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Supreme Court upholds health care law, calls mandate’s fee a tax

The Supreme Court upheld nearly all of President Barack Obama’s health care law Thursday, ratifying the signature domestic achievement of his presidency and affirming the broad overhaul that Democrats had sought for more than six decades.

The decision assured that the law will continue to take effect – barring an unexpected repeal – extending coverage to the uninsured, providing new protections such as coverage for pre-existing medical conditions and imposing new taxes to finance it all.

In a ruling that’s politically far-reaching but legally restrained, the court said in a 5-4 decision that Congress had acted within its taxing power when it mandated that people buy health insurance or pay a penalty. The rest of the health care law likewise survived, save for tinkers with a provision that directs states to expand Medicaid coverage.

“It is reasonable to construe what Congress has done as increasing taxes on those who . . . choose to go without health insurance,” Chief Justice John Roberts Jr. wrote for the majority. “Such is within Congress’ power to tax.”

Roberts, a 57-year-old conservative nominated by former President George W. Bush, formed an intriguing alliance with the court’s four Democratic-appointed justices to control the decision. In essence, they reached the same conclusions by different routes. The liberals wanted a more expansive ruling. Instead, they ended up providing most of the votes while Roberts narrowed the reasoning as much as he could.

“I know there will be a lot of discussion today about the politics of all this, about who won and who lost. That’s how these things tend to be viewed here in Washington,” Obama said at the White House after the decision. “Whatever the politics, today’s decision was a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it.”

Congressional Republicans, who voted en masse against the Patient Protection and Affordable Care Act in 2010, vowed to kill it if they could. The House of Representatives will vote on a repeal bill July 11, Majority Leader Eric Cantor, R-Va., announced Thursday. Though the repeal is likely to pass the House, it almost certainly will fail in the Senate, where Democrats hold the majority.

“There’s a lot of resolve amongst our colleagues, and amongst the American people, to stop a law that’s hurting our economy, driving up the cost of health care and making it more difficult for employers to hire new workers.,” House Speaker John Boehner, R-Ohio, said in a statement.

Passed on party-line votes in Congress, the law includes hundreds of provisions that are being phased in over several years. Many are politically popular across party lines, such as one allowing parents to keep their children on family insurance policies until the age of 26. The centerpiece, though, is a government mandate on individual Americans that alarms conservatives.

The mandate requires that taxpayers obtain a minimum level of health insurance coverage by 2014. With some exceptions, those who don’t get insurance must pay annual fees that start at $95 in 2015 and rise to $695 by 2016. The court upheld this mandate, though not necessarily in the way many expected.

The court’s conservatives, including Roberts, agreed that the individual mandate violated the Constitution’s Commerce Clause. The Commerce Clause authorizes Congress to regulate commerce "among the several states." Since the New Deal era of the 1930s, this has justified many expansions of the federal government on the basis that the activity substantially affects commerce.

“It is no surprise that Congress has employed the commerce power in a wide variety of ways to address the pressing needs of the time,” Roberts wrote, “but Congress has never attempted to rely on that power to compel individuals not engaged in commerce to purchase an unwanted product.”

The court’s four liberal justices contended that the Commerce Clause empowered Congress to impose the mandate, with Justice Ruth Bader Ginsburg arguing in dissent that while “the insurance-purchase mandate is novel . . . novelty is no reason to reject it.” This reasoning, had it prevailed, would have been much more sweeping than Roberts wanted. It also would have encouraged more congressional efforts to build laws atop the Commerce Clause.

Justices Sonia Sotomayor, Elena Kagan and Stephen Breyer joined Ginsburg.

Instead, Roberts tied approval of the individual mandate to the power of Congress to “lay and collect taxes.” Though Obama and congressional Democrats denied that the individual-mandate penalty was a tax, Roberts reasoned that it effectively serves as a tax. That saved the mandate, but it set a less aggressive precedent.

“It’s very narrow in its implications,” said Jeffrey Rosen, a George Washington University law professor.

Nan Aron, the president of the liberal Alliance for Justice, went further, calling the court’s circumscribed view of the Commerce Clause a “ticking time bomb” that may enable a conservative majority to form again in the future and undo other social welfare legislation.

Three conservative justices who usually are Roberts’ allies, along with swing-vote Justice Anthony Kennedy, said that even the tax-powers reasoning gave Congress too much benefit of the doubt.

“In the case of the Affordable Care Act, Congress went to great lengths to structure the mandate as a penalty, not a tax,” Kennedy wrote for the dissenters. “But the majority now says that it is a tax, at least for the purpose of sustaining it.”

Justices Antonin Scalia, Samuel Alito and Clarence Thomas joined Kennedy.

Roberts also combined with liberal justices to salvage part of an expansion program for Medicaid – the federal-state health plan for the poor – albeit in more limited form.

Flexing federal muscle, the law pushes the states to cover residents who have higher incomes. It also establishes new minimum coverage levels for Medicaid. The law allows a cutoff of federal Medicaid money to states that don’t expand coverage to individuals with incomes up to 133 percent of the poverty line – about $30,000 for a family of four.

Although the federal government still will pay 90 percent of the additional costs, states complained that the threatened withholding of funds amounted to inappropriate coercion. The states receive more than $250 billion annually in federal Medicaid funds.

While describing the threatened loss of all Medicaid funds as a “gun to the head,” Roberts said the federal government could reasonably withhold new funds intended to pay for the expanded coverage.

“What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding,” Roberts wrote, adding that “nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use.”

Twenty-six provisions of the Affordable Care Act took effect in 2010, the law’s first year, and 17 went on the books last year, according to the Kaiser Family Foundation. Nine new provisions have taken effect this year. In anticipation of a court ruling, United Healthcare, Humana and Aetna separately announced earlier this month that they’d retain some of the law’s provisions regardless of what the court decided.

The much-anticipated ruling came on the last day of the court’s 2011 term, which began last October, and it lands amid tangled political turf. Forty-four percent of U.S. residents surveyed in May expressed unfavorable views of the law and 37 percent had favorable views, the Kaiser Family Foundation found. The group’s survey also found widespread ignorance about the law and the legal challenges to it; many people told surveyors that they thought the court already had acted.

“The court does not express any opinion on the wisdom of the Affordable Care Act,” Roberts wrote. “Under the Constitution, that judgment is reserved to the people.”