The push for increased government involvement in the administration of health care in the United States dates back to 1912, when presidential candidate Theodore Roosevelt, campaigning on the Progressive Party ticket, called for the establishment of a national health insurance system modeled on what already had been established in Germany.
The proposal languished until the Great Depression, when a 1932 a governmental panel known as the Wilbur Commission reported that millions of Americans were unable to afford adequate medical coverage and recommended the expansion of group medical practices and group prepayment systems wherein the financial risks associated with potential illness or disability could be shared by many people who were covered by the same insurance company.
In 1934, President Franklin Roosevelt's working groups on Social Security and unemployment insurance devoted some time to discussing the feasibility of a national health insurance program that would cover every American. But because of the financial crisis that continued to grip the nation and because the American Medical Association (AMA) was strongly opposed to proposals for government-run health care, efforts to promote legislation toward that end failed to generate any traction.
In November 1945, President Harry Truman called on Congress to initiate a ten-year plan to transform the existing American health care system into one where coverage would be compulsory for all people. The American Medical Association warned that such “socialized medicine” would be detrimental to Americans' health care, and the plan ultimately stalled in Congress.
With the outbreak of the Korean War in June 1950, the Truman administration and Congress were forced to turn their attention away from the health care debate. Nonetheless, the issue of government-provided medicine was now an established part of the political dialogue in America. And the simple fee-for-service relationship whereby patients had paid doctors out of pocket was being replaced by insurance coverage. By 1951, some 77 million U.S. residents had purchased some type of voluntary accident or sickness insurance -- an increase of 11 million over the previous year's total, and nearly 40 million more than World War II-era levels.
In a televised speech to nearly 20,000 people at New York's Madison Square Garden in May 1962, President John F. Kennedy advocated legislation to provide health benefits to Social Security recipients. Said Kennedy: “This bill serves the public interest. It involves the government because it involves the public welfare. The Constitution of the United States did not make the President or the Congress powerless. It gave them definite responsibilities to advance the general welfare, and that is what we're attempting to do.” The plan, however, stalled in Congress once more.
On July 31, 1965, President Lyndon Johnson signed legislation creating the Medicare and Medicaid programs to provide comprehensive health care coverage for people aged 65 and older, as well as for the poor, blind, and disabled. By 1968, these new government programs had caused healthcare-related spending nationwide to skyrocket and to become a major political concern. America's $50 billion in medical expenditures for that year was 25 percent higher than the corresponding figure for 1965; 500 percent higher than the figure for 1948; and 1,250 percent higher than the 1929 total.
In 1971, President Richard Nixon backed a proposal requiring employers to provide a minimum level of health insurance for their workers while also maintaining competition among private insurance companies. By contrast, Senator Ted Kennedy championed the so-called Health Security Act, a universal single-payer health reform plan directed and financed entirely by the federal government. This marked the start of a career-long effort by Kennedy to overhaul the country's health care system.
When Jimmy Carter was elected U.S. President in 1976, he promptly called for “a comprehensive national health insurance system with universal and mandatory coverage.” But when the nation fell into a deep recession soon after Carter took office, health care was relegated to the “back burner” of Congressional concerns.
In 1986 Congress passed the Emergency Medical Treatment and Active Labor Act, which required hospitals to screen and stabilize all emergency-room patients. It also proposed a test of the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, which allows employees to pay for coverage by their group health plan for up to 18 months after losing their jobs.
In July 1988, Congress passed (and President Reagan signed into law) the Medicare Catastrophic Coverage Act (MCCA), the most significant health legislation since 1965. Designed to protect older Americans from financial ruin due to illness or disability, the MCCA, financed entirely by a surtax imposed upon the nation's 33 million Medicare beneficiaries, set ceilings on Medicare patients' expenditures on hospitals, doctors, and prescription drugs. But within a few months after the bill's passage, many hundreds of thousands of affluent senior citizens grew resentful over having to pay a surtax to help finance a program that merely duplicated benefits which many of them had already been receiving prior to MCCA's enactment. Increasingly large numbers of protesters began to assail members of Congress at town hall meetings in virtually every congressional district, and, in a dramatic legislative reversal, Congress overwhelmingly repealed the program in December 1989.
