Initial reporting on the Supreme Court decision on the Affordable Care Act, subject to change, update, and further analysis as more is known.  

This is the corrected version of our original piece.

In a 5-to-4 decision, with Chief Justice John Roberts in the majority, the United States Supreme Court today effectively upheld the Patient Protection and Affordable Care Act, otherwise known as the Affordable Care Act or ObamaCare, by treating the individual mandate as a tax.

On the individual mandate, Lyle Denniston of SCOTUSBlog writes:

Salvaging the idea that Congress did have the power to try to expand health care to virtually all Americans, the Supreme Court on Monday upheld the constitutionality of the crucial – and most controversial — feature of the Affordable Care Act.   By a vote of 5-4, however, the Court did not sustain it as a command for Americans to buy insurance, but as a tax if they don’t.  That is the way Chief Justice John G. Roberts, Jr., was willing to vote for it, and his view prevailed.  The other Justices split 4-4, with four wanting to uphold it as a mandate, and four opposed to it in any form.

The crux of health reform has always rested on the notion expanding affordable health care coverage to the vast majority of Americans could only work if insurance companies were guaranteed a large pool of consumers through some form of mandate intended to dramatically reduce the risks inherent in covering only the oldest and the sickest by ensuring everyone “paid in” to the system. Put very simply, the core argument is that the larger the pool of purchasers of insurance, the lower the costs per person would be, and the more affordable would be health care overall. Under the Affordable Care Act, Congress passed the individual mandate, requiring everyone to buy health insurance or face a penalty. According to Denniston, by treating the requirement as a tax that must be paid:

“The ACA’s key provision now amounts to an invitation to buy insurance, rather than an order to do so, with a not-very-big tax penalty for going without.” But, he notes, “It is not “immediately clear whether the Court’s approach will produce as large a pool of new customers.”

Ruling on Medicaid Expansion:

Kevin Russell of SCOTUSBlog writes the following on the Medicaid portion of today’s ruling:

The Court’s decision on the constitutionality of the Medicaid expansion is divided and complicated. The bottom line is that: (1) Congress acted constitutionally in offering states funds to expand coverage to millions of new individuals; (2) So states can agree to expand coverage in exchange for those new funds; (3) If the state accepts the expansion funds, it must obey by the new rules and expand coverage; (4) but a state can refuse to participate in the expansion without losing all of its Medicaid funds; instead the state will have the option of continue the its current, unexpanded plan as is.

Matt Yglesias points out that in this ruling, the Court invalidates one of the most important means through which Congress sought to expand health insurance under the ACA, by expanding Medicaid coverage. In effect, Medicaid expansion acted as both a carrot and as a stick in prompting states to expand care under the ACA, promising more funding from the federal government if states agreed to expand coverage to low-income individuals and families, but allowing the federal government to penalize states if it did not. But because it ruled against the federal government on penalizing states, what the court decision does, in effect, explains Yglesias, is to take away the stick and leave only the carrot.

Yglesias writes:

Explaining what happened here requires some background, so please have patience.

Medicaid is a program to provide health coverage to low-income people. It’s run as a partnership between the federal government and the states, where states design their own programs within bounds set by federal regulations and the federal government ponies up a large share of the money. How much of the money? It’s complicated. But basically the more a state spends the more the federal government kicks in, but you get diminishing returns in terms of how much extra money you can get. So the upshot is that a stingy conservative state can expand for cheaper at the margin than can a generous liberal state.

Medicaid is also basically the cheapest health insurance program around. It’s for poor people, it’s pretty stingy, and it pays providers poorly.

So somewhere in the legislative sausage-making, budget-conscious centrists realized that it would be cheaper to rely heavily on Medicaid expansion to achieve the Affordable Care Act’s coverage goals. To an extent this is exactly what liberals have been saying about single-payer all along. But in this case it played as a centrist desire to keep the bill relatively cheap. The problem is that most of the Medicaid expansion that would have to happen would have to come from politically conservative states. So congress’ approach was essentially to make Red America an offer it couldn’t refuse—expansion could be done on very generous terms with the federal government picking up over 90% of the tab, but failure to expand would come with a hefty financial penalty in terms of lost matching Medicaid grants.

Chief Justice Roberts joined with the other conservatives on the court to argue that this penalty—withdrawing of existing federal money unless states kicked in new money of their own—overstepped the constitutional bounds of the spending power. So now states have the carrot to expand Medicaid but not the stick.

Since your state’s citizens have to pay taxes to the federal government one way or the other, you’d have to be pretty crazy to refuse the carrot if you ask me. But ideological zeal may well lead some states to turn it down. In that case, substantially more people than the law’s authors expected might find themselves eligible for either hardship waivers from the mandate or subsidies to buy insurance on exchanges. How much of each of those things happened will depend on exactly what states do, and figuring out the budgetary implications of the whole thing is going to require some hard work by the little modeling gnomes at the Congressional Budget Office.

What the Medicaid decision means for women is right now unclear because legal analysts are still reviewing the opinion. But what states decide to do will have critical implications for women’s health. One in ten women between the ages of 18 and 64 rely on Medicaid for their health coverage, and women over the age of 14 account for over 70 percent of Medicaid participants, so in effect, states that opt out of Medicaid expansion are making a de facto decision to deny millions of women access to care. This will clearly affect all manner of primary preventive care, including but not limited to basic reproductive health care, contraceptive care, and other forms of needed care. Moreover, it is not yet clear what this decision means in relation to states like Texas and Indiana which have already tried to selectively deny Medicaid funding of reproductive health care clinics.

More to come on this and other issues as more analysis is available.