The Insurance Industry Will Want a Fix, Not Repeal

Randy Barnett was ahead of the game when he invented the "action vs. inaction" distinction that almost took down the Affordable Care Act, but he's a bit slow when it comes to picking up the fanciful idea that if people think of the penalty for not buying insurance as a "tax", they'll be less likely to buy insurance than if they think it's a penalty. Even if nothing else changes.

Let's imagine that its... 2016? 2020? Something like that. We now have millions of people signed up for insurance through exchanges, or through individual policies that insurance companies can't refuse to to their pre-existing conditions. And let's imagine that the penalty for non-compliance is set at a level that's not inspiring enough people to sign up for insurance before they're actually sick. What's a poor insurance company to do.... I mean, other than raise their rates, which would be a pretty obvious response to increased costs.

But let's assume that Congress, faced with a choice between finding a way to increase the incentive to buy insurance and repealing the provisions that allow people with pre-existing medical conditions to obtain health insurance. Does Barnett imagine that Congress is going to allow insurance companies to dump clients who signed up for insurance because of their pre-existing conditions? That doesn't seem likely but, even if you say they don't have to accept new clients with pre-existing conditions, if you don't allow insurance companies to retroactively dump those clients their short-term financial position won't improve. And if things are so bad that the insurance companies can't sustain their profits, they won't be satisfied with, "Wait a few years, it will balance out in the end."

For that matter, why does Barnett believe insurance companies would want to dump expensive clients if they have another option - a way to keep those clients and maintain their profits? The goal of the insurance company, after all, is to make profits, and they will be very focused on the 80%/20% loss ratio. Getting rid of a client that has $800,000.00 in medical bills could cost them $200,000 toward overhead and profits. (Ain't free market capitalism grand? Or at some point are we going to admit how distorted and twisted the health insurance and healthcare markets have become?)

So really, Barnett should not be anticipating that insurance companies will clamor for repeal, any more than they wanted Medicare Advantage repealed when they couldn't compete as equals with the government. They will much more likely want an improved sanction for the non-purchase of insurance or, even better, a subsidy. Because, yay, free markets and all that.

I'm still of the position that Roberts' ruling will have no meaningful impact on how people respond to the mandate. I'll grant that with enough anti-mandate demagoguery more people may "opt out" than if they weren't actively being urged to do so by people who want to damage the ACA and its implementation, but that won't be because Roberts called the mandate a "tax". But really, once the ACA is firmly in place, even Republicans will be looking not to repeal it, but to fix it.

In fact, that's been their fear from day one.

Right-Wing Bullying of Justice Roberts

Randy Barnett, inventor of the "activity/inactivity" distinction takes us back to the days before the Supreme Court decided the ACA case, and quotes himself approvingly. You see, after reading those great legal scholars, Jennifer Rubin and Kathleen Parker, it occurred to Barnett that if Roberts did anything other than overturn the ACA his reputation would be forever stained:

Now, however, if the Chief Justice rules to uphold the ACA after all these nonlegal pleas and threats, he will always be suspected by both supporters and opponents of the ACA of having changed his vote in response to this political pressure. As with Justice Owen Roberts’ vote, the supporters of the law will cheer and the opponents will complain, but both groups will have reason to believe that Chief Justice Robert’s decision reflected political considerations rather than his considered legal judgment in a close case. And, because Supreme Court deliberations are secret, he cannot defend himself by revealing that he did not in fact change his vote after conference.

Secret, that is, if we ignore the leaking from somewhere in the ranks of the dissenters, meant to embarrass Justice Roberts.

I've already suggested the first question raised by Barnett's brand of character assassination: None of this matters unless you believe Roberts is the sort of person who will bend to political pressure. If he will not, the story is over before it began - before the political right, through the pens of people like Kathleen Parker and Jennifer Rubin, implied that any vote except reversal would forever tar Roberts' reputation. If he is, then it's a distinction without a difference - whatever his vote, whether or not he had a change of heart somewhere along the way, people on the right perceived Roberts as being pliant to political pressure, their ultimate disappointment being that for some reason he bent the wrong way.

But more than that, when Barnett speculates about pressure on Roberts from "President Obama, Senator Leahy, and pundits like Jeff Rosen", exactly what form does he imagine that "pressure" could take? Exactly why is it that he believes Roberts would care what President Obama thought of an issue, let alone respond to "pressure" from the President? Of all the nonsensical right-wing conspiracy theories we've endured over the past few decades, the idea that the President has the power to cow the life tenured Chief Justice of the Supreme Court is right up there with the best of 'em.