In 1993 President Bill Clinton launched an effort to provide universal health care coverage based on the idea of “managed competition,” where private insurers would compete in a tightly regulated market. The plan called for everyone, whether or not they were employed, to carry health insurance and to contribute to its cost, though government subsidies would be made available for the poor. Moreover, the plan required employers to bankroll 80 percent of all policy premium costs for workers and their families. People who were already covered by existing government programs -- Medicare, Medicaid, Department of Veterans Affairs, Indian Health Service, etc. -- would simply continue to use those programs. The Clinton plan proposed to cover all services related to hospitalization, emergency care, office visits, preventive care, mental health, substance abuse, abortion, prenatal care, hospice care, home health aides, laboratory and diagnostic tests, prescription drugs, rehabilitation, durable medical equipment, prosthetic devices, vision and hearing care, preventive dental care for children, and health education classes.
Americans rallied against what was called Hillarycare because of the First Lady’s role in drafting the legislation. One of the reasons for their opposition was that Mrs. Clinton, who headed the 500-member Health Care Task Force (HCTF), attempted to conduct all HCTF business in secret meetings led off from public scrutiny. This modus operandi was in violation of so-called “sunshine laws” forbidding such secret meetings from taking place when non-government employees are present.
In 1997 President Bill Clinton signed legislation to create the State Children's Health Insurance Program (SCHIP), an initiative designed to provide federal matching funds (to states) for health insurance covering children whose family incomes were modest but too high to qualify for Medicaid. Because SCHIP's funding formula gave states an incentive to add middle-income youngsters and even adults to its rolls, the program's costs spiraled out of control. By 2008, the SCHIP program covered not only 7 million children but also 600,000 adults in fourteen states; in six states, more SCHIP money was being spent on adults than on children -- even as the program had still failed to enroll almost 2 million children who qualified financially.
In December 2003, President George W. Bush signed the Medicare Modernization Act, which expanded Medicare to include prescription drug coverage. Democrats derided the President's legislation as a sham that inevitably would destroy Medicare, and maintained that theirs was the only political party that could be trusted to protect the program. “Who do you trust?” Senator Edward Kennedy shouted. “The HMO-coddling, drug-company-loving, Medicare-destroying, Social Security-hating Bush administration? Or do you trust Democrats, who created Medicare and will fight with you to defend it -- every day of every week of every year?”
During his 2008 presidential campaign, Democrat Senator Barack Obama promised to bring about sweeping health-care reforms for the estimated 47 million Americans he claimed could not afford health insurance. Obama had long advocated the creation of a federally administered, government-run, “single-payer” health care system. But when it became clear that such a plan would be too politically unpopular to have any chance of passing in the form of a single, sweeping piece of legislation, Obama and Congressional Democrats crafted a bill whose aim was to pursue that same ultimate objective in incremental steps rather than all at once. The chief method of promoting such incrementalism was the bill's call for the establishment of health care "exchanges" through which people could purchase government-subsidized coverage. Details of this are provided below, in the section titled: "How Obama and the Democrats Laid the Groundwork for an Incremental Move Toward a Single-Payer System."
Throughout 2009 and into early 2010, the political process of pushing the health care reform legislation through Congress was led by Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi. The process was extraordinarily rancorous. Reid, for instance, likened opponents of the bill to people who, in bygone eras, had defended slavery and opposed women’s suffrage:
“You think you’ve heard these same excuses before? You’re right. In this country, there were those who dug in their heels and said, ‘Slow down, it’s too early, let’s wait, things aren’t bad enough’ — about slavery. When women wanted to vote: ‘Slow down, there will be a better day to do that, the day isn’t quite right.’ And when this body [the U.S. Senate] was on the verge of guaranteeing equal civil rights to everyone regardless of the color of their skin, some senators resorted to the same filibuster threats that we hear today.”
