Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

Forbes

 

Obamacare at the Supreme Court: The Pre-Game Preview

March 24, 2012

By Avik Roy

As everyone knows, from March 26 to March 28, the Supreme Court will hear oral argument in one of the most important cases to come before the court in our lifetimes: Florida v. HHS, the case that will determine the constitutionality of the Patient Protection and Affordable Care Act. Lest you think I’m exaggerating, the High Court has assigned six hours, over three days, to hearing arguments in the case: something it hasn’t done in 45 years. In this article, I’ll preview the key aspects of the case, and what to look for in the courtroom.

The Super Bowl of constitutional law

FYI, I will be hosting a live blog over at National Review to discuss the case, starting at 10 a.m. on Monday. Come on over and say hi—we’ll be monitoring Twitter feeds from journalists who are attending the hearings, and chip in with our own observations.

Janet Adamy and Jess Bravin had an excellent piece in the Wall Street Journal last week, describing how hard it is to get seats to hear the oral argument in person. Imagine if the Super Bowl could only be seen in person by 400 people, and you’ll get some sense of the situation. Even Senators on the Judiciary Committee have had to work their connections to get tickets. Georgetown Law professor Randy Barnett, who came up with the main legal arguments being used against the individual mandate, had a tough time getting a seat.

Fortunately, the Supreme Court has decided, due to the “extraordinary public interest” in the case, to publish audio recordings and transcripts of the arguments no later than 2 p.m. each day. I will have commentary up here at The Apothecary as quickly as I can, after reviewing those tapes. Check back here each day in the afternoon.

Most people know that the central controversy in the case is the constitutionality of the individual mandate: the rule that forces all Americans to buy health insurance. Never before has the federal government asserted its authority to make people buy a private product, hence the controversy. But there are several other aspects of the law that are up for review.

Monday, 10:00-11:30: Is the mandate a tax or a penalty?

On the first day of oral argument, the Court will deliberate on whether on not the individual mandate is a tax, or a penalty. This is not merely a semantic distinction. As I reviewed in September, the Anti-Injunction Act of 1867 requires that a tax already be implemented, and in effect, in order for plaintiffs to have grounds to sue to block it.

In addition, some believe that the mandate would have been more constitutional had it been framed as a tax instead of a penalty. That’s not completely clear—a selective tax on people without health insurance has its own constitutional problems—but it’s true that Obamacare could have achieved its goals more straightforwardly by increasing taxes.

Both parties in this case agree that the mandate is a penalty, not a tax. Nearly every lower court agreed with them. Hence, the Court had to hire a lawyer to argue the other side, that the mandate is a tax.

Why is the Court even bothering to address this? It may be because they want to create some clarity around the distinction of taxes and penalties, to help future Congresses avoid these pitfalls.

Tuesday, 10:00-12:00: Is the individual mandate constitutional?

Tuesday will be the big day for the individual mandate. Pay close attention to Kennedy, Scalia, Roberts, and Alito, in that order; those are the justices who will decide the outcome of this case.

There are two key questions they will have to address. If Congress can force you to buy private health insurance, what can’t it force you to do? Is there a limiting principle to this idea? Many legal scholars think that Congress can, in fact, do whatever it wants, even requiring you to buy broccoli or regulate mental activity.

The limiting principle that pro-mandate forces have had the most success with is that health care is unique. In the Sixth Circuit, they convinced conservative Judge Jeffrey Sutton that the mandate was okay, just in this instance, because it involves “regulating how citizens pay for [the health care that] they already receive.” In the D.C. Circuit, they convinced conservative judge Laurence Silberman that “the health insurance market is a rather unique one, both because virtually everyone will enter or affect it, and because the uninsured inflict a disproportionate harm on the rest of the market.”

To me, the “health care is unique” argument is preposterous. It was demolished by the Eleventh Circuit, which pointed out that only one percent of national health expenditures is affected by uncompensated care, and that the mandate has numerous exemptions for lower-income people, who will still engage in the practice. In addition, the Constitution does not specify any particular area of the economy for special treatment.

But it doesn’t matter what I think.

Wednesday, 10:00-11:30: Is the mandate severable from the rest of the law?

If the Court decides to overturn the individual mandate, they then have to choose between three options: does overturning the mandate require (1) the Court to strike down the rest of the law, in its entirety; (2) closely-related parts of the law; or (3) nothing at all other than the mandate itself?

Both parties in the case agree that, if the mandate goes down, some closely-related provisions should as well: specifically, those forcing insurers to take on those with pre-existing conditions (“guaranteed issue”) and forcing insurers to charge similar rates to both the young and the old (“community rating”). If those provisions are allowed to stand, the private health insurance market will collapse in an adverse selection death spiral, as the young and healthy avoid buying pricey insurance, driving up the cost of that insurance for everyone else, until everyone but the seriously ill drop out of the system.

