Today’s the big day. Supreme Court day. Decision day. Individual mandageddon. Or is that individual mandategeddon?
Larry Tribe, the Harvard law professor who taught both Barack Obama and John Roberts, says the mandate will be upheld. So does Tom Goldstein of SCOTUSblog. And Linda Greenhouse of the New York Times. Ed Whelan of the National Review says it’s gone. A poll of former Supreme Court clerks backs him up. Ex-Solicitor General Walter Dellinger says the Court will split the difference. Orin Kerr, a former Kennedy clerk, makes a convincing argument that the Supreme Court will never give you up, never let you down, never run around and desert you.
I have no idea how the Supreme Court will rule. But I do have a prediction: given the ways they’re likely to rule, what will really matter for the Affordable Care Act is who the next president is.
Broadly speaking, there are three ways the Supreme Court could go today. They could uphold the law. They could overturn the mandate, and perhaps some related regulations. Or they could overturn the whole law. (Note that there’s a separate case on the Medicaid expansion, but most experts think that one a pretty easy win for the administration, and so in this analysis, I’m just talking about the individual mandate challenge.)
If the Supreme Court overturns the whole law, all bets are off. But most observers think that’s a fairly unlikely outcome.
If the Supreme Court overturns the mandate and some related regulations, then the law is missing its core regulations of the insurance markets. But it retains most everything else, from its subsidies to its cost controls to its delivery-system reforms. If Mitt Romney is then elected president, he’ll almost certainly repeal the remainder. But if Barack Obama is reelected president, the law survives. And, even without the mandate, it begins providing insurance to tens of millions of people in 2014, at which point there is no way Congress wil be able to remove it. So, eventually, Congress and the president will have to figure out some way to make the law work, either by replacing the mandate with other policies or by using waivers to kick the issue to the states.
If the Supreme Court upholds the law, then the law is unchanged. If Barack Obama is reelected, it goes into effect as written. But if Mitt Romney is elected, it is likely to be fully or substantially repealed before it goes into effect in 2014.
So, in the long-run, whether the law is fully upheld or the mandate is overturned matters considerably less than who the next president is.
Now, I want to be clear on this: That’s not to say it would be inconsequential for the Court to overturn the mandate. It would be a huge blow to the law, and, assuming an Obama victory, it would ensure a much more difficult, uncertain, and lengthy implementation process as Congress gridlocks over how to fix it. But if the law survives to 2014, then it’s ultimately going to survive. And barring a much more radical ruling today than most observers are expecting, what will be most decisive to whether it survives is whether Mitt Romney or Barack Obama occupies the Oval Office in 2013.
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Top story: The big day
The Supreme Court will decide the future of American healthcare today. “The Supreme Court is expected to issue a decision sometime after 10 a.m. Thursday in a lawsuit brought by 26 states and the National Federation of Independent Business that challenges the constitutionality of the Affordable Care Act…Chief Justice John Roberts and his fellow justices could side with the president and allow the law to take root as intended by Congress. But the Supreme Court may elect to overturn the entire law, or just components of it, and in the process destroy or at least derail the most ambitious effort ever taken to address the shortcomings of the American health care system.” Jeffrey Young in The Huffington Post.
@pourmecoffee: My cousin works at Kinko’s and he said Justice Roberts was making copies of decision and left one and Obamacare is upheld.
Meet Lyle Denniston, the man who will probably tell you what happens. “Lyle Denniston is an 81-year-old retiree with three children and six grandchildren. In his free time, he enjoys sailing. And on Thursday, Denniston expects to tell a quarter-million Americans — including the most devoted court-watchers — whether the health-care law still stands. Denniston works for SCOTUSBlog, a Web site that, for the past two years, has live-blogged the release of Supreme Court opinions. On a good day, it used to attract 1,500 readers, usually Washington-based lawyers. As the Supreme Court’s decision on health care has neared, SCOTUSBlog’s traffic has exploded. It hit 70,000 concurrent viewers last Thursday and 100,000 on Monday. On Thursday, when the Supreme Court hands down its health-care decision, SCOTUSBlog expects 250,000 readers. It’s Denniston’s job to tell them the outcome, and do it quickly. ‘It’s our number one ambition to be first and beat everybody,’ Denniston says.” Sarah Kliff in The Washington Post.
