Following Doug’s comments on the case for payment and delivery reform in the United States, Stuart Gerson was next to the podium to discuss whether the mandate is constitutional.
Stuart began by saying that it’s important to understand one thing – this discussion, besides the quality and efficiency issues, is about health insurance and not about healthcare itself. This is one of the real pitfalls of the US system – we provide healthcare to almost everyone, but it’s done through a series of cost-shifting and inefficiencies, and that’s what these programs are trying to address.
He added that he hoped to make his presentation interesting for non-Americans, many of whom live in systems with national health programs supplemented by private insurance. These countries feel that they have all the answers, and in some senses they do, with many of the countries providing a reasonable quality of healthcare at a vastly lower percentage of the GDP than what the US is doing. Although the US has some high end medicine, we also have a lot of inefficiency.
In terms of constitutional law, and what the Supreme Court is about to decide, Stuart said that "we really have a case of the tail wagging the dog." He commented that one would assume that the most important issues have to do with whether we can provide healthcare to the poor, can we provide high quality health care efficiently, and is there an efficient system of remuneration involving the private and public sectors – but the driving issue in the Supreme Court doesn’t have anything to do with that.
The Individual Mandate
The issue that’s taking up the Court’s attention, and upon which everything else depends, has to do with the "individual mandate." When the healthcare program was formed as a theoretical matter, long before even Massachusetts addressed it and the Obama administration took up a similar idea, one of the think tanks to which Stuart is an advisor (The Heritage Foundation) came up with an idea in response to the complaint of insurance companies, which is that if you force them to take on masses of new people – older, sicker, whatever – they’re going to lose money.
Among the uninsured, there is a significant group that are not poor and are not sick. They’re not eligible for Medicaid, a program for indigent people. They’re largely young, often employed, and they don’t want to purchase health insurance. Insurance companies have asked that if they have to take on sick people, how can they avoid the adverse reaction of putting these older, sicker, more likely to need medical care people in their pool? The answer is to create this mandate, to make the people who don’t want to buy health insurance and don’t qualify for public assistance, buy it.
Stuart said that in one sense, it doesn’t sound like a harsh idea – the states could do it under police power and the national government could do it if they created a tax system. It could be done in a number of ways, but no one running for public office wants to be held or seen as raising taxes. So, this system was created with this "individual mandate," which says that this certain category of people (religious objectors and people in prison are excluded), who are not poor, who could afford health insurance but don’t want to pay for it, who don’t qualify for government assistance, have to buy it, and the government will enforce it through a penalty under the tax code.
This was viewed as very noncontroversial, though not by Stuart – he was in a situation a few years ago when the firm was asked to opine on this program in its infancy, and he said that people would object because there’s a constitutional problem here.
A Little Constitutional Lesson
Why? Stuart said what we need to know is that the US constitution is different than all of the other constitutions in the world. It’s the oldest written constitution that’s still active, and the reason for it has to do with the structure of government. We don’t have a rights constitution – most other constitutions start with an elaborate declaration of all the things people are entitled to, but that’s not what our constitution does.
Our constitution describes the relationship between two levels of government – federal and state – and limits the power of the national government. We had a failed constitution, called the Articles of Federation, after the American Revolution. It was much like the constitution we now have, except that it had no limitation on what the states could do in commerce. So states were taxing the commerce of other states indiscriminately, and the nation was not forming the way that it should have.
So we got a new constitution several years later – the two main differences between the constitution we now have, and the one we used to have is something called the "commerce clause" and another part called the "supremacy clause." The latter said that where there’s a conflict between federal government mandates and what the states do, the federal government takes precedence. But the important part was the commerce clause – it prohibited the restraint of interstate commerce. As it was passed, and as it was intended, it was a limitation on the states.
That’s all it was intended to be – it prevented the states from discriminating against the commerce of other states, so that you’d have the free flow of goods and services across the whole country and you’d have a national economy. It did develop that, and it works extremely well.
Over time, and reaching its zenith during the New Deal, the commerce clause took on an additional meaning – the one about the states’ discriminating hasn’t been lost, but the new meaning is that the commerce clause serves as an empowerment to the federal government to do things related to interstate commerce.
A Constitutional Problem & The Decision Before the Court
The interesting thing about the individual mandate is that it is the first time, other than a few special cases like the military draft or jury duty, and really the only time on a national basis, that the federal government has sought to impose an affirmative obligation on individuals to engage in commerce – to do something, to buy something, that they don’t want to buy.