The process was also replete with corruption, which in some cases took the form of special, privately negotiated payoffs funded by federal taxpayer dollars. These payoffs were intended, generally, to persuade reluctant Democrats to support the bill. One noteworthy deal was a $300 million federal subsidy to cover Medicaid expenses that otherwise would have been borne by state taxpayers in Louisiana; this bargain was designed to win the vote of that state's Democratic Senator Mary Landrieu. In another high-profile pact, Nebraska Governor Ben Nelson won, for his state, a permanent exemption from its own share of the Medicaid expansion costs that were built into the health care legislation; that burden, which would amount to $45 billion over the first decade alone, was shifted onto the federal government.
Senator Reid was unapologetic about having struck these deals. “You’ll find a number of states that are treated differently than other states. That’s what legislating is all about. It's compromise," he said. But when political leaders in other states subsequently complained that they had not been offered arrangements similar to those lavished on Landrieu and Nelson, Reid and Pelosi amended the legislation to increase federal Medicaid subsidies not only to Louisiana and Nebraska, but to all 50 states through 2017.
Despite opposition from a significant majority of the American people, the Democrat-dominated House of Representatives passed the Affordable Health Care for America Act on March 21, 2010. The margin of victory for the legislation was 220 to 215. In the final tally, 219 Democrats voted for the bill, and 39 voted against it. Louisiana Congressman Joseph Cao was the only Republican to support it. President Obama signed the bill into law two days later.
Pledging to extend health insurance to 32 million uninsured Americans, the new legislation greatly expanded the federal government's role in the American health care industry. Among its more noteworthy provisions were the following:
The uninsured and self-employed would be able to purchase insurance through state-based exchanges with subsidies available to individuals and families earning between 133 percent and 400 percent of poverty level (i.e., up to $88,200 for a family of four). Separate exchanges would be created for small businesses to purchase coverage -- effective 2014.
The Office of Personnel Management (OPM) would sponsor at least two health plans that would compete nationwide against private health plans. Critics predicted that this would lead to a de facto “public plan” dominated entirely by the federal government.
Medicare would be cut by approximately $455 billion.
Medicaid coverage would be extended to include childless adults up to age 26.
Policies with lifetime and annual limits on health-care services would be banned.
Insurance companies would not be permitted to reject any applicant because of a pre-existing medical condition.
Insurers would be required to charge healthy people the same premiums as those who chose not to buy a policy until they were sick. (That reform had previously devastated the private-insurance market in every state that had adopted it -- pushing premiums so high that more than half of individual and small-group policyholders had dropped their insurance altogether.)
Approximately $20 billion in tax hikes would be imposed on medical-device companies.
Onerous new taxes would be levied on drug manufacturers.
Beginning in 2013, families with incomes greater than $250,000 (and individuals whose incomes exceeded $200,000) would pay an extra Medicare Payroll Tax of up to 2.35 percent, plus a new 3.8 percent tax on interest and dividend income.
Fines of $2,000 per employee would be levied on businesses with 50 or more workers if any employee received a subsidy from the federal government.
By 2014, everyone would be required to purchase health insurance or face a $695 annual fine. Critics of this provision warned that it would incentivize many Americans to pay the fine until they faced a major health expense, at which time they would purchase insurance at the higher, government-mandated rates.
Starting in 2018, "Cadillac" insurance plans -- i.e., high-end policies whose premiums cost at least $10,200 annually for individuals or $27,500 for families -- would be subject to a 40 percent excise tax.
According to the Congressional Budget Office, the Affordable Health Care for America Act (AHCAA) would increase health care spending by some $210 billion over its first ten years. A report from the chief actuary at the Center for Medicare and Medicaid Services placed the figure slightly higher, at $222 billion.
