Between Congress and the Courts, Obamacare took more hits this week:
- The most despised part of the ACA—the moribund individual mandate—was declared unconstitutional in a 2-1 decision by the Fifth Circuit Court of Appeals, but the judges left it to a lower court to sort out the complex task of deciding how much, if any, of the rest of the law should stand.
- Congress repealed for good three key Obamacare taxes, but a huge opportunity was missed to leverage repeal of these despised taxes to pass other vital health reform legislation.
First the lawsuit: The thoughtful 62-page opinion is an important marker not only for health care but for larger constitutional protections from government coercion. The Supreme Court will, of course, have the last word, we think most likely in 2021.
The Appeals Court decision quotes Chief Justice John Roberts from his 2012 opinion as saying the individual mandate “commands individuals to purchase insurance…not a valid exercise of Congress’ power.” The Constitution “gave Congress the power to regulate commerce, not to compel it,” Roberts wrote.
Of course, Justice Roberts upheld the law by reading the individual mandate penalty as a tax, therefore giving people the option to buy insurance or pay a tax. But after Congress set the tax at $0 two years ago, the Texas V. Azar challenge was engaged.
The individual mandate penalty no longer produces revenue—a key definition of a tax—and it therefore is unconstitutional, the Appeals Court ruled.
If the command to purchase health insurance were to remain on the books, it could be revived by a future Congress that reestablishes (at its peril) the tax penalty. So the appeal to the Supreme Court is still a crucial fight.
Meanwhile, the case goes back to the district court—which had declared exactly one year before—that the whole law should be struck down because the unconstitutional individual mandate is not severable from the rest of the law.
“The court must determine if Congress would have enacted the remining provisions without the unconstitutional portion. If Congress would not have done so, then those provisions must be deemed inseverable.”
The Appeals Court decision acknowledges the many tentacles of the ACA in the rest of the health sector—including its regulations and other taxes, creation of the exchanges, changes to Medicare, and even requirements that restaurants display nutritional information.
The court says what’s needed is a “careful, granular approach to carrying out the inherently difficult task of severability analysis.” So a lot of us will be working now to provide guidance to the court on that issue.
Repeal of the Obamacare taxes: Brian Blase wrote a commentary this week about Congress repealing three key Obamacare taxes as part of the year-end spending deal to keep the federal government open until Spring.
In his Daily Signal piece, Brian explains the “Spending Deal Would Make Obamacare More Fiscally Irresponsible” and blows up any remaining facade that Obamacare was paid for.
We despise taxes, especially ones that raise the cost of health insurance (the Health Insurance Tax) and threaten one of our most vibrant health industries (the Medical Device Tax), but erasing them from the books is one more trick played on taxpayers who were promised by President Obama that he “would not sign a plan that adds one dime to our deficits, either now or in the future.”
Perhaps most painful, there was one tax in the ACA that actually could have been helpful by putting some constraints on open-ended taxpayer subsidies for ultra-expensive employer health plans. But the Cadillac tax has been axed, too.
Brian concludes that with the spending bill, “Congress is about to make both fiscal and health policy worse.”
What’s even worse is that these taxes—hated by industry, employers, and consumers—were not used as negotiating tools to get bigger health reforms that could actually have made a difference to lower costs and increase choices in health care.
There is bi-partisan agreement that Obamacare has failed, but the law still is an open till to taxpayer dollars that in turn fuel higher and higher health costs. Lifting regulations, giving consumers more coverage options, and devolving power to communities to solve unique problems are just a few of the changes congressional conservatives could have demanded in exchange. They await a new year and likely a presidential election for a new mandate for change.