What the Obamacare decision will mean for Utahns

As oral arguments for Florida v. Department of Health and Human Services come to a close at the U.S. Supreme Court, some Utahns might wonder what impact the court’s ruling could have on them. Let’s review some of the issues at hand.

Individual mandate

The primary issue is whether Obamacare’s requirement that all Americans hold health insurance is constitutional. If upheld, the “individual mandate” would force all Utahns to carry insurance or pay an annual penalty beginning in 2014. This mandate would affect as many as 300,000 uninsured Utahns, unless they qualified for government assistance.

The main argument offered in support of the mandate is that uninsured individuals shift costs to those who do have insurance when the uninsured need care and can’t afford it, and that taxpayers bear higher costs when the uninsured use government services. 

Chief Justice John Roberts questioned this line of reasoning, making a comparison with emergency services, such as “police, fire, ambulance, roadside assistance, whatever.” Roberts asked, “You don’t know when you’re going to need it; you’re not sure that you will. But the same is true for health care. … So, can the government require you to buy a cell phone because that would facilitate responding when you need emergency services?”

Other justices asked whether Congress would have any limits on its power to compel citizens to purchase particular products or service, such as a car or broccoli, if the individual mandate is upheld. Donald B. Verrilli Jr., representing the Obama administration, and several justices attempted to outline principles that could limit other action, but some justices were skeptical, including Justice Sonia Sotomayor, who said, “The problem goes back to the limiting principle. Is this simply anything that raises revenue, Congress can do?”

If the court upholds the individual mandate and doesn’t identify a clear limiting principle, then it’s possible Congress could compel Utahns to purchase other products or services they might not need or desire.

According to most commentators, the outcome for this part of the case depends largely or solely upon Justice Anthony Kennedy who seemed skeptical of Verrilli’s arguments but could vote to uphold the individual mandate if he can identify a reasonable limiting principle (see here, here, here and here). Most legal analysts are predicting the individual mandate will be overturned.

Severability

The court also considered whether the rest of Obamacare should be invalidated if it strikes down the individual mandate. On this point, the justices did seem willing to consider striking down the entire law. In the words of one commentator, “The government never sufficiently spelled out how the mandate could be severed from the rest of the bill without upsetting the intricate system of subsidies and the goal of expanded access.”

Justice Kennedy even argued that striking down the entire law could be considered an act of judicial restraint whereas leaving the rest of the law intact might be considered judicial activism because “we would have a new regime that Congress did not provide for, did not consider.” In other words, removing the individual mandate – the linchpin of Obamacare – could change the law so substantially that Congress would be left with an irreparable law, so they might as well start from scratch. To use an analogy, when a bad car accident destroys the engine of a car, its owner might as well buy a new car rather than attempt to reconstruct the damaged one.

Of course, if the justices rule that the individual mandate and the rest of the law are not severable, then Utahns would no longer be subject to any provisions of Obamacare. But it’s also possible the court could strike down key aspects directly related to the individual mandate, such as “community rating” (insurers can’t charge more for individual medical conditions) and “guaranteed issue” (insurers can’t deny coverage to those with pre-existing conditions). In this case, Utahns would need to comply with whichever parts of the law remain.

Medicaid and Utah’s health exchange

The final round of arguments addressed whether Obamacare’s expansion of Medicaid is constitutional. The court also appears willing to consider overturning this aspect of the law. According to one legal analyst:

“The Justices were actively engaged in what was the Court’s first full exploration in history of the idea — never put into actual practice — that the conditions that Congress attached to money it hands out to the states can be so onerous that they deprive the states of their sovereign independence, coercing them into compliance with federal controls.”

In an interesting exchange, Justice Elena Kagan asked whether “a big gift from the federal government,” or “a boatload of money,” is coercive, making an analogy with offering someone $10 million a year for a job. Paul D. Clement responded, “Well, I guess I would want to know where the money came from.” Kagan interrupted, “Wow. Wow. I’m offering you $10 million a year to come work for me, and you are saying that this is anything but a great choice?” Clement then retorted, “Sure, if I told you, actually, it came from my own bank account.”

If the justices do find this part of the law to be coercive and strike it down, then Utah’s Medicaid program would continue to operate as it does now, and the Utah Health Exchange (mentioned in today’s hearing) probably would not need to change to meet the requirements of Obamacare. In this case, Utah could spend less on Medicaid but fewer people would qualify for health care services through the program.

Whatever the court’s decision, it’s clear this ruling will affect Utahns and the state considerably and that it will likely have major, long-term implications for the relationship between the federal government and the states. The justices will now deliberate the case and are expected to make their decision public sometime in June.

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