WASHINGTON – The US Supreme Court today handed President Obama a major victory by upholding the sweeping 2010 healthcare law, declaring that Obama and Congress acted within their powers in requiring most Americans to obtain health insurance.
The ruling reaffirms the most ambitious and controversial undertaking of Obama’s first term: attempting to guarantee that most of the 45 million Americans without insurance will get better access to medical care. Demonstrators supporting the healthcare law exploded in cheers outside the Supreme Court as news of the ruling emerged.
The justices ruled 5-to-4 that Congress acted within its authority to impose an “individual mandate’’ by using its taxing powers to fashion the enforcement side of the requirement. Under the law, individuals who fail to obtain insurance will be required to pay a tax penalty. The requirement begins in 2014.
Chief Justice John Roberts Jr., an appointee of former President George W. Bush who often has sided with the conservatives on the court in close cases, sided with the more liberal wing this time and proved to be the decisive vote.
There is some irony in the turn of events. As a US senator in 2005, Obama voted against Roberts’s confirmation. Now Roberts has handed Obama one of the biggest victories of his political life.
Within two hours after the decision was announced, Obama entered the East Room with a group of White House officials including Kathleen Sebelius, secretary of Health and Human Services and praised the court for reaffirming a fundamental American principle – “no illness or accident should lead to any family’s financial ruin.”
He ticked off the popular consumer protections that Americans will continue to enjoy thanks to the court’s ruling. And for the first time in recent weeks, Obama addressed the controversial individual mandate upheld by the court, making the case that when the uninsured show up in emergency rooms for care or when those who could afford insurance wait until they are sick to buy coverage, everyone else ends up footing the bill in terms of higher premiums.
“That’s why, even though I knew it wouldn’t be politically popular, and resisted the idea when I ran for this office, we ultimately included a provision in the Affordable Care Act that people who can afford to buy health insurance should take the responsibility to do so,” said Obama, emphasizing that Mitt Romney, too, supported the idea and included it in the Massachusetts reform law when he was governor.
Now that the highest court in the land has spoken, Obama said, “what the country can’t afford to do is refight the political battles of two years ago, or go back to the way things were.”
“With today’s announcement, it’s time for us to move forward,” he said, “to implement and, where necessary, improve on this law.”
Romney also responded quickly. “What the court did not do on its last day in session, I will do on my first day if elected president of the United States,” he said. “What the court did today was say that ObamaCare does not violate the Constitution. What they did not do was say that ObamaCare is a good law or that it’s good policy.”
Romney went on to slam the health care law for adding to the national debt, making it more difficult for business to hire, and allowing the federal government to intrude on the health care choices of individuals.
“Our mission is clear,” Romney said. “If we want to get rid of ObamaCare, we’re going to have to replace President Obama. My mission is to make sure we do exactly that.”
By maintaining the status quo, the Supreme Court has given Republicans in Congress a fresh rallying point, as they have vowed to continue their fight to legislatively repeal the sweeping law. But with the conservative-leaning court affirming the government’s power to intervene aggressively in the national healthcare market, the GOP faces a difficult path.
Obama and his Democratic allies have said they will continue seeking to persuade voters of the virtues of the law during the election season, including popular provisions that bar insurance companies from denying coverage for pre-existing conditions and that require insurers to cover children in family plans until they are 26 years old. The law also includes a massive expansion of the federal Medicaid program, which is expected to add 17 million new people to government-sponsored coverage by 2016, also remains intact.
The victory for Obama and Democrats bucked conventional wisdom and proved the futility of attempting to predict how the Supreme Court will act when fundamental and unprecedented questions about the power of federal government are on the line. Most analysts had anticipated a high-court setback based on the tone of questions during oral arguments and a recent conservative tilt of the court.
Stephen Ryan, head of the government strategies group in the Washington-based law firm of McDermott Will & Emery, said Chief Justice Roberts saved the court from being seen as a politicized body, with a potential trifecta of partisan decisions given decisions in the past 12 years on Bush v. Gore, determining who won the 2000 presidential race, and Citizens United on unlimited political spending by corporations.