Here’s Lyle’s guide to reading the ruling. “If the Court rushes out an opinion, it might not have a headnote with it. But, with the health care decision having been under study for three months, there very likely will be a headnote. It will have a quite brief opening section that provides background facts about the controversy, and briefly recites how lower courts ruled on it. The thing to look for next is the truly vital part of the headnote: it usually begins with the word ‘Held,’ written in italics, followed by a colon. That is supposed to tell, in brief form or in several paragraphs, just what legal conclusion or conclusions were drawn by the controlling number of Justices.” Lyle Denniston in SCOTUSblog.
The Kaiser Family Foundation also has a guide: http://bit.ly/L3iFqG.
@RyanLizza: If fed mandate is struck down & indiv. states respond by passing state-level mandates to patch ACA, what’s Romney/GOP position on that?
@sahilkapur: If SCOTUS axes just the ACA mandate it’d be the Chamber of Commerce’s first defeat this term.
If Obamacare falls, some will push single-payer. ”If the Supreme Court strikes down the individual mandate on Thursday, states are left with a vexing question: What next? A liberal coalition in California wants to make the answer single-payer…While a single-payer system may be a pipe dream in Washington–almost certain to stall in Congress–that’s not necessarily the case in California…Here’s how the thinking goes: If the individual mandate falls, but the rest of the law stands, California still expects to receive a big pile of money to expand insurance coverage. The state has the highest number of uninsured people anywhere, meaning it will get one of the biggest funding boosts. For the Medicaid expansion alone, between 2014 and 2019, the state expects to receive $55 billion. If California got the necessary waivers from the Obama administration, it could pool those dollars with existing funds to lay a foundation for a single-payer health care system.” Sarah Kliff in The Washington Post.
GOLDSTEIN: The mandate will be upheld. ”In the end, you have to make a prediction and take responsibility for it. I believe the mandate will not be invalidated tomorrow. Far less important, I expect the principal opinion will be written by the Chief Justice; a majority of the Court will find it has jurisdiction; and the challenge to the Medicaid expansion will be rejected. Most observers disagree. There are certainly good reasons to believe the Court will invalidate the mandate. Most important, at the oral argument, the questions of two critical Justices – Justice Kennedy and the Chief Justice – were on the whole critical of the mandate’s constitutionality. But in the end, based on the entire mix of information I have, I think the mandate will not be struck down tomorrow…My level of confidence isn’t overwhelming, but it’s good enough to give a concrete prediction. We’ll see.” Tom Goldstein in SCOTUSblog.
WHELAN: The Court will strike down the mandate 5-4. ”I’ve abstained up until now from making any predictions on how the Obamacare cases will be decided. But I’m now ready to offer my own reading of the tea leaves. Specifically, the fact that Justice Scalia read his dissent from the bench in the Arizona immigration case leads me to believe that the Court will invalidate the individual mandate by a 5-4 vote…It seems very likely that the Chief Justice is the author of the lead opinion in the Obamacare cases. Among other things, he is the only justice not to have issued a majority opinion from the March and April sittings. Also, he has written only six majority opinions so far this term, when nearly everyone else is at seven or eight…If the Chief Justice were authoring an opinion upholding the individual mandate and if Scalia were dissenting from that holding, Scalia, as the senior justice in dissent, would have the prerogative to assign himself the lead dissent. I don’t see why he would pass over that option.” Ed Whelan in National Review.
