Editor: Is it surprising that the Court failed to uphold the ACA on the basis of the Commerce Clause – the underpinning since the ’30s for upholding broad federal powers?
Millett: Surprising? Not really, given the strong jurisprudential support for limiting congressional power on the Court. But disagreements with aspects of the Court’s ruling? Yes.
There was always a substantial question whether the minimum coverage provision was going to survive Supreme Court review under the Commerce Clause. What made it such a close question was that the plaintiffs argued and five justices ultimately agreed to rely heavily on the activity/inactivity distinction. This distinction has fallen into disuse in the law. The solicitor general and the dissent, moreover, argued how that conception does not translate well to the insurance context. That is because insurance is, at its essence, a promise that care will be there when you need it, not something you actively use day to day. You are essentially paying for peace of mind and contingent protection. The way the solicitor general presented the case, and with some merit, was that the individual plaintiffs have all expressed their desire and intent to use the healthcare system and, thus, were enjoying the benefits of a statutory scheme and healthcare system that affirmatively gave them the promise that, even if they do not have the money to pay, medical care will be there for them. It is hard to describe this situation of intending to use healthcare but not committing to paying for it as purely inactivity in any sort of traditional sense.
I think of it as the Wimpy economic model (from the old Popeye cartoon): Wimpy was always saying “I will gladly pay you Tuesday for a hamburger today.” In Justice Ginsburg’s opinion, those who go without insurance are similarly getting the benefit today of promised coverage while being unwilling to pay until tomorrow. To Justice Ginsburg, that is economic activity, not the “inactivity” it was to the chief justice. It’s a little hard to say that what Wimpy was doing is not commerce. He was enjoying the benefits of something for which he would pay at another time.
Having said that, the majority’s focus was a very common and understandable first reaction to the law. There was no disputing that this was the first case where Congress compelled people to go out and buy a product predominately in the private market. And the majority worried that approving this unusual form of legislation here would open the door to Congress pushing its authority in other areas as well. I think they had sincere constitutional concerns with letting the legislative camel’s nose in the tent.
Editor: What are the implications of the Court’s establishing a limiting principle on the power of the Commerce Clause, i.e., regarding the concept of economic inactivity as being outside its scope? What was Justice Ginsburg’s view?
Millett: It may not have much impact because it was an unusual animal that Congress enacted here – it’s hard to think of a lot of other scenarios similar to this one where the nature of the economic system is that Congress is going to direct the public to buy a product. Even had the Supreme Court ruled the other way, public reaction to this type of legislation was strong, and Congress should be most attentive to such public reactions as a political matter. Its job is to detect when the public is unhappy with a form of legislation.
Justice Ginsburg was drawing upon other Commerce Clause decisions in applying a more traditional approach to that clause and its traditionally broad and flexible sense of congressional power, applying it here to uphold this law as the Court (eventually) did to uphold novel legislation in the New Deal era. She also addressed the nature of the insurance system and how this activity/inactivity model doesn’t fit well with the insurance concept.
Editor: Why did Chief Justice Roberts go to great lengths to save the individual mandate? What precedent is set here, particularly as it relates to his expansive and creative legal argument?
Millett: I think the chief justice ruled exactly what he firmly believed in his heart of hearts was the right constitutional answer. He was pretty clear that he might well disagree with the President on policy, but voting on policy is not the job of a Supreme Court justice. The chief justice understood that, while the Court has the duty to enforce the Constitution and to make sure that new laws stay within constitutional bounds, the unelected Supreme Court should be very reluctant to overturn newly enacted legislation and should look for every possible source of constitutional authority for the law. He said that how a provision is labeled – “penalty” instead of “tax” – is not what matters most to the Constitution. The Constitution looks at substance over form. And that is a good thing.
