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Supreme Court Wimps Out on Obamacare

In a craven decision written by the Chief Justice, the Court upholds most of PPACA.

By 6.28.12

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The government lawyers who defended the Patient Protection and Affordable Care Act (PPACA) before the Supreme Court probably began to fear that its "minimum coverage provision" was headed for the mortuary when Justice Kennedy, from whom they had hoped to receive a reprieve, said the requirement that all Americans buy health insurance "changes the relationship of the federal government to the individual in a very fundamental way." They must have known it was a goner when Kennedy followed up with this lethal injection of reality: "Do you not have a heavy burden of justification to show authorization under the Constitution?"

The Solicitor General, Donald Verilli, fended off that apparently deadly thrust with the absurd claim that the mandate wouldn't affect the government's relationship to the citizen as profoundly as Kennedy had suggested: "[A]ll this minimum coverage provision does is say that, instead of requiring insurance at the point of sale, that Congress has the authority… to ensure that people have insurance in advance of the point of sale." This argument was so weak and its delivery was so poor that most of the law's supporters sank into slough of despond. CNN's Jeffrey Toobin called Verilli's performance a "train wreck" and all but pronounced the PPACA dead.

But the death of Obamacare and its much-reviled mandate was, as it turns out, greatly exaggerated. In an utterly Orwellian opinion authored by Chief Justice Roberts, the majority held that the mandate was not a tax for purposes of applying the Anti-Injunction Act (AIA), but that it was constitutional because it falls within Congress' taxing powers: "The Affordable Care Act describes the ‘[s]hared responsibility payment' as a ‘penalty,' not a ‘tax.' That label is fatal to the application of the Anti-Injunction Act.… It does not, however, control whether an exaction is within Congress's power to tax." So, sometimes it's a tax and sometimes it's not.

Chief Justice Roberts had to use two definitions of "tax" because AIA forbids legal challenges to taxes before they go into effect, and the mandate doesn't take effect until 2014. For the AIA to apply, then, the mandate had to qualify as a tax. When the first legal challenges to Obamacare were litigated, the government tried to argue that the mandate was indeed a tax, but couldn't find any buyers because Congress had gone out of its way to avoid characterizing it as such. In all of the many courts that considered the legal implications of "reform," only a single judge in the Fourth Circuit Court of Appeals took the tax argument seriously.

And Roberts also rejected that argument -- until it came time to deal with the central question of the Obamacare challenges: Is it within the legitimate power of Congress to command individuals to purchase health insurance? To answer this question in the affirmative the Chief Justice had to change his method of defining the word "tax" in midstream. Notwithstanding the contortions Congress went through to avoid associating the "T" word with the mandate, Roberts followed "a functional approach, ‘[d]isregarding the designation of the exaction, and viewing its substance and application.'"

The Court also upheld the rest of the law, except for part of its Medicaid provision. In all, the justices considered four questions to arrive at this ruling. The first involved AIA. The second concerned the mandate. A third question involved severability: Was the Court required to strike down the entire statute if it deemed the mandate unconstitutional? Obviously, the ruling rejected the jurisdictional issue raised by AIA and the severability question was rendered moot when the mandate was upheld. The final question considered was the claim, made in Florida v. HHS and NFIB v. Sebelius, that PPACA's expansion of Medicaid was unconstitutionally coercive.

On this Medicaid question the majority took a different view than was taken by the lower courts, where the plaintiffs had a tough time selling the coercion argument. Even U.S. District Judge Roger Vinson, who struck down Obamacare in its entirety in early 2011 and started Florida v. HHS on its long road to the Supreme Court, wrote that the states "always have the option, however impractical, to withdraw from Medicaid." Today, the Court ruled that the federal government cannot withhold all matching funds from a state that does not agree to expand the joint state-federal program as PPACA dictates.

Needless to say, some of the justices disagreed with the majority. Justice Kennedy, whom everyone expected to be the swing vote, was particularly succinct as he read his dissenting opinion from the bench: "In our view, the act before us is invalid in its entirety." Kennedy went on to point out the glaring inconsistencies between the "reform" law itself and the way it was characterized in the ruling: "What Congress calls a penalty, we call a tax … Congress went to great lengths to say it was a penalty … In short, the court imposes a tax when Congress deliberately rejected a tax."

Thus Chief Justice Roberts saved Obamacare and its egregious mandate. He cast the deciding vote with the Court's liberals, justices Kagan, Ginsburg, Breyer and Sotomayor. Then, he wrote a majority opinion containing enormous logical and semantic inconsistencies to justify that vote. He used two conflicting definitions of "tax" and, as Kennedy pointed out, ignored the actual text of the statute. So the country will have to go on living with the the grotesque morass of bad ideas and corrupt bargains that constitutes Obamacare, despite countless surveys showing that Americans wanted the Court to overturn all or part of the monstrosity.

As to the effect of the ruling on the industry Obamacare purports to "reform," it will be minor. Health providers have been preparing for the advent of Obamacare's major provisions for two years, in areas ranging from quality of care to information technology to reimbursement to regulatory oversight. Most health care insiders I have talked to never believed that the potential demise of PPACA was going to change our lives very much. The consensus was that most of Obamacare's provisions would have been imposed on us by government fiat, no matter what the Court decided in Florida v. HHS or NFIB v. Sebelius.

And the patients? They will continue to receive the best health care available on the planet. This law was never about health care. It was about power and money. Today's ruling just confirms that, in the end, it's up to the voters. If we want to rid ourselves of this monster, we can't rely on divine intervention from the Supreme Court. The justices of that august institution let the beast off the hook today. If the voters want to kill it, they will have to do so at the ballot box in November.

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About the Author

David Catron is a health care consultant. He has an MBA from the University of Georgia and blogs at Health Care BS.