It's even harder to imagine what Senator Leahy might have done that would cause Roberts to feel any amount of pressure. (Massage his shoulders?) Jeffrey Rosen? Does Barnett imagine that Rosen teaches at Hogwarts instead of George Washington University and somehow got his hands on the Elder wand? Rosen himself addresses the absurdity of the argument:

The idea that I was trying to “intimidate” or “bend” the Chief Justice came as a surprise to me. The justices have already voted in the health care case and are hardly influenced, in any event, by legal punditry. On the contrary, I suggested that this is a moment of truth for Chief Justice Roberts because I’ve been a staunch supporter of the vision of bipartisanship that he articulated when he became Chief Justice, and have continued to defend him during the past six years when others have denounced him for failing to live up to the standards he set for himself.

Yeah, but what do facts have to do with an otherwise good conspiracy theory?

So far we seem to be dealing with the following:

1. Somebody leaked to the right-wing media that Roberts might vote to uphold the ACA.

2. A number of right-wing political columnists, largely of the hack variety, started to write editorials claiming that Roberts was coming under pressure from the political left, and how atrocious that was.

3. No evidence was ever produced of any form of actual pressure on Roberts from the political left, let alone of why he would have been receptive or responsive to any such pressure.

4. Roberts ultimately voted to uphold the ACA.

5. Many on the political right has since engaged in a relentless attack on Roberts.

Sorry, Randy, but this whole thing appears to be on the political right. I don't know if you thought Roberts was pliant to right-wing pressure and would always vote the way you wanted on important cases, but if you did not it's difficult to believe you would continue to push this issue. The only evidence of pressure on Roberts, implied threats against his reputation (as opposed to mere observations of how history might treat his decision) have come from the political right. Since the decision came down, the only efforts to trash his reputation have come from the political right.

So far, I see no reason to believe that Roberts cares about all of the right-wing furor, or the implication that he can expect this type of personal attack every time he rules the "wrong way". After all, he has never shown even the slightest concern about opprobrium from the political left resulting from any of his past decisions. Do those on the political right who are still pushing this line of attack believe otherwise? Are the attacks a form of prolonged venting of misdirected anger? Of disappointment that he's a mindful as opposed to mindless partisan? Are they hoping to make Roberts or other justices more responsive to their pressure in the future?

Really, why do these attacks keep on coming?

Dictum vs. Holding

Back when I started practice, I attended a seminar at which a judge described a common problem with briefs submitted by lawyers who came of age in the era of Lexis and WestLaw: They would punch keywords into the search box, hit enter, find language in cases that supported their arguments, then quite that language without bothering to determine if they were citing the holding of the case - the court's binding decision - or dictum, statements not directly bearing on the issue before the court and thus not binding.

So I find it interesting that a law professor is excited about a column by a reporter (who studied law at Yale) that references and quotes as its sole legal authority a quote taken from a legal opinion in which the judge, as dictum, quoted dictum. For goodness sake.

Please, all you law profs, stop bringing back this sort of memory of law school. Some things, I would prefer to forget.

Severability Clauses and Healthcare Reform

Randy Barnett notes that the Obama Administration has conceded that if the individual mandate is held unconstitutional, "provisions preventing health insurance companies from discriminating against people with pre-existing conditions would also be invalidated by the court because the two are inseparably linked".

To me that doesn't seem like a big concession. First, it's obvious that those regulations would not be economically viable in the absence of an individual mandate. Second, were the Obama Administration to argue otherwise, the health insurance industry would launch a full-bore assault on the bill both in the courts and in Congress, and they would (for once) have a valid argument to make.

Frankly, given how many concessions the Obama Administration had to negotiate to get a bill that the various health industry players wouldn't torpedo, it seems less reasonable to assume that the Dems "forgot" to include a severability clause as opposed to having deliberately omitted one in order to prevent an outcome where a court upheld the regulations while striking the individual mandate. The "need" for a severability clause is largely overstated by opponents of the legislation and, to put it mildly, the inclusion of a clause that would have stated "If the individual mandate goes, so do provisions like 'no discrimination based on pre-existing conditions'" would not have been politically popular.

Be Careful What You Wish For....

