There is a lot of debate right now over the Patient Protection and Affordable Care Act (ACA), and the Supreme Court of the United States’s (SCOTUSA) recent ruling on the constitutionality of two major provisions of the bill. These provisions include the “Individual Mandate” and “Medicaid Expansion.”
What you are about to read is not part of that debate. I have been less than pleased with some of the articles that I was reading about the SCOTUSA decision, so I have decided to read the entire majority opinion of the court, which was written by Chief Justice Roberts (when SCOTUSA reaches a decision, the majority opinion of the court is written by the highest ranking justice who is part of the majority decision).
At this point, I have yet to fully form my own opinion on the SCOTUSA ruling and on the ACA.
The Individual Mandate
Roberts explains the Individual Mandate as a “penalty” (per Congress’s wording in the ACA) that will be collected like a tax by the IRS. The Individual Mandate then becomes a tax (shared responsibility payment/penalty per ACA language) imposed on those without insurance, excluding those with low incomes (see next section explaining the Medicaid Expansion provision ruling) and members of American Indian tribes.
This will be 2.5% of one's annual income with a minimum and maximum amount that the IRS can collect. Unlike with other taxes, the IRS cannot arrest you or seize your property if you fail to pay this tax.
Later, Roberts writes about why the SCOTUSA has the right to rule on the Individual Mandate. They have the right. Moving on. (pages 10-15).
The Government makes two cases supporting their right to enact the Individual Mandate:
- They say that because not buying health insurance raises the cost of the insured’s medical care and insurance rates (Congress estimates that unpaid medical bills cost the average American family $1,000/year in insurance premiums), the government then has the right to force people to buy health insurance under the Commerce clause. And if SCOTUSA is not buying that one…
- The Government states that they have the right to tax the citizens of the United States if they do not have insurance.
The Opinion then references the “Community Ratings” and “Guaranteed-Issue” provisions which stop insurance companies from denying coverage or charging higher premiums to those with pre-existing conditions. Roberts says that this provision encourages people to not purchase insurance until they are sick, and will cause premiums to rise for everyone because insurance companies must cover the unhealthy at the same rate as the healthy. Congress says that the Individual Mandate ensures that people will buy insurance before they become unhealthy. (page 17).
The Majority Opinion disagrees with Congress’s first defense of the Individual Mandate, saying that though Congress does have the power to “regulate” commerce, they do not have the power to create commerce so that it may be regulated. The Opinion refuses to grant Congress the ability to force people to buy a product to solve a problem. So Congress loses their first case. (Page 18).
- “Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority.”
Though SCOTUSA says that a mandate (forcing citizens to purchase insurance) is unconstitutional, the Opinion goes on to say that in the second argument raised, “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.” (Page 31).
So now Roberts relates the decision to be that, though Congress may not have referred to the “shared responsibility payment” as a tax, it acts like a tax, so it can be called a tax. The IRS collects it, and the amount is determined by income, dependents, etc. (page 33).
Roberts says that there are already taxes that encourage people to act a certain way, such as taxes on cigarettes meant to stop people from smoking. (page 37).
The majority opinion also states that because Congress has estimated that 4 million people will choose to pay the tax rather than buy insurance, Congress cannot mean that these 4 million people are to be deemed outlaws worthy of punishment. So though Congress used the word “penalty” what they really meant was “tax.” (page 38).
The judges that argued against the tax claimed that even if Congress is really creating a “tax,” they said “penalty,” and a “penalty” would be unconstitutional. Roberts says that the opposing argument is a matter of “labels.” The majority opinion maintains that, regardless of labels, the shared responsibility payment is a tax used to influence behavior, and this has been found constitutional by SCOTUSA in the past.
The Opinion recognizes that there is a concern about being taxed for not doing something. To this Roberts replies that the Constitution does not say that Congress cannot tax inactivity, and after all, the Capitation Tax taxes people simply for “existing.” Roberts also ensures that this power to tax on inactivity is not taken lightly and will not be regarded by the court as a limitless power. (page 42).
Roberts makes the distinction that Congress enacting this tax as a penalty would give Congress the power to treat citizens as criminals by revoking their freedoms. When the mandate is reduced to simply a tax, Congress can take no further action but to tax.
Roberts concludes his Individual Mandate ruling on page 44:
- “The Federal Government does not have the power to order people to buy health insurance.”
- “The Federal Government does have the power to impose a tax on those without health insurance.”
The Medicaid Expansion
The Opinion explains the origination of Medicaid as a plan for State government to offer free healthcare to those in need (e.g., blind people, old people, poor people, pregnant women). The funding for this assistance would come from the Federal government. States would have to comply with Federal standards of service to receive funding. States could opt out of the program, and would then simply not receive funding for a service that they were choosing not to offer. By 1982, all states opted into the program. (page 10).
The ACA gives States more funding to cover more people (e.g. People whose incomes are less than 133% of the national poverty level). If States choose not to comply with the extension of Medicaid (a portion of the financial burden will be paid by the state), they risk losing all of their funding, and not just the extra funding for the extra people.
Roberts explains that the new federal requirements for insurance coverage by the states is hugely increased. Where now states typically only cover those in special need (examples above) and only those below 67% of the poverty line, the new Medicaid expansion requires every state to cover every adult who makes the previously mentioned 133% of the national poverty line. (page 46).
Congress estimates that the cost for Medicaid will increase nationally by $100 billion a year, and the ACA states that the Federal government will cover all expenses until 2016, after which they will gradually reduce their payments to 90%. (page 46).
The real issue against the Medicaid expansion as far as the SCOTUSA is concerned, is that federal government can revoke all Medicaid funding if a State fails to comply with the new expansion.
Roberts says that the Spending Clause gives Congress the right to give federal funds to States and to make sure that those funds are spent the way Federal government intended, but there are limits on how far Federal government can go to regulating State action with money. (page 46).
He states that threatening to withhold all Medicaid funds if States do not comply with the expansion is a “gun to the head.” (page 48).
The government claims that States agreed to allow changes to be made to the Medicaid program when they originally signed on to the Medicaid program. (page 53).
The majority opinion of the court ruled that though Medicaid could be expanded by Congress, Congress could not withhold all Medicaid funding from the States if they fail to expand their Medicaid program. (page 56).
The Concluding Ruling:
Though SCOTUSA found parts of the Individual Mandate and Medicaid Expansion to be unconstitutional, after small adjustments that were not seen as detrimental to the rest of the Affordable Care Act, both of these two provisions were found to be constitutional.
The Federal government cannot force citizens to buy insurance, but they can tax citizens for not having insurance, as long as they are above a certain annual income level and not part of an American Indian tribe. Because the amount of the tax is significantly lower than annual insurance premiums, the court does not see the tax as forcing citizens to buy health insurance.
The Federal government cannot take away all of a State’s Medicaid funding for refusing to agree to expand their Medicaid coverage. Medicaid can be expanded, and States will have a choice of whether or not to comply, while keeping their current Medicaid funding in tact.
And if you have managed to read this far...
Did this summary of the Chief Justice Roberts majority opinion of the court help clarify the recent decisions made as far as the Individual Mandate/Shared Responsibility Tax is concerned and Medicaid Expansion?
Does the opinion of the court affect your own opinion of not just these two provisions, but of the whole Affordable Care Act?