How Obama and the Democrats Laid the Groundwork for an Incremental Move Toward a Single-Payer System:
Journalist Byron York provided a clear, concise explanation of how the Democrat plan created huge economic incentives which would virtually guarantee that millions of Americans would switch from their existing health-insurance plans to a government-run alternative:
"On the one hand, the new law orders the establishment of health care 'exchanges' through which anyone can purchase government-subsidized coverage. On the other hand, the law levies fines on employers who fail to offer coverage to their employees -- but sets the fine far below the cost of coverage. In 2010, the average employer paid $4,150 to cover a single employee and $9,773 for family coverage. (Both figures are about double what they were in 2000.) The new law sets fines for employers who don't cover their workers at $2,000.
"So when it takes effect in 2014, the law will give employers a choice: Continue to offer increasingly expensive health coverage, or pay a relatively small fine, save a lot of money, and let employees buy their own subsidized coverage on the exchange. The incentive seems pretty clear....
"The bottom line is that the new system appears designed to push more and more people into the exchanges, with more and more people receiving health coverage subsidized by the government. For the cynical, it might even appear that is what Obama and his Democratic allies wanted all along. Remember that Obama said, during a January 2008 debate that, 'If I were designing a system from scratch, I would set up a single-payer system.' He couldn't pass a single-payer system, or even a public-option system, even when he had filibuster-proof majorities in Congress. But he could enact a system that will take a slower route in that direction."
Legal Challenges to the Health-Care Reform Bill:
Immediately after the health-care overhaul became law, twenty attorneys general across the United States filed suit against the federal government, claiming that the law was unconstitutional and that Congress is not authorized to require that all Americans purchase health insurance. Virginia Attorney General Ken Cuccinelli, for example, filed a lawsuit the same day the health-care reform bill was passed -- arguing that the case was about “preserving liberty of individual Americans” and about “the outer limits of federal power under the Constitution.”
In its defense of the law, the Justice Department invoked the Commerce Clause and claimed that the imposition of penalties on Americans who failed to buy health-care coverage was consistent with the federal government’s powers to regulate interstate commerce and impose taxes. Describing the penalty as a tax, the Justice Department filing stated that the law “imposes a tax on the choice of a method to finance the future costs of one’s health care.” In response, Florida Attorney General Bill McCollum said:
“The Justice Department’s defenses clash directly with comments made by President Obama during the debate on the health care reform bill, including the President’s insistence on national television that the purchase mandate was absolutely not a tax. Yet in its motion to dismiss, the Obama administration defends the individual mandate under Congress’ 'taxing and spending' power.”
On March 25, 2010, Democrat Max Baucus, Chairman of the Senate Finance Committee, said the following about the newly passed healthcare legislation:
"This is also an income shift. It’s a shift, it’s a leveling, to help lower income, middle income Americans. Too often, too…much of late, in the last couple, three years, the mal-distribution of income in America has gone up way too much. The wealthy are getting way, way too wealthy. And the middle income class is left behind. Wages have not kept up with the increased income of the highest income Americans. This legislation will have an effect of addressing that mal-distribution of income in America."
Four days later, former Democratic National Committee Chairman Howard Dean was asked, "Do you think that, deep down, your party knows that perhaps our long-term growth rate could be hurt [by the healthcare bill] but were willing to accept that to live in a different type of society ... more akin to Europe?" Dean replied:
"I think that depends how you measure growth rate. Inequality is a problem, and it has been exacerbated over the last, say, 20 or 30 years. So the question is, in a democracy, where does the right balance between those at the top ... and those at the bottom [exist]?... When it gets out of whack, as it did in the Twenties and it has now, you need to do some redistribution. This is a form of redistribution. If you redistribute too much, then the system doesn't work because you take the incentive out of it. So it's like a machine. You [sic] always gotta tune it right."
On April 22, 2010, the Associated Press reported that according to the Department of Health and Human Services, the cost of health care under the new legislation would rise, contrary to assurances by President Obama and Congressional Democrats that costs would drop. Said the AP:
"President Barack Obama's health care overhaul law will increase the nation's health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.
