KHN’s Mary Agnes Carey, Stuart Taylor and Julie Appleby are joined by SCOTUSblog’s Tom Goldstein and Lyle Denniston to break down Thursday’s landmark Supreme Court decision on the constitutionality of the health law. A transcript follows.
MARY AGNES CAREY: Good day and welcome to a live webcast of health reform in the court. I’m Mary Agnes Carey.
Today the Supreme Court upheld nearly every provision of the landmark 2010 health care law, and in doing so, handed a major victory to the Obama administration and Democrats. By the narrowest of margins, 5-4, the court said that a key provision in the law — a requirement that most people buy health insurance by 2014 or pay a fine — was constitutional.
Not all of the law emerged unscathed. The court said states could decide whether or not to participate in the law’s expansion of Medicaid without risking their current federal funding for the program.
With us today to discuss the Supreme Court’s ruling are Tom Goldstein, of the law firm Goldstein & Russell and publisher of SCOTUSblog; Julie Appleby, senior correspondent for Kaiser Health News; Stuart Taylor, legal analyst and writer; and Lyle Denniston, reporter for SCOTUSblog who has covered the Supreme Court for nearly six decades. Tom will start off the day with a discussion of the legal aspects of the ruling, and then I’ll pick up with a conversation about policy and political implications. Tom, take it away.
TOM GOLDSTEIN: Thanks so much, it’s a pleasure to be here, of course. You think that most of the folks who are watching are familiar with the basic decision of the court, which you summarized, and that is the challenge to the individual mandate was rejected, even if on a rational that many didn’t expect, and then the rest of the statute, by and large with one important exception, upheld and the challenges rejected. But I want to turn first to Stuart who was in the room and give us a flavor, if you would, of what that experience was like.
STUART TAYLOR: It was the most riveting Supreme Court theater I’ve ever seen, Tom. It was really dramatic, and I was glad I could be there. Why? Suspense is why. Nobody knows going in what’s going to happen. Chief Justice Roberts begins summarizing the opinion. It goes for half an hour. Five minutes in, ten minutes in, they’re going to strike it down, is what I’m thinking, and I think most people in the room were thinking, because he’s talking about the Commerce Clause argument and he’s saying that the Commerce Clause does not justify —
TOM GOLDSTEIN: What a tease.
STUART TAYLOR: — then five minutes later, oh my God, no, they’re going to uphold it. Because now he’s talking about the taxing and spending power and saying that’s good enough.
So then he starts Medicaid and you think, well, they upheld the individual mandate and nobody thinks they’d strike down Medicaid. Oh my gosh, they’re going to strike it down. And they did, by 7-2, with two of the more liberal justices joining, which was a huge surprise.
Then comes the footnote. All we’re striking down is the extra penalty that would be imposed on the states that would be taking all their Medicaid funding if they won’t go along with this. We’re not striking down anything else. And then you get through 20 minutes of angry dissents by liberals and conservatives. But at the end of Justice Ginsberg’s dissent, you get, in the end, the Affordable Care Act survives largely unscathed. Bingo. That’s the case.
TOM GOLDSTEIN: That’s when everybody knew. Well, let’s break it down. Let’s talk about individual mandate challenge and also the Medicaid challenge. Can you just give us some context here on how this move from the Commerce Clause to the taxing power is a little bit confusing and requires you to dig a little bit deeper into how the statute actually operates. How the mandate intersects with this tax. So can you give us the sense of that?
JULIE APPLEBY: Well, there is what was originally called a penalty and now the court has said it’s a tax. If you don’t carry insurance in 2014, you face the possibility of this penalty. There are some exceptions to it. But the penalty starts out pretty low in 2014, it’s $95, but it ramps up, it ramps up to about $695 or 2.5 percent of income, whichever is more. So that’s what is the penalty which is now a tax. If you don’t have insurance, you face this penalty, with some exceptions. If the cost is going to be more than a certain percentage of your income, if you have religious exceptions, there are some reasons why you don’t face the penalty.
TOM GOLDSTEIN: So this is actually incredibly important for about how the statute is going to function. So the idea is this. If you don’t comply with the mandate, you decide, I’m not going to buy health insurance. Can anything happen to you other than you’re hit with this tax stroke penalty?
JULIE APPLEBY: In what way?
TOM GOLDSTEIN: Well, my impression from the opinion is that’s it.
MARY AGNES CAREY: It is. It is.
TOM GOLDSTEIN: Then if you’re willing to pay $95 in year one, for example, then what do we think? Maybe we’ll table this for a second, but I think that’s going to be the real intersection between the legal decision today and the health policy implications. Lyle has been writing through the day that this may have very significant implications for Americans, particularly in the early years. Well, maybe I just won’t get health insurance and I’ll pay the $95 — and what will that mean for insurers?
JULIE APPLEBY: That’s a big question. Will that be enough for people to sign up? But remember, a lot of people already have job-based coverage. Many people aren’t going to face this penalty at all because they already have coverage through their jobs or some other way. But the question is, if you don’t, is $95 or even $695 going to be enough to encourage you to do so?
MARY AGNES CAREY: Proponents of the law have made it clear there’s no jail time involved here.
TOM GOLDSTEIN: Well, if you don’t pay the tax there can be.
STUART TAYLOR: The important thing, I think, Tom, is that it was an integral part of the court’s holding that this could be upheld as a tax to say, if you don’t buy the insurance, the only thing that happens is that you have to pay this penalty. You cannot go to jail; you’re not a lawbreaker.
LYLE DENNISTON: You can go to jail if you lawfully refuse to pay the tax.
STUART TAYLOR: Right. Just like any tax.
