The Right Opinion

Health Care Act's Death Star?

By George Will · Jan. 20, 2013

WASHINGTON – A willow, not an oak. So said conservatives of Chief Justice John Roberts when he rescued the Affordable Care Act – aka Obamacare – from being found unconstitutional. But the manner in which he did this may have made the ACA unworkable, thereby putting it on a path to ultimate extinction.

This plausible judgment comes from professor Thomas A. Lambert of the University of Missouri Law School, writing in Regulation quarterly, a publication of the libertarian Cato Institute. The crucial decision, he says, was four liberal justices joining Roberts' opinion declaring that the ACA's penalty for not complying with the mandate to purchase health insurance is actually a tax on not purchasing it. With this reasoning, the court severely limited the ability of the new health care regime to cope with its own predictable consequences.

What was supposed to be, constitutionally, the dispositive question turned out not to be. Conservatives said the mandate – the requirement that people engage in commerce by purchasing health insurance – exceeded Congress' enumerated power to regulate interstate commerce. Liberals ridiculed this argument, noting that since the judicial revolution wrought during the New Deal, courts have given vast deference to Congress regarding that power. The ridicule stopped when five justices, including Roberts, agreed with the conservative argument.

This did not, however, doom the ACA because Roberts invoked what Lambert calls “a longstanding interpretive canon that calls for the court, if possible, to interpret statutes in a way that preserves their constitutionality.” Roberts did this by ruling that what Congress called a “penalty” for not obeying the mandate was really a tax on noncompliance. This must, Lambert thinks, have momentous – and deleterious – implications for the functioning of the ACA. The problems arise from the interplay of two ACA provisions – “guaranteed issue” and “community rating.”

The former forbids insurance companies from denying coverage because of a person's pre-existing health condition. The latter, says Lambert, requires insurers to price premiums “solely on the basis of age, smoker status, and geographic area, without charging higher premiums to sick people or those susceptible to sickness.”

The point of the penalty to enforce the mandate was to prevent healthy people – particularly healthy young people – from declining to purchase insurance, or dropping their insurance, which would leave an insured pool of mostly old and infirm people. This would cause the cost of insurance premiums to soar, making it more and more sensible for the healthy to pay the ACA tax, which is much less than the price of insurance.

Roberts noted that a person earning $35,000 a year would pay a $60 monthly tax and someone earning $100,000 would pay $200. But the cost of a qualifying insurance policy is projected to be $400 a month. Clearly, it would be sensible to pay $60 or $200 rather than $400, because if one becomes ill, “guaranteed issue” assures coverage and “community rating” means that one's illness will not result in higher insurance rates.

So, Lambert says, the ACA's penalties are too low to prod the healthy to purchase insurance, even given ACA's subsidies for purchasers. The ACA's authors probably understood this perverse incentive and assumed that once Congress passed the ACA with penalties low enough to be politically palatable, Congress could increase them.

But Roberts' decision limits Congress' latitude by holding that the small size of the penalty is part of the reason it is, for constitutional purposes, a tax. It is not a “financial punishment” because it is not so steep that it effectively prohibits the choice of paying it. And, Roberts noted, “by statute, it can never be more.” As Lambert says, the penalty for refusing to purchase insurance counts as a tax only if it remains so small as to be largely ineffective.

Unable to increase penalties substantially, Congress, in the context of “guaranteed issue” and “community rating,” has only one way to induce healthy people to purchase insurance. This is by the hugely expensive process of increasing premium subsidies enough to make negligible the difference between the cost of insurance to purchasers and the penalty for not purchasing. Republicans will ferociously resist exacerbating the nation's financial crisis in order to rescue the ACA.

Because the penalties are constitutionally limited by the reasoning whereby Roberts declared them taxes, he may have saved the ACA's constitutionality by sacrificing its feasibility. So as the president begins his second term, the signature achievement of his first term looks remarkably rickety.

© 2013, Washington Post Writers Group

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11 Comments

veritaseequitas in Fightertown, USA said:

"Republicans will ferociously resist..."
Really? I haven't seen the Republicans "ferociously resist" anything lately. Except, of course, their ferocious resistance to stepping up to the plate to oppose King Craptastic and his craptastic posse of left wingers and their craptastic policies that are killing America.

Sunday, January 20, 2013 at 7:03 AM

Doktor Riktor Von Zhades in Western KY replied:

Agreed!

Sunday, January 20, 2013 at 8:44 AM

Tod the tool guy in brooklyn ny said:

Blind sheep do not seem concerned with tangible results of their unjust legislation, only the FACT that PPACA was LORDED, over us(a),--- racist conservatives. I'm praying that LIBERAL HUBRIS, will be their own downfall. In 2016, voters can say, unequivocally, "OH- how the mighty Marxists have fallen.It is a terrible thing to be UNDER the JUDGEMENT of ALMIGHTY GOD, rather than the so-called Supreme Court! PAX VOBISCUM PATRIOTS!!!

Sunday, January 20, 2013 at 8:44 AM

Mr. Ed in Indiana said:

"Republicans will ferociously..."

Dude! George!

You can't put stuff like that way deep in your article where people are plausibly mid-sip on their coffee when they reach it. It scalds the nasal passages, old boy!

Ferocious Republicans. LOL of the century!

Sunday, January 20, 2013 at 10:05 AM

JDB Esq in CA/VA said:

If this was Robert's intention, then he outfoxed a lot of people. And, the Republicans won't have to "ferociously resist." They can merely attend to 'other matters,' and never even have to address it.

Sunday, January 20, 2013 at 3:29 PM

Nam_Vet68 in Philadelphia said:

The Republicans are a major disappointment. Stick a fork in them.

Sunday, January 20, 2013 at 9:00 PM

Jay in Epping, NH said:

The creators of the ACA care not one whit about whether it is effective, only that it establish the baseline notion that health care is the responsibility of government. The real show starts later on, once the onerous pile of regulation and taxation has destroyed the existing (somewhat) free market system of health insurance.

Monday, January 21, 2013 at 3:02 PM

JTG in Indiana said:

Let me see if I can piece this together:
1. We have numbnuts in the WH;
2. We have no nuts in the House;
3. We have gone nuts in the Senate;
Add a little Ben Bernanke at the Fed and who in the politcal world would care if young people do not pay into the system so long as QE and money printing is the mainstay of our economy? The political class have destroyed our country and we're looking at them to fix it? What's the definition of insanity again? We have to look inward rather than blaming the bozos we put in there.

Monday, January 21, 2013 at 3:02 PM

Eleanor in AK said:

So NOW Congress will have to go on record as raising taxes? And that will deter them?

Monday, January 21, 2013 at 4:08 PM

Tod the tool guy in brooklyn ny said:

Smelly rats are raising taxes, hell, strife, chaos,---EGAD!!! Lord Jesus, SAVE US(A) FROM THIS DARK HOUR!!!

Monday, January 21, 2013 at 5:11 PM

Abu Nudnik in Toronto said:

Brilliant! I finally understand why Roberts looked like the cat who ate the canary while Kennedy fumed.

Tuesday, January 22, 2013 at 1:32 PM