The Dangers of Prudence and the Supreme Court’s Health Care Ruling

The Supreme Court’s decision yesterday on health care reform launched a tidal wave of commentary and opinion that captivated, if only momentarily, discourse among even casual observers of American politics.  The ruling was expected to be momentous, but the surprise twist of Chief Justice Roberts acting as the deciding vote busted up everyone’s expectations and sent the conversation spinning.

I’m still sorting out my own thoughts on the opinion, wavering between the “political genius” interpretation that puts Roberts (potentially) in the league of John Marshall and the “he simply got it wrong” camp.

It’s fascinating, though, how Roberts was caught between two principles of modesty that proved ultimately irreconcilable.  For one, Roberts (it seems) decided to protect the Court’s legitimacy by working, as much as possible, to defer the work of governance to the other branches.  But Roberts’ narrow understanding of the commerce clauses’ powers was also rooted in an interpretative modesty, an unwillingness to expand the reach of the government’s ability to coerce beyond that which had been previously established.

Ultimately, the two couldn’t stand together:  in order to maintain the court’s legitimacy, Roberts sacrificed his interpretative modesty and–as Alito and the rest argue in their dissent–innovatively argued that the law’s penalties for not purchasing health insurance constitute a tax.

'Supreme Court' photo (c) 2009, Mark Fischer - license: http://creativecommons.org/licenses/by-sa/2.0/That’s a neat solution, a way of cutting through the gordian knot.  But prudential decisions of this sort are invariably accompanied by significant collateral damage.  To pick a non-legal example, when Bush first bailed out the banks, he invariably sacrificed conservative principles for the sake of our financial institution’s ongoing existence.  It’s easy in retrospect to criticize him for it, though we sometimes forget just how precarious things were (and, I suspect, few of us actually really knew just how dire the situation actually was).  Subsequent bailouts hardened our opinion against him, and understandably so.  It’s one thing to give an alcoholic on the battlefield a shot of whiskey before surgery.  It’s quite another to keep it flowing once the fellow’s on the mend.   That simply to say, though, momentary prudential concessions have their way of eventually being formalized into new doctrines.

That’s especially true, of course, within an institution that operates self-consciously on the grounds of precedent.  The question for the court going forward will be whether the expansion of the government’s powers of taxation is worth the cost of maintaining its legitimacy as a non-partisan institution.  Holding on to legitimacy this way, by offering a strained reading of the law, is potentially the sort of Faustian bargain that may go no better than it did for Bush.

Along those lines, though, my friend Josh Hawley suggests that turning the law into a tax includes conditions that prevent it from similar arguments being made in the future:

This is why: Roberts does not say that the government may now regulate anything it likes by calling the regulation a tax. He says this mandate can be read as a tax in these circumstances — that is, in light of the fact that it would be unconstitutional on any other ground and the court is supposed to avoid finding statutes unconstitutional if it can — and on these grounds: because it is administered by the IRS through the tax code and operates in many respects like a normal tax. Only if future regulatory schemes can meet all these criteria would they be valid under the taxing power. Yet Roberts does not give a single example of any such scheme — and we know for a fact, because they have told us repeatedly, that members of Congress would never have voted for this regulation if they had believed it was a tax.

That’s an interesting point and as a matter of political prognostication that may be true.  Josh is smarter than I and I’m inclined to defer.  However, it’s not implausible that future controversial bills will follow the course that this one has gone through–being advanced in the court of public opinion as “mandates” or what have you, and the defense that they are taxes (and hence constitutional) only coming when they arrive in court.

Idiosyncratic musings aside, I yield to a friend who passed along the following reflections on various aspects of the decision.

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The Medicaid decision is a real win for federalism, and this should not be lost amidst the focus on the mandate.  States cannot be treated as local administrative divisions of the federal government, period.  They are independent sovereigns, and they have the right to refuse participation in a cooperative-funding program they don’t like.  And Congress can’t radically change the bargain on the program mid-way through.  The Court has never set a limit on the spending power before vis-a-vis the states (it’s last chance to do so was S. Dakota v. Dole, which tied federal highway funds to a 21-yr-old drinking age).  This is a big win for states, especially because so many programs are cooperative-funding (transportation and primary/secondary education are the two biggies besides Medicaid).

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Roberts misses the importance of labels for democratic accountability.  The “Roberts is a genius” line of commentary is that he’s just hung a massive tax hike around Obama’s neck four months before the election.  True enough.  He emphasizes throughout his opinion that voters, not the courts, should hold their elected representatives accountable for policy — if the voters don’t want Obamacare, then throw out the bums who imposed it.  And he says in the Medicaid section that “permitting the fed govt to force the states to implement a federal program would threaten the political accountability key to our federal system.” (pg. 48).

Yet he misses the significant loss of political accountability in the taxing-clause discussion.  He says that we should ignore Congress’s label (“penalty”) and look past the “most straightforward meaning” (because of deference) and instead ask about the “function.”  Yet Congress’s label and the straightforward meaning are key to political accountabilityduring the legislative process.  If Congress was forced to label it a tax when the bill was introduced, then the bill may never have been passed.  We need honesty and accountability on the front end, as legislation is working its way through the system, rather than only on the back end when at best we can throw the bums out after the law is enacted.