"A report by economic experts at the Health and Human Services Department said the health care remake will achieve Obama's aim of expanding health insurance — adding 34 million Americans to the coverage rolls.
"But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, however, since the report also warned that Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back.... The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, 'possibly jeopardizing access' to care for seniors....
"The overhaul will increase national health care spending by $311 billion from 2010-2019, or nine-tenths of 1 percent....
"The report's most sober assessments concerned Medicare. In addition to flagging the cuts to hospitals, nursing homes and other providers as potentially unsustainable, it projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular program. Enrollment would plummet by about 50 percent, as the plans reduce extra benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.
"In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces "a very serious risk" of insolvency."
On December 13, 2010, Federal District Court Judge Henry E. Hudson in Virginia ruled that a key provision of the health-care legislation, the “insurance mandate,” violated the Commerce Clause and was therefore unconstitutional. The suit challenged the notion that the federal Constitution gives the U.S. Congress power to enact laws forcing Americans to buy things they do not want to buy.
Compared to Judge Hudson’s decision, prior rulings on the constitutionality of the health-care reform bill had been less propitious for those opposed to the legislation. Among the nearly two dozen legal challenges to "Obamacare," there was a ruling by U.S. District Judge Norman K. Moon in Lynchburg, Virginia, which dismissed a lawsuit brought by Liberty University arguing that the individual and employer mandates were unconstitutional under the Commerce Clause. Liberty had contended that the mandates penalized people for inactivity, that is, the act of not buying health insurance. But Moon said decisions about health care “substantially affect the interstate health care market.”
In a prior decision in Michigan, U.S. District Judge George C. Steeh sided with the Obama administration, ruling that if a person does not buy health insurance, he or she is making a conscious decision to go without it. And if enough individuals make the same decision, everyone sips from the stream of commerce. Thus congress is empowered to manipulate the flow.
Other rulings, by contrast, had given hope to those opposed to Obamacare. In October 2010, U.S. District Judge Roger Vinson of Florida dealt the Obama administration a blow in a case brought by 20 state attorneys general challenging the power of Congress to make everyone buy health insurance. Judge Vinson said the Commerce Clause has “never been applied in such a manner before,” and that to do so was “simply without precedent.” He also criticized the administration’s claim that the mandate was somehow a tax rather than a penalty.
By December 2010, at least 42 states had either passed or introduced freedom-of-choice legislation or amendments designed to guard their citizens from the federal law’s “individual mandate.”
On January 31, 2011, Judge Vinson ruled that as a result of the unconstitutionality of the "individual mandate" that requires people to buy health insurance, "the entire act must be declared void." Because there is nothing in the bill that allows the insurance mandate to be severed from the rest of the bill, said Vinson, the bill would have to be rejected in its entirety. While it is relatively undisputed that Congress has the authority to regulate interstate commerce under the Commerce Clause (Article I, Section 8, Clause 3), Vinson explained that:
"[i]t would be a radical departure from existing case law to hold that Congress can regulate inactivity under the commerce clause. If it has the power to compel…it would have set out to create a government with the power to force people to buy tea in the first place... Congress could require that people buy and consume broccoli…because people who eat healthier tend to be healthier…and put less strain on the health care system. Similarly, because virtually no one can be divorced from the transportation market, Congress could require that everyone…buy a General Motors automobile…."
Vinson's ruling paved the way for the Supreme Court to make the final decision as to the constitutionality of ObamaCare.
On April 4, 2011, the Association of American Physicians and Surgeons (AAPS) -- a conservative, national organization of physicians in all specialties -- filed a legal brief to join the lawsuit which the Commonwealth of Virginia and 27 other states had already initiated to challenge the constitutionality of the Affordable Health Care for America Act. The defendant in the case was the Secretary of Health and Human Services Department.
