US Supreme Court Upholds Affordable Healthcare Act

US Supreme Court Upholds Affordable Healthcare Act

Courtesy of Jesse's Cafe Americain

The vote is out and it is 5-4 in favor of the constitutionality of the US Healthcare Reform Act.

Chief Justice Roberts provided the 'swing vote' in viewing the individual mandate as a 'tax' rather than accepting the Commerce Clause justification which Reich had thought would carry.  Justice Kennedy dissented, staying with the Republican appointees on the bench.  I am sure Antonin Scalia will provide an entertaining dissenting opinion.

The expansion of Medicaid was held to be unconstitutional 5-4, based on the argument that the government cannot withold funding for the entire program from states that do not comply with the expansion. In essense, the Medicaid expansion was fine, it was the penalty that was deemed to be an unconnected intrusion on the States since the Court saw the expansion as 'separate' and not part of the original program.

I remind the reader that 'Obamacare' with its private sector 'mandate' is in reality a long-standing Republican proposal, originally conceived in the conservative Heritage Foundation think tank, to use the private sector to try to manage healthcare costs, rather than the 'single payer' option.  Prior to Obama the largest implmentation of this approach was achieved and lauded in Massachusetts by guess who. 

As it evolved the law was considered a betrayal of Obama's base by the progressive voters who strongly favored the expansion of single payer.  This inhibits its acceptance by a broad swath of the public as it is a sort of awkward compromise, still containing some rather popular facets such as inclusion of older children, the striking down of predatory pricing, and the refunding for excess profits. In essence, the law seeks to turn the health care monopolies into managed utilities.

Robert Reich was very close in his prediction yesterday of how this would come out.  Roberts was concerned that another blatantly political ruling would undermine the credibility of his court and his legacy.

I should remind the read that this interaction between the Administration and a conservative Supreme Court is a remarkable replay of the 1930's, in which the Court, packed with the legacy of prior Republican administrations, repeatedly struck down elements of the New Deal.

I think the most reliable forecast is that rational discussion will continue to decrease, while polarized hysteria will dominate much of the commentary and most of the conversation.

All this is of most interest to us because of its significance on the inability to generate economic recovery.  

And in the short term it did not support the two day stocks rally and caused those gains to be sold off.  Since I agreed with Reich I had put on a big short hedge, and it has worked.   

This will passd quickly and Europe and the domestic economy will become the driving forces.  This being an election year most of the activity in the Congress for the rest of the year will be theater.

Why the Supreme Court Will Uphold the Constitutionality of Obamacare 
By Robert Reich
Wednesday, June 27, 2012

Predictions are always hazardous when it comes to the economy, the weather, and the Supreme Court. I won’t get near the first two right now, but I’ll hazard a guess on what the Court is likely to decide tomorrow: It will uphold the constitutionality of the Affordable Care Act (Obamacare) by a vote of 6 to 3. 

Three reasons for my confidence:

First, Chief Justice John Roberts is — or should be — concerned about the steadily-declining standing of the Court in the public’s mind, along with the growing perception that the justices decide according to partisan politics rather than according to legal principle. The 5-4 decision in Citizen’s United, for example, looked to all the world like a political rather than a legal outcome, with all five Republican appointees finding that restrictions on independent corporate expenditures violate the First Amendment, and all four Democratic appointees finding that such restrictions are reasonably necessary to avoid corruption or the appearance of corruption. Or consider the Court’s notorious decision in Bush v. Gore. 

The Supreme Court can’t afford to lose public trust. It has no ability to impose its will on the other two branches of government: As Alexander Hamilton once noted, the Court has neither the purse (it can’t threaten to withhold funding from the other branches) or the sword (it can’t threaten police or military action). It has only the public’s trust in the Court’s own integrity and the logic of its decisions — both of which the public is now doubting, according to polls. As Chief Justice, Roberts has a particular responsibility to regain the public’s trust. Another 5-4 decision overturning a piece of legislation as important as Obamacare would further erode that trust. 

It doesn’t matter that a significant portion of the public may not like Obamacare. The issue here is the role and institutional integrity of the Supreme Court, not the popularity of a particular piece of legislation. Indeed, what better way to show the Court’s impartiality than to affirm the constitutionality of legislation that may be unpopular but is within the authority of the other two branches to enact?

Second, Roberts can draw on a decision by a Republican-appointed and highly-respected conservative jurist, Judge Laurence Silberman, who found Obamacare to be constitutional when the issue came to the U.S. Court of Appeals for the D.C. Circuit. The judge’s logic was lucid and impeccable — so much so that Roberts will try to lure Justice Anthony Kennedy with it, to join Roberts and the four liberal justices, so that rather than another 5-4 split (this time on the side of the Democrats), the vote will be 6 to 3. 

Third and finally, Roberts (and Kennedy) can find adequate Supreme Court precedent for the view that the Commerce Clause of the Constitution gives Congress and the President the power to regulate health care — given that heath-care coverage (or lack of coverage) in one state so obviously affects other states; that the market for health insurance is already national in many respects; and that other national laws governing insurance (Social Security and Medicare, for example) require virtually everyone to pay (in these cases, through mandatory contributions to the Social Security and Medicare trust funds). 

Okay, so I’ve stuck my neck out. We’ll find out tomorrow how far.

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