GREENHOUSE: The Arizona case was a major reaffirmation of federal authority. Is healthcare next? ”The most useful way to read a Supreme Court decision, I figured out years ago, is to start with the dissents. That way, you can proceed to the majority opinion as a better informed reader, with the full range of possibilities in view: What arguments did the majority reject? Which did it respond to, and which did it not even bother to acknowledge? Most important, what was the disagreement really about? Taking that approach to the Arizona immigration decision the court issued on Monday, it is pellucidly clear from the dissenting opinions of Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. that Arizona lost big and that the decision amounted not to the split decision of early news reports but a major reaffirmation of federal authority…All of which, of course, leads to the question: what about the health care decision?..It’s undoubtedly foolhardy to repeat my prediction that the court will uphold the law. Well there, I just did.” Linda Greenhouse in The New York Times.
@ezraklein: Observation: A few days ago, CW seemed much more certain the mandate would be overturned. But nothing has changed between now and then.
But experts aren’t very good at predicting Supreme Court cases: http://wapo.st/L3hlUK.
COHN: If the mandate falls, the Affordable Care Act remains. ”A ruling that invalidated the mandate only would not be catastrophic: Fewer people would end up with insurance and the program, as a whole, would be less efficient. But the core elements of the system would remain in place, people with pre-existing medical conditions would finally have access to comprehensive coverage, the deficit would actually end up slightly lower, and people making less than four times the poverty line (about $90,000 a year for a family of four) would pay the same as they would if the mandate were still in place. A ruling that invalidated the mandate and the insurance reforms would be significantly worse. But, even then, key parts of the law would remain. Chief among them would be the expansion of Medicaid to all people making less than 133 percent of the poverty line, which would effectively establish universal health insurance for the poor. The point is that these provisions are worth defending.” Jonathan Cohn in The New Republic.
TRENDE: All of Obamacare could be thrown out. ”I do wish to emphasize that there’s also a substantial chance that the court will strike down the entire law, contrary to what almost all news outlets have reported recently. This issue turns around the arcane question of severability, and there’s a reason CNN Legal Analyst Jeffrey Toobin called the arguments on this issue a ‘plane crash’ for the government (as opposed to a mere ‘train wreck’ after the arguments on the mandate). Basically, laws typically include a severability clause specifying that if any portion of the law is struck down as unconstitutional, the remainder should survive. But Congress didn’t include a severability clause in the health care law…It isn’t at all clear how well these other pieces work without the individual mandate, nor is it obvious how the justices are supposed to decide what stays and what goes.” Sean Trende in Real Clear Politics.
CASSIDY: The right has already won. ”On the eve of the Supreme Court’s decision on Obamacare, here’s a message to all the conservative activists out there, for whom this day has been a long time coming: Hats off to you! Unlike many of your opponents, you know how to build and sustain a political movement. No, really: I mean it. Though the case against Obamacare that the Court is considering is a legal travesty, lacking in serious foundation, the moment is truly momentous. After thirty years of organizing, strategizing, and mobilizing, the conservative counter-revolution may be about to win its biggest victory yet: the striking down of a massive new government program, and, equally important, the overthrowing of a legal doctrine that Administrations of both parties have relied on for seventy years to regulate the economy.” John Cassidy in The New Yorker.
BERNSTEIN: The substance really, really matters. The spin doesn’t. ”What happens at the Supreme Court tomorrow is not being overhyped: it really is that important. But a lot of what you may hear tomorrow will be spin from both sides about the political meaning of the outcome — and even worse, reporting and commentary on that spin. Ignore it. Dig deep here for the substance, because it really is more consequential than the shouting matches would lead you to believe. The Court’s decision will matter, substantively, in two ways. First, depending on what the Court says, either millions of people will soon be able to get health insurance, or they won’t…The second way this will matter substantively is about the Constitution. The Court may take a major step towards implementing an agenda of returning the Constitution — and the government in general — to how it was before the New Deal. Or it may re-affirm current Constitutional precedents.” Jonathan Bernstein in The Washington Post.