“This is the move of a great pol,” Ryan said. “He in effect has taken his branch of government out of being seen as having dumped something ugly in the punch bowl.”
The Obama administration has been criticized for not effectively selling the law’s benefits since it passed in 2010.
“The president has one last opportunity to sell this law to the American public today, which he has never done,” Ryan said. “His presidency might ride on his ability to convince people that his policy actually makes sense but they just didn’t know enough about it.”
The president fulfilled a longstanding goal of the Democratic Party in 2010 when he pushed through the most sweeping expansion of health care coverage since the federal government established the Medicare insurance program for the elderly in the 1960s. The law included a vast expansion of the federal Medicaid program to include millions of new beneficiaries and set up an array of cost-savings and reforms in federal healthcare programs. Modeled on the landmark healthcare plan passed by former Governor Mitt Romney in Massachusetts, the federal law also calls upon states to establish healthcare exchanges where low-cost and subsidized plans would be offered.
But the political costs were extremely high to both the president and Democrats in Congress. The vastly expanded role of the government in the healthcare market spawned a conservative backlash that spawned the Tea Party movement and helped Republicans win back the House from Democratic control in the 2010 mid-term elections.
Democrats lost 63 House seats and 6 Senate seats that year.
“The long rows of Democratic political dead can rest in peace today that they didn’t die in vain,” Ryan said. Had the ruling struck down all or parts of the law, “the president would have had a real problem dealing with Democratic members watching their colleagues lay down their seats for nothing.”
The negative reaction in 2010 also helped Massachusetts Republican Scott Brown seize the seat left vacant by the death of Senator Edward M. Kennedy, who spent most of his career advocating for better health care coverage and was a crucial backer of the Obama effort until his death in August 2009.
Polls have shown Americans never fully understood or supported the benefits or costs of the complex law; a narrow majority continues to favor its total repeal. Even Obama has not campaigned aggressively on its passage in his 2012 re-election bid.
Suitably for a historic case, the justices said in their opinions that it turned on basic questions of federal power, the role of Congress and the court, and the checks and balances of the American system of government. Roberts, writing for the majority, began with a civics lesson about judicial restraint.
“We do not consider whether the [health care] act embodies sound policies. That judgment is entrusted to the nation’s elected leaders,’’ said the court. “We ask only whether Congress has the power under the Constitution to enact the challenged provisions.’’ And the court, it said, found that Congress did act within its power.
But the four dissenting justices – Anthony Kennedy, Antonin Scalia, Samuel Alito, and Clarence Thomas -- strongly disputed the majority’s reasoning. They said the court, by allowing the government to compel certain behavior (obtaining insurance), was authorizing an expansion of federal power without precedent. They said the entire law should have been thrown out.
“The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting states all Medicaid funding,” the dissenting opinion said. “These parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them. In our view it must follow that the entire statute is inoperative.”
Medicaid is paid for by both the federal government and states and is administered by states. The dissenting justices said such coercion was an undue exercise of federal authority over states.
“The values that should have determined our course today are caution, minimalism, and the understanding that the federal government is one of limited powers. But the court’s ruling undermines those values at every turn,’’ said the dissenters. “In the name of restraint, it overreaches. In the name of constitutional avoidance, it creates new constitutional questions. In the name of cooperative federalism, it undermines state sovereignty.’’
The majority rejected the government’s argument that the interstate commerce clause of the Constitution allows Congress to force consumers to take action. It said that would have been an excessive expansion of raw federal power that is not permitted by the Constitution. Instead, it upheld the individual mandate based on another argument the Obama administration presented: the taxing powers of Congress. People who do not buy insurance under the mandate are subject to a penalty, payable to the IRS, which is not a novel concept.
“… Taxes that seek to influence conduct are nothing new,’’ said the court, citing, for example, trade tariffs and sin taxes on things like cigarettes, marijuana, and sawed-off shotguns. Under this logic, the key is that the consumer has the option of buying insurance or paying the penalty. The compulsory nature of the mandate is mitigated. The court noted that the government has estimated 4 million people will not buy insurance and instead pay the penalty – which will range from $60 a month for someone with an income of $35,000 to $200 a month for someone making $100,000.
