On November 14, the Supreme Court granted the Writ of Certiorari
to hear the appeal of the cases testing the constitutionality of
Obamacare. The resulting decision will mark an historic watershed
not only in the restoration of constitutional jurisprudence, but in
fundamental, market reform of the entire entitlement state.
Historic Decision Brewing
I write serving as the General Counsel of the American Civil
Rights Union (ACRU), as one of several current positions. The ACRU
was started by former top Reagan aide Robert Carleson, with former
Attorney General Ed Meese as Chairman of the Advisory Board, along
with other former Reagan Justice Department officials, besides
myself as a former Reagan White House staffer.
In my capacity for the ACRU, I wrote and filed amicus
curiae briefs on behalf of the ACRU in both the district court
and the circuit court in the challenge by 26 states in the 11th
Circuit that resulted in an order striking down the entire
Obamacare law. I also wrote and filed ACRU amicus curiae
briefs in the challenge by Virginia Attorney General Ken Cuccinelli
in both the district court and the circuit in the 4th
Circuit. The district court found the individual mandate
unconstitutional, while the circuit court ruled that Virginia had
no right to bring the case (two Obama appointed judges on the
three-judge panel).
I am predicting that the Supreme Court will strike down
the entire Obamacare law on a 5-4 ruling. That starts with the
individual mandate, which the Court will find unconstitutional
because it has reiterated several times in recent cases that it
will enforce some limit on the Commerce Clause as justification for
federal regulation, reserving the role of police power to regulate
for the general public good to the states. Virtually all the judges
in all the lower court cases concluded that there was no precedent
anywhere in U.S. history upholding a law requiring citizens to
purchase a good or service. Not participating in interstate
commerce by choosing not to buy a product or service leaves no
basis for regulation to compel such participation under the
Commerce Clause power to regulate interstate commerce.
The fate of that argument before the Supreme Court is
indicated by the thorough opinions of District Court Judge Roger
Vinson in the 11th Circuit, District Court Judge Henry Hudson in
the Fourth Circuit, and the majority of the 11th Circuit panel
striking down the Obamacare individual mandate. These judges are
good indicators as to how similarly minded Justices Scalia, Thomas,
Alito and Chief Justice Roberts will come out.
While the decision of simpatico Judge Laurence Silberman
upholding the Obamacare mandate is somewhat troubling, that
reflected Silberman’s poorly reasoned conclusion that he was bound
as a lower court judge by the Supreme Court’s 1930s precedent of
Wickard v. Filburn. That case did not involve a regulation
compelling anyone to purchase anything, but rather a defendant who
had made an affirmative decision to take action to grow and use
wheat in his farm operations, with the regulation applying directly
to that action. That illogical blunder is not characteristic of
Silberman’s usually brave and far sighted work.
The Supreme Court will strike down the entire law as Judge
Vinson did because even the government is arguing that Obamacare is
unworkable without the individual mandate. Obamacare requires
insurers to issue insurance coverage to everyone who applies at
just standard rates, regardless of how already sick and costly they
are when they first apply. Without a mandate requiring everyone to
buy such insurance and so contribute to its costs, the healthy will
just wait until they are sick and then buy the guaranteed
insurance, avoiding any contribution to the costs (imposed by
others) during all their healthy years. That will leave insurers
covering primarily a very sick and costly pool, requiring very high
insurance rates for financial survival. Those high rates will cause
even more of the healthy and lower cost workers to drop out,
resulting in an admitted financial death spiral for the
insurers.
What makes this predicted legal result especially likely
is that the Obamacare law overconfidently excluded a traditional
severability clause, which provides that if any part of a law is
found unconstitutional, the rest would remain intact. The drafters
in their full Obama era arrogance thought excluding the clause
would leave the courts less likely to strike down the mandate,
which could then legally threaten the entire law. The drafters were
so certain that the law would be so wildly popular, just like other
overpromised entitlements, that no court would dare do that. But
with strong public majorities so virulently detesting the law, the
lack of a severability clause just assures that the Court will
strike down the unworkable law.
Of course, the law will not work with a mandate enforced
with a weak penalty anyway. The healthy will pay the penalty, just
a fraction of the costly regulatory mandate, avoiding the bulk of
the costs until they are sick. That will happen with the employer
mandate as well. We see this practice under the quite similar
Romneycare in Massachusetts.
The Key to the Case
I believe
the key to winning the fifth majority vote of Justice Kennedy is
the argument that striking down Obamacare does not mean there is no
constitutional way for a health care safety net to assure no one
will suffer from lack of necessary medical care. That argument has
been a specialty of the briefs I have filed for the ACRU based on
my own direct role in health policy, going back to the first paper
proposing health savings accounts which I co-authored with John
Goodman almost 30 years ago.