The chief justice then explained how the minimum coverage requirement and the personal responsibility payment worked together like a tax on the status of being uninsured – a tax that requires people to exercise individual responsibility for the costs that their postponement of insurance exacts on everyone else in society. He ultimately saw the law as not having a mandate, but a choice: either buy insurance with minimum coverage or pay this penalty on your tax return. Looked at that way, it looks a lot like a tax provision: You pay the penalty as part of your tax return each year; it is calculated by reference to income; the limited enforcement mechanisms look like a tax, not a freestanding penalty; and, of course, people who legally are not obligated to file tax returns do not have any consequences. The fact that it was called a penalty, not a tax, should not matter. Nor does the fact that the taxing power is used to encourage behavior. That is common for the taxing power: tax exemptions encourage home ownership, make it super-expensive to buy cigarettes, etc.
Editor: How do you reconcile Chief Justice Roberts’s determination that the “penalty” was not a tax for purposes of eliminating potential barriers within the Anti-Injunction Act and then using the taxing power to uphold the individual mandate?
Millett: This is an argument that only lawyers can love. The long and the short of it is that statutes can use words that have different meanings from how the Constitution uses those same words. Think about it this way: federal (or state) laws can protect your privacy against “searches” by the government – e.g., online privacy, privacy of your Social Security number or driver’s license information – even if a government effort to get that information would not be an unconstitutional “search” under the Fourth Amendment. And federal laws prohibit forms of discrimination that are not unconstitutional discrimination under the Constitution. So statutes can simply reach subjects and regulate them differently than the Constitution. The Constitution is our baseline – it tells when the government is working within bounds or out of bounds in the most fundamental way. Thinking that way, the Anti-Injunction Act is a statute that was not defining what the Constitution means, but Congress simply said that, for certain things that Congress thinks are “taxes,” taxpayers have to pay first and sue later. But when the Constitution talks about Congress’s taxing power, it is defining the fullest breadth and power that Congress could ever exercise consonant with the government’s control over revenue raising. That is why the statute’s coverage has always been narrower than the Constitution’s taxing power. It’s simply asking two different questions: what did Congress mean in the language of the Anti-Injunction Act versus what did the Constitution’s framers mean by the power to tax? The Constitution is obviously a more transcending and enduring depository of authority, and, thus, its coverage is not determined by what any one Congress says in any one law.
Editor: In finding ACA’s Medicaid mandatory expansion unconstitutional, making it optional instead, the Court characterized this provision as bordering on coercion. Please discuss this language within the decision.
Millett: This was a much more surprising outcome for me than the majority’s rejection of the Commerce Clause argument. While the Supreme Court had discussed the potential existence of such a line in past cases, it had never found it violated and had seemed skeptical of the ability of states, as major sovereign players, to be coerced. The challenging states had as good an argument as states could have in this case because Medicaid is exceptional in the amount of money it involves relative to other programs. It can be nearly 10 percent of a state’s budget—and that is a lot in these tight economic times. Congress took a strong stance in ACA in demanding this expansive extension of Medicaid—bringing in everyone who is within 133 percent of the poverty line—and telling the states they had to take it or leave Medicaid altogether. So because it was all or nothing and because it was so much money, the states were able to convince the Court that, if anything were ever to be coercive, this would have to be it. That is why Chief Justice Roberts talked about figuratively placing a gun to the states’ heads. Now, to be sure, the federal contribution is incredibly generous—100 percent to start with and still 90 percent by the time of the full rollout, but the Court felt that Medicaid’s payment is so big that footing the bill for even 5 or 10 percent of the expansion would be a lot of money for states, many of which must balance their already-lean budgets. States are worried about administrative costs as well.
Now to be clear, the Court did not invalidate the Medicaid expansion, but simply limited the secretary’s enforcement authority and said the federal government cannot expel the states from the Medicaid program altogether if they do not expand. The Court required a third option: States can stick with old pre-expansion Medicaid, but then they must forgo the new money too.
Editor: Do you foresee any constitutional challenges regarding the federal government’s power to establish insurance exchanges in states that opt out?
