SCOTUS Dissects the Individual Mandate

Conservative justices on the Supreme Court performed an oral dissection on the individual mandate in Obamacare, yesterday.

The Obama administration faced skeptical questioning from a U.S. Supreme Court dominated by conservatives on Tuesday during a tense two-hour showdown over a sweeping healthcare law that has divided Americans.

A ruling on the law’s key requirement that most people obtain health insurance or face a penalty appeared likely to come down to Chief Justice John Roberts and Justice Anthony Kennedy, two conservatives who pummeled the administration’s lawyer with questions.

But Roberts and Kennedy also scrutinized the two attorneys arguing against the 2010 law, which is considered President Barack Obama’s signature domestic policy achievement.

The two pivotal justices on the nine-member court asked highly nuanced questions on Tuesday, the second of three straight days of oral arguments. They seemed torn on whether it would be more of a break from past cases to strike down the so-called individual mandate to obtain insurance or to uphold it.

Aggressive in their questioning of both sides, the justices fired off hard-hitting queries about the limits of the federal government’s power and whether it could even extend to requiring eating broccoli and buying gym memberships or cars.

While conservative justices took aim at the insurance mandate, liberal justices supported it.

The administration’s lawyer, Solicitor General Donald Verrilli, told the justices that Congress, in passing the law, was trying to address the troubling problem of shifting costs from people who are uninsured to those who purchase coverage, arguing “the system does not work” and lawmakers were addressing “a grave problem.”

At stake is the power of Congress to intervene in one of U.S. society’s most difficult problems – soaring healthcare costs and access to medical care. Annual U.S. healthcare spending totals $2.6 trillion, about 18 percent of the annual gross domestic product, or $8,402 per person.

So, what happens to the American taxpayer if the Supreme Court rules that the individual mandate is constitutional?

The Heritage Foundation offers a glimpse into the near future:

In essence, the mandates on individuals to purchase health insurance will raise taxes on families. When fully implemented in 2016, the individual penalty for not complying will reach up to $695 per person (for up to three people or $2,085 per household) or 2.5 percent of taxable income.[5] Many healthy but uninsured individuals will now be forced to buy insurance plans under the PPACA. This added cost–whether as new premiums or as a penalty for not purchasing insurance–is a de facto tax increase for these individuals.

Employers also have a new mandate to provide health insurance for their employees. Employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will pay a fine of $2,000 per employee (excluding the first 30) or $3,000 per employee receiving the premium tax subsidy.

As with the individual mandate, families will feel the bite of these tax increases in two ways:

If an employer begins to offer insurance, the wages of those employees to be covered will drop by the amount that the newly provided health insurance plan costs the employer.

If the employer fails to offer coverage, it will pay the tax, and the employee’s compensation will fall by that amount.

Either way, workers’ total compensation does not change; only its composition changes. But because workers will be forced to take more of their compensation in the form of health insurance, their cash wages will fall, and they will have less flexibility to use their earnings as they wish. Even though their total compensation will not change, lower cash income will negatively affect middle- and low-income families.

Heckuva job there, Barry.

This important moment in our country’s history continues tomorrow.

Wednesday, March 28, 10:00 a.m. (90 mins. of argument)

The Issue: If the mandate must go, can the rest of the law survive?

The challengers maintain that, if the Court strikes down the mandate, it should invalidate the rest of the law as well. The administration will argue that a few related provisions would have to go if the mandate is found to be unconstitutional, but the rest of the law should remain in force. The Court appointed an amicus counsel, H. Bartow Farr, III, to stake out a third position: that the mandate is completely severable, so nothing else in Obamacare needs to change even if the Court gives the mandate the heave-ho. Clement will speak for the challengers and Deputy Solicitor General Edwin S. Kneedler will represent the administration.

Wednesday, March 28, 1:00 p.m. – (one hr. of argument)

The Issue: Does Obamacare’s huge expansion of Medicaid and the conditions for any federal funding of it violate basic principles of federalism?

Clement will argue that the law effectively coerces states to participate in a radically more expansive Medicaid program than what they have worked under for decades. In the early years of the expansion, slated to begin in 2014, the feds will supposedly pick up all the new costs. But the states argue the expansion will impose massive new costs almost immediately, which will only increase in future years when the federal government decreases its payments. Verrilli will argue that the federal government can alter the terms of the federal-state program any time it wants to and, if the states don’t care for the changes, they can just opt out of Medicaid.

The Supreme Court does not allow oral arguments to be broadcast live, either on TV or radio. For this case, it will release an audio tape of the arguments a few hours after they conclude. For more timely reports on the arguments, check the Foundry [at heritage.org], where reports and pod casts will be posted soon after the sessions’ closings.

SCOTUS will not hand down their ruling on Obamacare until June.  Until then, all Americans can do is watch, wait…and pray.

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