Analysis: The case that challenged conventional wisdom | St. Louis Public Radio

Analysis: The case that challenged conventional wisdom

Jun 29, 2012

This article first appeared in the St. Louis Beacon, June 29, 2012 - Surprise. If there is a single theme to the story of “Obamacare,” it is that surprises have lain in wait at every turn.

The biggest surprise may have been Thursday when the U.S. Supreme Court upheld the Affordable Care Act. Most of America expected the court to toss out the law after it had spent three days roughing up Solicitor General Donald Verrilli last spring.

At the time, Jeffrey Toobin, the lawyer and noted legal expert, had rushed breathlessly from the court the microphones to tell the world that the argument had been a "train wreck" for the government.

Not only was Thursday's result a surprise, but so too was the lineup of justices and the reason given by the court for upholding the law.

Normally, if the four more liberal justices appointed by Democratic presidents hope to win a close case, they have to rely on Justice Anthony M. Kennedy. But this time, it was Chief Justice John Roberts who provided the pivotal vote, something he had not done previously.

And the congressional power on which Justice Roberts relied in upholding the law was not Congress' strong right arm of the Commerce Clause, but rather the taxing power. The Obama administration had claimed in its Supreme Court briefs that the individual mandate was justified by the taxing power, but almost none of the six hours of argument had been devoted to the issue.

Penalty vs. tax

For one thing it had seemed like such a stretch. To get the law passed, the Obama administration had claimed that the fee for failing to buy health insurance was a penalty, not a tax.

Then, in the Supreme Court, it had maintained on the first day of legal arguments that the penalty was not a tax and on the second day that it was a tax.

On the first day it said the mandate was not a tax for purposes of the Anti-Injunction Act. Had it been considered a tax under that act, the challenge to the individual mandate would have gone away because a taxpayer can't challenge a tax until the tax has been paid and that would not have been until 2014. The Obama administration, like its opponents, wanted to get a decision on the law this term.

But the second day, when the individual mandate was debated, Verrilli maintained it was a tax because everyone agreed Congress had power to impose the mandate under its taxing power. It was a fall-back argument in case the government's main argument about its commerce clause powers failed. The court paid no attention to the claim at the time. The justices didn't ask about it; the lawyers didn't talk about it. But the case ended up turning on it.

Greg Magarian, a law professor at Washington University, said "the court's main holding, on the taxing power, is very odd. The court first holds that because the government called the mandate payment a penalty rather than a tax, the suit isn't barred under the Anti-Injunction Act. But then the court turns around and says that it can characterize the payment as a tax based on its own independent analysis. That's a very quick shift from formal to substantive reasoning, and while it isn't obviously wrong -- maybe it's just nuanced -- it is odd."

Odd but decisive.

The Medicaid conundrum

Another surprise was that the court limited Congress' power on the sleeper issue in the case, ruling that Congress could not cut off Medicaid money to states that did not go along with the Medicaid expansion crucial to extending health care to 17 million uninsured people.

Never before had the Supreme Court limited Congress' power to spend for the general welfare. But the chief justice said that the threat of losing the Medicaid money was like a "gun to the head" of the states, "dragooning" them into something they might not favor.

That ruling will put the states challenging the law into a difficult position. If they don't go along with the Medicaid expansion, they are leaving billions of federal dollars on the table. In addition, their citizens will be taxed to pay for the Medicaid expansion in states that go ahead, while their own state gets no benefit.

Thomas Greaney, a law professor and co-director of the Center for Health Law Studies at Saint Louis University, explained the situation now facing legislators in states like Missouri. "Should those states calling most loudly for repeal/overrule of the ACA now be true to their convictions and walk away from Medicaid expansion?" he asked in an email.

"To do so would be a remarkable triumph of ideology over their constituents' public interest and economic interest. They would be abandoning a large segment of their most needy citizens AND leaving a lot of money on the table. ...he states standing to benefit the most from Medicaid expansion are by and large red states, so the political dynamic will be interesting," wrote Greaney.

Michael A Wolff, former chief justice of the Missouri Supreme Court and a law professor at Saint Louis University, had a more pointed twist on the same issue. "The limit on the feds' ability to penalize states that do not expand Medicaid puzzles me. But I like the result, if not the reasoning, because it puts a whole bunch of states and their legislatures in the position of leaving billions of dollars on the table for ideological reasons. I say, go ahead guys, if your voters are that dumb, they may be beyond hope."

Unconventional wisdom

From start to finish, the case has challenged conventional wisdom.

Mainstream legal scholars thought at first that there was little doubt but that the court would uphold the mandate as a constitutional exercise of commerce power. After all, the court had upheld the Civil Rights Act under the Commerce Clause. And it had even found that a woman raising marijuana for her own medicinal use was engaged in activity involving interstate commerce -- even if the marijuana never left her house.

But as time passed, the credibility of the challenge under the Commerce Clause grew. Never before had people be forced to engage in commerce, opponents argued. If the government could force people to buy health care they could force them to buy broccoli.

Many legal scholars ridiculed the broccoli argument and were surprised it got traction and even became a major part of the oral arguments. But, in the end it carried the day. The chief justice said that Congress can regulate activity, not inactivity, like failing to buy health insurance. If Congress could regulate inactivity, it could force people to buy vegetables so they would be healthy.

Another conventional belief by legal scholars was that the court's decision was likely to be a monumental legal moment. A day after it was handed down, it's not clear that it was. It wasn't a Brown vs. Board of Education or a Roe vs. Wade moment.

For one thing, there were not five votes for the chief justice's reasoning on the Commerce Clause. As a result, legal scholars such as Magarian, Wolff and Dave Roland, director of litigation for the libertarian Freedom Center of Missouri, agree that the chief justice's words amount to nothing more than "dicta." Dicta means that the words are not part of a ruling of the court and therefore lose impact. That can't be cited as controlling in lower court cases.

The first-time limitation on Congress' spending power could turn out to be important, but lawyers could not think of example of other programs where so much money was involved and where the hand of the federal government would be seen as so coercive.

Update begins: "Where we expected a bang we got a whimper," said Roland. "Honestly, for as much as I think we all expected a blockbuster decision of sweeping importance, I think this has to rank as a letdown.

"While the justices offered a window into their thinking on the Commerce Clause and the Necessary and Proper clause, they produced no binding precedent on those issues. While the opinion clearly expands Congress' taxing power ... Justice Roberts strained to justify his argument that the ACA imposes a tax for the purposes of constitutional analysis, but not for the purposes of the Anti-Tax Injunction Act, and the result was not especially persuasive.

"The one truly resounding conclusion from this case is that Congress has to be careful when threatening to withdraw federal funds from the states, because if it crosses a certain line ... courts might determine that Congress has violated the Constitution. This unquestionably marks an important limit ... but the opinions that determined the Medicaid expansion was unconstitutional provided no real guidance as to how Congress and the courts are supposed to figure out the limits of the legislature's power."

End update: The most important result may be the improvement of the court's image and reinforcement of its legitimacy as a body that can make decisions based on the law and not politics.

Wolff put it this way: “The biggest impact is on the 'political capital' of the court as an institution. In our society, more than most, courts are respected and obeyed. Prior to Bush vs. Gore the 'approval rating' of the court was way ahead of the other institutions of government, the executive and legislative branches. The recent New York Times poll put the court's approval rating at 44 percent, low but nowhere near the disastrous rating for Congress. If the decision had been 5-4 on 'party lines' striking down a major legislative achievement of a Democratic President, Roberts as (chief justice) and the court in general would be perceived for a generation or two as a partisan, political arm of government."