LYLE DENNISTON: Well, having pushed this over into the tax code, then the whole panoply of the federal power to force the tax code comes into play, at least if you willfully, now that means intentionally you just have to say no to the IRS and you have to mean it, then you are subject to criminal prosecution. I think that’s a very vital part of this opinion. But on the point about its impact, there were estimates – and the Chief Justice mentioned them – that at least four million people every year have refused to sign up for health care.
Now four million people doing that when we’re talking about a country of 375 million people, may not be a large number, but the question is how infectious is the refusal to buy insurance going to be? You know, we can count on Republican politicians and conservative organizations trumpeting the idea that this is such a bad idea, nobody should buy health insurance.
TOM GOLDSTEIN: In fact, I was out on the steps when Michele Bachmann was saying millions of people are going to refuse. Absolutely.
JULIE APPLEBY: And that may be true. And there’s also subsidies, however, I think the supporters are going to say, these subsidies might well entice people to sign up, because if the government is going to give you a bunch of money to sign up for health insurance and you want it anyway because you’d like to protect your family, hey, they’re going to give me money, you might as well do it.
TOM GOLDSTEIN: Am I right in thinking this is a really the heart of how the statute operates that the insurers, in order to have a balanced portfolio of risk, really do need younger, healthier people to come into the pool and to not refuse and to not pay the penalty. They need them to get coverage.
MARY AGNES CAREY: They really need them. They’re younger. They’re healthier and they’re going to balance out the risk pool. So if they don’t get involved, if they don’t see this worth their while and they don’t get involved, that kind of smoothing out that this intended may not happen because you need your healthier people to do that.
JULIE APPLEBY: They breathed a sigh of relief today about that, because they were worried the mandate was going to go and leave them with the other pieces.
TOM GOLDSTEIN: Well, that’s true, but maybe — now the question is, is it a sigh or are they drawing a little bit shorter breath because could this become so political? Could some sort of movement emerge? Could there be some broad-based decision to say, I’m going to take the penalty rather than getting the insurance? Right? That’s a possibility?
LYLE DENNISTON: Well, without getting too wonkish about it, remember the insurance industry went along with this, after having fought it for decades because they thought that they were going to get a guaranteed pool of premium payers. Now apparently that this doesn’t go far enough to really empty that pool, but it may well, depending on people’s choice, choices that would be made by millions of individuals if Congress doesn’t repeal this law in the meantime, in 2014. And the question is: What is the impact going to be on that premium paying pool?
And the insurance industry is probably going to have some sleepless nights between now and 2014 over just how much does this switch away from the idea that people have to buy insurance to the idea that they’ve got a choice whether to buy insurance or pay a fairly modest tax penalty.
TOM GOLDSTEIN: Right. It’s a really interesting illustration of kind of Supreme Court optics, because the court did uphold the mandate. It did uphold the penalty stroke tax, but it puts a veneer on the case that really focuses the mind on the idea that, hey, if I don’t really like this mandate, or I don’t feel I need insurance, or I can’t afford all the insurance, what happens to me? Well, one of the things the Chief Justice did make perfectly clear is, well, you’re going to pay this tax, but it’s not like you’re breaking the law.
STUART TAYLOR: But the government of the United States said that in the argument. They said you should uphold this because the only consequence is the tax. The Chief Justice helps you do the math if you’re wondering wither you should buy the insurance and do the tax. He says the insurance would cost you about $400 a month. If your income is $35,000 a year, the penalty is $60 a month. If your income is $100,000 a year, your penalty is $200 a month. So up to a certain income there’s a significant advantage financially to just paying the penalty.
TOM GOLDSTEIN: Right. I absolutely agree that the government’s legal position here was totally clear and that is: they really wanted to try and set up this fallback tax argument, and so they said the only thing that can happen to you is that you’ll have to pay the penalty if you don’t get the insurance. But I think now that people are looking at the decision, people are paying attention to it. Nothing got struck down in this respect, but it does focus on the grand bargain that was part of the statute. Before we focus entirely on the individual mandate, which is obviously what people care a lot about, let’s not forget the important Medicaid decision. So Lyle, do you want to give us a little bit more detail?
LYLE DENNISTON: I think, first of all, a little bit of history. That part of the law was passed under Congress’s spending clause power – the clause in the constitution that gives Congress the authority to raise or to impose taxes and to spend money. The court had not struck down any federal law passed under the spending clause since 1936. So you’re talking about a long period of history in which Congress could do just as it wanted under the spending clause.
Now – really, for the first time – in all of that time, the court has said, you can go too far when you give money out to the states with the conditions that you attach to them. And for the first time, and this literally is the first time in history where that the court has applied what’s called the Coercion Theory. In other words, the appeal of money and the amount of money that the government is handing you is so unavoidably attractive, you got to take it, but the conditions that are attached to it are so onerous that they’ll break our budgets at the state level. And so the states say that’s coercion.
The Supreme Court has mentioned the Coercion Theory three times since 1936. One time it mentioned it, for example, in a program when Congress was trying to get states to raise the drinking age, and so they said, if you don’t raise the drinking age, we’re going to take away all your highway money.
MARY AGNES CAREY: Bet the kids loved that.
LYLE DENNISTON: Oh, the kids loved it, sure. But the Court had mentioned this theory three time over the years, but had never applied it. And as a matter of fact, the theory was so far out there, it seemed, in terms of legal doctrine, that in none of these cases – in the health care cases in the lower courts – did anybody, except the 11th Circuit Court, whose decision the Court was reviewing today, said, well, the Supreme Court says the theory exists, but no one has ever applied it.
