The American Health Care Act (v. 1.0) famously went down in flames before it could even get to a vote in the House. The Republicans, perhaps to make Nick Bagley’s sabbatical less of a sabbatical, continue to keep “health care reform” on their agenda. (I joke about what their agenda does to Nick Bagley’s sabbatical because what it does to people with preexisting conditions, or people with family or friends with preexisting conditions, or people who depend on Medicaid is not really amenable to jokes. Imagine what it is like to be on edge wondering if your now affordable health care, and now attainable health insurance, is constantly teetering on the edge of being yanked away from you.)
The last week or so of AHCA talk comes despite the President’s not-too-distant tweets that he planned to sit back, watch, and do nothing while health care costs and insurance coverage imploded. It appears his other (contradictory) tweets, in which he insisted that “repeal and replace” talks are continuing, were correct.
What has emerged is something of a Schrödinger’s cat of health care reform. The President insists that the AHCA “tak[es] care of preexisting conditions.” (It doesn’t, at least not in any meaningful way.) And on Monday, the President stated that the bill was “not in its final form,” even though the administration hopes to hold a vote on the bill soon.
I thought I'd use the return of the AHCA to follow up on two quick things from my prior post on the AHCA. My prior post explained how all of the “constitutional” arguments that were made about the ACA’s minimum-coverage requirement applied to the AHCA’s version of the minimum-coverage requirement, and revealed the arguments against the ACA as something that had all the hallmarks of empty formalism. Whereas the ACA gave everyone the choice between purchasing minimum health care coverage or paying a tax penalty to the federal government, the AHCA would give everyone the choice between purchasing minimum health care coverage now, or paying 30% more for coverage later.
One backward-looking follow up, and one forward-looking one. The backward-looking follow up is that my prior post neglected to mention that the ACA was not the first proposal to require individuals to obtain minimum health care coverage. Before the ACA did so, the Heritage Foundation had floated the possibility of a mandate. Yes that would be the same Heritage Foundation that was so sure the ACA’s minimum coverage requirement was unconstitutional. Item 2 on the Heritage plan was to “mandate all households to obtain adequate insurance.” (Item 2 appears on page 6 of the linked document.) The Heritage plan would have require[d] “all households to protect themselves from the potentially catastrophic costs of a serious accident or illness.”
The forward-looking follow up is in response to a question from a reader. A reader asked whether the AHCA’s mandate, like the ACA’s mandate, could be “saved” by construing it as a tax. In National Federation of Independent Business v. Sebelius, the Chief Justice (infamously?) wrote that although Congress lacked the power under the commerce clause and Necessary and Proper Clause to impose a monetary penalty on individuals for failing to obtain health insurance, Congress could impose a tax penalty on individuals for failing to obtain health insurance. (Ilya Shapiro and Randy Barnett have argued that this reasoning is part of what led to Donald Trump being elected President.)
The answer is almost certainly that the AHCA’s mandate could not be “saved” by construing it as a tax as the Chief Justice did with the ACA in NFIB. The AHCA imposes a penalty on individuals who have not purchased health insurance the year before, and directs that the penalty (30 percent of the monthly premium rate that would otherwise be applicable) be paid to insurance companies when an individual goes to purchase health insurance.
That’s not a tax under NFIB. In NFIB, the Chief (and Justices Ginsburg, Breyer, Sotomayor, and Kagan) reasoned that the ACA’s minimum-coverage requirement could be read as a tax because it was “paid into the Treasury” (the AHCA penalty isn’t); was paid by “ ‘taxpayers’ when they file their tax returns” (the AHCA penalty isn’t); the amount of the payment was tied to taxation-related factors, such as taxable income (the AHCA penalty isn’t); and the requirement was in the Internal Revenue Code and enforced by the IRS, which assessed the penalty “in the same manner as taxes” (that’s not how the AHCA works).
So no, the AHCA could not be read as a tax. I guess that means the AHCA’s drafters were really sure that NFIB was wrong to suggest that Congress lacked the power to impose a monetary penalty for failing to purchase health insurance.