Condemning the law as “the most offensive, harmful and unconstitutional legislation enacted by Congress in a generation,” the AAPS brief declared: “Under the Constitution, a patient has a right to a ‘private enclave’ where his or her medical care and information are private. The [law's] individual mandate [requiring everyone to purchase medical insurance] obliterates that enclave.” The right to a “private enclave” underlies Fourth and Fifth Amendment jurisprudence.
The AAPS brief also argued that, contrary to the claims of congressional Democrats, the individual mandate to buy insurance could not be justified under the Commerce Clause of the Constitution. This contention had already been stated forcefully in a March 4 decision of U.S. District Judge Roger Vinson.
In contrast to the AAPS, two other organizations of doctors -- the American Medical Association and the American Academy of Family Physicians -- had been given special benefits under the healthcare reform bill and thus supported the law.
On June 8, 2011, a three-judge panel of the 11th Circuit Court of Appeals began deliberations on whether the healthcare reform law's mandate that nearly everyone purchase health insurance by 2014 was constitutional. The case was initiated by 26 state attorneys general — all Republicans — who jointly challenged the law. As the proceedings began, Chief Judge Joel Dubina said, "I can't find any case like this. If we uphold this, are there any limits [on the power of the federal government]?" Judge Stanley Marcus added that he "can't find any case" in the past where the courts had upheld "telling a private person they are compelled to purchase a product in the open market.... Is there anything that suggests Congress can do this?"
Judge Frank Hull, the third member of the appellate panel, repeatedly asked the lawyers about the possible effect of striking down the mandate while upholding the rest of the law. Most often, when passing a complex law, Congress includes a "severability clause" to ensure that if one part of the law is struck down, the rest can stand. The House of Representatives included such a provision in its version of the healthcare bill, but the Senate did not. In the end, the House adopted the Senate's version, creating a situation where -- according to both sides of the 11th Circuit Court case -- the court faced an all-or-nothing decision.
On August 11, 2011, the 11th Circuit Court ruled that the insurance-purchase mandate was unconstitutional, and that Congress had exceeded its authority when it required Americans either to purchase coverage or face a financial penalty. A Washington Times report stated:
"While throwing out the key provision of this legislation, the court also ruled that the remainder of Obamacare could remain in effect. However, the elimination of the 'individual mandate' effectively guts the legislation, depriving it of its major source of funding. The other primary source: a radical cut in Medicare benefits."
By contrast, in late June 2011, judges on the 6th Circuit Court of Appeals -- which covers Michigan, Ohio, Kentucky and Tennessee -- ruled that Obamacare’s individual mandate (which would penalize people for not purchasing insurance) was “a valid exercise of Congress’s authority under the Commerce Clause.”
On September 8, 2011, the 4th Circuit Court of Appeals in Richmond said that the individual mandate was essentially a tax and thus could not be challenged in court until consumers had started paying it. According to Politico, "The [4th Circuit] panel cited the Tax Anti-Injunction Act, which requires taxpayers to pay a tax and ask for a refund before they can challenge it in court." Such a course of action, if adopted, would leave the constitutionality of the individual mandate unresolved until at least 2014, when the mandate was slated to take effect.
In October 2011, the Obama administration scrapped one part of its healthcare overhaul -- the Community Living Assistance Services and Supports (CLASS) program -- which would have covered the costs of long-term care such as nursing homes and home-health aides for disabled people. The program, which had been scheduled to take effect in 2012, was supposed to function as a self-sustaining voluntary insurance plan, open to all working adults regardless of age or health, who would pay monthly premiums -- ranging from $235 to $3,000 under various scenarios -- during their careers. But at those rates, financial analysts deemed it unlikely that large numbers of healthy people would willingly enroll in the program during their working years. In the event of a shortage of enrollees, the program, in turn, would have been forced to raise its premiums so that it could meet its obligations to disabled or ailing beneficiaries. Moreover, those rising premiums would have rendered CLASS even more unattractive to potential purchasers. As early as 2009 -- nearly a year before the passage of Obamacare -- Richard Foster, head of long-range economic forecasts for Medicare, had warned the Obama administration and congressional officials that CLASS would be financially unworkable and was destined to collapse. But the President and his fellow healthcare reformers ignored Foster's counsel and continued to call for CLASS to be implemented.