1) KLEIN: The Republican Party no longer supports universal health care. “Whatever the fallout from the Supreme Court decision on the Affordable Care Act, the two parties have clearly laid out their health-care platforms for 2012. The Democrats’ commitment is to provide every American with health insurance. The Republican Party’s commitment is to prevent any American from being forced to have health insurance. It wasn’t always this way…The battle over the Affordable Care Act has largely distracted voters from this tectonic shift in the Republican Party. Yet unlike in past elections, in which even the most conservative Republicans argued that we should ‘ensure that all Americans would have affordable, quality, private health coverage,’ voters this year will choose between one party that supports universal health care and one that doesn’t, with health insurance for as many as 50 million voters hanging in the balance.” Ezra Klein in Bloomberg.
2) DELONG: Markets seem to expect a depressed economy for the next decade. “A normal US economy has a short-term nominal interest rate of 4%. Since the ten-year US Treasury bond rate tends to be one percentage point above the average of expected future short-term interest rates over the next decade, even the expectation of five years of deep depression and near-zero short-term interest rates should not push the 10-Year Treasury rate below 3%. Indeed, the Treasury rate mostly fluctuated between 3% and 3.5% from late 2008 through mid-2011. But, in July 2011, the ten-year US Treasury bond rate crashed to 2%, and it was below 1.5% at the start of June. The normal rules of thumb would say that the market is now expecting 8.75 years of near-zero short-term interest rates before the economy returns to normal. And similar calculations for the 30-year Treasury bond show even longer and more anomalous expectations of continued depression. The possible conclusions are stark.” J. Bradford DeLong in Project Syndicate.
3) KRUGMAN AND LAYARD: The response to economic malaise should be grounded in economic sense. “More than four years after the financial crisis began, the world’s major advanced economies remain deeply depressed, in a scene all too reminiscent of the 1930s. The reason is simple: we are relying on the same ideas that governed policy during that decade. These ideas, long since disproved, involve profound errors both about the causes of the crisis, its nature and the appropriate response. These ideas have taken root in the public consciousness, providing support for the excessive austerity of fiscal policies in many countries…As a result of their mistaken ideas, many western policy makers are inflicting massive suffering on their peoples. But the ideas they espouse about how to handle recessions were rejected by nearly all economists after the disasters of the 1930s. It is tragic that in recent years the old ideas have again taken root.” Paul Krugman and Richard Layard in The Financial Times.
4) FELDSTEIN: Monetary stimulus will no longer work. “The United States Federal Reserve’s recent announcement that it will extend its ‘Operation Twist’ by buying an additional $267 billion of long-term Treasury bonds over the next six months – to reach a total of $667 billion this year – had virtually no impact on either interest rates or equity prices. The market’s lack of response was an important indicator that monetary easing is no longer a useful tool for increasing economic activity…The Fed is unlikely to be able to reduce long-term rates any further. Their level is now so low that many investors rightly fear that we are looking at a bubble in bond and stock prices. The result could be a substantial market-driven rise in long-term rates that the Fed would be unable to prevent. A shift in foreign investors’ portfolio preferences away from long-term bonds could easily trigger such a run-up in rates. Moreover, while the Fed’s actions have helped the owners of bonds and stocks, it is not clear that they have stimulated real economic activity.” Martin Feldstein in Project Syndicate.
5) BARTLETT: With a full board, the Fed can finally act. “Fed Chairman Ben Bernanke noted that this is the first time during his chairmanship that the seven member board has been at full strength. This may have important implications for the future course of monetary policy…It is almost a certainty that he will get resistance from the regional bank presidents regardless of what he proposes. But if they are convinced that the board members stand in unison, the bank presidents are less likely to make waves since they know the chairman has the votes to win. It is my belief that the Federal Reserve Board vacancies of the last 6 years are a key reason why the FOMC has been so reluctant to act in the face of declining inflation, sluggish growth, and high unemployment. Now that the board is finally at full strength, the stage may be set for the long-awaited move by the FOMC toward aggressive monetary easing, perhaps through unconventional channels.” Bruce Bartlett in The Financial Times.
