Listen to This: The Lumineers, "Ho Hey"

I belong with you.
You belong with me.
You're my Sweetheart.

Best New Restaurant Name in a Long While: Proudest Monkey

The menu ain't bad, either.

This place is at 108 S. Main in Bryan for you locals, and I now have lunch plans.

Also, glad for an excuse to flashback to 1996.

Engineered to Fail? The ACA's Individual Mandate

Since the Supreme Court ruled that the Affordable Car Act's mandate for individuals to purchase health insurance could be constitutionally sustained as a use of Congress's power to collect taxes, the political world has flipped out over whether the "penalty" for failing to purchase health insurance is a "tax." Whether the penalty is a tax or a fine is immaterial from a policy perspective, though. The ACA doubles-down on the worst aspects of the American health care system---particularly its reliance on insurance to structure the pricing of and finance most routine medical care.

In addition, though, I don't see how the twin pillar's of the ACA's insurance scheme work on its  own terms. The law is supposed to advance universal health insurance be requiring health insurance companies to extend coverage to anyone (regardless of any preexisting conditions) and that everyone buy health insurance whether they want to or not. The basic idea is that by forcing people who currently do not purchase health insurance to do so, the risk pool will be sufficiently expanded to allow people with preexisting conditions to buy in without bankrupting the insurance companies. The viability of private insurers and the feasibility of the plan hinge on forcing enough buy to literally into the health insurance system (who currently opt out) to cover the costs of insuring those who are currently uninsurable. If all of those with preexisting conditions rush into the health care market while those who are supposed to be mandated in continue to stay out, the costs of paying for health care for the newly insured will create large increases in premiums, pushing more people out of the private insurance market, further raising premiums, and creating a viscous cycle that ends with private insurance having to surrender to a single payer system.

So, the mechanism that incentivizes or forces people into the health insurance system has to be as watertight as possible. As it stands, though, the mandate is almost anything but mandatory.

In the first place, the penalty for opting out of purchasing health insurance is too low. Penalties for failure to have health insurance range from $695 for low income individuals, to $4,700 for those making up to $200,000 a year (and up to the cost of a basic health insurance plan for those making over $200,000 a year). For most people, the cost of health insurance will exceed the cost of the penalty. Since the ACA commands that insurers *must* sell policies to anyone, even those with preexisting conditions, the maximum risk a person faces for failing to have health insurance under the ACA is the cost of any medical care their might need in the interval between the present moment and the moment the can start a policy---which he or she can buy with certainty. That maximum liability is substantially lower than that faced by most people who presently opt out of health insurance, who face the prospect of having to pay for all medical services they may need from the present moment until the end of time since they could not obtain insurance once a medical condition was known. That means that many people who prefer to opt of private health insurance now are likely to continue to opt out even when the ACA's mandate to purchase goes into effect.

The problem is even worse than that, though, since, apparently, there is almost no mechanism in the ACA as it now stands to collect the penalty for failing to purchase health insurance other than withholding it from a person's tax refund. If a person is not owed a refund, the law provides almost no way to punish a person who does not pay the penalty or to force him or her to pay it. As Howard Gleckman of the Urban Institute and Brooking Institution's Tax Policy Center writes:

The ACA says the IRS should enforce the law by imposing a tax penalty—but then effectively blocks the agency from using most of the tools it normally uses to go after tax scofflaws.

The ACA bars the IRS from bringing a criminal enforcement case against someone who refuses to pay the non-insurance penalty. And it makes it very difficult, if not impossible, for it to enforce a tax lien. Law professors Jordan Barry and Bryan Camp have a nice piece in Tax Notes explaining it all.

That leaves only one tool—the IRS can subtract the penalty from any refund it owes a taxpayer. But that applies only if the IRS happens to owe somebody a refund. These days, two-thirds of taxpayers get one, but it is usually their choice.

Only low-income households who receive refundable credits, such as the Earned Income Credit, always get refunds. But the ACA specifically exempts most of them from the tax because their income is so low.

Bottom line: Notwithstanding the nutty Internet rumors that the IRS is hiring 20,000 revenue agents to collect the tax, most people who really want to game the system will probably get away with it.