This is what happened in a less-noticed Obamacare challenge, Goudy-Bachman v. HHS, where Judge Christopher Conner overturned both the mandate and these related provisions.

Some conservatives mistakenly believe that, because the law lacks an explicit severability clause, the High Court is obliged to strike down the whole law. As I explained in this discussion of Free Enterprise Fund v. PCAOB, that is simply not true. However, some courts have struck down the law in its entirety, most notably Judge C. Roger Vinson in the district-court ruling in Florida v. HHS.

The Eleventh Circuit, in the appeal of Florida v. HHS, took the third option, overturning the mandate but keeping the rest of the law intact. “We are not persuaded that it is evident (as opposed to possible or reasonable) that Congress would not have enacted [mandate-driven insurance reforms] in the absence of the individual mandate,” they opined. This judgment on their part was a clear indictment of the states’ superstar lawyers, Paul Clement and Michael Carvin, who whiffed when they had the chance to make the case that more of the law should be overturned.

Wednesday, 1:00-2:00: Is PPACA’s Medicaid expansion coercive unto the states?

One of the biggest surprises in the Court’s decisions thus far is that it is taking up the question of whether or not Obamacare’s dramatic expansion of Medicaid is constitutional. The states have argued that it is, because it forces states to expand these programs, and sticks them with a chunk of the bill. The feds have argued that their action was not coercive, because states can opt to drop out of the Medicaid program, and forgo the avalanche of federal funds that goes along with it.

As a matter of practice, it’s nearly impossible for states to pull out of Medicaid, because if they do, they’d have to raise taxes by a substantial amount in order to keep their programs afloat.

I reviewed the relevant case law in this post, most notably the 1987 case South Dakota v. Dole, in which the Supremes came up with a four-factor test to determine whether or not Congress was being coercive when attaching strings to federal funding. But that four-factor test is a bit of a mess, so even if the Supremes end up siding against the states, they’d do everyone a service by creating a better one.

In the Obamacare challenges, every court sided against the states on this issue of coercion. But, clearly, somebody on the Supreme Court (Thomas?) thinks it’s worth addressing.

Live blog starting 10:00 am on Monday

As I mentioned above, stay tuned to this space for daily updates on the case. I’ll also have the live blog over at National Review. I’ll leave you with this final thought.

There are a lot of ways to require people to have insurance. For example, the Supreme Court would likely rule that “Medicare for all” would be constitutional. If Obamacare had raised everyone’s taxes by ten percent, and used that money to provide everyone with “free” health insurance, that would be constitutional too.

But for political reasons, that’s not what Obamacare does. The President wanted to honor a campaign pledge that he wasn’t going to raise taxes on people making less than $250,000. In order to honor that pledge, he created a convoluted structure that violates the Constitution.

This constitutional challenge would never have happened in the first place, if Democrats had more openly sought to raise taxes and spending in pursuit of their otherwise defensible goals. They chose not to.

UPDATE 1: The original version of this post erroneously stated that Randy Barnett couldn’t get a seat; he will be sitting with the plaintiffs.

UPDATE 2: If you’re interested in a strong argument as to why the Supremes should overturn the entire law, if they find the mandate unconstitutional, three legal scholars—Mario Loyola, Richard Epstein, and Ilya Shapiro—have published one here. It’s similar, in terms of its policy interpretation, to the concluding section of my recent blog post on the subject.

UPDATE 3: My co-blogger Robert Book has posted two perceptive pieces on the SCOTUS hearings: this one on some related events in Washington, and this one on the fact that we already have a broccoli mandate.

UPDATE 4: The Wall Street Journal has posted a 17-minute video of a discussion featuring me and Gillian Metzger of Columbia Law School, moderated by WSJ legal reporter Ashby Jones.

Original Source: http://www.forbes.com/sites/aroy/2012/03/24/obamacare-at-the-supreme-court-the-pre-game-preview/

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

The Real Challenge When Police Use Lethal Force
Stephen Eide, 12-15-14

Why Cops Need To Sweat The Small Stuff
Nicole Gelinas, 12-08-14

A Bill To Loosen Police Discipline
E. J. McMahon, 12-08-14

More Subsidies For Big Wind
Robert Bryce, 12-08-14

Bill Slanders His Cops
Heather Mac Donald, 12-07-14

What The Numbers Say On Police Use Of Force
Steven Malanga, 12-04-14

Detroit's Bankruptcy and Its Painful Reforms
Stephen Eide, 12-04-14

The EPA Pours On The Pain With New Ozone Regulations
Diana Furchtgott-Roth, 12-03-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494