As many people know, the United States Supreme Court recently ruled on one of the more controversial issues of this millennium. Over the last few months, The Supreme Court heard arguments centering on the new health care bill (more commonly termed “Obama Care”), including a portion of the bill that requires a citizen of the United States to maintain health insurance, or incur a “shared penalty”. This “penalty” would be paid to the IRS with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties. Along with the individual penalty, the bill requires each state to cover an expansion of the current Medicaid program to cover adults with incomes up to 133 percent of the federal poverty level. The states currently only cover adults with children if their incomes are considerably lower, and most do not cover childless adults at all. If a state does not comply with the bill’s new requirements, it may lose not only the funding for the expansion, but also all of its Medicaid funding. These two parts of the new bill were the focus of the arguments heard by the Supreme Court. The main question presented is whether the Constitution grants Congress the power to enact the challenged portion of the bill.
The majority opinion, given by Chief Justice Roberts, held that the “shared penalty” portion of the healthcare bill will not be construed to prescribe a penalty, but will be understood to impose a tax. This is Constitutional under Congress’ power to “lay and collect taxes,” but not under the Commerce Clause.
Under the Commerce Clause, Congress has the power to regulate areas that affect interstate commerce, or the flow of goods and services between the states. The Court stated that this theory could not support the individual mandate portion of the healthcare bill. The individual mandate was intended to correct the cost shifting problem. In theory, everyone will eventually need health care, even if they cannot afford it. In this country, based on social norms, hospitals are not able to turn down patients simply because they do not have insurance. This then shifts the costs to the hospitals, which then shifts the costs to the insurance companies, who then increase premiums to the insured patients. Eventually this shifts the cost to the people who already have insurance. Although this does happen, this would require the precedent to be set that inactivity by the general public affects commerce. Congress has never attempted to rely on this power to compel individuals not engaged in commerce to purchase an unwanted product. The Court stated that “the power to regulate commerce presupposed the existence of commercial activity to be regulated. If the power to “regulate” something also included the power to create it, many of the provisions in the Constitution would be superfluous.” This would then stretch Congress’ power to put anything it felt was needed into an act and use the Commerce clause as the justification. This would stretch an already loosely interpreted portion of the Constitution even further. The Court concluded that Congress does not have the power to dictate the conduct of individuals under this theory. “The commerce clause is not a general license to regulate an individual…” For this reason, the Court stated this was not a good theory to support the individual mandate.
The Court looked at the tax theory from a distance, stating it is not the Court’s role to “forbid it, or pass upon its wisdom or fairness.” Although the government does not have the power to force people to buy insurance, it does have the power to impose a tax on individuals without health insurance. The Court relied on precedent to show that labels are not an end all. It is more important on how the label would be imposed. Since this “penalty” would be paid through the IRS and collected with tax penalties as much other taxes, it should be viewed as a normal tax.
Lastly, the Court examined the expansion of the current Medicaid program and the penalty incurred by not complying with it. The Court determined that the Constitution does not give congress the authority to require a state to regulate a federal program and does not give Congress, or the Federal Government, the power to force the States to implement a program that would take current funding away from the States. This portion of the health care bill would remove money from a state the current system, forcing the States to implement the new system, or lose the funding for the current one. This is the main portion of the bill that the Court did not agree with. It is Constitutional for Congress to set conditions on what federal money can be used for, but what this bill does is deemed to have over-stepped the Constitutional bounds. The Court goes as far as saying “the financial inducement Congress has chosen is much more than a relatively mild encouragement; it is a gun to the head. The loss of nearly ten percent of a State’s overall budget is unheard of. In conclusion, the Court states “ nothing in our opinion precludes Congress from offering funds under the Affordable Healthcare Act to expand the availability of health care, and requiring that States accepting such funds comply with conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”
In my opinion, the Court’s decision was definitely in the right direction. This “tax” is a step in the right direction to fix the current health care issue in the United States. However, I feel this is, no pun intended, a band aid. The concurring opinion written by Justice Ginsberg points out that the cost sharing, as stated earlier, is a clear issue and would place this act under the Commerce Clause. I agree on the first point, but disagree with the second. Cost sharing is absolutely an issue in this country. Many people see “public healthcare” as an issue where the people who pay for insurance will now be paying for the people who do not. What these people don’t realize is, that in the modern system, this is already happening. Cost sharing eventually moves its way down to the paying customers in the form of higher premiums to maintain insurance. This extended version of public insurance would actually lower premiums for paying customers due to the new competition for the lower income population. This increase in supply would bring down the price of the “big name” insurance providers and withdraw the cost from these customers in increased premiums. But, the fact that this would fall under the Commerce Clause, would increase the strength of Congress to an unimagined height. To allow this would also allow Congress to force the population to buy anything, even if it is undesired. The Commerce Clause is not there to dictate what people must buy. To call it a tax is the best way to describe this and, as stated in the Court’s opinion, this will raise an enormous amount of money for the country in the next few years. Again, this is not a cure-all but it may be the best quick option at the moment.
I completely agree with the Court’s decision regarding the imposition of penalties against the States and the cutoff of Medicaid funding. Congress should never have the power to take any percentage, let alone 10% of a state’s budget, for not agreeing with a program and choosing not participate. As the Court states, this would put an extreme amount of political pressure on state governments. Congress should only be allowed to with hold the money for the purpose of the program if a state simply does not want to participate of its own accord.