United States Supreme Court upholds Obamacare

Image Credit: dbking via Flickr

As everyone is no doubt aware by now, the U.S. Supreme Court upheld nearly every provision of the Patient Protection and Affordable Care Act (aka Obamacare) earlier today in a 5-4 ruling.

Despite many predictions to the contrary, the Supreme Court upheld the individual mandate. The Court ruled that the mandate is constitutional as a tax, but not under the Commerce Clause.

“In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Chief Justice John Roberts wrote in the majority opinion. “Such legislation is within Congress’s power to tax.”

Republicans are desperately scrambling to put a favorable spin on the Supreme Court ruling, insisting that the ACA is nothing more than a new tax that must be repealed. Rep. Jeff Landry (R-La.) went so far as to say that “Obamacare is a malignant tumor that feeds on America.”

Republican attempts to paint the Affordable Care Act as a tax increase rather than a healthcare bill are patently absurd.  The ACA is far from a mandatory tax increase — anyone can choose to opt out of the tax, simply by buying health insurance.

Furthermore, unlike nearly every other Federal tax, there are no real penalties associated with not paying this tax. According to the congressional Joint Committee on Taxation, the tax cannot be enforced with liens or property seizures, interest cannot be assessed, and civil or criminal penalties cannot be imposed for non-compliance.

The Supreme Court also ruled that the Federal government cannot withhold Medicaid funds from states that opt out of the Medicaid expansion proposed in the Affordable Care Act.

All things considered, this is a much better outcome than many pundits expected. However, many are concerned that states with conservative governments will refuse to participate in the Medicaid expansion.

At least one Republican governor, Bob McDonnell (R-VA), appeared to indicate that his state will implement the Medicaid expansion.

“This is going to be a huge expansion of Medicaid,” he said. “In coming months, Virginia’s health care leaders will work to develop the best possible system to meet the health care needs of our citizens.”

While this is far from an explicit assurance that Virginia will implement the Medicaid expansion, it is strongly suggestive that it will.

Gov. McDonnell also claimed that the Medicaid expansion would cost Virginia $2.2 billion over the next 10 years, while conveniently forgetting that the vast majority of Medicaid funding will come from the Federal government.

According to the Center on Budget and Policy Priorities:

Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-16). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.

Many of the states that would benefit most from the expansion, such as Texas and Florida, are also states with severely conservative governments. Expanding Medicaid in these two states alone will extend health insurance coverage to approximately 2.8 million more people, according to the Urban Institute.

Only time will tell which states decide to implement the Medicaid expansion. In the years to come, it’s likely that even the most conservative states will recognize the overwhelming benefits this expansion will have for their residents.