This understanding of the mandate, held by the CBO and by most of Obamacare’s defenders, has been shattered by the Supreme Court’s ruling. In his opinion, Chief Justice Roberts plainly said that “the Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command.” It could be constitutional only if it was understood to simply levy a tax on the uninsured, Roberts argued, and so that is all that it can be understood to do.
Essentially, the Court struck down the mandate while retaining the penalty. So those champions of Obamacare who relied on behavioral economics to argue that the law’s individual mandate could be sufficient to avert an insurance death spiral must now contend with the fact that the Court has closed off that argument.
In the wake of the Roberts decision, participation in Obamacare’s insurance scheme is optional. Rather than a requirement to buy coverage backed with a penalty for violators, the law now offers Americans two equally lawful and legitimate options: buy expensive insurance (which Obamacare will make all the more expensive), or pay a modest (and still largely unenforceable) tax and just buy insurance for the same price later if you need it. Presented as a choice, not a command, this provision will invite a straightforward comparison, and for many Americans the choice it would pose would be a very easy one.
Obamacare was always going to lead to a disastrous meltdown of America’s health-insurance system, but in the wake of the Court’s decision, many of its former defenders should acknowledge this fact too. If you argued that the mandate was the linchpin of the system, and that it would work despite its low and unenforceable penalty because Americans are a law-abiding people, you should now see that the mandate as you understood it no longer exists. The CBO should certainly acknowledge this in its new score of the law’s effects on federal spending and the uninsured, due out later this month.
Of course, this doesn’t really make Obamacare optional, because although the law can no longer order consumers to buy what insurers are selling, it still strictly defines what insurers may sell. People would therefore only have a choice between Obamacare and nothing. Many will prefer nothing, but that’s hardly a great set of options to choose from.
Obamacare is optional in a different, more important way, however. The November election will serve as a referendum on the law, which can be repealed in 2013 with new political leadership. The Supreme Court’s decision has made the case for repeal even stronger.
— James C. Capretta is a fellow at the Ethics and Public Policy Center. Yuval Levin is the Hertog Fellow at the Center and the editor of National Affairs.