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Analysis: Why a health care law, anyway?

This is one of a continuing series of articles the blog will publish over the next six weeks, explaining more fully the new federal health care law, and the Supreme Court’s review of the constitutionality of key parts of that law.   This article deals with Congress’s reasons for enacting the sweeping national law, and explains why key provisions were immediately challenged in court, leading now to Supreme Court review.



It may come as a surprise to the critics of the new federal health care law, who derisively label it “Obamacare” to put the blame for it on the current President, but the fact is that Congress actually started thinking about requiring all Americans to obtain health insurance as early as 1994.   But it will come as no surprise, to those Democrats in Congress who finally voted to adopt such a mandate in 2010 (the new bill got no Republican votes in either the House or Senate), that the very idea has been surrounded by constitutional doubt for a generation.  Thus it was that, within seven minutes after President Obama in March 2010 signed into law the Patient Protection and Affordable Care Act, the insurance mandate’s constitutionality had been put to a test in a federal court in Pensacola, Fla.

It is that very case that the Supreme Court has now agreed to review.

As the Justices review the case filed by 26 states against the Affordable Care Act, they will be examining the core meaning of the Constitution’s vertical separation of powers, between national and state governments.   That separation, the Supreme Court said just last Term, is a factor contributing to the individual liberty of Americans.   The Court will hear from one side that the new health care law is essential to economic liberty and the basic health of Americans, and from the other side that, as a manifestation of the concentration of power in Washington, the new law itself is a threat to Americans’ personal liberty.  With that much at issue, why did Congress take the bold step, which its own staff had been warning might be taking a constitutional risk, in passing the  Act?

It is not too much to say that the Nation has a health care crisis, and that the crisis has persisted for years.   The medical profession, the hospital industry, and the medical insurance companies all acknowledge that fact.  New advances in medicine cost a lot of money, maintaining the health of an aging population means more patients and more medical bills, the poor get inadequate care or none at all, the price of health insurance soars beyond the reach of many, and the system for the delivery of health care — a $2.5 trillion industry — operates under severe economic stress because so many people have no health insurance.

That is the picture Congress has seen before it, at least since the early 1990s, and probably before.  The failed effort to enact sweeping new reforms for health care during the Clinton Administration only highlighted the urgency that some in Congress felt was intensifying as the years passed after that.  When the Obama Administration entered office in early 2009, it made legislation for comprehensive health care change its dominant domestic policy initiative, and spent a great deal of its political capital left over from the 2008 election getting that written into law.

There is a basic theory behind the law, and it can be stated with a few propositions, which Congress relied upon in its formal “findings.”  America, according to census data, now has about 50 million people who do not have health insurance, either because they opt not to obtain it, can’t afford it, or have been turned away by insurers. Each of them, however, at some point will need medical care and, when they do, Congress concluded, the result will be a shift of cost: the uninsured will get medical care, especially in emergencies, and the cost will have to be absorbed either by the providers, or by increasing premiums paid by those who do have insurance.  Employers provide health insurance for some 176 million Americans, and some 24.7 million have private individual policies.

This cost shift, according to Congress, amounted to about $43 billion in 2008.   The consequence, it found, is that each family that does have health insurance will have to pay $1,000 a year on average in added premiums, and each individual with insurance will face an annual premium increase near or above $400.

Many of the 50 million or so who lack insurance, Congress concluded, would like to have insurance, and, where they can afford it, have tried to get it, but have been turned away because at the time they were not healthy, or had previous medical histories of serious ill health.  Congress had figures before it suggesting that somewhere between 9 and 12.6 million of the uninsured were either denied coverage, had been charged a higher premium for coverage, or had been offered policies that denied coverage for preexisting medical conditions.

Congress said that problem could be traced to the economic norms in the medical insurance industry.   Like all insurers, the medical policy-writers calculate their premiums and their willingness to provide coverage on the concept of spreading the risk.   If a company provides policies primarily to people who are currently healthy, that lowers their risk exposure substantially.   This is called “medical underwriting.”  It makes economic sense in a risk-based industry but, Congress concluded, it imposes a significant social cost: it put a price tag of $90 billion on this phenomenon.

As all of these considerations make clear, Congress was putting its focus primarily on the financing of health care, and what that means for its availability.  It thus considered that, when it passed the Affordable Care Act, it was undertaking to regulate only the commercial market for health insurance.   Its concerns, Congress said, were “how and when health care is paid for” and “when health insurance is purchased.”  Its primary goal: reduce the number of uninsured Americans, not to the point that there would be absolutely universal health insurance, but approaching that.