“That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws,’’ the court said.
The most contentious aspect of the 2010 law is the “individual mandate.’’ Requiring that most Americans obtain insurance is a critical tradeoff in barring insurance companies from denying benefits for pre-existing conditions and imposing other limits on coverage.
Without forcing healthy people to buy insurance and pay into the pot, not enough premiums will flow into an insurance plan to cover everyone who gets sick. In anticipation of the Supreme Court ruling, insurance companies in recent weeks have been scrambling to explain why they need this provision if they are going to be required to cover all comers, regardless of their medical history or condition.
Without the mandate, individual insurance premiums would rise to the point of becoming prohibitively expensive, and tens of millions more people would remain uninsured – the very problem the law was meant to address, analysts said.
Conservatives simultaneously claimed victory and defeat on Thursday.
The fact that the individual mandate was upheld not on the basis of the commerce clause was a victory for the Constitution, said Dean Clancy, legislative counsel and vice president of health care policy for FreedomWorks, a Tea Party group. The narrowly tailored opinion creates no precedent expanding Congress’ commerce power.
“We’re thrilled that federal power has been limited under the commerce clause, but we are baffled how a law that violates the Constitution is nevertheless permissible under the taxing power,” Clancy said. “It’s now in the hands of the American people to make the 2012 election a referendum on the full repeal of ObamaCare.”
Clancy also accused Obama and congressional Democrats of perpetrating a “major fraud” on the American people by repeatedly insisting in 2010 that the law was not a tax, only to have the court uphold the law precisely as a tax.
“We’re mystified by the court’s logic and outraged by its onstitutional acrobatics,” Clancy said.
Tom Barker, former acting general counsel at the US Department of Health and Human Services, praised the “brilliant” way Roberts narrowed the scope of the ruling.
“What he has done was to stop the encroachment of Congress using the commerce clause to enact social welfare legislation,” said Barker, now a partner at Boston-based Foley Hoag.
On Justice Scalia’s concern during oral arguments about whether the federal government has the power to force everyone to eat broccoli, Barker said today’s ruling means that while the government cannot force people to eat broccoli, “in theory, you can impose a tax on people who don’t eat broccoli and it would be upheld.”
Dr. Don Berwick, former head of the Centers for Medicare and Medicaid Services who oversaw the rollout of the law in its early stages, hailed the court decision as “majestic.”
“It’s America moving at last towards health care as a human right,” said Berwick, a former Harvard School of Public Health professor who lead the Cambridge-based Institute for Healthcare Improvement. “I hope now we can put aside not just the uncertainty but the grenades, and come together as a country to make the law work.”
Berwick acknowledged however that the political season ahead will create continued uncertainty around health reform.
“There is a big communication job to do, and I know the administration is committed to that,” he said. “Health care is a complex area and explaining it in a way that people can grasp is an important job to do.”
Now that benefits of the law are starting to kick in, Berwick said he believes more and more Americans will come to embrace it. The biggest challenge now is to set up the health care exchanges and changing the way health care is delivered to inspire more collaboration between doctors, hospitals and home care and rein in costs.
Berwick, along with many other attorneys and health analysts, said he was surprised that the court basically made the law’s Medicaid expansion provision optional by ruling it unconstitutional for the government to withdraw all federal Medicaid dollars from states that don’t comply. States that choose not to expand Medicaid eligibility to more low-income people would now only lose new funds tied to expansion. The ruling could very well slow the expansion of health insurance to the uninsured.
“They pulled a few teeth in terms of the degree in which the law can assure Medicaid expansion at the state level,” Berwick said. “That is basically going to confront the states with a choice: do you want to leave people uncovered or take advantage of federal dollars? I would suspect most states are going to come to their senses and not leave poor people high and dry.”
Nationally, the sweeping health reform law is supposed to expand coverage to 30 million people who are currently uninsured by 2016, through a combination of employer-sponsored insurance, Medicaid expansion, private individual plans, and insurance exchanges. It is unclear how many would ultimately be covered without the mandate to buy insurance or pay a penalty starting in 2014.