As a healthcare lawyer, many friends and acquaintances have asked my opinion on the Patient Protection and Affordable Care Act Supreme Court case. Fortunately, the decision gave me a really easy answer to that question. Although it certainly didn’t break the way I thought it would—or, for that matter, hoped it would—it did vindicate what I have said all along about Obamacare and healthcare reform generally: The Affordable Care Act is much more focused on health insurance reform or health finance reform than it is on healthcare reform. And the Supreme Court case isn’t about healthcare at all; it’s all about the limits—if any—of the federal government’s power.
Obamacare was never about changing the healthcare system: It did not change the basic structure of the delivery system or the regulatory scheme that makes the system so legally challenging to its participants. Instead, it was always about changing the financing mechanism, “doubling down,” if you will, on the current system of private and public insurance paying up front to hedge against the cost of future services.
The financial underpinnings of the U.S. healthcare system, like homeowners insurance, involve a basic “risk pool” approach: payment of a small amount up front, with the vast majority of any expenses incurred paid out of the risk pool if you happen to need the services. Most people won’t need the services, but their unconsumed premium payments provide the funds for those who do need it. Almost nobody buys healthcare a la carte, paying in full for services as they are consumed, as one might do for groceries or dry cleaning. The real problem with the current system is the number of “free-riders” who don’t pay into the risk pool, but count on the fact that they can still receive the services if needed, and not be required to pay.
That risk-pool system, with a private (commercial insurance) and public (Medicare, Medicaid, etc.) component, wasn’t changed by Obamacare. Rather, the central focus of the PPACA was to make participating in the risk pool arrangement mandatory for all Americans. In that way, Obamacare isn’t radical; it supports and expands the current system of public and private insurance by attempting to force the free-riders to participate in the private insurance side or, if eligible, join the public insurance side.
Just as the PPACA isn’t about reforming the healthcare system, NFIB v. Sebelius isn’t about healthcare, either. Ultimately, the Supreme Court case was decided on the government’s power to tax rather than it’s power to control interstate commerce; but, regardless, the case was simply about what the government could and couldn’t do when it comes to dealing with the free-riders.
According to five justices, Obamacare (Obamatax?) was beyond Congress’ power under the Constitution’s grant of power to regulate interstate commerce. However, according to five justices (including four different ones), Congress has the ability to tax citizens on the basis of their failure to buy health insurance. The potential breadth of that decision will be debated for some time.
In the end, “healthcare reform” isn’t so much about healthcare as it is health insurance, and the Supreme Court decision isn’t so much about healthcare as it is governmental power.
Oh, and my answer to the question about what the Supreme Court decision meant for healthcare? “Don’t ask me, I’m a health lawyer, not a tax lawyer.”
Jeff Drummond is a partner in the health law section of Jackson Walker. Contact him at firstname.lastname@example.org.