A complete health care safety net assuring essential
health care for all can be achieved with no individual mandate and
no employer mandate, for just a fraction of the cost of Obamacare,
actually sharply reducing government in the process. That
starts with the provision already in federal law, stemming from the
Kennedy-Kassebaum legislation of the 1990s, providing for
guaranteed renewability. That means if you already have health
insurance, you cannot be terminated because you become sick. That
is what the insurance insures against after all, so such
termination would actually be fraud, as state law across the
country recognized before Kennedy-Kassebaum. Under this regulation,
insurers also cannot discriminatorily raise rates for those who
become sick while insured. This law ensures that if you have health
insurance, you will be able to keep it as long as you continue to
pay the premiums.
The second component of a health care safety net would
involve block granting Medicaid back to the states, just as was
done with the enormously successful reform of the old AFDC program
in 1996. Each state would then transform their Medicaid programs
into a premium support system which would provide the assistance
necessary to purchase essential health insurance for those who are
too poor to pay for it otherwise. Each state would decide how much
assistance is necessary at each income level in their state to
assure the poor could afford such essential coverage.
This would greatly benefit the poor because Medicaid today
is structurally an institution serving to deny the poor essential
health care just when they are the sickest and most in need of such
care. That is because Medicaid does not pay the doctors and
hospitals enough to assure such care. But with the above reform,
the poor would enjoy the same health care as the middle class
because they would have the same private insurance as the middle
class, paying market rates for care.
The third component of the safety net is a high risk pool
in each state for the uninsured who never get coverage and then
become too sick with costly illnesses like cancer or heart disease
to buy it. That is like calling an insurance company for fire
insurance after your house is already on fire. The uninsured in
this case would be able to get coverage as a last resort from the
high risk pool, paying what they can based on their income. Taxes
would subsidize the pool to keep it afloat. Because only 1-2
percent ever become actually uninsurable like this, this is the
least expensive option for assuring an essential safety
net.
With that everyone would be assured of a means to obtain
essential health care. If you have insurance you will be able to
keep it, despite President Obama’s abusive, deceptive rhetoric to
the contrary. If you are too poor to obtain insurance, the
government provides the necessary help to buy it. If you
nevertheless stay uninsured, and become too sick to buy it, you can
obtain essential coverage from the high risk pool.
Such a health care safety net is entirely constitutional.
Consequently, striking down Obamacare as unconstitutional does not
mean condemning the needy to suffering without essential health
care.
Exploding Medicaid
The
Supreme Court in deciding to hear the Obamacare appeal included the
question of whether Obamacare’s massive expansion of Medicaid is
constitutional. CBO projects that by 2021, Obamacare will explode
the Medicaid program for the poor to covering 100 million
Americans. Medicaid is financed jointly by the states as well as
the feds, so this explosion imposes massive costs on the states.
Can the federal government do that constitutionally?
The traditional answer would be if the states do not want
to accept the federal assistance financing Medicaid with all the
strings Obamacare attaches to that assistance, the states are free
to turn down the federal Medicaid funding. But the challenge to
Obamacare on these grounds argues that the federal Medicaid
financing is now so enormous, and so essential to serving the poor
in each state, that states as a practical matter are no longer
actually free to turn it down, regardless of the strings
attached.
Of course that is true. In regard to Medicaid, Obamacare
treats the states as sub-departments of the federal government,
like local government units in France, rather than as the sovereign
governments they are under traditional American federalism.
Federalism was a chief concern of ACRU founder Robert Carleson, as
well as his boss Ronald Reagan. So the ACRU will take the lead in
arguing this cause before the Supreme Court.
Political Consequences
The Supreme Court decision in this case will come down in the
summer of 2012, just before the election. Regardless of the
outcome, the decision will be a political disaster for Obama’s
reelection. If the Court strikes it down, that will confirm that
Obama wasted his first two years in office taking America on an
unconstitutional frolic, rather than addressing America’s most
urgent problems in an effective way.
If the Court upholds it, then voters will know the only
way to get rid of it is to vote Obama and his Democrats out of
office. That will be a result they will have so richly
earned.
But if my predictions above are correct, the Court’s
decision will not only begin the long road back to the real
Constitution. It will be the first step in real entitlement reform,
as the Republicans likely to take over in 2012 are already
coalescing around sophisticated entitlement reform with proven
political viability. More on that next week.