That Tax Notes piece Gleckman references concludes similarly:

The restrictions placed on the IRS’s ability to collect the tax penalty make it unlikely the IRS can effectively enforce the individual mandate. The only major collection tool that remains unaffected is the offset, which, by its nature, applies only if the taxpayer happens to overpay her federal income tax obligations or is entitled to a net refund in a given year. Thus, many taxpayers who neglect or refuse to pay the tax penalty could structure their affairs in such a way as to avoid being subject to legal consequences of any sort for years to come, if ever. For those taxpayers, the individual mandate may not actually be mandatory after all.

So, not only will the penalty dissuade few people who are voluntarily outside of the private health insurance system from entering it, the penalty is nearly unenforceable.

Unless the mandate to purchase health insurance in the ACA is actually mandatory, the law's requirement insurers to take all comers will ultimately undermine the entire system of private health insurance in the United States. Yet, the law's enforcement provisions are, apparently, essentially frivolous. Though I am sure most of the ACA's supporters were sincere in their desire for the law to help extend the number of people covered by health insurance in the United States, the ACA continues to look like a "Trojan Horse" for pushing more aggressive public interventions in health care.

Post-Game: The Supreme Court and the Affordable Care Act

The Supreme Court ruled last Thursday that the President's health care reform law, the Affordable Care Act (ACA), often call ObamaCare, is constitutional. The decision was nominally 5-4 in favor of the law. However, as Yale Law School Professor Akhil Reid Amar noted in an interview with Ezra Klein, the decision was really 4-1-4. Four conservative members of the Court---Jutices Alito, Kennedy, Scalia, and Thomas---found that the law as a whole was unconstitutional. In particular, they found that the individual mandate to purchase health insurance exceeded the scope of Congress's power under the Commerce Clause, that the mandate was not otherwise constitutionally permissible, that the mandate was not severable from the rest of the law, and that the law as a whole was therefore invalid. Four liberal members of the Court---Justices Breyer, Ginsburg, Kagan, and Sotomayor---found that the mandate to purchase insurance was within Congress's power to regulate interstate commerce, that the mandate was also sustainable by Congress's power to collect taxes, and that the law as a whole was constitutional.

Chief Justice John Roberts, however, wrote a majority opinion on behalf of himself and the four more liberal members of the Court that split the difference between these positions while upholding the law. The Chief Justice agreed with the Court's conservatives that the mandate to purchase health insurance was beyond Congress's power under the Commerce Clause; however, he also agreed with the Court's liberals that the mandate could be sustained under Congress's power to collect taxes since the penalty for failing to purchase health insurance could be considered a tax rather than a fine. This latter conclusion was sufficient to sustain the mandate and other related provisions of the law. (In a separate analysis, Roberts led a majority of 7 justices in concluding that the ACA's Medicaid provisions are unconstitutionally coercive and that states may therefore opt out of expanding Medicad coverage without losing any existing Medicaid funds.)

In addition to the obvious and critical questions about the implications of the decision for health care in the United States and the interesting puzzle of how it might influence the upcoming presidential election, the decision reflects important challenges for scholars of law and judicial politics.

First, I should point out that the decision in the case was---in the one most important respect---contrary to my own expectations. I had predicted a 5-4 decision striking down the mandate under the Commerce Clause. Though the Court ruled exactly as I predicted on that issue, the five justice majority resurrected the the tax argument on behalf of the law after every appeals court that had heard challenges to the law had rejected it. I certainly did not predict that. Though a handful of people predicted that Roberts would join a narrow majority to save the mandate (Adam Serwer and Will Wilkinson spring to mind, but there were undoubtedly others. Also, Ann Coulter's 2005 take on John Roberts is worth a looksee.), no one I know of predicted that the case would hinge on Roberts's reading of the tax clause.