6) ROACH: A export-driven recovery is a unstable recovery. “Yes, the US economy has been on a weak recovery trajectory over the past three years. But at least it’s a recovery, claim many – and therefore a source of ongoing resilience in an otherwise struggling developed world. Unlike the Great Recession of 2008-2009, today there is widespread hope that America has the capacity to stay the course and provide a backstop for the rest of the world in the midst of the euro crisis. Think again. Since the first quarter of 2009, when the US economy was bottoming out after its worst postwar recession, exports have accounted for fully 41% of the subsequent rebound. That’s right: with the American consumer on ice in the aftermath of the biggest consumption binge in history, the US economy has drawn its sustenance disproportionately from foreign markets. With those markets now in trouble, the US could be quick to follow.” Stephen Roach in Project Syndicate.
Early 00s ‘nostalgia’ interlude: Dixie Chicks cover Stevie Nicks’ “Landslide” at The Kodak Theatre.
Got tips, additions, or comments? E-mail me.
Still to come: Europe has reached the summit; new rules still stop ER debt collections; some student loan subsidies will end; a highway bill at last; and a baby rhino checks out all the cool new things in the world.
The E.U. summit starts today. “The leaders of Spain, Italy and France are expected to pitch ideas for easing the crisis that will be mostly deflected by German Chancellor Angela Merkel, whose country would finance most of them…The leaders will discuss how euro-zone economies can move toward tying their budgets and banking systems closer together based on a report put together by senior European Union officials. But markets aren’t optimistic about major progress…Officials and analysts said Ms. Merkel is coming under more direct pressure at top-level meetings as the crisis gets worse and since the departure of former French President Nicolas Sarkozy, who had helped keep proposals strongly opposed by Berlin off the table at summits.” Gabrielle Steinhauser and Stephen Fidler in The Wall Street Journal.
Plans for a banking union are facing some resistance. “Poland and the Czech Republic are deeply concerned about the banking union being proposed at Thursday’s EU summit, with the Czech premier warning on Wednesday that his country would not accept a measure that could be ‘extremely damaging’ for its economy. The warning from Petr Necas reflects anxiety across central Europe that the region could be hurt by the creation of a common system of banking regulation and deposit insurance aimed at shoring up the EU banking system…The reason is the high level of foreign bank ownership in countries such as the Czech Republic, where almost 90 per cent of the banking sector is owned by west European banks, and Poland, where the proportion is about two-thirds. Banking regulators worry that pan-European regulation would make it easier for parent banks to drain liquidity from their often well-funded central European subsidiaries – potentially causing economic problems in the countries where these are based.” Jan Cienski and Neil Buckley in The Financial Times.
A housing recovery may finally be here. “Announcements of a housing recovery have become a wrongheaded rite of summer, but after several years of false hopes, evidence is accumulating that the optimists may finally be right. The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames…Like the economic recovery that began three years ago, what happens next is likely to prove a little disappointing. The pace of recovery will probably be slow, and the prices of many homes will continue to decline. But roughly six years after the housing market began its longest and deepest slide since the Great Depression, a growing number of experts and people who actually put money into housing believe the end has come.” Binyamin Appelbaum in The New York Times.
@fivethirtyeight: Are there hipster economists who only use vintage economic data?
Time lapse interlude: A trip around the world with a little help from NASA.
Many federal firefighters don’t have health insurance. “Right now, wildfires of ‘epic proportions’ are tearing through the Colorado forests. Thousands of federal firefighters charged with taming the blazes do not have health insurance…Many federal firefighters are temporary employees, who only work six months out of the year (although as Lauer describes it, they can often work a full year’s worth of hours with the long shifts). Under federal regulations, temporary employees of the Forest Service do not receive benefits. That means no health care and no retirement pension…The Affordable Care Act-if survives the Supreme Court Thursday-could help. It would guarantee access to health insurance for a firefighter who, for example, might have bronchitis. Many earn relatively low salaries, about $25,000 to $35,000 per year, meaning they would qualify for subsidies. If the law gets overturned, however, the firefighters stay in the same situation they’ve been in all along: Working a dangerous job and unable to afford coverage.” Sarah Kliff in The Washington Post.
