Both sides can cheer the Supreme Court

by Robert I. Field, Ph.D., J.D., M.P.H.

OK.  I was wrong. I predicted the Supreme Court would strike down the mandate in the health reform law. 

But at least I was in good company. Few people expected the mandate to get a clean pass.

However, on another key aspect of the ruling, many observers (this one included) were correct. It was extremely narrow. The decision rests on settled constitutional principles of tax law, not on a novel expansion of federal power. (The full opinion is available here. A summary of key aspects is available here.)

The Court found that the mandate to maintain health insurance is nothing more than a tax incentive. And it has repeatedly recognized Congress’s broad power in that area.

Health reform lets you choose between obtaining coverage, which leaves your taxes unchanged, and going uninsured, which triggers a surcharge.

Congress encourages many kinds of behavior in this way. Car buyers can purchase a gas-powered vehicle and pay their full tax bill or buy a hybrid, and gain a tax credit. Smokers can pay the heavy tax on cigarettes or quit.

In none of these instances has Congress actually “mandated” that individuals do anything. It has given them a choice of two perfectly legal alternatives.

Viewed from this perspective, the health reform law does not force you buy insurance. It gives you two options. You can pay an insurance company for coverage or pay the government and remain without it.

This approach may nor may not represent wise public policy, but it does not violate the Constitution.

Most observers expected the Court to base its decision on different grounds. The most intense legal controversy had centered on Congress’s power to regulate interstate commerce. Health reform opponents had warned that if this power included the ability to mandate behavior, it would be limitless. We might even have to buy broccoli.

Even though opponents failed to block this part of the law, their worst fears were not realized. There was no expansion of Congress’s commerce power. 

In fact, parts of the Court’s opinion restrict that power. Justice Roberts, who wrote the decision, found that the law would not have passed muster if viewed as a regulation of commerce. He declared that Congress may not “create” commerce in a product, like insurance, that did not previously exist. That is a limit on federal authority that had not previously been recognized.

The Court’s decision on the law’s expansion of Medicaid was similar. It permitted Congress to extend that program, but, once again, on narrow grounds.

The holding let Congress offer generous funding to states if they open their Medicaid rolls to more people. But it did not permit complete defunding of a state’s Medicaid program, if it refuses.

In other words, Congress can use a carrot to encourage states to expand Medicaid but not a stick to punish them if they do not.

In this aspect of the ruling, as well, health reform opponents failed to block a part of the law that they had challenged but gained something nevertheless. The Court had previously recognized few limits on Congress’s power to spend money while attaching strings on its use. The Court’s decision recognizes a new restriction.

The take-away message for most people from yesterday’s ruling is that Obamacare won. That is true, but it was a narrow victory.

While the Court decided that the law can take effect, Congress will have to use care in structuring new social programs going forward.

The decision gave both sides something to cheer.

Read the transcript of my online chat following Thursday's ruling. 

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