TOM GOLDSTEIN: And then so little was thought of it under existing doctrine that the states and the business groups, they weren’t even pressing the Supreme Court to hear this question. The Supreme Court added it into the case causing everyone to scratch their heads, and now we know why. They were serious about making something. And so the rule now, Lyle?
LYLE DENNISTON: The rule now is that, at least, well, first of all on the Medicaid itself, that Congress cannot enforce the new conditions on unwilling states. If a state is not willing to do that, you cannot take away their existing allotment under the Medicaid program for the poor.
TOM GOLDSTEIN: That is, if they won’t take the new money, you can’t take away their old money.
LYLE DENNISTON: It’s an opt-in procedure now. If a state doesn’t opt-in and accept the conditions, then you can’t take away its access to Medicaid funds under prior programs. And that is a huge win for the states.
MARY AGNES CAREY: How much weight did it have that the law gives, for this newly enrolled population, that the federal government covers 100 percent of that cost for about three years and then it goes down eventually 90 percent? That’s a lot of the federal government lifting that financial burden, if you will, off of the states. How did that weigh in on the justice deliberations? How much did they give to that?
TOM GOLDSTEIN: Not much. They really drew a line that said, look, if you want to tie this money to these conditions, the new money and the new conditions, fine, but to threaten all the old money, right? So, even though you may be financing 95 percent of it now, you’re putting a threat on something that they have made all of their budgetary planning on, all of their, well, not all of their, but a huge amount of health care is on the basis of it and that just crosses a line.
Now it may not have immediate, practical consequences, because how many states are really going to turn down the new money, given the prominence of the level of federal funding, it’d be kind of shooting yourself in the foot. So I don’t know that today a lot of states, or any states are really — you will would be the experts – going to turn around and say, thanks, I appreciate that, it’s millions of dollars, but I just find that an onerous, coercive condition. But for the longer term; what do you all think about whether this could this be a significant change in the law?
STUART TAYLOR: I think the fact that it was 7-2 to hold that this was an unconstitutional condition imposed on the states – even though, as Lyle said, none of the lower court justices bought it, they’d never done it before – but the fact that two of the more liberal justices, Justices Breyer and Kagan, agreed, tells me that they’re not worried that it’s going to be used to unravel the federal safety net or they wouldn’t have signed onto it.
LYLE DENNISTON: Well, but I think one of the things that we have to keep in mind in looking to the future under this is for the last several years, perhaps most of the last decade, every year in the Supreme Court terms, we get one or two or three petitions, that is appeals, by states saying this or that federal program is coercive and we want to be relieved from the conditions.
The Supreme Court up to now has turned a very cold shoulder to every one of those. Now the question is, just how onerous do the conditions have to become? So it may be, and there was, I think, Stuart tends to believe that this will be only an occasional threat to the safety net, but I don’t think we could say that conclusively, at this point.
TOM GOLDSTEIN: Occasional to the point of no more, perhaps, you think, Stuart, correct?
LYLE DENNISTON: Yeah.
STUART TAYLOR: I’m betting that it won’t happen again for at least five years, maybe 10, maybe a 100.
MARY AGNES CAREY: So it wouldn’t affect federal funding for highways or education. That this is not a warning to the government, don’t overstep your bounds.
STUART TAYLOR: Justice Ginsberg, who dissents on this, points out, this is going to be very hard to administer; you’re talking about a spectrum. Does it hurt the state a little bit to turn down the new money, or a medium bit, or a whole lot, or a huge amount? And you’ve got that whole spectrum. This one there, they’re relying on the idea, I think, that it’s a huge amount. And so if you don’t have another program that comes along to them to review where it comes across as a huge coercion, it’s just a little coercion, I think they’ll uphold it.
LYLE DENNISTON: Well, another thing we have to keep in mind is that the more popular the program is with the people in the state, the more the states are going to feel that they have to take part in it, and so that they have to abide by the conditions. So if they don’t want to take part in it at all, then they won’t get any of the money. But there is this odd arrangement, where more popular programs are the ones that the states say, gosh, we just can’t stop doing that.
TOM GOLDSTEIN: All right, but let’s also bottom line it again for the viewers and that is: The constitutional challenge to the individual mandate gets rejected; it’s upheld as a tax. And while that might focus the mind a little bit on whether you want to go ahead and pay the tax rather than getting insurance, the constitutional challenge fails. And as to Medicaid, it probably doesn’t have a practical impact today, unless the state says, alright, I’m going to take my opportunity to turn down my Medicaid expansion money, which might be a little unlikely.
But before we lead the legal piece of this, let’s let people know whether this is the end of the line. These challenges were so incredibly serious. There are a lot of people who are in love with the statue, think it’s the greatest thing ever, and a lot of people think it’s the end of the country. And they will want to know, is there another round of litigation, another round of cases, or is the Affordable Care Act as proposed and pressed by the president and passed by the Congress, is it constitutional and we’re done?
MARY AGNES CAREY: How about we talk a little bit, just before you finish on Medicaid, Julie, could you talk a little bit — we were discussing about how providers in the states are going to put a lot of pressure on governors. You know, 26 states sued on the constitutionality of the health care law, a lot of people, Republicans, upset on the Medicaid provision. Can you talk a little bit about how providers are going to put pressure?
JULIE APPLEBY: Well, like Tom said, I think it’s going to be very difficult for states to say, we’re going to walk away from the table and not take this money, partly because the federal government wants to hand them all this money. But partly because hospitals are going to come to them and say, we want to have fewer uninsured people walking in the door. Part of the deal in supporting this effort going forward with the health reform model is that we figured we were going to get more insured people. So if you don’t expand Medicaid to more people, we are going to be very unhappy with you. So I think there’ll be more pressure on the states for that as well.
