Obamacare: The Supreme Court Ruling Explained

Yesterday’s Supreme Court ruling on the Affordable Care Act, aka “Obamacare”, resulted in the upholding of significant aspects of the health care reform law. While I am in dramatic disagreement with the Court’s decision in favor of the program, I thought you would like to know the reasoning behind the Supreme Court’s majority vote and the arguments from the dissenting side.

The most controversial portion of Obamacare was the implementation of an individual mandate. This mandate would require every American to have health care. Failure to acquire health insurance would result in a financial penalty on the individual. Opponents of Obamacare argued that the Federal government couldn’t force citizens to purchase health care, saying that this infringed on personal freedoms.

The majority opinion was made by Chief Justice Roberts, and joined by Justices Breyer, Sotomayor and Kagan. Justice Ginsberg wrote a concurring opinion. The purchase of insurance mandate was being justified by the Obama administration on the grounds that the Federal government had the power to enforce this mandate under the Commerce Clause of the US Constitution. The Court rejected this argument and stated that the individual mandate would not be constitutional under the Commerce Clause because that clause only gives the federal government the power to regulate, not compel, economic activities. Instead, they upheld the individual mandate as constitutional under Congress’ taxing power. They stated that the mandate and any fines that were to be paid for not obtaining health care is actually a tax. Congress has the authority to impose and collect these taxes.

This “tax” part I find confusing. In my 24 years practicing law, I have never heard the Justices decide on a position that neither side put forward. The Obama administration had been adamant during the procedures that this mandate was not a tax, yet the majority opinion now qualifies it as one. If such a tax is levied, it will be the biggest tax imposed on the middle class in our nation’s history. While the opposition did state this mandate was just a massive tax on the American people, they still didn’t see the constitutionality of it. So the fact that it was deemed a tax AND constitutional was a unique decision.

The majority struck down a narrow section of Obamacare that dealt with Medicaid expansion and funding. This section required states to drastically increase their Medicaid coverage, and threatened the withdrawal of all federal Medicaid funding if states didn’t comply. The Court deemed this unconstitutional because, while the Federal government can amend funding to states, this measure would be a complete overhaul of a preexisting agreement between the Federal government and states. Therefore, the Court’s ruling only allows the Federal government to deny future funding to noncompliant states. Put simply, if Virginia were to reject the expansion of Medicaid coverage, we would continue to get the funding we already receive from the Federal government, but would not get any additional funding for newly covered classes as contemplated by Obamacare. While this part of the ruling has not received much attention, I believe it is a huge victory for state’s rights!

The dissenting side consisted of Justices Scalia, Alito, Thomas and Kennedy.  Like the majority, they rejected the Commerce Clause argument, stating that the Federal government doesn’t have to power to regulate inactivity. Their opinion stated “one does not regulate commerce that does not exist by compelling its existence.” The dissent also rejected the tax justification of the mandate, stating that the penalty for not obtaining health insurance should not a tax. They defined a tax as an enforced contribution to support the government while a penalty is a fine imposed as punishment for an unlawful act.

In the end, it was Chief Justice Roberts’ support for the mandate under taxing authority that resulted in the entire Obamacare (with the exception of the Medicaid expansion and funding) to be upheld. As Mitt Romney stated in a press conference after the decision, “What the Court did today was say that Obamacare does not violate the Constitution. What they did not do was say that Obamacare is good law or that it’s good policy.” It is now up to the voters to go out and decide whether they think this is a good direction in which to be sending our nation.

 

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