Capretta & Levin: Finding the Insurance “Requirement” Unconstitutional May Undermine Obamacare

To uphold the Affordable Care Act, Chief Justice Roberts adopted a “saving construction” in which he deleted the “requirement” that all non-exempt Americans buy health insurance, leaving only the “penalty,” which he then recharacterized as a tax.  The next day, in my Washington Examiner essay, Roberts decision didn’t open floodgates for ‘compulsion through taxation’, I contended that it was a serious misreading of the opinion to say that the individual insurance mandate had been upheld under the Tax power.  Instead, the law had been rewritten to eliminate the mandate, leaving only the penalty.  Some questioned the meaningfulness of this distinction.

Today, in their essay, The Mandate After the Court, James Capretta & Yuval Levin explain how this aspect of Roberts’ unique opinion weakens the already weak penalties, thereby undermining the statute’s ability to prevent the insurance death spiral its other insurance company regulations will cause.

The CBO clearly understood the mandate to consist of the federal government ordering people to buy coverage. In a 2010 paper explaining its assessment of the mandate, the agency said the law meant that “nearly every resident of the United States will be required to have health insurance coverage.” That paper also makes clear that the CBO understood the mandate and the penalty as two distinct if related components of the law, each with its own effect on public behavior, and that the fact of the mandate as a legal requirement was very important. The effects of the mandate would not just be a matter of math but would be influenced by people’s inclination to be honest and “their desire to comply with the law” ordering them to buy coverage….

In the wake of the Roberts decision, participation in Obamacare’s insurance scheme is optional. Rather than a requirement to buy coverage backed with a penalty for violators, the law now offers Americans two equally lawful and legitimate options: buy expensive insurance (which Obamacare will make all the more expensive), or pay a modest (and still largely unenforceable) tax and just buy insurance for the same price later if you need it. Presented as a choice, not a command, this provision will invite a straightforward comparison, and for many Americans the choice it would pose would be a very easy one.

Obamacare was always going to lead to a disastrous meltdown of America’s health-insurance system, but in the wake of the Court’s decision, many of its former defenders should acknowledge this fact too. If you argued that the mandate was the linchpin of the system, and that it would work despite its low and unenforceable penalty because Americans are a law-abiding people, you should now see that the mandate as you understood it no longer exists. The CBO should certainly acknowledge this in its new score of the law’s effects on federal spending and the uninsured, due out later this month.

It was always assumed by the ACA critics that the very weak penalties in the Act were there as loss leaders.  When they later proved too weak to work, they would be jacked up.  Now that the decision makes this very difficult, the insurance companies who were bought off by the promise of compulsory customers for their government-dictated “insurance” policies may well be led to support repeal and replace.


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