans of their individual liberty and violates the United States Constitution. The U.S. Supreme Court will decide whether to enforce constitutional limitations on federal authority — or, conversely, whether to allow the federal government to dominate states and individuals to the point of dictating day-to-day decisions.
The court should reaffirm the basic constitutional bargain struck among the states that makes our federal government one of limited, enumerated powers.
The act’s chief problem is its individual mandate, which requires virtually everyone to obtain health insurance coverage simply as a condition of living in America. Forced conscription into a commercial market is a startling new exercise of federal power that Congress has never before attempted.
The individual mandate’s stated goal is to lower insurance costs by forcing “healthy individuals” to buy expensive policies that they do not want or need so that insurers can charge less to others. Congress’s central planning on both the supply and demand side of the insurance market exceeds its constitutional authority because the bare power to “regulate” commerce does not include the power to force Americans into commerce. If it did, there would be no end to Congress “fixing” markets with the wallets of ordinary citizens. Congress could require Americans to obtain unwanted loans to bail out failing banks, to purchase a car to reinvigorate struggling carmakers or to buy solar panels to resuscitate failed Solyndra-like investments.Continue reading…
Those challenging the ACA in court profess deep concern about government forcing citizens to buy insurance or pay a fine. The fundamental harm here is monetary; it’s about being required to purchase insurance, not to use it (or to get any medical care at all).
If the Court agrees with them, why can’t there be a parallel monetary right not to be bankrupted by health care costs? In the 1973 case San Antonio School District v. Rodriguez, the Supreme Court decided, by a 5-4 vote, that children did not have a constitutional right to education. But at that time, at least four justices thought the state was obliged to make a decent education available to all. Why can’t a future Court do the same for health care?
If the current Supreme Court were to declare the ACA unconstitutional, it would need to abandon several landmark precedents. That’s not a problem for the Roberts Court; it’s already jettisoned once-venerable holdings on campaign finance, equal protection, antitrust, and voting rights.
For many Americans in these tough economic times, rights to education, housing, health care, and food are a lot more meaningful than the right to be free of an insurance mandate. We the people can locate these ideals in a Constitution and a Declaration of Independence rich with grand and sweeping language. If the ACA’s opponents can use our nation’s founding texts to undermine the ACA, those who care about meeting basic human needs need to gear up to use them to do quite a bit more.
2013 may be the most significant year in health care policy ever.
But we have to get through 2012 first.
Once the 2012 election results are in there will be the very real opportunity to address a long list of health care issues.
If Republicans win, the top of the list will include “repealing and replacing” the Affordable Care Act. If Obama is reelected, but Republicans capture both houses of Congress, we can still expect a serious effort to change the law. Then there is the granddaddy of all problems, the federal debt. The 2012 elections could well prepare the way for entitlement reform—particularly for Medicare and Medicaid. Even if Obama is reelected, the 2013 agenda will include a serious debate about Republican ideas to change Medicare into a premium support system and block grant Medicaid to the states.
If the election is a draw with neither side able to unilaterally move their agenda—likely in the form of Obama still in the White House but facing a Republican Congress, the pressure to deal with the growing costs of Medicare and Medicaid as well as nagging concerns about the implementation of the Affordable Care Act will create an imperative for action in 2013.
As the New Year begins, I look forward to reading and commenting on the latest developments in health economics. I thought I would start by making a few predictions:
1) With the economy on a slow but steady road to recovery, Republicans will resurrect health reform as a key issue in the fall election. They run a controversial ad showing a patient named Debbie getting diagnosed by her iPhone’s Siri. In response, Democrats show Debbie filing for bankruptcy because her insurance refused to pay for Siri’s consultation fee.
2) The Supreme Court will uphold the purchase mandate in the Affordable Care Act. Lobbyists for every major industry flood Congress with requests for more purchase mandates.
3) Healthcare continues to be a bright spot in a sluggish labor market. As a way to simultaneously address persistent unemployment and the growing needs of the elderly, Nancy Pelosi proposes a new law mandating that all baby boomers purchase a caregiver for their parents.
4) CMS will release new revised rules for ACOs. The new rules discourage ACOs from only covering patients in good health by reducing reimbursements for patients who are able to lift the new 1200 page ACO rulebook.