In March 2012, the Congressional Budget Office (CBO), which in 2010 had estimated that Obamacare would cost $940 billion over a ten-year period, revised its estimate to approximately $2 trillion. The CBO also changed its 2011 estimate that one million workers would no longer receive insurance coverage from their employers once the healthcare law was fully implemented; the revised figure was 4 million. Further, the projected number of uninsured people who would be covered by the new law was reduced from 32 million to 30 million. And, because the law was slated to provide many people with partial rather than comprehensive coverage, the number of non-elderly legal residents who would be forced to obtain supplemental insurance policies was now projected to rise from 82 percent in 2012, to 93 percent in 2022.
On June 28, 2012, the Supreme Court upheld the constitutionality of Obamacare, particularly its core provision – the so-called individual mandate under which most Americans would be required to buy health care insurance with at least the minimum amount of coverage stipulated by the federal government or pay a fine. The Court upheld the mandate on the grounds that it was within the taxing authority of Congress. Chief Justice John Roberts provided the swing vote to give the liberal justices on the bench the majority they needed to uphold the controversial law.
In a 5-4 decision written by Chief Justice Roberts, he concluded that “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” Although the Obama administration had tried to characterize the individual mandate as a legitimate exercise of congressional power under the separate Commerce Clause of the Constitution, Chief Justice Roberts’ opinion rejected that approach and opted to call the fine, imposed on individuals who decide not to buy health insurance despite the mandate, a tax. "Simply put, Congress may tax and spend," wrote Roberts. "The federal government may enact a tax on an activity that it cannot authorize, forbid or otherwise control."
In his dissent, Justice Anthony Kennedy wrote: “In our view, the entire act before us is invalid in its entirety.” Kennedy's dissent was joined by Justices Samuel Alito, Clarence Thomas and Antonin Scalia, who noted that the law refered to the individual mandate as a requirement and a penalty with only the “flimsiest of indications to the contrary.” According to Kennedy, the majority opinion (written by Roberts) constituted a rewriting of the law. “What Congress calls a penalty, we call a tax,” Kennedy said. “In short, the court imposes a tax when Congress deliberately rejected a tax.”
Asserting that “judicial tax-writing is particularly troubling,” the four dissenters wrote:
“Taxes have never been popular … and in part for that reason, the Constitution requires tax increases to originate in the House of Representatives. That is to say, they must originate in the legislative body most accountable to the people, where legislators must weigh the need for the tax against the terrible price they might pay at their next election, which is never more than two years off.... In a few cases, this court has held that a ‘tax’ imposed upon private conduct was so onerous as to be in effect a penalty. But we have never held — never — that a penalty imposed for violation of the law was so trivial as to be in effect a tax. We have never held that any exaction imposed for violation of the law is an exercise of Congress’s taxing power — even when the statute calls it a tax, much less when [as here] the statute repeatedly calls it a penalty.”
Former Assistant United States Attorney Andrew C. McCarthy offered this analysis of the Court ruling:
Led by Chief Justice John Roberts, the Supreme Court decided that Americans have no right to due process.... The assessment charged for failure to comply with ObamaCare’s “individual mandate,” which requires Americans to purchase health insurance, was presented to the country by the administration and the Democratic Congress as a penalty assessed for lawlessness — i.e., for refusing to honor this new legal requirement. It was strenuously denied by proponents that they were raising taxes.