MARY AGNES CAREY: Right. Mississippi’s saying they can’t afford the expansion, other states are saying they’re weighing it and looking at it, but this certainly, to your point, this idea that they can’t even pick up the remaining 10 percent will be too much of a fiscal pressure. Absolutely.
LYLE DENNISTON: On Tom’s point, about whether or not there’s going to be another round, we should remember that this was a law that was 2,700 pages in length, and since the law was passed, the Department of HHS has been issuing of multitudes, reams, stacks of regulations. And some of those regulations do impose pretty heavy burdens on hospitals, other caregivers.
For example, there’s a whole range of regulations that tell hospitals that if you discharge somebody too soon, your benefits under the federal law are going to be reduced. So I anticipate that a lot of the regulations that are being issued now to implement this statute are likely going to lead to new lawsuits.
TOM GOLDSTEIN: And then we have some of the more socially divisive issues. The contraception mandate, for example, is going — that set of regulations. But as to the big picture, this law is constitutional, it’s in place now and the individual mandate goes into effect in 2014. And there’s no immediate prospect that I can see — anybody disagree — that there’s a piece of litigation some court’s going to block.
STUART TAYLOR: Well, except the Republicans in the House will say, well, they think it’s constitutional; we don’t, and we’re an independent branch of government, and we can make our own decisions about what’s constitutional.
TOM GOLDSTEIN: Right, one house of Congress actually can’t.
STUART TAYLOR: They can also vote it down for any reason they please, so it doesn’t really matter whether they think it’s constitutional or not.
TOM GOLDSTEIN: Right, they can try to repeal it. But it seems like, I suppose, if there’s big Republican victories in the 2012 elections, expanding a House majority, getting a Senate majority, they attempt to repeal it. And then a lot would depend on whether there’s a Republican president who would veto a bill like that.
MARY AGNES CAREY: The House Republicans are already saying that they’re going to have another repeal vote after the July 4 recess. And obviously this is going to be a message for them all through the summer into the fall campaigns. It’s going to be a rallying cry for the base: Elect more Republicans; we can finally get rid of this law; we can repeal this law. Mitt Romney was saying today again that he wants to do away with it. So it is definitely in play in the political conversation for months to come.
LYLE DENNISTON: But a cautionary note for everybody who’s really upset about this decision today and this law is that there are parts of this law that are hugely popular. For example, the coverage of children until age 26 is enormously popular. So I think whatever Republican efforts we see are going to be calibrated rather than wholesale. In other words, they’re going to pick and choose the parts of the statute that they want to take down and not try to bring the whole thing down, because their constituencies are in favor of a good deal of what’s in this law.
MARY AGNES CAREY: All right, well, this is also how the Obama administration has to kind of make its case for the law over the next few months. We know that the public opinion is split over the law, over the mandate, and they’re going to be out there — pressing to your point, Lyle — look you can already cover children up to 26 on your policy, no out of pocket copays, preventative care. Those kinds of provisions are immensely popular, right?
JULIE APPLEBY: They are, and the mandate is the most unpopular part in the polls, but people are also very confused about what’s actually in the law, but when you poll them on these different things. And the other thing that polls very highly is the fact that insurers will have to take people with medical conditions starting in 2014.
TOM GOLDSTEIN: Yes, preexisting conditions —
JULIE APPLEBY: That’s huge, and so they are going to face a challenge. You also have to remember that the public was split on this law. So some people are going to be happy with the decision today, and some people are not, but you’re never going to make the entire public happy because it’s been so split all along.
TOM GOLDSTEIN: On that one point, because the conservative base has been very upset at this notion of an individual mandate being a governmental overreach, it is perhaps significant that a conservative chief justice was not only in the majority, but wrote the opinion. And perhaps that can get people to focus a little bit more on the substance of what happened and a little bit less on the idea that this is kind of a democratic hyper-liberal ploy takeover by the government. Because it seems like that’s a hard message to convey with him having written the majority opinion.
MARY AGNES CAREY: And you just mentioned the idea of potential future litigation. If I’ve got it correct, when the Supreme Court ruled on immigration, they didn’t preclude future litigation. As that Arizona law went forward, how did the Justices speak to any sort of intersection between implementation of the health law, the regulatory process and future litigation? Was that addressed at all?
LYLE DENNISTON: No, that was not. One always understands that lawyers will find a way to litigate further beyond anything.
MARY AGNES CAREY: Is there one? You’re applauding.
LYLE DENNISTON: Of course, like Tom Goldstein and his firm. But that was not mentioned explicitly. It was mentioned in the Arizona immigration case, and I think that’s because the Court during the course of considering that had been apprised of the fact that they were only getting the first piece of that big legal puzzle and more of it was ongoing. So they, I think Justice Kennedy in writing that opinion felt a need to say that we’re not closing off these other avenues in the court so those would go forward. And the Court didn’t need to say that today because there will be other litigations. And Tom mentioned one, of course, immediately the Becket Fund for Religious Liberty already has a half dozen lawsuits over the contraceptive coverage, the bishops have filed a massive lawsuit over that, so that’s going to be at least part of the first round in the next round.
MARY AGNES CAREY: Okay. I wonder if we can take things maybe to the policy side for a moment. We’ve talked about the politics and it’s definitely been a big win for President Obama and Democrats, but it’s not smooth sailing now ahead for the health law, right?