New rules will stop ER debt collections at charitable hospitals. “Deb Waldin was in pain when she arrived at the emergency room of Fairview Health Services, a nonprofit hospital system in Minnesota. On a scale of 1 to 10, she says she was at 12. She turned out to have kidney stones. But before she got the diagnosis, when she was still lying on a gurney, waiting to see a doctor, she was approached by a debt collector from a company called Accretive Health…On Friday, the U.S. Treasury Department released new proposed rules to protect patients from abusive debt collection practices at nonprofit hospitals. The rules were required by the 2010 federal health law. In releasing the rules, the Obama administration alluded to stories like Waldin’s…Three out of five hospitals in the country are nonprofit. The rules say these charitable hospitals must give patients a clear explanation of how they can get free or reduced-cost care. Then the hospitals have to give patients at least eight months to apply for it.” Jenny Gold in Kaiser Health News.
Congress is set to pass corporate pension reform this week. “US companies with large pension deficits – mostly industrial groups such as steelmakers – will be bolstered by legislation that is expected to be approved by Congress this week. A measure to stabilise the funding of corporate pensions is being used as a way to cover the cost of a two-year bill to fund road construction and a one-year bill to freeze interest rates on student loans. Talks on Capitol Hill were in their final stages on Wednesday evening and a deal was imminent, congressional aides said. The pension provision, if enacted, would give a reprieve to US groups forced to raise the value of their pension fund liabilities by the marked decline of interest rates since 2008. If approved, the change would reduce the amount of money companies have to pay into their defined benefit pension plans. In turn, that stands to boost their taxable income and so bolster government tax revenues.” Michael Mackenzie and James Politi in The Financial Times.
Two subsidies for student loans end this weekend. “Even as Congress moves to prevent undergraduate student loan rates from doubling, lawmakers have decided to eliminate two federal subsidies that will increase the cost of higher education. One would hit the same college students who are benefiting from the interest rate freeze. Though their rates will be only 3.4 percent, they will be responsible for paying that interest as soon as they throw their graduation caps in the air — a change that is expected to cost them more than $2 billion. Meanwhile, students hoping to earn the advanced degrees that have become mandatory for many white-collar jobs will no longer be eligible for federally subsidized loans. That means graduate students are facing an $18 billion increase in interest rate payments over the next decade, about three times the amount at stake in the debate over undergrad interest rates. Both measures will take effect Sunday.” Ylan Mui in The Washington Post.
@rortybomb: Why are we dropping student loan initial 6 month grace period when unemployment for students graduating college was 9.4% last year?
Baby rhinos are really cute interlude: Indonesia’s Sumatran Rhino Sanctuary has a a rare baby Sumatran rhino.
Congress reached a transportation bill deal for the first time since 2005. “Congress has reached an agreement on a transportation bill for the first time since 2005, averting a crisis that could have disrupted the nation’s highway projects at the height of the construction season. In the final days before a deadline, Republicans dropped their demands to piggyback onto the bill approval for the Keystone oil pipeline, as well as relaxation of proposed restrictions on coal ash produced by power plants. In return, Democrats gave up on $1.4 billion for conservation and agreed to allow states more leeway in how they use money that was once mandated for landscaping, bike improvements and pedestrian walkways…While the details will take several days to emerge, the bill would streamline a federal system that expanded its network of agencies and programs in a patchwork fashion to meet immediate needs, producing a cumbersome bureaucracy that has smothered state transportation projects.” Ashley Halsey III in The Washington Post.
@AdamKSnider: Transpo pun of the day from a GOP aide: “The rumor machine seems to be in overdrive today.”
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.