Has the right wing finally killed Obamacare?

December 21, 2018

Christopher Baum examines the ruling of a federal judge who wants to overturn the ACA — and explains how the contradictions of the law leave it open to attack.

A FEDERAL judge in Texas has declared the Affordable Care Act (ACA), also known as Obamacare, to be unconstitutional, creating grave uncertainties for millions of people who stand to lose their health care coverage if the act is ultimately struck down.

The ruling in Texas v. United States, issued last week by U.S. District Judge Reed O’Connor, focused on the ACA’s so-called “individual mandate”: the requirement that everyone, with a few exemptions, obtain health insurance or else pay a penalty — the so-called “shared responsibility payment” (SRP) — at tax time.

In an earlier challenge to the ACA’s constitutionality, the U.S. Supreme Court, despite its conservative majority, upheld the individual mandate. A majority of justices agreed that the SRP is effectively a tax, imposed by Congress on people whose income is above a certain level, but who choose not to buy health insurance — and levying taxes is within Congress’ constitutional powers.

Now, however, O’Connor, a George W. Bush appointee, has ruled that, because of changes implemented as part of Republicans’ most recent efforts to sabotage Obamacare, the Supreme Court’s analysis is no longer valid, and the individual mandate is now unconstitutional.

Speaker Paul Ryan (left at front) with fellow House Republicans in 2016
Congressional Republicans celebrating in 2016

But he didn’t stop there. O’Connor also found that the individual mandate can’t be “severed” from the rest of the ACA: In other words, if the mandate is struck down, the rest of Obamacare must fall with it.

For now, Obamacare remains in effect while O’Connor’s ruling is appealed. But in the meantime, people who rely on the ACA for access to health care have a grim threat hanging over their head. As the New York Times explained:

If Judge O’Connor’s decision ultimately stands, about 17 million Americans will lose their health insurance, according to the Urban Institute, a left-leaning think tank. That includes millions who gained coverage through the [ACA]’s expansion of Medicaid, and millions more who receive subsidized private insurance through the law’s online marketplaces.

Insurers will also no longer have to cover young adults up to age 26 under their parents’ plans; annual and lifetime limits on coverage will again be permitted; and there will be no cap on out-of-pocket costs. Also gone will be the law’s popular protections for people with pre-existing conditions.

This kind of conservative attack on the ACA is deeply unpopular. In July of last year, Republicans — under pressure from a grassroots mobilizations that confronted lawmakers across the country — couldn’t even get enough votes in a Senate where they had a majority to pass their “repeal and replace” legislation.

Meanwhile, Obamacare has only grown more popular, despite its flaws. This gives the Democrats the upper hand in the mainstream political discussion.

But by focusing narrowly on defending and preserving Obamacare — almost to the exclusion of all else during this fall’s midterm elections, for example — the Democrats don’t acknowledge how the ACA’s reliance upon delivering acceptable profit margins to private insurance companies not only opens the law to right-wing attack, but also deepens the health care crisis it was supposed to resolve.

THE IMMEDIATE backdrop to the Texas v. United States decision is the attempt by Republicans late last year — after the failure of their legislation to “repeal and replace” Obamacare outright — to fatally undermine the law. Party leaders declared that they would repeal the individual mandate as part of the massive tax cut giveaway to corporations and the rich.

In order to push the massive Tax Cuts and Jobs Act of 2017 through Congress, Republicans made use of the Congressional budget reconciliation process. This approach removes certain hurdles to getting laws passed, but the legislation has to be limited to fiscal matters and can’t be used to simply repeal other laws.

But if they couldn’t truly get rid of the mandate, the Republicans could neutralize it. This they accomplished by “zeroing out” the shared responsibility payment — leaving the law in place, but changing all the relevant numbers to zero, so that beginning in 2019, the penalty for failure to comply with the ACA’s individual mandate would be $0.

In other words, while the individual mandate remains on the books, the penalty that enforces it has effectively been removed. As a practical measure, the mandate will be dead as of January 1.

The 2012 Supreme Court decision upholding the law in National Federation of Independent Business [NFIB] v. Sebelius) had depended on the reasoning, articulated by Chief Justice John Roberts in the majority decision, that while Congress doesn’t have the power to compel people to buy health insurance, it does have the power to impose a tax on those who don’t by it.

Roberts did observe that the mandate “reads more naturally as a command to buy insurance” — which the Court held to be impermissible. But because it could also be fairly construed under the terms of Congress’ powers of taxation, it was held to be constitutional.