Law professors who argued from legal doctrine made the worst predictions about the outcome of the case. Laurence Tribe's analysis of the case and his prediction that the law would be upheld 8-1 under the Commerce Clause are especially comical in retrospect. Political scientists, as a group, did much better, but still missed the boat. Attitudinalists like me typically assumed Kennedy was the mostly likely member of the Court's conservative majority to side with the liberals against the mandate. Mike Bailey and Forrest Maltzman's forecast---based on a statistical model accounting for both justices' preferences and the weight of precedent---of a 6-3 decision in favor of the mandate under the Commerce Clause hinged on a Kennedy defection and Roberts going along to control the opinion. Though this law-and-politics forecast got the direction of the decision right, it did not predict the composition of the majority or the holding on the Commerce Clause issue.

As I look back now on what I wrote about the Supreme Court last February when I predicted a 5-4 decision against the mandate and hold it up against the decision itself and news reports that Chief Justice Roberts initially sided with the Court's other conservatives in voting to strike down the entire law before switching sides and crafting an opinion that broke for the ACA while still holding against it on the moot Commerce Clause issue, I can't help but think (self-servingly) that I was generally right about what makes the Court tick but (obviously) wrong in one important detail: John Roberts took the threat to the Supreme Court's legitimacy that would come from the backlash against a decision striking the law more seriously than I.

In particular, I see these three things going on the decision.

1. The "law" doesn't matter much in Supreme Court decisions. Despite the legal academy's nearly complete consensus that the Court's prior Commerce Clause cases left the action-inaction distinction raised by opponents of the ACA's individual mandate utterly insupportable, a majority of the Court held that Congress could not directly compel commerce as part of a regulatory scheme. Despite the fact that the ACA does not refer to the penalty on failing to purchase health insurance as a tax, the repeated public insistences of President Obama and other supporters of the law that the uninsured were not going to be taxed, and the failure of any lower federal court to decide for the ACA under the power to tax, the Court held that the mandate is constitutional since the penalty may be considered a tax. As I see it, the decision looks like it does because John Roberts wanted to decide for the mandate but did not want to publicly surrender the principal that Congress could do anything it pleased. These are political judgments, not legal ones, and the law---understood as precedent or the language of the statute---was ultimately no constraint on what the Court did or did not do.

2. External constraints matter. I had written that public opinion was so evenly divided on the ACA question that the Court could decide the case however it wanted without facing a realistic threat to its standing. My hunch is that John Roberts saw a public that was deeply divided on health care reform, a president and party willing to actively campaign against the Court for the first time since FDR, and a news media willing to back a court-curbing movement to the hilt, and he backed down. I think the Court could have weathered the storm, but John Roberts, of course, has much more reason to be risk averse on this count than I do. After all, history has been quite kind to John Marshall's wily assertion of judicial independence amidst total political surrender. Perhaps John Roberts hopes to pull off a similar trick.

3. The Chief Justice is different. I am working on a project that makes the claim that the Chief Justice plays a unique role in protecting the legitimacy of the Supreme Court. My coauthor, Carla Flink, and I write:

[There is a] general...relationship between the leadership capacity of the chief justice and the quality of the Supreme Court’s decisions in terms of their prospects for supporting the legitimacy of the Court... Synthesizing this intuition with on a model of public management due to Meier and O’Toole (1999), we articulate a theory of the chief justice’s role on the United States Supreme Court. In particular, theories of public administration tend to emphasize the effects of management on the quality of outcomes produced by an institution rather than by its ability to produce outcomes consistent with a particular political ideology or by a particular process. This approach suggests that the leadership of the Supreme Court, embodied formally in the office of the chief justice, has a special interest in producing outcomes of high quality for his institution rather than merely producing outcomes consistent with his personal policy preferences or legal philosophy. Unlike prior theoretical accounts of the chief justice’s role in Supreme Court decision-making, we do not view the chief as a merely a justice of ordinary motivation (perhaps political) with some extra-ordinary institutional prerogatives (e.g. the ability to assign opinion authorship when voting with a conference majority). Instead, we consider the chief justice as a “manager” who exerts leadership on his institution to improve the quality of its outputs in terms of the standing of the institution itself.

The upshot is that the Chief Justice's office is different than that of the Associate Justices. In particular, the Chief has special responsibilities to protect and enhance the legitimacy of the Court as an institution. If John Roberts acted to preserve the standing of the Court, then his behavior is entirely consistent with this approach (even if it might not have been necessary in this case).