Randy blogs at VC about an Op-Ed we co-authored in USA Today arguing that ACA supporters must admit, at last, that the Affordable Care Act imposes a tax on the uninsured. Admit it already! Obamacare is a tax.
There are important constitutional reasons for labeling this law accurately. Five members of the Supreme Court in NFIB v. Sebelius held that a penalty that forces people to purchase health insurance is unconstitutional. The Chief Justice found that a tax on those who do not have health insurance, in contrast, would be constitutional if it is not coercive. Thus, the only way Obamacare’s constitutionality could be saved was as a tax. If it is a penalty, it would be unconstitutional.
The significance of the tax/penalty distinction will take on an even greater importance in the future when it becomes evident that the “tax” on not having insurance is too low to incentivize many to buy insurance. Inevitably, there will be efforts to increase the cost of being uninsured. There are suggestions that the Administration made the penalty low in 2010 in order to make the bill an easier sale (like the “you can keep your insurance” pitch), with the understanding that it could be raised later. That option is no longer available because, in his opinion upholding the bulk of the ACA, Chief Justice Roberts said that the tax cannot be so high as to coerce or “mandate” anyone to buy health insurance.
As I noted in Unprecedented, the Chief Justice’s opinion places limitations on the size of the penalty (p. 288).
Roberts viewed the penalty provision as a tax because it was not punitive or prohibitory and it was cheaper than purchasing health in- surance. If Congress were to raise the penalty too high (high enough to be effective), this reasoning would no longer save it as a tax. To Roberts, the penalty is constitutional if it still gives a person the choice of whether to buy insurance or not. Once this is no longer the case, the penalty conflicts with the reasoning of the chief ’s opinion.
Randy also makes an important constitutional point. The Court did not already hold that the ACA imposes a tax.
For those who may argue that the Court already found that the law is a tax, and there is no reason for Congress to act on it, that is not the case. Chief Justice Roberts only treated Obamacare as a tax for purposes of his saving construction. The reason why he needed to rewrite the law was because the actual law Congress passed was an unconstitutional penalty.
Five members of the Court were quite clear that the law Congress wrote was not actually a tax. Only a make-believe tax.
Across the street from the Supreme Court, members of Article I are not bound by duties of judicial restraint, or saving constructions. In fact, the legislative process demands the exact opposite. The peoples’ representatives should debate and vote on actual laws, not hide behind fake, judicially-created laws.
The ramifications of NFIB require Congress to take stock that this law is in fact a tax, and that there are limitations on how it can be used. For now, Congress and the President should finally admit that Congress is a tax.