JULIE APPLEBY: It’s true, it’s not — there are a lot of things that still have to happen. As we’ve mentioned, there’s all these political implications. It’s going to definitely be part of the November election campaigns – and who knows what’ll happen with the elections. But the elections could well decide some of the factors of this. Will Congress say, hey, you know what, we want to defund some of this; we want to get rid of some of the subsidies; we want to change some things? Will they have the votes to do that? There’s all kinds of things that could still happen. And as you mentioned, there could be further legal challenges, that type of thing. So, yes.
MARY AGNES CAREY: So how much do you think the Republican message of – now obviously the court has spoken and this is the law of the land – but how much will the Republican message of big government overreach square with the benefits that consumers and getting and the things that are to come? How will the Obama messaging handle that as it moves forward?
JULIE APPLEBY: Well, that’s their challenge. You saw the president today. He came on and he gave this whole round up of what all this law does and how it helps folks who have health conditions and want to buy coverage. How there’s subsidies for folks. So their message now is to try to explain what’s in this law to a public that really doesn’t understand what’s in it and is very confused by it. Republicans do feel that it’s overreach. They say it raises taxes; it’s going to hurt growth. That’s going to be the message. The Democrats are going to say it’s going to slow spending over time, and it’s going to help these tens of millions of people get coverage. But it’s all going to come down to that. And then I think, as we saw today, the discussion about should we focus on fighting this fight again or should we focus on going forward, providing more jobs for the country, that type of thing.
TOM GOLDSTEIN: I’m not an expert on this but my intuition is that this plays in two very different ways. For Republicans, the base folks, members who are the tea party, this is a real motivator.
JULIE APPLEBY: I think so, I think you’re right.
TOM GOLDSTEIN: We’ve got to get out to the ballot box; we’ve got to get out there. On the other hand, those folks seemed pretty motivated; they haven’t been that pleased with this president. And if you look at instead from independents, I just have the feeling that this is a real validation. The stakes were raised so much about this law as being an overreach, it was everywhere in every newspaper, and it was thrown down the gauntlet. And for a relatively conservative Supreme Court written by the conservative chief justice, this is a validation I think for folks who are starting to focus on whether they want this president again. And so I can imagine it playing for Republicans as getting out the vote and for Democrats in winning some votes.
JULIE APPLEBY: From the independents essentially.
TOM GOLDSTEIN: Yes.
LYLE DENNISTON: Well remember that this law in its short form title is called the Affordable Care Act, and what I think the Supreme Court did today, among many other things, was to validate two ideas. One that Congress has a role in making sure that health coverage is affordable for lots of people, including the poor, even though the Medicaid was partially struck down. But the other part of it is that this is an embrace of the idea of a universal health coverage, and that was a controversial idea when — it’s been a very controversial idea at least since Theodore Roosevelt. And now Congress has undertaken to pass a law that undertakes — at least aspirationally — to have universal health care coverage, and today the court validated at least one mechanism for doing that.
STUART TAYLOR: I think it’s also important — I think that the role of Roberts, and this is very interesting — there are four different issues decided. Three of them were 5-4, and Roberts is the deciding vote in all of those, and then he’s writing the opinion for the other, which is 7-2. And strategically, I think he’s got a decision that nobody loves, but a lot of people can live with. His conservatives are mad at him for not being conservative enough; the liberals are mad at him for not going all the way their way. But one thing he gave the conservatives that I think we should emphasize is he said: No more expansion of the commerce power. At least, you can’t regulate people for inactivity; you can’t make them buy Buicks or whatever. And that is a huge deal in its own right in terms of limiting federal power. Yes, the taxing power is construed very broadly here, but Justice Ginsberg’s dissent goes on and on about what a terrible thing it is that the court, meaning Roberts, has now made it impossible for Congress to regulate interstate commerce as muscularly as she would like to see it done.
LYLE DENNISTON: I think there’s another aspect of the chief’s role here, those of us who hang around the courthouse a lot know that this chief justice is very sensitive to the complaint that he is leading a partisan-driven court. He is sensitive about it, and his sensitivity obviously was heightened when during the State of the Union message after the Citizens United decision on campaign finance, the chief called out — the president called out the Court to their face. And so I think one of the motivating factors for the chief’s movement in this case into the leadership of the court was to send his own kind of institutional, reputational message. I am going to protect this court from becoming a political football in the midst of a presidential campaign, because I’m going to do something here that cannot be labeled partisan, and that’s important to him I think.
MARY AGNES CAREY: And as the campaign goes forward the proponents of the law, we’ll talk about what it means for consumers. For example, as consumers view this what does it mean for you if you get your health insurance at work?
JULIE APPLEBY: And most people do, I mean most of the people who are covered get their employment through job based insurance. It’s about 55-percent of people who have coverage get it from their jobs, so this is a big deal. Initially this decision I don’t think has a big impact right away on people who get their job-based coverage, you’ve got to remember some things already in effect, you can keep your kids on your policy until age 26, they can’t set lifetime limits on your plan anymore, there’s free wellness check-ups and things like that through your plan. So those things are already in place, they’re going to stay in place, the bigger changes come in 2014 when as you mentioned, there’ll be these penalty fines if you don’t carry coverage, there’s also fines on employers for not offering it. So if your employer doesn’t offer coverage now, they might in 2014 but for job-based coverage things stay sort of the same for a while until about 2014.
MARY AGNES CAREY: Now what if I buy my own insurance, I’m on the individual market, it’s 18 to 20 million people out there fending for themselves, what does this do for them now and in the future?
