SCOTUS Delivers Shock Decision, Upholds President Obama’s Healthcare Law 5 – 4

The Affordable Care Act has survived what should be the biggest legal challenge it will ever face - a 5-4 decision in support from the Supreme Court.

The Affordable Care Act has survived (mostly) what should be the biggest legal challenge it will ever face – a 5-4 decision in support from the Supreme Court.

In perhaps what will go down as one of the biggest decisions in the 2010s decade, the Supreme Court of the United States unexpectedly sided with the Obama Administration in support of the Affordable Choice Act – ACA (or Obamacare, if you must… Romneycare if you’re even worse). At least it mostly did. The 5 – 4 decision was not swayed by the expected swing vote of Justice Kennedy, but instead by the Chief Justice himself John Roberts. This is notable as typically Chief Justices do not put themselves out there as the swing vote.

What can be described as a massive victory for the Obama Administration comes with a gigantic asterisk. While the law was mostly upheld, the individual mandate was not upheld under the Commerce Clause (Congressional power to regulate commerce between the states) upon which the case was originally made, but instead as being within the power of the Congress to tax. The court stated:

…it is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes.

While having no immediate effect on the law, as SCOTUS ruled in favor, this distinction does have the future effect of making the path to overturning easier in theory. Only requiring 51 votes in the Senate to end a tax, a Republican hold of the House, capturing of the Senate, and victory by Mr. Romney in the fall would put ACA right back in the spotlight – and probably straight for the firing squad. A victory by Mr. Obama in November and/or a Democratic hold of the Senate would effectively shelve any talk of icing this law until 2014 at the earliest – in the event of a hold by Mr. Obama probably not until 2016.

Republican Presidential nominee, Mitt Romney, staked out his position on the SCOTUS ruling - to repeal & replace if elected.

Republican Presidential nominee, Mitt Romney, staked out his position on the SCOTUS ruling – to repeal & replace if elected.

The two contenders for the White House did offer their two cents about the decision:

“We will continue to implement this law and we’ll work together to improve on it,” said Obama, speaking somberly in the White House East Room, the same setting he used to announce the 2011 death of al Qaeda leader Osama bin Laden.

“What we won’t do – what the country can’t afford to do – is re-fight the political battles of two years ago or go back to the way things were. With today’s announcement, it’s time for us to move forward,” Obama added.

Romney, who pushed through a similar healthcare overhaul at the state level in 2006 as governor of Massachusetts but opposed Obama’s law, called on voters to help him defeat the president in order to repeal the law critics derisively call “Obamacare.”

“If we’re going get rid of ‘Obamacare’ we’re going to have to replace President Obama. My mission is to make sure we do exactly that,” Romney said on the roof of a building overlooking the U.S. Capitol.

Chief Justice Roberts sided with the court's liberal wing to uphold ACA - though on the grounds of taxation, not commerce.

Chief Justice Roberts sided with the court’s liberal wing to uphold ACA – though on the grounds of taxation, not commerce.

The ruling is being considered a “defining moment” for the Roberts Court – which could be one among many in the years to follow as other hot button issues are presently working their way up through the courts:

 Chief Justice John G. Roberts Jr. has a favorite quotation from one of the giants who preceded him on the Supreme Court. Assessing the constitutionality of a law passed by Congress, Justice Oliver Wendell Holmes Jr. once wrote, “is the gravest and most delicate duty that this court is called on to perform.”

In finding a way to uphold President Obama’s health care overhaul law on Thursday, Chief Justice Roberts performed the task with exquisite delicacy. That he did was a surprise from a judge whose rulings and background, including legal work in the administrations of President Ronald Reagan and the first President George Bush, suggested a conventionally conservative worldview.

To be sure, the chief justice considers himself the custodian of the Supreme Court’s prestige, authority and legitimacy, and he is often its voice in major cases. There was reason, then, to think he might have provided a sixth vote to uphold the law had Justice Anthony M. Kennedy joined the court’s four-member liberal wing. That would have allowed Chief Justice Roberts, the thinking went, to write a narrow, grudging majority opinion. But almost no one thought that he would provide the fifth vote, joining only the liberals, to uphold a Democratic president’s signal legislative achievement.

The court Chief Justice Roberts leads is not leaving the national spotlight. The next term already includes a major case on affirmative action in higher education, and cases on voting rights and same-sex marriage are likely to follow. All will test the chief justice’s leadership, and the novel alignment in Thursday’s case is unlikely to be repeated. In cases concerning the role of race in admissions and voting, he is likely to take his usual place with the court’s conservatives. In cases on gay rights, Justice Kennedy is likely to be the swing vote.

Scoreboard?

As for the part where “most” of the healthcare law being upheld, there was one part struck down – the ability for the federal government to hold back on the funding of Medicare for the states if they did not comply with plans to expand Medicare coverage:

In another part of the decision, the court said Congress went too far in a part of the law that requires states to expand the government’s Medicaid health insurance program for the poor with the goal of covering more of the uninsured.

The court said this problem can be fixed by precluding the federal government from stripping states of existing Medicaid funds if they did not comply with the expansion, and that this did not require striking down other parts of the law.

To be entirely fair, there is still a ways to go before true universal health care.

To be entirely fair, there is still a ways to go before true universal health care.

