Putting A Mirror Up To Obamacare
The confirmation hearings for Amy Coney Barrett begin today and Democrats are up in arms.
In a recent speech, Joe Biden warned that Barrett’s confirmation would jeopardize the Affordable Care Act. The U.S. Supreme Court will hear a case that seeks to invalidate the law one week after Election Day. A final ruling will not come until late spring or early summer 2021.
Biden and other Democrats have perpetuated a doomsday scenario in which Judge Barrett’s confirmation will lead to the ACA’s demise. But that’s unlikely to happen. The Supreme Court has already upheld Obamacare twice—and legal scholars generally agree that this challenge is weaker than the other two.
That’s not to say that Obamacare deserves to survive. There’s plenty of evidence to indict the law on policy grounds, if not constitutional ones.
Obamacare first came before the high court in 2012, in National Federation of Independent Business v. Sebelius. Florida and 12 other states challenged the constitutionality of Obamacare’s individual mandate, which requires Americans to purchase insurance or face a fine. It was the first time in the country’s history that Congress had ordered Americans to engage in a particular act of commerce.
Chief Justice John Roberts wrote for the 5-4 majority that the individual mandate was indeed constitutional under Congress’s power to tax.
That decision is at the heart of the case now before the court, California v. Texas. In 2017, the Tax Cuts and Jobs Act reduced the individual mandate penalty to $0. The plaintiffs in this latest challenge to Obamacare argue that zeroing out the mandate penalty rendered it no longer a tax—and so the constitutional justification for the mandate is no longer valid.
They go on to assert that the mandate is not “severable” from the rest of the law. If one part of the law is unconstitutional, the whole thing must be, the thinking goes.
Many court observers, including critics of the Affordable Care Act, believe that the Court won’t buy that theory. Obamacare has continued operating in spite of the zero-dollar penalty. Congress’s decision to zero out the penalty while leaving the rest of the law intact would seem to suggest that lawmakers thought that the mandate was indeed severable.
Further, Chief Justice Roberts has already voted to uphold the ACA in the two previous challenges. In a ruling in July, he made a case for severability, stating, “We think it clear that Congress would prefer that we use a scalpel rather than a bulldozer.”
Justice Brett Kavanaugh has echoed the “strong” presumption of severability, saying “it is fairly unusual for the remainder of a law not to be operative.”
Regardless, the Supreme Court isn’t Obamacare’s biggest problem. The law itself is its biggest problem.
Thanks to its many mandates—including the requirement that insurers sell to all comers regardless of health status or history, the requirement that premiums for the old be no more than three times those for the young, and the ten essential health benefits mandates—premiums have soared. Between 2013, the year before Obamacare’s rules took effect, and 2017, individual market premiums more than doubled.
Essentially the only Americans who can afford to purchase insurance on the exchanges are the ones getting paid by the government to do so. Eighty-six percent of exchange enrollees are receiving subsidies this year. The government was spending close to $700 billion—$6,300 per subsidized enrollee—in annual exchange subsidies as of 2018.
Those subsidies are only available to those whose income is less than 400% of the federal poverty level. For patients on the “subsidy cliff,” whose income is just above 400% of the poverty level—about $50,000 for an individual—exchange coverage is out of reach. The number of uninsured Americans living in households with an income above the “cliff” increased by 1.1 million between 2017 and 2018. From 2016 to 2018, 2.5 million unsubsidized Americans left the exchanges—a 40% drop.
The Supreme Court has repeatedly declared Obamacare constitutionally sound, and it’s unlikely that a new justice will change that. As health policy, though, the failures of the law continue to compound.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.