JULIE APPLEBY: This is the group that I think the drafters of the law were really looking at, because these are the people that have the most challenges at times buying coverage. In most states right now if you have some kind of medical condition insurers can reject your application entirely, you can’t even get coverage. A lot of folks can’t afford it so starting in 2014 the law requires insurers to take everybody even if you have a medical condition. They can’t charge the sick more than the healthy, they can’t charge women more than men, it sort of evens out some of the variations in premiums. So for that group, right now there are some high risk pools that can help those folks who have medical conditions and can’t get coverage, but starting in 2014 is when the big changes happen for them. And that’s also when the subsidies kick in and when the states create these new marketplaces they’re calling exchanges where individuals and small business can go to buy coverage.
LYLE DENNISTON: Yes, but there’s been, up to now, some of the states have really held back on creating these marketplaces.
MARY AGNES CAREY: Exactly.
LYLE DENNISTON: And particularly places where there are Republican governors and Republican attorneys general and there is a question now in that this act has been validated, what will those states do? Will the exchanges now start coming in? The big, and remember in this law there is a provision if the states don’t do it for themselves, the Feds will come and do it for them.
TOM GOLDSTEIN: Right.
JULIE APPLEBY: Right so they’re looking at that and saying well what are we going to do now? I think that’s a really good question, how many of them are going to do it? And I saw a study out last week; it was a report from the insurance commissioners who were estimating that maybe about half the states would be ready by the end of the 2013 when open enrollment starts. They’ve got to have the whole thing going by January 1st, it’s got to be ready to go but they start open enrollment at the end of 2013 so they’ve got to be ready. But that was an optimistic assessment from what a lot of my sources are telling me so if an optimistic assessment is half those states, how many will really be fully ready to go?
STUART TAYLOR: Why would a state object to this? Why would they say no we’re not going to open an exchange? Is it —
JULIE APPLEBY: Well a number of reasons.
STUART TAYLOR: — does it cost them a lot of money?
JULIE APPLEBY: They’re getting a lot of money from the feds, just about every state has taken a grant to start planning for this. I think it’s political, a lot of them didn’t want to do anything at all to implement the health law so they said no we’re not going to, so that’s probably the main reason. But they’re going to have to look at that now and remember some of those regs that came out just recently said that they’ve got to give a blueprint to the government within 10 days after the November election about whether they think they’re going to be ready to move forward with this. That’s not a lot of time to tell them how you’re going to do this, it’s a very complicated thing, some of them may want to do it but it’s just you’ve got to get your computer systems from your Medicaid enrollment updated, you’ve got to create this whole new marketplace where you can shop. You’ve got to get those systems talking with each other and get them talking with this federal data hub that’s being created that’ll help determine is somebody eligible for subsidies, that kind of thing so it’s technically challenging.
LYLE DENNISTON: Yes another factor here and is, and I think this accounts for some of the states’ hesitation, remember this law was challenged 11 seconds after President Obama signed it in March of 2010.
JULIE APPLEBY: That’s right.
LYLE DENNISTON: And so there has been this cloud of uncertainty hanging over it and I know that the health insurance industry, the came to the Supreme Court before it took this first case and they said we really don’t take a position on where you ought to come out on this but please give us some guidance. Please give us some certainty because we’ve got this whole law here and we don’t know whether any part of it is valid, whether we’re going to have to follow any part of it. So taking away that uncertainty at least up to a considerable degree, is going to I think, be in the impetus for some the states to start moving.
MARY AGNES CAREY: You know what’s interesting though, I was at a conference a month ago and there were a lot of state officials there and in states where Republicans are in the governor’s chair, some of them are saying even if the Supreme Court upholds it, we’re going to wait until the election. Because again, that intersection between politics and policy so just imagine if they wait until the election and when’s their plan due, 10 days or something in relation?
MARY AGNES CAREY: It’s 10 days later yes, yes.
JULIE APPLEBY: Because these exchanges have to be up, you’ve got to be able to enroll people by 2013, they kick in coverage 2014 and about maybe 15, 14 states and the District of Columbia have passed the enabling legislation to do this.
TOM GOLDSTEIN: Can I just — again, just to bottom line for a second because I don’t understand the exchanges as well as I should, just for our viewers, what does that mean? As a practical matter for how the statue operates and their ability to health insurance, if they live in a state that is going to fall behind on the timetable for creating the exchange, what does that mean for their ability to get health care coverage if anything?
LYLE DENNISTON: Well the virtue of health exchanges is that supposedly it’s a marketplace in which you have bidders so you can in — a group of small businessmen for example — can go into a marketplace and shop. It’s actually like an insurance mall.
MARY AGNES CAREY: It’s to be competitive right? Exactly small businesses, and individuals.
LYLE DENNISTON: It’s supposed to be competitive, you have a number of providers coming in and offering their plans and the whole purpose of it and the whole idea behind it is to have, with the competitive juices running strong, people will offer insurance at lower rates.
TOM GOLDSTEIN: So is the upshot then that health insurance might be somewhat more expensive for them but it’s not that it’s going to be unavailable or the statue won’t function in their state?
MARY AGNES CAREY: It might be cheaper.
JULIE APPLEBY: No, if a state doesn’t do an exchange, the federal government is going to run a fallback exchange so folks in those states would be able to go to this federal exchange. And remember if you want a subsidy you’ve got to buy your coverage through the exchange, so if you think you qualify for that — so that is a key piece –
TOM GOLDSTEIN: So every state — an exchange will operate everywhere, it’s just a question of whether it’s going to be a state run or a federal one? Just for people who are trying to figure out, who might own a small business or who might be an employee, this dilemma; the states dragging their feet on purpose for political or whatever reasons, isn’t going to stop their ability to get health insurance.
JULIE APPLEBY: They’ll be able to go to the federal exchange.