Tangible benefits will now continue to roll out thanks to provisions outlined in the ACA. Among them was a call for 80% of a health insurance provider’s premiums to be spent on health care only – not administrative or other costs. This will continue to drive a cost cutting boom in the industry that will end up being one of the largest drivers of tech job growth in the 2010s:

While most people will keep insurance they already have, the way their insurance companies act will change under the new law, said David Jones, a Louisville venture capitalist. “You’ll buy health insurance the way you buy an airline ticket now,” he said. “There’s way more efficiency on the administrative side, and there’s lots more efficiency to come on the medical side.”

Companies are spending hundreds of millions on technology already to cut administrative costs, he said. Instead of buying individual health policies through agents who take up to 10% of the policy’s cost in commissions, consumers will buy coverage online or on the phone, he said, to help meet the law’s requirement that insurers spend 80% of premiums on health-care services.

The most important efficiencies will emerge as insurers rework payments to doctors and hospitals, giving them incentives to promote primary care, avoid hospitalizations and slash mistakes that lead to hospital readmissions and longer stays, Cigna Chief Executive David Cordani said. The idea is to emphasize preventive care, especially for patients with chronic conditions such as diabetes or asthma, he said. In return, providers will be able to share savings with Medicare, which is implementing so-called Accountable Care Organizations of doctors and hospitals provided for under the law, and with private insurers.

President Obama spoke out in support of the SCOTUS decision on Thursday.

President Obama spoke out in support of the SCOTUS decision on Thursday.

For health insurance providers that fail to spend 80% of premiums on health care costs, rebates are demanded by the new law to be refunded to the insurance buyer. Nominally this means around 12.8 million people will be entitled to a rebate averaging $151 per household, however the rebate goes back to whomever  bought the insurance. Therefore if you receive 100% health care coverage from your employer you will not receive a rebate – even if the company you get health services from had to issue rebates for not meeting the 80% requirement. If you pay 20% of the costs, your share will be an average of $30, and so on. Still, this reflects $1.93 billion in health care savings this year alone. That money that doesn’t wind up back in your pocket but instead your employer could go toward lowering the cost of premiums, lowering contribution amounts, improving or offering new health services, targeting preventable care, and more.

Oh and the Internet was around too, for reaction.

Today was not CNN's finest hour.

Today was not CNN’s finest hour.

CNN had a “Dewey Defeats Trumanmoment as the decision was being announced. Anxious reporters (admittedly this happened to Fox as well but not as dramatically) read the first half of the sentence – that the individual mandate had been struck down under the Commerce Clause – and breathlessly reported that the mandate had been struck down in its entirety. While this was corrected within minutes as it became apparent that the mandate had survived under the power of taxation, it was still a long enough period of time for President Obama to be informed of the mandate’s defeat:

Top administration officials, briefing reporters, said that the president initially saw news alerts that the court had ruled the individual mandate unconstitutional while watching coverage in the outer Oval Office. The news was being projected on a single monitor with four split screens, each showing a different station. Both Fox News and CNN inaccurately reported the court’s decision at first.

After a period of time, White House Counsel Kathryn Ruemmler and Chief of Staff Jacob Lew came to greet the president with news of the actual ruling.

Ruemmler flashed him two thumbs up. The court, she relayed, had upheld the Affordable Care Act by a 5 to 4 vote, ruling the individual mandate valid under Congress’ taxing power.

The period between when Obama heard the wrong report and the corrected one lasted no longer than a couple of minutes, the top administration officials said. White House aides had been watching cable news in addition to following SCOTUSblog to track the results.

The Internet spoke out fluently about the decision.

The Internet spoke out fluently about the decision.

Stupid people were also allowed to opine on the decision. Lowlights include radio host Michael Savage suggesting Justice Roberts supported ACA because he likes his epilepsy medication, a former GOP spokesman in Michigan opining that right now would be a perfectly good time to form an armed rebellion against the United States, someone at The Daily Caller thinks the government now owns our bodies, and well… there are probably more, probably worse. On the bright side, we have Twitter out there to help us boil the stupidity down into 140 characters or less. To that end…

Anyone who was long the Individual Mandate being struck down was smacked pretty well.

Anyone who was long the Individual Mandate being struck down was smacked pretty well.

Yes… Dred Scott. That would be the 1857 decision, in case anyone was wondering, that said slaves brought to America were in fact really slaves and had no protection under the U.S. Constitution. A civil war and the 14th Amendment eventually reversed that decision, though it is still widely regarded as the worst decision in the history of the SCOTUS.

The professional gamblers on the InTrade prediction market were crushed – this morning the “The US Supreme Court to rule individual mandate unconstitutional before midnight ET 31 Dec 2012” contract traded as high as $7.60 a share – indicating that there was a 76% possibility that the mandate would be struck down. Within minutes of the decision the contract traded down to $1.50 – an 80% loss.

Last but certainly not least was the online stampede of twitter users (and presumably other social network users) that collectively threw up their hands and declared their intention to move to Canada. Presented in screenshot form for when the tweets eventually disappear:

Think about what you're say... aw screw it just hit enter.

Think about what you’re say… aw screw it just hit enter.

Two seconds of research produces the following:

Health care in Canada is delivered through a publicly funded health care system, which is mostly free at the point of use and has most services provided by private entities.

At which point leaves really only one final tweet to sum the hand wringing, and this entire round of the battle for health care in the United States: