Counterparties: The Supreme Court’s healthcare tax argument
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If you haven’t seen by now, or were, like President Obama, confused by CNN and Fox News – or are already fleeing for Canada – the Supreme Court upheld Obamacare today. The individual mandate, Chief Justice John Roberts wrote in his ruling, is not broccoli or car insurance. It’s effectively a tax (even if Obama didn’t want to call it one).
The court ruled that the penalty for not buying health insurance contained in Obamacare is part of Congress’s wide constitutional power over the tax code. Legal scholar Erwin Chemerinsky, in comments to NPR, put this into context: “Since 1937 not one Federal tax and spending program has been declared unconstitutional”. David Leonhardt helpfully points out that the tax code effectively penalizes Americans for all sorts of things – like not having children.
The economic impact of the ruling is immense. To the right, it’s the “biggest permanent tax increase in history”. To the left, millions more Americans will now have access to healthcare. (In the long term, some 30 million more Americans will have health insurance; the short-term benefits include adding some 3.1 million young Americans to the ranks of the insured.)
The ruling, Jared Bernstein writes, did have at least one dark cloud for Obamacare fans. The bill said the federal government could withhold all Medicaid funding from states that didn’t agree to expand Medicaid coverage to older and poorer Americans. The court shot that portion of the bill down, leading to worries that some states would begin withdrawing from Medicaid altogether. Josh Barro isn’t concerned; the choice is really “should we take this nearly free money from the federal government?”
There are murky long-term issues as well. Jonathan Chait and Tom Scocca both note that five justices ruled that a health insurance mandate not structured as a tax is unconstitutional. To Socca this reading of the Commerce Clause is a serious attack on congressional power over the economy: “Obama wins on policy, this time. And Roberts rewrites Congress’ power to regulate”. – Ryan McCarthy
On to today’s links:
A profile of Chief Justice Roberts, the man who just saved Obamacare – New Yorker
The economics of the SCOTUS healthcare decision – Mark Thoma
There goes the uncertainty crutch for healthcare companies – WSJ