The Supreme Court delivered a surprising and mixed opinion on the constitutionality of the Affordable Care Act (ACA). The most controversial provision of the Act — the so-called “individual mandate” to buy health insurance — was deemed unconstitutional as a regulation of commerce yet constitutional as a tax. The Act’s mandatory Medicaid expansion — extending coverage to an estimated 16 million poor individuals who can’t afford private insurance — was declared unconstitutional, allowing states to “opt out” of the expansion.
Upholding the individual mandate as a tax was the big shocker. No other lower court had ruled the mandate was sustainable as a tax, and supporters of the law — from President Obama to former House speaker Nancy Pelosi to Senate majority leader Harry Reid — had repeatedly and vigorously insisted that the ACA did not raise taxes.
Oral arguments at the high court spent virtually no time on the tax issue, and most constitutional law experts didn’t give it much serious thought, focusing on a much more difficult issue: whether Congress could use its commerce power to compel individuals to buy private products. In the end, those who opposed the mandate on Commerce Clause grounds were vindicated. But it is an odd, uncomfortable victory: Congress cannot directly force individuals to buy something, but it can tax them for not buying it.
The court’s invalidation of the Medicaid expansion was less shocking but equally important. Conceptually, the ACA is a two-legged stool for expanding access: One leg — the individual mandate — expanded access for about 16 million middle-class individuals by mandating they purchase health insurance. The other leg — the Medicaid expansion — expanded access for another 16 million poor individuals by forcing states to extend Medicaid to them. Recognizing the states’ sovereign right to opt out of an expensive Medicaid expansion effectively took a chainsaw to one of the ACA’s two legs, leaving a politically wobbly and unstable structure.
The net effect is this: Many poor individuals will remain uninsured because they live in states that will opt out of the expensive Medicaid expansion. And many middle-class individuals, faced with a choice between paying a tax of several hundred dollars or buying an insurance policy for several thousand dollars, will pay the tax and remain uninsured. The problem of the uninsured is far from solved, and the debate about how to solve this seemingly intractable problem is now thrown back to the federal and state legislatures.
Two major issues — one political, one practical — now loom large for our elected representatives. First, what portions of the ACA will survive politically? And second, assuming politicians still want to fix the problem of the uninsured, how can they do it in a manner taxpayers can afford?
The political issue will reach its zenith between now and the November election. Conservatives and tea partiers have already vowed to repeal the remaining portions of the ACA, including the mandate’s tax. House majority leader Eric Cantor has announced that the repeal bill will be scheduled for July 11. The Democrat-controlled Senate is unlikely to repeal.
If Congress can’t repeal the ACA, this will steel the resolve of tea partiers and other opponents of the law to dethrone President Obama and other candidates who have supported it. The 2012 elections have now received an injection of adrenaline.
For the moment, we are left with a law that resembles a tattered quilt, imposing politically unpopular taxes, covering only a fraction of the uninsured, and doing little to lower healthcare costs. Indeed, the ultimate lesson to be learned may be that for any health program to be sustainable, honesty about its tax consequences and a serious attempt to reign in costs needs to be undertaken before enactment, not after. Americans — particularly in this economy — don’t take kindly to laws that increase their taxes, but especially when those taxes aren’t spent wisely. The choice now is relatively clear: Wipe the slate clean and start over, or retain the remaining parts of the law, hope for the best, and continue searching for ways to stop costs from spiraling out of control?