To reach that goal, Congress chose five mechanisms.  Not all of those are currently before the Supreme Court.  Three definitely are.  First is the mandate that virtually all Americans must obtain and maintain all the time adequate health insurance or pay an annual penalty until they do.  Second are compelled changes in the way the insurance companies operate — such as requiring them to provide coverage where they previously would not have, and curbing their authority to raise prices on premiums when they do provide riskier coverage.  (The obligation to have insurance was designed by Congress to put enough people into the insurance market that the companies can afford the expanded coverage.)  The third, designed to cover 9 million of the uninsured initially and 16 million within five years, is an expansion of the federal-state Medicaid program that provides care for the poor and the disabled.

One of the two methods of reducing the uninsured that is not directly before the Court is a provision to create health insurance “exchanges,” to be run by state governments to allow individuals, families and companies with few employees to shop for insurance policies, by banding together to qualify for lower premium rates.  They get help in paying for their insurance by federal tax credits or subsidies.   The other provision to reduce the uninsured was challenged in appeals to the Supreme Court, but the Justices opted not to review that one: a system of penalties on larger employers if they do not offer adequate insurance coverage to their full-time employees.

It is conceivable, though, that if the Supreme Court were ultimately to strike down the insurance-purchase mandate, every part of the new law could fall, too,  That is what the federal judge in Pensacola concluded after he found the mandate beyond Congress’s legislative powers, but a federal appeals court disagreed, and said that nullifying the mandate would not take down any other part of the law.  That conclusion, too, is before the Court for review.

Of all the provisions in the new 2,700-page law, none is as controversial as the insurance-purchase mandate.  When that idea first surfaced in Congress 17 years ago, the Congressional Budget Office concluded that “a mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action.”  Congress, it said, had never before forced people to buy any good or service as a condition for living in the U.S.

And, when that idea came up again while Congress was considering the Affordable Care Act, the Library of Congress’s Congressional Research Service went further.  It said it was unclear whether the Constitution’s Commerce Clause “would provide a solid constitutional foundation” for such a mandate.  Its constitutionality, the Service added, “is perhaps the most challenging question posed by such a proposal.”

Congress, though, deemed it vital: without the mandate, it could not impose on insurers the obligation to expand their coverage, the ranks of the uninsured could not be reduced, and the cost of obtaining insurance would again soar beyond many people’s reach.   The conditions that prevailed before the Act’s passage would return, Congress believed.

Historians in the future may some day conclude that it was a coincidence, but Congress’s consideration and then passage of the Affordable Care Act was occurring just as the social phenomenon that would become the “Tea Party movement” was forming, and expanding.    During the summer of 2009, “Tea Party” protesters flooded into town-hall meetings of members of Congress visiting their districts, many of them following a common strategy of shouting down their lawmaker.  They were protesting big government, and they did not like what Congress was thinking about doing on health care.

Then, in November, a “Tea Party” rally in Washington specifically targeted the proposed new health care law as Congress worked on it.  Another major rally by the movement in the capital city would be staged just as Congress moved toward final passage of the bill in March 2010.  The movement has remained among the new law’s most aggressive critics since its enactment.  If there is one ideology that unites the movement’s adherents, it is the complaint that the federal government has grown too large, that its very size threatens individual liberty, and that the threat is no more clearly manifested than in the Affordable Care Act, and especially its insurance-purchase mandate.

Almost every one of the 30 lawsuits that would be filed across the Nation after the President signed the bill into law included among its challenges the claim that the mandate was beyond any power that Congress had under Article I — the Commerce Clause, the General Welfare Clause, or the Necessary and Proper Clause.

The unprecedented nature of the mandate has troubled many of the federal judges who have ruled upon its validity, including some who wound up concluding that it was within Congress’s authority under Article I.

Those judges, though, have not been troubled by the requirement that the Medicaid program be expanded so that millions more of the poor and disabled have medical care available to them, at government expense.  That part of the law has been upheld wherever challenged.  Even so, the Supreme Court will hear the state governments’ protest to that provision, too.

Together, the mandate and its penalty, and the Medicaid expansion, will draw the Court into a fundamental examination of what those who wrote the original Constitution had in mind when they split governmental power between national government and state governments.  It could be the Court’s furthest excursion into that proposition since the days in the mid-1930s when the Court struck down many provisions of the New Deal that President Franklin Roosevelt and Congress deemed necessary to pull America out of the Great Depression.

Next in this series: A discussion of the right — or lack of it — to challenge the new law’s individual insurance-purchase mandate.

Recommended Citation: Lyle Denniston, Analysis: Why a health care law, anyway?, SCOTUSblog (Nov. 16, 2011, 12:01 AM),