MARY AGNES CAREY: Right and that thought is right, instead of people buying — we talked about the individual market a moment ago, instead of you being out there on your own buying for yourself or buying for your small business, you go to a marketplace where in theory these insurers are trying to compete for your business. It’s all in one marketplace. And the federal government has been very flexible, they really want the states to do this, they really don’t want to do it so they’ve been very flexible.
JULIE APPLEBY: They’ve been very flexible but at the end of the day it looks like the Federal Government will be running all or part of maybe half the states’ exchanges.
MARY AGNES CAREY: Now what about insurers had a lot riding on this, they did not want to mandate tossed or the market reforms, the requirement that insurance be given to all applicants and Julie, to your point about smoothing out the risk, they must be pretty happy with today’s ruling.
JULIE APPLEBY: They’re glad the mandate alone wasn’t tossed and that they have these other pieces that required them — a lot of other pieces that – didn’t change the insurance market but they’re glad the mandate wasn’t dropped, so a sigh of relief on that.
They’re looking at a lot of new customers — Bloomberg Government did an analysis a couple weeks ago and they were estimating that up to a trillion dollars in new gross revenue over eight years for the insurance industry so they’re happy about that. But at the same time they also face a few new rules, right? So they’ve got to spend at least 80 percent of their premium revenue on medical care.
TOM GOLDSTEIN: Lawyers? Oh no. (Laughter)
JULIE APPLEBY: Yes, but on medical care or quality.
MARY AGNES CAREY: It’ll be a high share, don’t worry about it.
JULIE APPLEBY: And if they don’t do that they’re got to give a rebate so some of those rebates are going back, so that’s one of the rules that’s already in effect. And they were also were going to held to some of these other standards that sort of smooth out the premium variations and that type of thing.
MARY AGNES CAREY: Employers have some things to be concerned about if you’re 50 or higher, 50 workers or more in 2014. They are going to — if you have a worker who gets a subsidy and goes to the exchange and you don’t offer coverage again, 50 workers or more, you might be hit with a fine.
JULIE APPLEBY: That starts in 2014.
LYLE DENNISTON: Well you know what’s interesting that when the Supreme Court selected these issues that it was going to consider, it was asked to consider the legality, the constitutionality of the employer mandate, they passed on that.
JULIE APPLEBY: Why did they say that?
LYLE DENNISTON: Well I don’t have any idea why they did it but the reality is the court apparently did not see any serious constitutional questions in telling employers that you’ve got to have these new plans, and so none of the lower courts accepted that argument. But I assume that argument will now be pressed in some further litigation because the court just took a pass on that.
JULIE APPLEBY: Well the law doesn’t say you have to have to offer coverage, it stops just short of that though because it says if you don’t, you’re going to have to pay this fine.
MARY AGNES CAREY: If somebody gets the subsidy and goes into that exchange, then.
STUART TAYLOR: Or if you’ve got — is it 50, is that the cutoff?
MARY AGNES CAREY: Fifty or higher, 50 or under you’re exempt.
STUART TAYLOR: If you’ve 48 employees and you were thinking of hiring five more you might say maybe I won’t.
JULIE APPLEBY: You might not.
MARY AGNES CAREY: No, that is the argument, that’s an anti-growth policy, that it could curb that for sure. And talk a little bit, maybe we could talk about the providers, this ruling affects the hospitals, physicians, all providers of health care. How do hospitals, which are huge providers of health care, stand to fare with the health law?
JULIE APPLEBY: Hospitals are probably happy today too because they’re going to get more paying customers right, they’re going to get more people covered by private insurance, the Medicaid piece may be a little concerning to them because now it’s a little more uncertain whether the full 16 or 17 million more people will get Medicaid or whether that’ll be a smaller number if some states do opt out, so hospitals are pleased with that.
Now remember hospitals face some other financial penalties and incentives as well as we were talking about earlier if they don’t meet some quality and patient satisfaction measures, their payments may be reduced. They’re having a marketplace basket, it’s sort of an inflation adjustment in Medicare, reduced as part of this law. So they’re facing a number of different things but they’re also facing some changes in the marketplace that are being asked both by this law and I think also [by] private insurers in the just the marketplace to work more closely with doctors and other providers to be more efficient, to create these organizations where they can smooth out the care and be more efficient and keep people from being readmitted to the hospital, that kind of thing and save money. With the care that if they save some money they get to share in those savings, so those efforts are going to probably move forward as well and now they’re happy about that.
LYLE DENNISTON: Well and also at least for reduction in the free rider problem where people who do not have health insurance show up in the emergency room or show up and hoping for inpatient treatment and don’t have health insurance. And the hospitals under federal law, they have to take those people at least for a period of —
JULIE APPLEBY: You have to take them in the emergency room and stabilize them.
MARY AGNES CAREY: You have to stabilize them, correct.
JULIE APPLEBY: Right.
LYLE DENNISTON: — you have to stabilize them.
LYLE DENNISTON: — and I think there have been court opinions which said that the stabilization process cannot stop let’s say after a day or two and then send them home even if they’re not really stabilized, and that’s very careful about that.
MARY AGNES CAREY: The Medicaid expansion was crafted to add 16 million people to the Medicaid rolls, if that is not the case, if states opt out then this will put more pressure on the hospitals, on the doctors, on the labs, all the providers that are providing this care and they’re not compensated for it. So you could have an unintended consequence there of the ruling.
STUART TAYLOR: Is it realistically possible that any state will opt out? “We’re going to give you a lot of money, we’re going to pay 100 percent of it, all you have to do is enable your citizens to benefit from the money we’re going to give you.” Who’s going to say “Sorry, it’s against our principles?”
TOM GOLDSTEIN: Well it’s not always 100-percent it will change –
JULIE APPLEBY: It will taper down to 90, eventually, which is still a better deal than they get right now, you know.
