An exciting time to be taking Penn’s ‘Health Policy’ with Zeke

Editor’s note: Today’s guest blogger is Dr. Ezekiel “Zeke” Emanuel,  an oncologist and former White House adviser, and vice provost and professor at the University of Pennsylvania. Dr. Emanuel is currently teaching “Health Policy and the Affordable Care Act.”  The class just started, so it’s not too late to sign-up if you haven’t already! 

WOW!  What an exciting and unexpected ruling from the Supreme Court.

No one predicted this decision. No one predicted Chief Justice Roberts would be the fifth vote upholding the Affordable Care Act and that it would be upheld on taxing grounds.    Everyone thought that if it were upheld it would be a 6 to 3 vote with Justice Kennedy voting with the more liberal justices.  But Justice Kennedy was squarely with the most conservative justices voting to throw out the entire law.

What is the bottom line of the ruling?  The Affordable Care Act (ACA) is constitutional.  This ends the two-year meandering of the legislation through the Courts, and the accompanying uncertainty about whether the law would be thrown out. Now the important thing is for everyone to focus on implementation.  

What, in particular, did the decision say?  First, most commentators thought that the key reason Congress could enact the ACA was because of its Commerce Clause power—that is, its power to regulate inter-state commerce.  The argument is that to ensure the proper functioning of the health insurance exchanges—which is clearly commerce and under Congress’ purview—Congress could mandate that people buy insurance or pay a penalty.   

Chief Justice Roberts disagreed, based on the idea that if people were not buying insurance they were not engaged in commerce.  If they were not engaged in commerce, then Congress could not regulate their action by requiring them to engage in commerce by buying insurance.   Instead, he argued, Congress could tax people who were not doing something—like buying health insurance.  So the penalty for not buying insurance became a tax, and Congress certainly has the power to tax people for not doing things and thereby to incentivize that they buy insurance.  While the label changed—from a penalty to a tax, which might be politically significant—the underlying policy did not change.

The other issue is a bit more complex.  The court, by a vote of 7 to 2, argued that Congress could not take away all of a state’s federal Medicaid money if the state did not agree to expand Medicaid to all uninsured people under 133% of the federal poverty line, as required by the ACA.  The Court felt that this expansion was not an expansion at all, but really a whole new program with the same name.  As a new program, Congress could not take away money from the old program to penalize states who did not want to accept it the new one.  Furthermore, the amounts of money that could be involved are so huge—up to 10% of state budgets, according to the Court—that it amounted to coercion or compulsion.  The practical effect of this part of the ruling for the ACA is probably going to be limited, because the federal government will provide so much of the money for the Medicaid expansion that it will be too good a deal for states to turn down.  Some may still turn down the money, but that would be based on ideology not economic realities.

What are the political consequences of this bill?  First, this is clearly a big victory for the President.  Think about how politically damaging it would have been to have the Supreme Court rule that the bill was unconstitutional and that the President had wasted over a year of his time passing something that was unconstitutional.  Beyond that point, it is hard to tell what the political fallout will be.   Certainly the Republicans will try to use the tax idea to attack the President.  Whether this would be effective is hard to know, especially since former governor Romney passed a similar “tax” in Massachusetts.  

The biggest remaining unknown is whether the Court’s ruling will sway the public to “move on” and accept the law.  This is certainly possible give the past history of this type of major piece of social legislation.

In the course, in weeks  5-7, we will look at the implications of the ACA for coverage as well as cost and access.

-Posted by Dr. Emanuel, University of Pennsylvania