Thursday, June 28, 2012

Accidentally Constitutional

That was the effective verdict of the Supreme Court this morning with regards to the healthcare reform bill’s individual mandate. Or, as it should now be rechristened, the healthcare tax. (You can read the decision here.)

Needless to say, it initially baffled the news reporters. Below are the conflicting screenshots of CNN and the Washington Post, both captured at 10:17 this morning.

But what does it mean?

Well, most simply, the healthcare reform survives constitutional challenge. It will now be either repealed or implemented, and we get to live with the results either way.

But from a larger perspective, there are two levels of ramifications: the legal and the political.

First, the legal ramifications. Chief Justice Roberts split the difference. He gave the statute’s challengers everything they wanted except the victory. He limited both the commerce clause and the necessary and proper clause powers, which were the first and second arguments the government used to defend the act. Those parts of his opinion give credence to the restrictive reading that most constitutional scholars hadn’t found convincing. And on that issue, five of the nine justices agreed. This shows that the Court still believes that there is an outer limit to the commerce clause and continues the tradition started in Lopez and Morrison. Only on their third argument—almost an afterthought of defending it as a tax—did the government prevail. (As a side note, I’ve wondered why it wasn’t defended as a tax from the beginning. I thought that was the best argument the government had.)

But the tax portion of Robert’s opinion is not a major expansion of federal power. Even at the oral argument it was conceded that Congress could incentivize purchasing insurance by means of a tax credit (similar to buying green appliances or houses or furthering education—or having children for that matter). There is strong legal precedent on the expansive power of Congress to tax, which goes all the way back to the Butler decision of 1936. (Ironically, Butler was a conservative decision that tossed out the first Agricultural Adjustment Act on the grounds that it violated the commerce clause, but adopted Hamilton’s interpretation of the general welfare permitting broad taxation powers. The commerce clause portion of Butler was subsequently overturned by Wickard, the wheat case that has received frequent mention in the healthcare arguments).

So the conclusion is that for the most part Roberts neither expanded nor contracted federal power in this case. He expressly stated that the commerce clause and necessary and proper clause did not permit the mandate. However, as a tax, he found sufficient constitutional grounds.

What I would have liked to see more of is argument about the direct tax issue. The Constitution prohibits direct taxes that are not apportioned (or collected from the states on the basis of population. The sole exception to this is income taxes, which are permitted by the Sixteenth Amendment. I think there is grounds to label the insurance tax an unconstitutional direct tax, since it applies to everyone regardless of income but is not apportioned. Roberts does address this and finds that it is not a direct tax, but this portion of his opinion is somewhat cursory. However, it includes more detail than I’ve seen anywhere else. Were I challenging the mandate, I think this would have been one of my primary arguments: that it is a type of tax that is expressly prohibited, and therefore (since the specific prohibition trumps any indirect permission under the commerce clause) it is unconstitutional. But that wasn’t the strategy taken.

So from a legal perspective, there is more good than bad here. Roberts upheld the law while successfully construing it in such a way as to avoid the broad expansion of federal power that so many feared. My prediction is that when future law students study this case, it will be in the context of a limitation on the commerce clause rather than an expansion of federal power. The fact that the law was actually upheld as an exercise of tax power will be relegated to a footnote in the textbook.

But the political ramifications are even more fascinating. To some extent this decision is reminiscent of Marbury v. Madison, where Chief Justice John Marshall gave Jefferson the win using a method (judicial review) that he knew Jefferson disagreed with. The same is true here, Obama won the case—which removes the politicization of the court argument that would have been raised had the mandate been overturned—but lost the legal argument.

Furthermore, because the law still stands, it remains a campaign issue for this fall. And since it’s now classified as a tax (and a regressive one at that, since it will affect the middle class more than anyone else), Obama can be painted as the President who raised taxes not on the rich, but on the middle class. And going into the week of the 4th of July, no less. In effect, the Republicans get to have their cake (limited federal power) and eat it too (an unpopular new tax to campaign against). It has been constitutionally defanged, but possibly made even more unpalatable for the general populace. After all, if there is one thing worse than the government making your healthcare decisions, it’s the IRS making your healthcare decisions.

Roberts also successfully avoids putting the court in the middle of the political battle. He upholds the constitutional limitations on commerce power, but does so in a non-political way. He doesn’t show an interest in solving the policy questions—exemplifying the conservative principle of being a judge who doesn’t make law. Instead, he pushes the policy questions squarely back into the political ream, not letting Congress get away with taxes under another name yet leaving the mess at their doorstep. In contrast, both the concurring and dissenting opinions have a stronger ideological/political tone to them. Roberts also supplants Kennedy as the deciding vote, taking credence away from the “Kennedy Court” approach many observers have writing about in recent years.

In large part, this decision reminded me why I like Roberts. He very carefully narrows down on the important issues and doesn't get distracted very easily by the politics. His approach is preeminently legal. Which, even when we dislike the outcome, is exactly what we want in a judge.

So no, despite what you’ve heard, the sky is not falling (but if it does, we’ll all have health insurance).
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