Relying on the unquestioned taxing power of the federal government, the Supreme Court ruled Thursday that the health care reform law – the signature achievement of President Barack Obama’s presidency – is constitutional.
The 26 states and the National Federation of Independent Businesses who mounted the consitutional challenge to the law relied on the commerce clause. They argued the government couldn't create commerce – the mandate that individuals buy insurance – in order to regulate it. By calling the penalties for failing to buy insurance a tax, Roberts was able to join the four liberals on the court to form a majority in favor of the law.
The decision means the government can continue moving forward in its implementation of health insurance coverage expansion that had been projected to extend coverage to an estimated 30 million Americans. However, the high court said the federal government could not penalize states that opt out of the Medicaid expansion, which accounts for about half of the coverage expansion, a victory for the 27 Republican-controlled states who challenged the constitutionality of the act.
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Chief Justice John Roberts joined four liberal justices in the 5-4 decision, which immediately reverberated across America’s divided political landscape. Reform advocates, who have pushed for nearly three-quarters of a century to make universal health insurance coverage a reality in the U.S. as it is in every other advanced industrial country, cheered the decision. Conservative commentators on Fox News immediately blasted Roberts for “joining with the left” and called the decision “a huge win for the Obama administration.”
“Our precedent demonstrates that Congress had the power to impose the exaction in (the law) under the taxing power,” the majority decision said, “and that (section) need not be read to do more than impose a tax. This is sufficient to sustain it.”
The immediate political reaction broke along partisan lines, with Democrats praising the decision and Republicans vowing to make it a major campaign issue during the fall elections. “The key point was the Supreme Court recognized what Congress was doing was constitutional, that we had a responsibility to provide affordable quality health care opportunities for all Americans, and that principle was upheld by the Supreme Court," Sen. Benjamin Cardin, D-Maryland, told MSNBC.
Cardin added that “it's good news for the American people that we will be able to move forward with the types of reforms – with the insurance reforms – with protecting people against abusive practices by insurance companies. We're able to move forward with allowing families to get their children covered under their policies. Medicare expansion was clearly allowed to move forward."
House Democratic Leader Nancy Pelosi of California tweeted, “Victory for the American people. Millions of American families and children will have certainty of health care benefits and affordable care."
Republican reaction echoed the four minority justices who dissented from the decision. Justice Anthony Kennedy declared, “In our view, the entire Act before us is invalid in its entirety."
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Former Republican Senator Jim Talent of Missouri, a close ally of presumptive GOP presidential nominee Mitt Romney, said that “on behalf of Gov. Romney, we think the law was a bad law. It’s a federal overthrow, really, of the health care system, and we know that’s going to raise costs for the average American up to $2,000 a year, throw millions of people off their private health insurance.”
“So we didn’t like the law, but obviously the Supreme Court needed to do what it thought was right from a constitutional point of view. But Gov. Romney continues to be for empowering people to get health insurance who don’t have it, and getting the economy going so that people have jobs and can buy health insurance,” Talent said.
The maximum tax penalty for failing to purchase health insurance is $695 a year under the law. That’s the equivalent of a two percent payroll tax on someone earning $35,000 a year – about the same amount Congress has granted in tax relief last year to stimulate the economy.
After weeks of speculation about how a court decision eliminating the mandate would affect both the economics and politics of health care reform, the bottom line is that the 50 states can now go forward in setting up insurance exchanges like ones in Massachusetts and Utah that allow individual citizens and small businesses to purchase lower-cost group insurance policies starting in 2014. The subsidy scheme for people who can’t afford the premiums remains in place.
The decision also leaves intact the sweeping delivery system reforms that are designed to reduce the growth of health care spending over the coming decades when 77 million baby boomers join the ranks of elderly Americans receiving Medicare, the government’s fastest growing spending program. While analysts differ as to the reason why, health care spending has slowed in recent years to its slowest pace in decades.
Many other sweeping provisions in the law that had little to do with broadening coverage or regulating the health insurance market, while rarely discussed in the run-up to the decision, also will remain in place. For instance, the law expanded generic drug competition to biotechnology companies. A number of billion-dollar blockbusters are coming off patent in the next few years. Generic competition could lower health care costs by billions of dollars annually and the Food and Drug Administration will still have legal authority to approve generic competition after today’s ruling.
The decision also left intact the requirement that health care providers disclose payments to physicians starting in 2013. Originally sponsored by Sen. Charles Grassley, R-Ia., the Physician Payments Sunshine Act will give patients information to decide whether their physicians’ decisions about treatments have been influenced by payments from drug, medical device or other health providers.
Since expanded coverage isn’t expected to go into effect until 2014, the immediate impact of the court’s decision to allow states to opt out of expanded Medicaid coverage remains unclear. "Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use,” the majority opinion said. “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.”
The law provided most of the funding for states to cover an estimated 15 million new people under Medicaid in the early years of the expansion. But future Congresses are free to reduce support and many states, especially in the Deep South, have opted out of prior Medicaid coverage expansion because of the matching requirements it would impose on state budgets.
Millions of Americans stayed glued to their computers, television sets and radios awaiting word. Over 850,000 people signed onto the Scotus blog where long-time Supreme Court reporter, Lyle Dennison, 81, and others, provided close coverage and analysis of the momentous decision.