Running Head: OBAMACARE LEGAL

OBAMACARE LEGAL

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The Supreme Court Landmark Decision on Obamacare

The landmark Affordable Care Act, loosely referred to as Obamacare, was signed into law in

2010. This marked one of the country’s most significant healthcare overhauls and introduced regulatory

reforms and expansion programs. The underlying principle behind the push for health reforms through

the ACA was equitable access to basic care. By the time Obama left office, the uninsured section of the

population had been cut by half; over 24 million Americans are now covered thanks to this landmark

legislation (Barnes, 2012). The push for affordable healthcare in America has encountered political

opposition from the right wing section of the house over the years. Another key challenge was facing

legal tussles with the Supreme Court at one point declaring parts of the ACA illegal.Even with these

massive challenges, then ACA has had a considerable impact in pushing for more equitable access to

basic health services and millions of low income earners are now insured.

In 2012, the landmark National Federation of Independent Business v Sebelius decision was

issued by the Supreme Court following a drawn out legal process. In a 5-4 decision, the court upheld

the constitutionality of the two provision of the ACA: individual mandate and Medicaid expansion

(Pear & Cooper, 2012). The court had agreed to hear the case challenging the constitutionality of both

provisions. Under the individual mandate, buying insurance is mandatory for all those who are not

covered by Medicaid, Medicare, and employer-sponsored insurance. The provision is also referred to as

the ‘buy insurance of pay a penalty’ clause. It was specially designed to introduce mandatory insurance

as well as to put certain reasonable limits on open enrollment for the purpose of avoiding an insurance

death spiral considering that a considerable number of people delay insurance until they fall ill. When

people delay buying insurance until they are sick, the resultant scenario would see major insurers

charging a higher premium for relatively sicker Americans. This, in turn, creates a vicious cycle in

which more people will prefer to drop their insurance coverage to caution themselves.
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As for the Medicaid expansion provision, the ACA seeks to create more equitable access to

basic health services by expanding Medicaid eligibility for low income Americans. Medicaid expansion

is not mandatory meaning that individual states can decide not to participate even though, evidently,

they all currently do. Through the Medicaid expansion plan, the Affordable Act pushes for insurance

reforms for the elderly demographic in which the participating states are required to insure all people

aged 65 years earning below a certain level of income.

The Supreme Court presided over the case where the petitioner challenged the constitutionality

Congressional power tax. In a 5-4 decision the court ruled in favor of the constitutionality of Congress

to ‘lay and collect’ taxes and the individual mandate component was upheld. The majority decision led

by the Chief Justice cited Article 1, Section 8 of the Constitution, which expressly states that Congress

shall have the power to levy taxes as part of its mandate to look out for the general welfare of the

country (Pear & Cooper, 2012). None of the lower courts had ruled as such before the Supreme Court

heard the case. The majority decision was also based on the argument that the penalty triggered by

failure to comply with the mandatory insurance requirement ‘looks like a tax’ for various reasons

(Barnes, 2012). First, the collection of shared responsibility payment is administered by the IRS.

Equally, the payment is filed together with individual tax returns and it does not fall on those whose

eligibility is not defined by the ACA’s individual mandate component. In addition, it is calculated on

the basis of income level and low income earners are exempted from it. Ultimately, the shared

responsibility payment or the penalty paid is some form of revenue for the federal government meaning

that it qualifies as a form of tax. The Supreme Court, in upholding the individual mandate, considered

the projected $4 billion that the shared responsibility payment as an essential feature of any tax.

The court gave three valid arguments to support the majority decision. First, the shared

responsibility payment will be far less than the actual price of insurance for most Americans since it is

required as such under the ACA meaning that it cannot be more by statute. Likewise, the Chief Justice
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argued that the IRS has no mandate to collect the payment through punitive measures, which makes it

humane. For instance, one cannot be criminally prosecuted as a means of collecting the shared

responsibility payment. Equally, the court clarified that the shared responsibility payment is not a

punitive way of forcing payment; it simply grants a person a legal choice to either procure insurance or

fail to do as long as they understand that non compliance attracts a penalty. These were the reasons for

upholding the power of Congress to levy taxes.

The four dissenting judges argued that the shared responsibility payment constitutes a penalty

imposed for people who violate a certain law. Imposing the penalty is a punitive measure to force

compliance meaning that the penalty should not be upheld through Congress. Likewise, the dissenting

opinion further held that the individual mandate is not severable from the rest of the Affordable Act

meaning that upholding it invalidates the entire law. Overall, the dissenting judges led by Justice

Ginsburg, who also concurred in part, was in support of the petitioner on the constitutionality of

Congressional tax powers.

On Medicaid expansion, the court’s decision was more complex because it was largely argued

that it was unconstitutional since it coerced states by failing to give reasonable notice so that they have

ample time for voluntary consent. The dissenting judges also expressed concerns that the Medicaid

expansion is a ‘gun to the head’ for individual states because they would have to allocate over 10

percent of the federal budget, which is economic sabotage (Pear & Cooper, 2012). On the other hand,

the majority decision in favor of Medicaid expansion was based on the argument that Congress remains

free to grant federal funds to the states. The Chief Justice also explained that the expansion could not

coerce states since membership is purely voluntary. No state will be required to participate since the

option is not mandatory.

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Ultimately, the much anticipated decision in the landmark National Federation of Independent

Business v Sebelius was delivered in March, 2012 (Barnes, 2012). The petitioner had petitioned the

court challenging the constitutionality of Medicaid expansion and the individual mandate. In a 5-4

decision, the court upheld both provisions arguing that Congress has the power to levy taxes and that

Medicaid expansion was not coercive since it is not mandatory for the states. Therefore, the ACA was

able to overcome that particular legal challenge on its enforcement.

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References

Barnes, Robert (March 28, 2012). "On health-care hearing's last day, Supreme Court weighs Medicaid

expansion". The Washington Post.

Pear, R & Cooper, M. (June 29, 2012). "Reluctance in Some States Over Medicaid Expansion". The

New York Times.