Sarah Kliff of the Washington Post writes the following:
The Affordable Care Act is mostly known for its mandate to expand health insurance to 30 million more Americans within a decade. That’s the side of the legislation Democrats touted last week, when the law hit its two-year anniversary. It’s also the point that has roused the most ire from opponents. Insurance expansion is at the heart of legal challenges the Supreme Court will take up on Monday, which argue that forcing people to buy insurance coverage is unconstitutional.
That last sentence doesn’t strike me as quite correct. The legal challenges are grounded in the premise that forcing people to buy insurance coverage is unconstitutional, but that wasn’t the only insurance expansion strategy in the health law (Medicaid expansion account played at least as prominent a role) and it wasn’t the only imaginable strategy (raising taxes and using the resulting revenues to fund coverage expansion is widely believed to be well within the authority of Congress). Consider the following from Stephen Sachs:
Labels matter in the law because they matter in life. Congress can punish “espionage” as harshly as “treason,” but the Constitution treats treason as special. And a civil penalty might be more fearsome than a criminal fine, but the latter still needs proof beyond a reasonable doubt.
The line between taxes and commands backed with civil penalties is blurry, but it still exists, and courts still enforce it. Speeding tickets may raise revenue, but they’re not taxes. And even if Congress can tax speeding, that doesn’t mean it can write a nationwide code of moving violations. In fact, courts have traditionally given greater deference to self-described “taxes” where self-described civil or criminal penalties might be impermissible. The fact that a different law would get us to the same place doesn’t make this law constitutional.
Nor have courts been persuaded, by and large, that we should look past this law’s structure to reimagine it as a tax under the Taxing Clause. To be sure, Congress had political reasons for not implement- ing the mandate as a tax. That is, they thought voters actually cared. (The public might accept a mandate as a punishment for wrongdoing but not as a device to raise revenue.) To my knowledge, no court, and indeed only one concurring opinion, has adopted the Taxing Clause defense thus far—and a bipartisan array of judges, including some who upheld the law, have rejected it. It’s hard to call a losing argument “easy.”
So it doesn’t seem quite right to suggest that insurance expansion as such is at the heart of the legal challenges. Rather, it was the decision to employ commands backed with civil penalties as the vehicle for insurance expansion rather than taxes.
One argument, which I am sympathetic to, is that the use of a command backed by a civil penalty was designed to minimize the perceived cost of coverage expansion, thus making coverage expansion more politically palatable. That may or may not be true. What we do know is that we saw many coverage expansions — of SCHIP, for example — in the recent past that were funded by taxes and not commands backed by civil penalties, and while conservatives may have objective on policy grounds, relatively few objected on constitutional grounds.
The rest of Kliff’s article concerns the ways in which PPACA has shaped the insurance business model. As a firm believer in the power of business model innovation to improve the U.S. health system, my only observation is that there were a number of ways to encourage business model innovation, including a Medicare-first strategy married to a change in the tax treatment of health insurance.