The Obama administration, in particular, was adamant that the assessment was a penalty, not a tax: the president himself indignantly objected to a suggestion to the contrary in an ABC News interview with George Stephanopoulos. Obama officials also vigorously maintained that there had been no violation of the president’s oft-repeated campaign pledge not to raise taxes on the middle class. Moreover, as stingingly noted in the joint dissenting opinion of Justices Scalia, Kennedy, Thomas and Alito, the Democratic majority in Congress rejected an earlier version of the bill that became ObamaCare precisely because it imposed a tax — lawmakers intentionally substituted a mandate with a penalty for failure to comply so they could continue to contend that no one’s taxes were being raised.
Chief Justice Roberts claims that Congress simply used the wrong label. That is legerdemain. This is not a case in which Congress was confused, or inadvertently used the wrong term under circumstances where the error wasn’t called to its attention. The tax-or-penalty question was a hotly contested issue. As the dissent points out, it is one thing for a court to construe as a tax an exaction that “bore an agnostic label that does not entail the significant constitutional consequences of a penalty — such as ‘license’…. But we have never — never – treated as a tax an exaction which faces up to the critical difference between a tax and a penalty, and explicitly denominates the exaction a ‘penalty.’” ...
Chief Justice Roberts & Co.... said the American people are not entitled to an honest legislative process, one in which they can safely assume that when Congress intentionally uses words that have very different meanings and consequences — like tax and penalty — and when Congress adamantly insists that the foundation of legislation is one and not the other, the Court will honor, rather than rewrite, the legislative process. Meaning: if Congress was wrong, the resulting law will be struck down, and Congress will be told that, if it wants to pass the law, it has to do it honestly.
Just as an appeals court may not legitimately rewrite an indictment and revise what happened at a trial, neither may it legitimately rewrite a statute and fabricate an imaginary congressional record. But today, the Supreme Court rewrote a law — which it has no constitutional authority to do — and treated it as if it were forthrightly, legitimately enacted. Further, it shielded the political branches from accountability for raising taxes, knowing full well that, had Obama and the Democrats leveled with the public that ObamaCare entailed a huge tax hike, it would never have had the votes to pass.
The ObamaCare mandate was enacted as a penalty flowing from Congress’s Commerce Clause power. It has been upheld as a tax flowing from Congress’s power to tax-and-spend under the General Welfare Clause. As the dissent sharply demonstrates, the contention that the mandate could have been enacted as a tax is frivolous....
Had ObamaCare been honestly presented as a tax, or had the Court acted properly by striking it down as an illegitimate use of the commerce power and telling Congress that if it wanted to pass the bill as a tax it would have to pass the bill as a tax, our dire financial straits might have forced this much needed debate about the limits of congressional welfare power.
We have now lost that opportunity through fraud: fraud in the legislative action, and fraud in the judicial review. Due process would not allow this to be done to a criminal, but the Supreme Court has decided that Americans will have to live with it.
In February 2013, the Congressional Budget Office (CBO) reported that Obamacare would push approximately 7 million people out of their job-based insurance coverage—nearly twice the previous estimate. As WorldNetDaily reported:
"CBO said that this year's tax cuts have changed the incentives for businesses and made it less attractive to pay for insurance, meaning fewer will decide to do so. Instead, they'll choose to pay a penalty to the government, totaling $13 billion in higher fees over the next decade."
Internal cost estimates from 17 of the nation's largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration's goal of affordability.
New regulations, policies, taxes, fees and mandates are the reason for the unexpected "rate shock," according to the House Energy and Commerce Committee, which released a report Monday [May 13] based on internal documents provided by the insurance companies. The 17 companies include Aetna, Blue Cross Blue Shield and Kaiser Foundation.
The report found that individuals will face "premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent."
One company said that new participants in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account, said the report. "The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 -- a $1,812 cost increase," it added.
The key reasons for the surge in premiums include providing wider services than people are now paying for and adding less healthy people to the roles of insured, said the report.
It concluded: "Despite promises that the law will lower costs, [Obamacare] will in fact cause the premiums of many Americans to spike substantially. The broken promises are numerous, and the empirical data reveal that many Americans, from recent college graduates to older adults, will not be able to afford the law's higher costs."