The New York Times offers a variety of arguments on the constitutionality of the healthcare reform bill, doing a reasonable job of representing both sides. The New York Times offered space to the lawyers who are suing to invalidate the individual mandate. Their argument, to me, is interesting as it seems to have at its heart a yearning for the repeal of the New Deal, or more accurately the sweeping expansion of the Commerce Clause in a series of Supreme Court cases that enabled the New Deal. The authors contend,

In a 1942 case involving wheat producers and Gonzales v. Raich , a 2005 case concerning medical marijuana, the Supreme Court upheld federal regulation of purely local economic activities as a necessary part of regulating the indisputably national market in those commodities.

The health care insurance mandate is in no way necessary to Congress’ efforts to regulate the insurance markets. It does not govern how, when and under what conditions insurance may be locally bought or sold as a means of regulating those activities on an interstate basis — as was the case in the wheat and medical marijuana cases.

The insurance mandate applies without regard to any economic or commercial activity, local or national. If Congress can legislate this broadly, then there is in fact no limit to federal power because every aspect of human life can be said — in the aggregate — to substantially affect interstate commerce.

That sounds like a discussion from a Constitutional Law class, in which first year law students debate the wisdom of that 1942 case, Wickard v Filburn. I don't think the sidestep works - the argument that an insurance mandate is not necessary to the effective regulation of insurance markets - as it is beyond obvious that in the absence of a mandate it is not economically feasible for insurers to follow regulations requiring them to end medical underwriting and insure any applicant regardless of their preexisting medical condition. It remains my opinion that the health insurance mandate is a clumsy tool, but if it is deemed unconstitutional what would actually be accomplished by opponents of healthcare reform? We would simply end up with a slightly modified system of taxes and credits to achieve the same end.

Law Professor Randy Barnett rails against the individual mandate,

Imagine if Congress ordered the majority of American households without a firearm to buy a handgun from a private company, and punished their failure to do so with an escalating monetary fine, which it labeled a “tax.” Would the supporters of the health insurance mandate feel the same about the constitutionality of such a measure?

Imagine if Congress passed a bill that allowed you to go into a gun store and, if you claimed to be in need of a gun, required the store to either immediately verify that you did not need a gun or provide you one on credit (or as a present) with no credit check - and that they could be sued for "big bucks" over a "wrongful denial". That would be a lot like how people get emergency care under EMTALA - show up at an emergency room and get treatment until you're medically stable, without regard to your ability to pay.

High numbers of uninsured and underinsured people do affect the quality, availability and cost of medical care available to the rest of the population. Some hospitals don't offer emergency departments to avoid EMTALA, and some in impoverished areas have had to close. As a law professor, Barnett is no doubt aware of the usefulness of rhetorical questions, hypotheticals and reductio ad absurdum to illustrate a point but, in class or out, a bad analogy is a bad analogy. Similarly,

Congress has never before mandated that a citizen enter into an economic transaction with a private company, so there can be no judicial precedent for such a law.

So... the cure is to tweak the nature of the mandate and associated tax? Or is Barnett telling us that all we need to make the healthcare bill constitutional is the implementation of a pubic option? Easy cures... how, in Barnett's view, do they compare to the "disease"?

Barnett also takes an activist view of the Supreme Court:

Now that it has, supporters are betting there won’t be five votes on the court to thwart a popular act of Congress. Another safe bet.

But what if the bill turns out to be supremely unpopular? What if one or both houses of Congress flip parties because of it? What if majorities in Congress favor repeal but are blocked by a Senate filibuster or a presidential veto? Still as confident about five votes?

Last I checked, there wasn't language in the Constitution that authorized the Court to determine whether or not a law was constitutional based upon the latest public opinion poll. I'm not certain what point Barnett intended to make, but his argument reads like continued advocacy for the form of judicial activism "that dare not speak its name" - a continuation of the Reagan/Bush/Bush II brand of conservative judicial activism that seeks to accomplish through the courts that which can't be achieved through the ballot box.

The quibbles that the political right is raising about healthcare reform likely could have been avoided had a mere handful of Republican senators worked to effect healthcare reform, rather than choosing obstructionism. I'm not optimistic that such a bill would have markedly better solutions to the individual mandate or tax structure behind the bill than the one that passed, but it's at least theoretically possible. Even now, a more mature approach would be to propose ways to fix the bill's defects, real and imagined. In the long run that would also be more effective than pointing to those same (real and imagined) defects in an effort to undo reform, while seemingly blind to the fact that those defects can be fixed in ways you'll like even less than the status quo.