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Yesterday the Supreme Court took up the case of whether all or part of the Affordable Care Act passed by Congress 2 years ago is constitutional. Twenty six states, all with Republican Attorneys General or governors, have filed suit claiming it is unconstitutional. The great irony of these suits is that the whole idea was not invented by President Obama (ObamaCare) or even Mitt Romney (RomneyCare). It's origin goes back to President Richard Nixon, who saw that many people did not have adequate health care and wanted a solution, albeit a Republican solution. His plan had an employer mandate, forcing every business to buy health care for its employees, not unlike ObamaCare, that forces individuals to do the same. Later, the very conservative Heritage Foundation modified Nixon's plan and proposed that individuals, rather than businesses, be forced to buy insurance from private companies. For decades, this was the Republican response to Democratic attempts to expand Medicare to cover everyone. Only after Obama pushed it through did the Republicans begin objecting to what was, in reality, their own plan.

On the face of it, the health industry constitutes about 18% of GDP and operates in all states, so there is little doubt that Congress can regulate the industry under the clause of the constitution giving Congress the power to regulate commerce among the states. What is contested, however, is whether Congress has the power to force individuals to buy a product (health insurance) from a private company or face a fine. Although Nixon never got the plan passed, he certainly never doubted its constitutionality, but times have changed, as has the Republican Party.

There are precedents all over the map concerning this. First, RomneyCare forces residents of Massachusetts to buy health insurance or pay a fine and this law has never been successfully challenged. However, some people argue that while the states can force people to buy insurance or wear seat belts or eat broccoli, the federal government cannot. Other people argue that since caring for uninsured people costs the country about $116 billion a year in medical costs, and these costs are foisted indirectly on everyone, both through taxes that pick up some of the bills and higher insurance premiums that pick up the rest, then the federal government's attempt to push the costs back to the people generating them surely falls under the heading regulating interstate commerce. Nevertheless, many people strongly object to the federal government's ordering them to do anything, hence the lawsuits.

A precedent that may weigh heavily on some justices is Gonzales v. Raich (2005). In this case, the Supreme Court decided that the constitution's commerce clause gives Congress the power to prohibit people from growing medicinal marijuana for their own personal use, even in states (e.g., California) where such production is legal. Many legal experts have said that if growing a product that is not part of any commerce, (i.e., is not for sale anywhere), is interstate commerce, then surely regulating 18% of the economy is within Congress' power to regulate commerce as well.

The Court could punt on making a decision at all now by declaring the penalty for not being insured to be a tax and then using an 1867 law saying that no one can bring suit about a tax until they have actually paid it, something that no one will be required to do until April 15, 2015. However, initial questioning from the justices yesterday seems to indicate that they do not consider the penalty to be a tax and do not consider the 1867 law applicable here. Their reasoning seems to be that the primary goal of a tax is to raise revenue and that is surely not the case here.

Ultimately, the justices could do any of several things. They could strike down the entire law and tell Congress to go do its homework better or they could strike down just the individual mandate and leave the rest intact. In the latter case, if the provision prohibiting insurance companies from refusing to insure people with preexisting conditions is maintained, large numbers of people will undoubtedly refrain from buying insurance until they are seriously ill, in which case the pool of people paying premiums will contain disproportionately many sick people and premiums will skyrocket. In fact, under these conditions, many insurance companies may just decide to get out of the health insurance business altogether, leading to a complete meltdown of the system.

If the entire health insurance system collapses, Congress will come under enormous pressure to do something. With an individual mandate impossible, its options will be limited. One choice would be to do nothing and continue to take the heat. A second (but unlikely) choice is full socialized medicine, which the U.S. already has in the form of the Veterans Administration, where the government owns and runs the hospitals and the doctors are government employees. Congress could simply pass a law allowing everyone to get free care at a (hugely expanded) V.A. hospital system and then raise taxes to pay for it.

Another option would be socialized insurance (like Canada has) by allowing everyone to buy into Medicare, but keeping the hospitals and doctors private. Only the insurance companies would be eliminated.

