UMKC School of Law professors Allen Rostron and Ann Marie Marciarille discuss last week’s Supreme Court ruling to uphold the Affordable Care Act (ACA).
Q: What does it mean that it was upheld using tax law and not commerce law? Is that just legal significance or does it have practical significance?
Rostron: The Court upheld the law as an exercise of Congress’s power to tax and spend money for the nation’s general welfare. (Only four of the Justices, one short of a majority, felt that the law was also a valid exercise of Congress’s power to regulate interstate commerce.) In some sense, it does not really matter whether the Court upheld the law under the tax power instead of the commerce power. If the law is valid, then it’s valid. The law will not be implemented in a different way or have different effects depending on whether it’s justified by the tax power or the commerce power. The distinction could have political significance, however, if it affects how people feel about the new law. For example, critics of the law will surely emphasize the idea that the law increases the financial burden on people who are already taxed too much.
Q: The only part it appears to be rejected was the government’s power to terminate Medicaid funds – what does this mean?
Rostron: The ACA expands the Medicaid program, increasing the number of low-income people who will be eligible to receive health care under that program. The federal government will pay for 100% of the cost of adding those newly eligible people to Medicaid for 2014, 2015, and 2016. After that, the federal government’s share of the cost will decline to 90%, and the remainder of the extra costs will be paid by state governments. Some states are not happy about incurring those additional costs. The federal government’s response was that if a state was unhappy about it, the state could simply drop out of the Medicaid program.
Some states challenged this in their lawsuits arguing that it is unconstitutional for the federal government to put them in this situation. As a practical matter, the federal Medicaid money is such a big part of each state’s funding that no state realistically could walk away from the Medicaid program. As a result, the states argued, the federal government was pretending to give the states a choice, but knew that it was not a real choice.
The states relied on a 1987 case called South Dakota v. Dole where the federal government wanted all states to raise their drinking age to 21, so Congress passed a law saying that any state that failed to raise its drinking age would lose a small percentage of its federal funding for highways. South Dakota argued that this was essentially an unconstitutional form of blackmail or extortion. The Supreme Court upheld the law, finding that the amount of money at stake was not large enough to be unduly coercive.
In this case, the Supreme Court concluded that it would be too coercive to force a state to choose between participating in the ACA’s expansion of Medicaid of dropping out of Medicaid entirely. The Court held that if a state wants to opt out of the Medicaid expansion, it should only lose the extra federal Medicaid funding associated with the expansion of the program, and not lose all the other Medicaid funding that the state was already receiving.
Q: What does this decision mean for the future of health care law?
Marciarille: The decision is significant both for what it does – allows the implementation of the modified ACA to go forward—and for what it tells us about a yet-to-be developed body of law on the relationship between the states and the federal government in Medicaid. The ACA implementation, with Medicaid expansion limited as a state opt-in provision in Medicaid, is momentous. Only two states, until this point, had advanced to the point of Exchange formation. Now, all must proceed with alacrity or the work of federal government Exchange formation in the states will begin in its place.
At the same time, Chief Justice Roberts’ opinion may have opened a new era in our understanding of the power relationship between the federal government and states in Medicaid even beyond the ACA. The fulcrum of his opinion determining that Congress lacked the power to unilaterally rewrite the original Medicaid statute is the presumption that the ACA’s changes to Medicaid are so sweeping in scope that they, in effect, repealed the original Medicaid statute and replaced it with a new one.
Q: What does the decision mean for the average American?
Marciarille: The crucial question is: “Are you insured?” If you are currently uninsured, this means promise of insured status beginning in 2014 when the bans on pre-existing condition exclusions (for adults), the rise of guarantee issue and community rating kick in. If you are currently uninsured and low income, this means you will be shopping for insurance through your state Exchange and may be entitled to government subsidies to make the premiums affordable. All documented citizens will be able to buy, regardless of health status. If you are very low income and uninsured, you may be able to gain insured status through the Medicaid expansion to include those up to 133% of poverty and up to 65 years of age.
Q: What happens next?
Marciarielle: Any number of states, including Missouri, will need to establish Health Care Exchanges or cede authority to do so to the federal government. That process encompasses many important decisions about how the individual mandate should be implemented as well as decisions about how consumers should access the health insurance marketplace. Many states will want to participate in the joint federal state determination of what minimum essential benefits will need to be offered. These will be hard fought regulations with considerable significance for the scope and depth of coverage available.
If you are interested in a broad overview of state-by-state action on Exchange development, you may want to view this map.
Complete rollout will not be achieved until 2020 or late, but it has already begun. The requirement that adult children between the ages of 18 and 26 be eligible for family health insurance coverage through their parents kicked in almost immediately. Similarly, the ban on pre-existing condition exclusion for children’s health insurance is also in place. Some of the provisions, like the creation of state insurance Exchanges, are on the horizon for 2014. And the individual mandate is also on that short time horizon, though the tax or penalty on the non-compliant is only gradually phased-in until it becomes substantially in force by 2016. For a ACA implementation timeline, click here.
Q: This has become a partisan issue especially in this election year. How successfully do you believe the justices were in avoiding this conflict and remaining focused on the legal matters?
Rostron: That is a great question, and although there is a great deal of speculation going on about why the case turned out the way it did, no one outside the Supreme Court really knows the answer. In particular, no one knows why Chief Justice John Roberts decided to provide the crucial fifth vote to uphold the statute.
One possibility is that Roberts was just sincerely trying to be a good judge. He told the Senate Judiciary Committee, at the hearings on his Supreme Court nomination in 2005, that judges should be like baseball umpires: they don’t make the rules, and instead just apply them. Roberts promised that he would do his best to just call balls and strikes as fairly as he could, rather than trying to advance his own personal views about things. Perhaps the decision today was just an example of John Roberts honestly trying to do that.
But many people wonder whether political considerations and other outside influences affected the decision. Some have speculated that Roberts initially voted to strike down the law, but then changed his mind because he was afraid that the Supreme Court’s reputation would be harmed if the decision looked too much like the result of political partisanship rather than legal reasoning. If Roberts had voted to strike down the law, it would have been five Republican-appointed judges on one side, and four Democratic-appointed judges on the other. Perhaps John Roberts wanted to protect the Supreme Court from that, by showing that it doesn’t always support one political party’s preferred positions.
It is also possible that Roberts was influenced by political considerations in a somewhat different way. Perhaps his bottom-line conclusion was that the fate of the health care reform law should be decided by the American people when they go to vote in November 2012, and not by the Supreme Court. In other words, the essence of his decision could simply be judicial restraint, the idea that whenever possible the Supreme Court should defer to the political process and let the voters and their elected representatives make important policy decisions.