STUART TAYLOR: Ninety is pretty close to 100.
TOM GOLDSTEIN: Ninety is pretty close to 100 but those numbers add up, and I’m with you, I can’t see it happening, but that would be the argument that it is going to be tens of millions of dollars for these states plus the principle, plus the prospect of the election. And taking a political stand on this question, I don’t see it happening but I don’t think it’ll be beyond the pale.
LYLE DENNISTON: Well but remember too, Stuart, this is not a constituency that a lot of politicians worry about, this is the poor and I don’t suppose a lot of politicians at the state level are going to get a lot of political pressure to really take care of the poor in their states. And the states are going to be exposed to considerable pressure on their budgets.
MARY AGNES CAREY: But see this is where the providers kick in though, that’s where the hospitals will say wait a minute.
TOM GOLDSTEIN: The hospitals will say this money doesn’t go out into the air, it’s going to make its way to us and they may have some play.
STUART TAYLOR: And I think part of the law is designed to make the Medicaid payments that are made more generous to the doctors because a lot of doctors say $60 to spend four hours doing a surgery in the middle of the night? Thanks I’ll skip it.
MARY AGNES CAREY: See that’s for the primary care physicians for two years and then the states have to decide do we continue or not?
JULIE APPLEBY: But is another issue that the law brings up, the whole primary thing, we’re going to need more primary care doctors so as more people get insurance we’re going to need more doctors. So that’s another issue for the country as a whole. How are we going to do that?
TOM GOLDSTEIN: Okay so can I just also ask another bottom line question from the health policy experts? You may think as a matter of politics, ideology, direction of the country good or bad, but a good day or a bad day for American health care?
MARY AGNES CAREY: I think that it’ll be viewed as a great day for American health care because you will get more people covered and of all the points that Julie was talking about how there are provisions in the law, especially with Medicare which is a big spender of health care of course in this country, to try to make health care more efficient.
The key will be does it work as intended? Will health care costs be reduced as proponents say they will be over time? No one really knows. Can you deliver health care as efficiently as they think? What will it be like when a variety of providers are asked to share in a payment versus getting paid fee for service, which is what they’re used to doing, that’s a large part of the Medicare market. I don’t know if you —
JULIE APPLEBY: I agree, I think the cost things are going to be the things that we look back on and say did they work? Because that’s one of the main issues is what happens with the cost: Will spending slow? But the other big piece is; did we cover more people who are uninsured? We’ve got 50 million people uninsured right now, that number would be projected to grow without this. So does it work, does it reduce the number of uninsured?
And as I mentioned earlier, I think some of the biggest changes in this law people aren’t feeling yet because they kick in in 2014 and because a lot of it’s aimed at people who buy their own insurance. And remember a lot of people have their job-based insurance; they have no idea how hard it is to get coverage on the individual market so this is going to be a big change but we won’t know until 2014.
MARY AGNES CAREY: It’s a big day for health care with a footnote. And so in our last few moments why don’t we talk about your impressions of how this day will be remembered in the legal community, in the historical books about the Supreme Court?
TOM GOLDSTEIN: It certainly would have been a history making decision if the mandate had been struck down because that would have been perhaps the biggest intervention by the court in economic legislation in 80 years. It’s still a really big deal, I think it will be a signature decision of the Roberts Court and will immunize the court.
This wasn’t its intended purpose, but will immunize the Court from a huge array of criticism that it’s partisan and there are a number of very conservative decisions coming down the road. For example, on affirmative action next term, that’s going to be much harder just criticize as ideologues and I think jurisprudentially the things that Lyle has talked about will be the history of the case.
LYLE DENNISTON: Yes I think this will go down perhaps not as big a day as Bush versus Gore but one of the things that we have to keep in mind around the Supreme Court is that in the Internet age and the rise and pervasiveness of the social media, there was an anticipation factor here for this decision that built up the public attention for it.
And so I mean it was palpable in the courthouse this week, how much pressure there was to know what the outcome of this was, and so particularly with the push of social media. That elevated the importance — the social, the cultural importance — of this decision very, very high and I think it — so far at least, it’s the biggest decision that the Roberts court has made without a doubt.
MARY AGNES CAREY: Closing thoughts?
STUART TAYLOR: I think I agree with Tom, I’ll put it a little differently. I think it’s going to be harder tomorrow than it was yesterday to characterize the Roberts Court as a radical conservative court, which a lot of people have been doing. Now you can still do it, you can say look what they did to Commerce Clause, or you can say first time in history they ever struck down anything under the spending power.
But on the Commerce Clause — bottom line they upheld the mandate, bottom line two of the liberals joined them on the Medicaid and bottom line, I don’t think this is going to change the law going forward. I doubt the decisions in the future will — you’ll see lots of radical things happening because of what the court did today.
MARY AGNES CAREY: OK, well I want to thank you all for a fantastic discussion.
TOM GOLDSTEIN: Thank you.
LYLE DENNISTON: Thank you.
MARY AGNES CAREY: Thank you. Thank you very much Stuart Taylor, legal analyst for Kaiser Health News. Julie Appleby of Kaiser Health News and Tom Goldstein and Lyle Denniston of the SCOTUSblog, thank you so much.
LYLE DENNISTON: Thank you.
MARY AGNES CAREY: And thanks to all of your for joining us today, we’ll invite you to join us again next Tuesday for a live webcast at 11 a.m. Eastern Time. We’ll be discussing the long-term impact of the court ruling with a round table of health policy journalists. And we invite your questions, please send them to firstname.lastname@example.org. We hope to see you then. I’m Mary Agnes Carey.