A final--and draconian--option would be to let people choose to buy or not buy insurance, as they prefer, but repeal the law saying that hospitals must provide emergency care to anyone who shows up. In this scenario, when an uninsured person showed up at an emergency room, the first question following the one about insurance would be: "Visa or MasterCard?" People who didn't have insurance and couldn't pay would simply be turned away as a consequence of their own decision not to be insured. It probably wouldn't take too many news stories about uninsured people dying inside or just outside hospitals before most people got the word that having insurance was a good idea. A variant of this version would be for hospitals to treat uninsured children but not adults. Still another variant would be to let people who opted out of insurance to later announce they wanted back in, but make them wait several years before getting it, forcing them to cover their own bills in the interim.

If the Court says the law is constitutional except for the penalty, Congress could (but won't) restructure it as an incentive by adding two lines near the end of form 1040.

44a. Add your tax from line 44 to $700 (health tax) and write it here.
44b. If you have health insurance, subtract your $700 health insurance credit from line 44a and write it here.

So by making everyone pay the tax and then offering an equal credit for people who have insurance, it no longer becomes a mandate to get insurance, but you get a credit for it if you have it. The tax code is riddled with optional credits, including lines 47 through 53 on form 1040 and dozens of others on different forms. There is no doubt that Congress can offer deductions or credits for anything it deems worthy. In fact, taking the tax credit route might have been better from the start but it would have involved a tax increase for everyone, which probably would have made it harder to swallow.

Putting aside for the moment the health consequences of the Supreme Court's decision, let us look at the political aspects. It is well known that the justices read newspapers and watch television. They know this issue is very partisan. Chief Justice John Roberts, in particular, is known to be concerned about having the public respect the Court. A 5-4 decision striking down all or part of the ACA, with all the Republican appointees voting as a bloc to kill the law and all the Democratic appointees voting as a bloc to sustain it, would make the Court look extremely partisan, and not at all like an umpire, just calling balls and strikes as he has put it before. Respect for the Court would undoubtedly hit an all-time low, and Roberts has to factor this consideration into his vote.

Another issue that everyone is aware of is how the decision, probably to be handed down in June, will affect the 2012 elections. Ironically, this is where the loser will probably win. If the Court strikes down the mandate or the whole law, Democrats will be incensed at judicial activism and redouble their efforts to make sure Obama is reelected so he gets to fill any Supreme Court vacancies that come up in the next four years. Considering Justice Ginsburg's age and health, her possible retirement (or death) in the next 4 years has to be taken into account. Furthermore, Republicans will relax, since they will no longer have to elect Romney to sign a law repealing the ACA: it will be already gone. Thus a clear decision to kill the law will help the Democrats.

The reverse is also true. If the Court says Congress was within its authority to pass the law, the only way for the Republicans to get rid of it is to take control of the White House, the House, and 60 seats in the senate. The Republican base will move heaven and earth to achieve these goals.

Finally, as usual, be careful what you wish for. You might get it. Many of the same people who hate the individual mandate also hate Social Security. They want to replace it with a law forcing (i.e., mandating) people to buy a pension or investments from a private insurance company, bank, or broker instead. If the Supreme Court says the government can't force people to buy health insurance from a private company, it is not likely to say the government can force people to buy a pension plan from a private company, thus derailing a major goal of the conservative movement.

Again, none of this is a secret to the justices. The four Democratic appointees are very likely to vote for the law's constitutionality. Clarence Thomas (and probably Samuel Alito) are likely to vote to strike it down. The other three, John Roberts, Antonin Scalia, and Anthony Kennedy are surely going to think hard to find a way to out of this mess. Roberts cares about the Court's reputation and probably does not want a 5-4 decision along partisan lines if he can avoid it. Scalia and Kennedy voted with the majority in Gonzales v. Raich, so if they vote against the ACA, they are going to be pilloried for saying that growing marijuana for personal medical use is interstate commerce but something that affects 18% of the economy is not.

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