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We should not overestimate the size of the win on the Commerce Clause.  I am more wary about the Roberts’ opinion the fellow over at Slate.  Roberts’ opinion refers to the Commerce Clause power as “broad” and “expansive.”  He reaffirms the continuing vitality of Wickard, which is the bugaboo of every legal conservative.  Because so few laws regulate “inactivity” by mandating the creation of “activity,” I highly doubt this will represent an enduring challenge to the modern regulatory state.  This is a win, for sure, but only because it drew a line at the way-far-out boundary and because none of the academics thought this argument serious even six months ago.

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Religious Liberties and Who Pays for Contraception

The discussion last week about the HHS decision to require religious organizations (excluding churches) to pay for contraception through their insurance plan was, in short, excellent.   My hope in what follows it to hastily outline a few thoughts in response to it.

But first, two news stories to keep an eye on.  First, even Chris Matthews has come out against the HHS on religious liberty grounds.  Which means it’s not just conservatives who are concerned here.

Second, the White House is floating language about a compromise because of the backlash.  That’s good news.

For the backstory, read Michael Brendan Dougherty, who has brought the A-game to this issue.  This question seems exactly right:

Isn’t this a case of conflicting rights? 

Yes, basically. Proponents of the regulation say that women of all faiths have a right to health-care and the way we provide health-care in this country is through employer-based health insurance. If contraception and sterilization and all these other things are health-care, then employers have to provide it. To them this is a simple uncontroversial idea, hindered only by the dogmas of a medieval Church.

The discussion last week centered on the question of whether it is an infringement of religious liberty to require religious institutions to pay for things they are morally opposed to.  One of my favorite commenters, “Christian Lawyer,” suggested that it was not on grounds that such institutions won’t actually be paying for contraception:

When paying salary, the funds flow from the university to the employee, who then chooses how to spend the money. Thus, no one argues that a Catholic university is being required to “fund” or “pay for” contraception when one of its employees uses their salary from the University to make such a purchase. The university’s religious liberty does not extend to dictating how funds are used once they are provided to a non-ministerial employee as salary because the funds go out of the control of the employer and into the control of the employee.

Health insurance is another form of compensation provided to an employee. Employer-sponsored or -provided insurance policies are a form of non-monetary compensation in which the employer contracts with an insurance company and pays a portion of the premiums to the insurer, which holds the money to be paid out only as directed by the employee. We know that this non-monetary form of compensation is substantively and legally no different from monetary compensation (salary) because, without the specific exemption in the IRS Code, the employer-paid cost of the health insurance policy would be taxed as ordinary income to the employee even though the employee receives it in the form of non-monetary insurance benefits.

Even if the government requires the employer to make arrangements for an insurance plan that covers contraception, there is no funding that ever flows from the employer to the actual provider of the contraceptives or abortion. The insurance company is not “providing” contraception. It merely holds the funds (or benefits) controlled by the employee. Thus, funds only go from the insurer to the actual provider of contraception if the employee so directs.

This is about as good an argument as you’re going to see on this, quite frankly.  Solid work, of the sort that makes me love Mere-O that much more.

But–and you certainly knew this was coming, didn’t you?–I don’t think it’s successful.   It’s absolutely true that Catholic employees can take their salary and do whatever they want with it (within the bounds of the law) without their employers saying, well, anything.

But the question of insurance funding is different:  while the decision to activate that particular part of the insurance plan might lie with the employee, the funds come directly from the employer.  The insurance company is simply a mediator, and as such has no moral significance (it seems to me).  It is the employer who presents the plan to the employee and outlines the benefits, the employer who has (or had, anyway) final say over what benefits get covered, and the employer whose money goes into the account to pay for it.  The actual insurance company serves at the will of the employer, which is why employers are frequently shopping companies trying to get better rates and packages for their employees.

Consider the parallel case of 401ks.  Employers are the “plan trustees,” but they are almost universally run and sourced by third parties.  But as the trustees, the employer funds them, approves the fund choices, etc. and so is materially responsible for their operation.   If, for instance, employers do not provide sufficient education for employees around investment options, the employer can be subject to lawsuit.

Insurance benefits function very similarly.  As such, it is absolutely the case that the regulation is forcing Catholic employers to pay for contraceptives–even if such contraceptives have to be requested by employees.

Let’s go at it this way, in case the argument hasn’t taken hold yet:  when an employees insurance covers something, who pays for it?  The insurance company or the employer?   The fact that insurance counts as non-monetary compensation within the tax code doesn’t much matter, as when such compensation is delivered in the form of contraceptives (or insurance checks paying for contraceptives) it’s still the employer writing the check.  To put it differently, the non-monetary compensation is compensation from the employer, not the insurance company who is managing the plan.

The money might end up in contraception one way or the other, if employees go spend their monetary compensation on it in the open market.  But when it comes to how it’s being paid for and who is footing the bill, the  difference in agency makes all the difference in the world.