UPDATED to 2:59 p.m. For those reading the opinions, the key section on the mandate is in Roberts’ opinion, from pp. 33-44. That clearly has five votes behind it.
Salvaging the idea that Congress did have the power to try to expand health care to virtually all Americans, the Supreme Court on Thursday upheld the constitutionality of the crucial — and most controversial — feature of the Affordable Care Act. By a vote of 5-4, however, the Court did not sustain it as a command for Americans to buy insurance, but as a tax if they don’t. That is the way Chief Justice John G. Roberts, Jr., was willing to vote for it, and his view prevailed. The other Justices split 4-4, with four wanting to uphold it as a mandate, and four opposed to it in any form.
Since President Obama signed the new law, it has been understood by almost everyone that the expansion of health care coverage to tens of millions of Americans without it could work — economically — only if the health insurance companies were guaranteed a large pool of customers. The mandate to buy health insurance by 2014 was the method Congress chose to supply that pool. It is not immediately clear whether the Court’s approach will produce as large a pool of new customers. The ACA’s key provision amounts to an invitation to buy insurance, rather than an order to do so, with a not-very-big tax penalty for going without.
The reality, of course, is that the health insurance industry was never guaranteed a vastly larger pool of premium-payers. The “minimum coverage” provision (that’s the technical name Congress gave what most people have called a mandate) was never to be enforced on its own — that is, the Affordable Care Act has never told people to buy insurance or you go to jail. It was always going to be enforced only by requiring an individual who refused to get health insurance to pay a tax.
One might say, then, that what happened on Thursday was that the Court brought into full public view — perhaps for the first time — the fact that the nation’s health care market is going to have as customers only those who opt to buy insurance rather than pay a tax. How this would work out, in real-world terms, may not be known for a couple of years, because this part of the new health care law is not due to go into effect until 2014.
When that happens (and it won’t, if Congress in the meantime were persuaded to repeal the ACA in whole or in part), then Congress’s goal of getting virtually everyone into the insured category is going to depend upon how millions of individual consumers make up their minds about whether or not to buy health insurance. Many may do so, for a multitude of reasons. But many may not, doing as many now do: wait until they get sick and then think about getting insured. The numbers in either category won’t be known until those millions of choices are actually made.
What the Court’s ruling does do, though, is important far beyond health care. Five Justices of the Supreme Court — the Chief Justice, for his reasons, and Thursday’s four dissenters, for their reasons — agreed that Congress cannot command individual Americans to buy a commercial product against their will. Here is the way the Chief Justice put it: “The Federal Government does not have the power to order people to buy health insurance.” Thus, he said, the mandate provision (Section 5000A of the Act) “would be unconstitutional if read as a command.” The four dissenters thought the mandate was invalid in any case, so they surely shared at least that sentiment.
At the same time, Congress has been told — by more than an implication — that if it can muster the votes to pass new laws to improve the social welfare of America, it might be better advised to create new cultural obligations that can be enforced under the tax code. Would that power be far narrower than what Congress has long enjoyed under the Commerce Clause? That is a highly debatable point. The tax code has proven to be a remarkably flexible set of laws for coaxing or compelling changes in human behavior (witness, of course, the high tax on cigarettes).
The most immediate issue for Congress in the wake of Thursday’s ruling, however, is whether Republicans are so upset by the fact that most of the ACA remains on the books just as Congress wrote it that they will mount a determined campaign to repeal it, in whole or in part. It can’t happen this year, because President Obama surely would veto such a measure, even if it could get through the Democratic-controlled Senate. And, if the President were to be reelected, he would retain the veto power over a new Congress, even if the GOP were to gain control of both chambers in Congress.
Because the fate of government regulation of health care does turn, in significant part, on the outcome of this year’s presidential election, in particular, the Court’s decision on ACA is sure to gain even greater intensity as a campaign issue.
Moving away from the political, and back to the legal, the Court majority’s tax discussion does leave something of a cloud over how effective this enforcement technique will be, in terms of inducing people to buying health insurance. Even the Obama Administration’s lawyers had conceded — and the Chief Justice’s opinion carefully takes note of it — that “if one chooses to pay [the tax] rather than obtain health insurance, they have fully complied with the law.” That concession, alone, may be the most revealing about how the mandate really is not a guarantor of a sharp upswing in business for health insurers.
The Chief Justice cited a congressional estimate that some 4 million people each year “will choose to pay the IRS rather than buy insurance.” And he noted that Congress was not enough troubled about that prospect to choose to punish people directly for failing to buy insurance. “Congress did not think it was creating 4 million outlaws,” Roberts wrote.
One factor that may hold down a new willingness to buy health insurance, the Chief Justice suggested, was that in dollar terms the size of the tax assessment will make it considerably cheaper than the annual premiums for health coverage.
The way the tax provision will work, if it does, in fact, go into effect about two years from now, is that individuals who do not obtain health insurance will be assessed a tax (based on family income) that they must pay along with their regular federal tax return. The enforcement of the tax will depend, ultimately, on whether an individual who refuses to buy health insurance chose — as a specifically intended response — not to pay the tax, for whatever reason. The Chief Justice’s opinion did note that willful failure to pay a tax that is due can lead to criminal prosecution. There would have to be proof of something more than a simple failure to include the penalty payment along with the return.
Here is the choice that individuals who do not want to obtain health insurance will face, according to the Chief Justice: “Those subject to the individual mandate may lawfully forgo health insurance and pay higher taxes, or buy health insurance and pay lower taxes. The only thing they may not lawfully do is not buy health insurance and not pay the resulting tax.”
It should be noted, though, that not every American is subject to the mandate and to the penalty tax. People who are too poor to pay taxes anyway are exempt, as are some other groups.
The impact of the new ruling on tax policy in general, and on Congress’s potential use of the tax code to promote social causes that it favors, will depend upon whether — over time — the Court establishes some limits on this option. The Chief Justice’s opinion did not spell out any such limits, but it did remark that “there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment.” He added: “Congress’s ability to use its taxing power to influence conduct is not without limits.”