Wednesday, July 11, 2012

The Individual Mandate Explained, Part 3


(6) What's all this tax vs penalty business that I am hearing all about?

When Democrats put the individual mandate in the bill, they didn't want to call it a "tax"  for a few reasons. The first being "taxes" are politically unpopular and they didn't want to be attacked for raising taxes. The second being that taxes have to originate in the house, where the ACA really came into being in the Senate. Serious constitutional problem right there. A third problem, which lead both the Republicans and Democrats to agree that it was not a tax, is that taxes can not be challenged until they actually take effect - which meant the whole law was going to sit in legal limbo for at least a few more years. Nobody wanted that. Democrats wanted it implemented and Republicans wanted it overturned. So both parties argued it wasn't a tax. The Supreme Court agreed for the purposes of the Anti-Injunction Act that it was not a tax - but a penalty.

Sounds simple enough, right? Wrong. For the purposes of Constitutionality, the Supreme Court ruled that it was a tax and not a penalty. A penalty would have meant that it would have passed legal muster under the Interstate Commerce Clause or the Necessary and Proper Clause, each of which would have increased (or maintained, depending who you ask) the power of the federal government. The 4 conservative dissenting  judges and Roberts basically said that the court cannot force you not to do something (double negative intentional) - they made a new legal distinction between activity, which the government can regulate, and inactivity, which the government can not. What impact this will end up having on future legislation and court cases is unknown.

Roberts, along with the four liberal judges, upheld the individual mandate under the Taxing and Spending Clause of the constitution - therefore declaring that the whole law was legal by the virtue that the individual mandate is a tax.

If you are wondering how the individual mandate is a tax and is not a tax at the same time, then you aren't the only one. I consider it a legal fiction, or a very very fine splitting of legal hairs, to get the result that Roberts wanted. Uphold the law, but do so in a way that limits the power of federal government. Everyone gets a prize. But if it's not a tax, does that means it's a penalty?

Well... Not A does not imply B. I'll just leave it at that.

(7) Wow, the law is confusing. No wonder all of the reporting got it wrong.

I blame the inaccurate reporting to people who read the first couple of pages of the ruling, then jumped to conclusions in order to be the first to report the news. The news world tends to reward organizations who are faster rather than more accurate. CNN has gotten burned doing this before, but yet they keep repeating the same mistake over and over again. CNN is not a bad and biased news organization (like Fox is), but rather just a very shoddy one. The term "lazy" might go too far, but it captures the same essence.

Anyways.... if you read the first few pages of the ruling, Roberts gives a history lesson on why the Supreme Court has the power to overturn federal laws. He even goes on about why and how a law can be found unconstitutional on the federal level while being completely legal on the state level. An argument that the detractors of the law made over and over again. Roberts then goes on to state,


"Members of this Court are vested with the authority to
interpret the law; we possess neither the expertise nor
the prerogative to make policy judgments.  Those decisions 
are entrusted to our Nation’s elected leaders, who can be 
thrown out of office if the people disagree with them.  It is 
not our job to protect the people from the consequences of
their political choices."


In short, the Supreme Court's job is to determine whether laws are legal and not whether the law is good policy or not. Most policy analysts agree that it is a good, if imperfect, law. If you read that paragraph with that presumption, then you come to the conclusion that Roberts is about to overturn the law on legal grounds. Full stop. Unconstitutional, right? CNN and Fox stopped reading on page 6.

Roberts continues for the next 30 pages explaining why the Commerce Clause and Necessary and Proper Clauses are inappropriate. Then finally gets to the Taxing and Spending Clause and sums it up by saying:


"Our precedent demonstrates that Congress had the
power to impose the exaction in §5000A under the taxing 
power, and that §5000A need not be read to do more than
impose a tax.  That is sufficient to sustain it."


(8) That seems like some strange language from Roberts. Why did he write it like that?

It's a conservative way to uphold the law. Besides that, rumors are that he switched his vote. As a policy matter, it doesn't matter too much. Therefore I am going to leave it to the people who care about the DC chatterbox.

(9) Are the legal challenges over?

This is America. The legal challenges are never over. Many people wish they were and are ready to move on. I wish the Republican party drops this whole repeal nonsense and goes on to make more helpful changes to the law instead. As a policy wonk, I know I am just setting myself up for disappoint to expect anything out of the US Congress.

(10) When you say "helpful changes", what do you mean? Where does health care reform go from here?

In brief, it goes from passing legislation to implementing it. There are a lot of technical and administrative challenges to make these things work. Actually getting the exchanges up and running is going to be a huge pain. States will continue to resist. The federal government might not have the resources able to set up exchanges if the states don't. Even if everyone moves forward, how many people out there actually have experience doing this before?  It might take a whole lot longer to implement than anyone imagined. No one said that this was going to be easy.



On the policy side, there were a lot of ideas thrown out there during the negotiations that got either dropped or half-heartedly implemented. Here are a few:

(a) Public Option
(b) Prescription Drug Changes
(c) Accountable Care Organizations and Bundled Payments

Not to say that all of these ideas are good ones. Even the good ones seem to have merit in theory, but would be difficult to put into practice. But the main point to take away here is: ObamaCare was not the end all be all to health care reform. There is still a lot wrong with the US health care system; therefore these is still  a lot to be done. Cost control is going to be a big issue going forward.

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