Most of the reporting on the Supreme Court's ruling this morning in National Federation of Independent Business v. Sebelius, No. 11-393 (June 28, 2012), naturally focuses on the immediate bottom line: The Court, by a vote of 5-4, upheld the "individual mandate" provision under which all adults are supposed to have health insurance, and many of those who don't purchase it (and don't have it under some group plan) will have to pay a penalty with their federal income taxes, and by a different vote, 7-2, held that the provision under which the federal government could withhold its Medicaid payments from states that do not comply with the statute's expansion of eligibility for Medicaid to a significant portion of the uninsured adults was NOT authorized under the Spending Clause because it was unduly coercive. At the same time, by a 5-4 vote, the Court holds that striking down this aspect of the Medicaid expansion does not require striking down any other part of the statute.
So, "Obamacare" survives in some form – but the question is, what form? How much repair work will Congress have to do prior to 2014 to patch up the damage to the economic assumptions underlying the overall bill as a result of the possibility that some – maybe many – states will decide to opt out of Medicaid expansion? How much of the goal of achieving near universal health insurance coverage for the American population may be defeated by this loss, and to what extent will the treatment expenses of the uninsured individuals detract from the overall goals of reducing the pressure on private insurance premiums driven by the requirement that hospitals render care to uninsured individuals?
And – although this may sound too much like "inside baseball" stuff to the general public, how much damage did today's opinions do to Congress's power to address economic issues through the Commerce Clause? Roberts and the joint dissenters (Scalia, Kennedy, Thomas, Alito), making up a majority of the Court, agreed that Congress did NOT have power under the Commerce Clause to adopt the individual mandate provision. They accepted the argument, as framed by challengers of the law, that Congress's authority to "regulate commerce" does not include the authority to require individuals to purchase health insurance policies, because, they said, the Commerce power is limited to regulating "activity" and not purchasing health insurance is being inactive, not active.
Justice Ginsburg, writing for four, aptly observes that the individual mandate has to be considered as part of an overall legislative package that does regulate commerce, as that concept has been developed in Supreme Court rulings since the 1930s, by imposing various regulations on the business of health insurance, and under the Necessary and Proper Clause of the Constitution, the individual mandate is authorized as an essential component of the overall regulatory package. The requirement that insurers sell to anybody who applies and set premiums without regard to individual medical history is unworkable economically unless virtually everybody is required to buy insurance, otherwise healthy people will decide to save the money on premiums and wait to buy insurance until they have an expensive medical problem. Her argument under the Commerce Clause that "self-insuring" is an activity is a bit less convincing, but her argument bringing in the Necessary and Proper Clause is very convincing.
Here's an attempt to summarize, given the somewhat complicated lineup of voting:
5 out of 9 (Roberts, Scalia, Kennedy, Thomas, Alito) ruled that Congress DOES NOT have power under the Commerce Clause to impose a financial penalty on individuals who fail to purchase health insurance policies
7 out of 9 (Roberts, Scalia, Kennedy, Thomas, Alito, Breyer, Kagan) ruled that Congress can't require the states to expand coverage of their Medicaid programs if they want to continue receiving any federal subsidy. (At present, the federal government picks up more than half the cost of state Medicaid programs, all of which might be forfeited by any state that doesn't agree to the expansion.)
4 out of 9 (Scalia, Kennedy, Thomas, Alito) would have found the entire statute unconstitutional
4 out of 9 (Ginsburg, Breyer, Sotomayor, Kagan) would find that Congress DOES have the power under the Commerce Clause to adopt the individual mandate
5 out of 9 (Chief Justice Roberts, Ginsburg, Breyer, Sotomayor, Kagan) find that the individual mandate can alternatively be characterizing as a "tax" and thus Congress has authority to adopt it under its power to impose taxes on individuals
2 out of 9 (Ginsburg and Sotomayor) find that under the Spending Clause Congress CAN amend the Medicaid program to cover more people and require states to comply if they want to continue participating in the program and receiving federal subsidies.
What concerns me most is the 5 member majority limiting the scope of Congress's power to address economic issue under the Commerce Clause, although I also agree with Justice Ginsburg that the majority's limitation of the Spending Power in this case is inappropriate. As she points out in detail, Congress has amended the Medicaid program several times to expand coverage since its original enactment in 1965, and each time it has required states to comply with the expanded coverage requirements in order to continue participating. In that sense, what Congress did in 2010 was not really new, albeit the size of the expansion was quite large.
Bottom line – a mixed result. On the level of politics and policy, more good than bad. On the level of Constitutional doctrine, problematic.