Millett: There may be challenges, but I do not know that any constitutional challenge would have much force. The states are not required to set them up, although that is preferred. If a state chooses not to come in, the statute envisions the federal government coming in and setting up the exchanges itself. I also think that the states’ willingness to operate the exchanges may depend on how flexible and cooperative the secretary of health and human services is in interpreting the statutory provisions and obligations in a manner that makes this process workable for the states and the varied needs of their individual populations. On the Republican side, I understand that some believe the concept of an exchange is acceptable, but the terms of the statute are too rigid, or the regulations may be too onerous. And, honestly, the reality is that nobody is going to know anything until after the November election, which will undoubtedly have a significant impact on how this statute is administered going forward.
Editor: There was a recent article in The New York Times about the fact that families may slip through the net of coverage since the Act’s language just applies to employees.
Millett: Robert Pear’s article highlights an issue relating to the IRS’s statutory interpretation of the ACA. Specifically, under the ACA, low- and middle-income individuals are eligible for tax credits and subsidies unless they have access to affordable coverage from an employer. Coverage is deemed unaffordable if the worker’s share of the premium exceeds 9.5 percent of his or her household income. The IRS’s proposed interpretation would determine the affordability issue based on the cost of coverage for the individual, rather than the cost of covering the individual plus dependents. On top of that, whenever you have any statute of this size, it is going to take some time for real or arguable gaps to be addressed. Some can be fixed by regulators through reasonable constructions of ambiguous statutory language; others may require legislative correction. As to the specific issue raised in the article, significant stakeholder engagement is already underway to try to address this gap at the agency level. With this issue and other gaps in the law, it is hoped that after the congressional and presidential elections in November, Congress and the administrative agencies will be in a position to start dealing with the real, on-the-ground problems confronting families.
Editor: What should states that agree to accept the Medicaid option be doing in preparation for its onset?
Millett: To prepare to take on this new population, states may want to take certain steps, including: developing and adopting ways to identify newly eligible individuals; developing and implementing a streamlined enrollment process; beginning to think about how the Medicaid determinations will work with the exchange in that state; and updating outdated technology systems. The steps that need to be taken will be state-specific. States are currently at various places along the implementation continuum. Some states, like Connecticut, have already expanded their Medicaid population. In other states, governors have indicated they will wait for the outcome of the November election to determine whether to implement the expansion. Depending on the politics, there may be some opportunities for states to engage with the secretary of health and human services to make the expansion work as best it can in each state. The secretary presumably will be open to such a cooperative approach and will have some discretion going forward to allow state-specific adjustments that promote the aims and purposes of ACA.
Editor: The federal government agencies will be drafting regulations to fill in specific provisions and definitions of the ACA. Do you expect there to be controversies and constitutional challenges here?
Millett: I am sure there will be a lot of challenges, although I expect the constitutional challenges to diminish over time and the arguments about statutory construction and proper regulatory interpretation by the agency to grow exponentially. It is critically important that, in implementing major legislation like this, that HHS work with the states and businesses in an effort to meet some of their legitimate needs, giving them some flexibility and making this really operate as cooperative federalism. After that, whether people like the way it works is for legislative judgment and the political process to deal with.
Editor: What language within the ACA requires further clarification (such as the definition of “essential” insurance benefits)?
Millett: The essential health benefits package (the minimum package of benefits that plans offered to individuals and small businesses must offer) is one significant area where stakeholders await clarification. The proposed rule on that topic is expected later this year. In addition, we expect to see rulemaking providing additional clarification on the other insurance market reforms contained in the law, many of which take effect in 2014.
There are a number of provisions of the law that will be implemented by the states that require further clarification at the state level, most notably, the implementation (or refusal to implement) the health insurance exchanges and the Medicaid expansion. In the aftermath of the Supreme Court ruling, there are questions about potential gaps in coverage that need to be addressed, particularly in any states that do not join the Medicaid expansion. There have also been challenges to the birth control coverage on First Amendment freedom of religion grounds because there was a decision in the Supreme Court earlier this year, Hosanna-Tabor v. EEOC, that dealt with a ministerial exception to antidiscrimination statutes. It is unclear what implications that decision has for these types of challenges. I am sure we will be hearing from the courts on that!