Roberts, Obamacare, and Consequences

“This bill [Affordable Care Act] was written in a tortured way to make sure the C.B.O. did not score the mandate as taxes. If C.B.O. scored the mandate as taxes, the bill dies.”—Jonathan Gruber

Shockingly, political considerations were in play in the passage of the Affordable Care Act. This was not particularly hard to see at the time. But Jonathan Gruber, he of the stupid American voter and architect of Obamacare, has exploded any remaining pretense.

One man in particular should be paying attention.

In his opinion upholding the Affordable Care Act’s individual mandate, Chief Justice John Roberts noted that it’s not the Court’s “job to protect the people from the consequences of their political choices.”

Clearly, the “political choices” the Chief Justice had in mind were electoral. The people elect their legislative and executive branch representatives, and must live with the consequences of the collective decisions made by those representatives – at least until they have a chance to throw them out of office.

What Roberts failed to appreciate—or willfully ignored—was that his decision did, in fact, offer protection from political choices, though of a different sort. Roberts’s opinion upholding the constitutionality of the mandate hinged on Congress’s authority to tax. What Congress labelled a “penalty” in the language of the law could be construed as a “tax,” according to Roberts, and thus was within Congress’s power. Roberts wrote,“That choice [of label] does not, however, control whether an exaction is within Congress’s constitutional power to tax.” In other words, Congress could do that which it said it was not doing. An interesting interpretation, for sure, but also one that protected Congress “from the consequences of [its] political decisions.”

Congressional Democrats certainly could have written a bill expressly levying a new tax to promote the purchase of health insurance, without any question of constitutionality. But they didn’t. They chose to write Obamacare with penalties rather than taxes. The bill’s authors, and Jonathan Gruber, recognized the political cost of increasing taxes—both to the bill (it would not have passed) and to themselves (fear of Democratic electoral losses). 

This is all relevant today because the Supreme Court has agreed to hear King v. Burwell, a case challenging the ability of the federal government to subsidize insurance (“premium assistance”) through insurance exchanges set up by the federal government. The plain text of Obamacare provides subsidies to those enrolled through exchanges “established by the State”. Those challenging the implementation of the law argue the IRS is not authorized to issue subsidies through the federally-established exchanges.

In recently revealed comments from 2012, Gruber offers Americans insight into the naked political considerations underlying this provision. Gruber argued the law was explicitly designed to “squeeze” states into setting up their own exchanges. The political calculation was that the cost of not expanding coverage through exchanges would be too great for governors and state legislators: “What’s important to remember politically about this is if you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits—but your citizens still pay the taxes that support this bill. …I hope that that's a blatant enough political reality that states will get their act together...” The law could have been written to clarify that the federal government could offer subsidies through its own exchanges – but, by political choice, it wasn’t.

Democrats were wrong in their calculations, however: 36 states have not established exchanges. The federal government established them in those states instead. If the law were applied as written, citizens in those states could not access subsidies through the federal insurance exchanges. Not one to be constrained by the language of a law, however, the Obama administration and the IRS have chosen to provide subsidies for those on federal exchanges, deciding “the state” really means “the federal government too.” 

Again the Court is faced with political decisions and their consequences. Will Chief Justice Roberts note that the decisions of those 36 states not to set up state exchanges are the consequence of the political choices made by the people in those states? 

Or will he and the Court override those political decisions? Will he again protect Congress from the consequences of its own political choices? 

He would be wrong to do so – just as he was wrong in 2012.

Joel Scanlon is the Director of Studies at the Hudson Institute.

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