On June 28th 2012, the Supreme Court of the United States of America issued a ruling which upheld the Affordable Care Act, also known as ‘Obamacare.’ Many individuals speculated that a decision on the case would not be made anytime soon, especially since the act isn’t technically in place yet. A number of the provisions, such as the tax penalties related to the individual mandate, do not take effect until 2014. Given this fact, legal professionals stated that the court could refuse to rule under the Anti-Injunction Act.
Despite these speculations, the decision was revealed to the general public, with a 5-4 ruling in favor of Obamacare. There are a number of economic and political repercussions for this ruling, many of which hinge on the individual mandate. Obamacare is a contentious subject largely because it is unprecedented in US history and because offers long term results as well as unknown long term ramifications.
What is the ‘Individual Mandate’?
One of the most contentious points in Obamacare is the individual mandate. This term refers to the Act’s requirement for each American citizen to have health insurance for themselves and their family by 2014 or to incur a penalty. In the year 2014 the penalty is cited as being 1% of a person’s income or $285, whichever amount is greatest. By 2016, when the penalties take full effect, this sum rises to 2.5% of income or $2,085.
Arguments Against the Mandate
Those who criticize the law state that it is unconstitutional for a government to force their citizens to buy a product or service from a private company. Although there are many other cases in which individuals are compelled to purchase insurance, such as flood insurance or car insurance, there are certain ways to opt out of the payments. For example, you can choose to live in an area that does not require flood insurance, or you can choose to not drive a vehicle. Conversely, the government does not give you a choice in buying health insurance- unless of course you’d like to pay the penalty.
Arguments for the Mandate
The argument brought about by the supporters of Obamacare is that healthcare is an unparalleled product and as such, it requires an unprecedented level of regulation. They state that you can live in an area that isn’t a floodplain or choose to take public transportation instead of driving an automobile, but you will at some point or another need medical care in your life. If an individual becomes sick, they are not refused care in a hospital just because they don’t have insurance. Rather, they incur massive bills that they cannot pay off by themselves, and ultimately they burden the general public. Consequently, everyone uses the healthcare market already, but not everyone pays for the products they utilize. By instating an individual mandate, the government seeks to repair this inequality.
Supreme Court Ruling
The Supreme Court ruled that the individual mandate found in the Affordable Care Act is constitutional. However, the charge instilled on an individual who does not purchase health insurance by 2014 cannot be called a ‘penalty.’ This terminology would indeed be unconstitutional under the Commerce Clause, making the dissenters of Obamacare correct. Instead Chief Justice John Roberts stated that the ‘penalty’ must be referred to as a tax.
Anti-Injunction Act: http://www.law.cornell.edu/uscode/text/28/2283
Supreme Court Ruling on the Affordable Care Act: http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf
US Constitution: http://uscode.house.gov/pdf/Organic%20Laws/const.pdf