As SW argued at the time, Roberts’ ruling reflected the fact that the powerful health insurance industry liked this part of the ACA, which forced millions of new customers to buy their overpriced products.

But Roberts and the Supreme Court majority also overturned another aspect of the ACA that the industry hated. They ruled that Congress had exceeded its authority in requiring all states to participate in the ACA’s expansion of the Medicaid health program for the poor — and that states must have the opportunity to opt out.

As a result, there are at present 14 states where the Medicaid expansion hasn’t been implemented — and millions of people in those states are without health coverage as a result. This substantially weakened one of the most truly progressive elements of the ACA.

With this damage done, O’Connor is returning to the issue of the mandate. According to him, the TCJA’s zeroing-out of the ACA’s shared responsibility payment means that it’s no longer a tax — since in the NFIB decision, Roberts had written that “the essential feature of any tax” is that it “produces at least some revenue for the government.”

So without any change in the ACA other than the replacement of one set of numbers with a bunch of zeroes, a provision that previously had been upheld by the Supreme Court has been declared unconstitutional.

In doing so, O’Connor nonsensically reversed the causal relationship between the SRP and the individual mandate.

In the real world, the SRP tax penalty only exists as a means of enforcing the individual mandate. But in O’Connor’s world, the individual mandate depends for its existence on the SRP, so with SRP zeroed out, the mandate becomes unconstitutional.

LEGAL EXPERTS have widely derided O’Connor’s reasoning, along with his conclusion that the rest of the law can’t be “severed” from the mandate, so the whole thing should be thrown out.

The issue of severability aside, however, O’Connor isn’t wrong to characterize the mandate as being a critical component of Obamacare.

This gets at the fundamental contradiction at the heart of Obamacare: between, on the one hand, its stated objective of making health insurance available to as many people as possible, and on the other, its practical goal of appeasing private, for-profit insurance companies, on whose participation in the coverage marketplace the system depends.

In a way, the individual mandate is the very embodiment of this contradiction.

The most positive elements of Obamacare are those that do the most to make health care available to people who didn’t have it before — its provisions guaranteeing coverage to people with pre-existing health conditions, for example, or restricting insurers from charging higher prices to less healthy people.

But these are precisely the kinds of measures that are least profitable for insurance companies. The purpose of the individual mandate is to help the industry keep its profit rates high by getting as many people as possible to buy coverage.

According to the flawed logic of Obamacare, the mandate is particularly important in forcing young and healthy people to pay insurance companies for coverage that they are less likely to use, if they do at all. The idea is that this added income helps to offset the insurers’ expenses from the new regulations and maintain a level of profitability they find to be acceptable.

But without the individual mandate, a cascade effect takes place: Those healthy consumers might wait to buy coverage until they actually need it. Insurers would raise prices to make up for fewer customers. People who could then no longer afford coverage would drop their policies, leading insurers to raise prices again, and on and on.

WITHOUT THE mandate, therefore, Obamacare is gravely hobbled — as a result of its own design. This, of course, is one major reason why the Republicans were so eager to take it off the board.

But it is vital to recognize that even if Republicans left it entirely alone, Obamacare would still be under constant threat of being upended because of its dependence upon private insurance companies.

When these companies decide, for any reason whatever, to leave the marketplace, the system is disrupted — potentially to a very high degree. If enough of them left, the system would collapse altogether, without a single Republican having lifted a finger.

The leverage that this gives to the insurance companies is obvious — Obamacare’s ability to meet its stated objective of expanding access to health care coverage is constrained by the wishes and whims of the industry.

This state of affairs is untenable, even if the ACA emerges from appeals of the Texas ruling with the mandate, zeroed-out or not, intact. What we need is a system that eliminates private insurers altogether — a publicly funded, single-payer system that provides quality coverage to all people.

Obamacare isn’t, and never will be, that system. But our side should continue to mobilize against Republican attacks that are aimed not at replacing the ACA with something better, but rather at rolling back as much of it as possible, so that funding that would have gone to supplying desperately needed health care to millions of people, will go instead to line the coffers of the rich and powerful.

The Republicans’ repeated failure to repeal the ACA, despite controlling the White House and both houses of Congress, has been in no small measure due to the grassroots opposition that arose to confront GOP lawmakers wherever they could be found. We should continue to mobilize for these kinds of protests.

But the left has something else to offer: This latest crisis of the ACA system shows why Obamacare is doomed to fall far short of meeting people’s needs — and so we need to start over, whether at the local, state or national level, in organizing for a system that will work: single-payer.

Further Reading

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