What’s the limitation? That’s the issue, and the debate in the Supreme Court. What’s interesting about the debate is that both sides are right. People who are proponents of the individual mandate say, and not without reason Stuart commented, that a decision not to buy health insurance really is a positive fact when it comes to interstate commerce, because sooner or later, you’re going to need healthcare coverage. You’ll get hit by a truck or have a heart attack, and if you don’t have health insurance, someone else has got to pay for it.
The opponent of that says, and there’s a lot of reason to that, that if you can make me do that, can you make me buy an American car? Where is the constitutional limitation on that kind of exercise of power? That’s what the Supreme Court is deciding if it chooses to take the matter on. There are issues of judicial restraint – there’s a law that suggests that a dispute over tax has to wait for the enforcement of the tax. As Lynn Snyder said, the provision isn’t effective until 2014, until after the Presidential election. The Court could abstain under that doctrine. In the 1930’s or ’40’s, it probably would have. In the wake of cases like Bush against Gore, it perhaps won’t. One would say there’s a substantial reticence about this individual mandate on the Court.
There’s an even greater reticence to do something else – if this mandate is held to be unconstitutional, how much of the rest of the 2,000 pages of the law will stand? In one sense, it’s fair to say that without the mandate, the law never would have passed. It’s also fair to say, as Doug Hastings said, that a great deal of the law – in fact, most of it – has nothing to do with the mandate.
In fact, there’s a certain inevitability about it – it will either survive, or be re-enacted in some other way. The idea of managing care, imposing cost controls, evidence-based medicine, preventative care – these things are inevitabilities. It’s the only way you can improve quality and it’s the only way you can get costs down – a certain kind of cost rationing has to take place.
So do you cut that out of the law? Nobody in the Court, whether you favor or disfavor the mandate, wants to involve himself or herself in parsing through 2,000 pages of law to make these decisions – that’s not a judicial function, that’s a legislative function. And everyone on the Court knows it, so the Court is grappling with that.
What’s going to happen? Stuart said that he’s practiced before the Supreme Court, and has talked to Justices from time to time, and has been involved in the preparation of some of the people who argued the case. He doesn’t know what will happen. There are 9 Justices on the Court, and it’s highly probable it will end up being a 6-3 decision, because the court has a very pronounced division between so-called liberals and conservatives – not political liberals and conservatives, but interpretive liberals and conservatives (strict and loose constructionists).
This divides the Court about four and four, with one Justice in the middle – Anthony Kennedy, who Stuart said writes more for history rather than policy. He probably will be the determinative vote or rather, was, since the Court has voted already. Stuart commented that you read a lot about oral arguments, and oral arguments don’t matter in terms of briefs, the work that’s done. The Court held a conference the day after the three days of arguments were finished, and the Justices have all cast their vote, and opinions have been assigned. It’s quite likely that the Chief Justice will join the majority. But which way does it come out? We’ll all find out probably near the end of June.
Will it all make a difference? Stuart said that one could make a very strong argument that it probably won’t make a difference at all, because we’re in the midst of a Presidential election campaign, and it’s less important who is the President in terms of the future of all of these things than it is who controls the legislature.
The US has a liberal democrat as president, but the House of Representatives, the popular body, is controlled by increasingly conservative Republicans and the Senate is up for grabs. So if one gets a division of government, with the legislature in the hands of one party, and the Executive Branch in the hands of the other party, it’s not a prescription for disaster. Stuart likes this gridlock, because it gives you only those things that are necessary. The last time we had a situation like this, he felt it worked rather well – in 1993, this kind of condition abided, and Bill Clinton became a much better President. He lowered his expectations and became much more fiscally responsible, and the country did a lot better.
But what is clear is that this is already an election issue either way. The Republican leadership has let it be known that there are two contingency plans. If the Supreme Court strikes down a significant portion of the Affordable Care Act, including the mandate, the Republicans, especially if they’re in the majority, will seek to enact some of the popular provisions of the current regime, having to do with making insurance available to everyone, having dependent children under the age of 26 automatically included on policies, community rating issues, and a number of other things. Those things are popular – nobody has spoken out for their appeal, even the most vehement opponents of the Affordable Care Act, because they’re focused on the mandate.
And the Republicans, if indeed the Act is upheld, they’ll move to repeal the mandate, and then they have to come up with some new ideas about financing. With time running short, Stuart finished by saying it’s a very interesting situation.