Judge Barrett Confirmed; What’s Next for Obamacare?COVID-19
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Judge Barrett Confirmed; What’s Next for Obamacare?
This is my non-stimulus update for Tuesday, October 27.
Why “non-stimulus” update? Well, there’s frankly not a whole lot going on in the world of stimulus right now, we’re basically in the home stretch of the election here, one week to go, the House and the Senate are not in session, House has not been for some time, and the Senate went home after Barrett’s confirmation vote last night.
Don’t want to read? Watch the video here!
Yes, as I’m sure you’ve heard, Judge Amy Coney Barrett was confirmed to the Supreme Court last night, 52 to 48. So I’m going to talk about that this morning as well as why Democrats are extremely frustrated about the timing of Barrett’s confirmation, not only so close to an election, but also because they perceive it to be a challenge to the Affordable Care Act A.K.A. Obamacare, I’m going to get into that, what’s next in terms of legal challenges to Obamacare because I’m reading a lot of these articles lately, and it’s kind of just saying, “Oh yeah, the Supreme Court is scheduled to hear arguments on another legal challenge to Obamacare” without really explaining what they mean, but for right now let’s just talk about Judge Barrett’s vote.
Not a single Democrat voted to confirm Barrett, and 52 of the 53 Republicans did, with Susan Collins of Maine, as expected, being the lone Republican who did not support Judge Barrett’s confirmation. This is the first time since December 1869 that a Supreme Court nominee has been confirmed without one vote from a major minority party, and there is now a solid six to three conservative majority on the Court for the first time in eighty years.
And just like that, in one term, Donald Trump has appointed three justices, one-third of the Supreme Court. Three justices in one term.
Obama only appointed two, George W. Bush only appointed two, Bill Clinton only appointed two, George H.W. Bush only appointed two, three justices in one term is the most number of Supreme Court justices appointed in one term since Ronald Reagan appointed Rehnquist, Scalia, and Kennedy in his second term, having appointed Sandra Day O’Connor in his first term. And naturally, Democrats are not happy about this.
They’re pointing back to 2016 when Senate Republicans refused to consider Obama’s nominee, Merrick Garland, because it was an election year, they said, we should let the next president get to pick, and of course the next president was Donald Trump.
Republicans this year said the situation is different because the same party controls the White House and the Senate. Like I said before, let’s just stop playing these games. Obviously both parties want to stack the court with judges that align with their values, and that’s that, right.
But Democrats are pretty agitated right now. Yesterday, Senate Minority Leader Chuck Schumer said that this date, the date of Judge Barrett’s confirmation to the highest court in the land, Schumer said this date will “go down as one of the darkest days in the 231-year history of the United States Senate.”
And the timing of this is especially frustrating to Democrats because on November Tenth, the United States Supreme Court is scheduled to hear oral arguments in the case California versus Texas, which was known as Texas versus United States in lower courts.
So what is this case about? It’s a challenge to the individual mandate under the Affordable Care Act A.K.A. Obamacare.
If you’ll recall, the individual mandate was a rule under the Affordable Care Act that said you must have a minimum level of health insurance coverage, and if you don’t, you must pay a tax penalty to the IRS, you would pay it in with your other taxes on your tax return.
In the Tax Cuts and Jobs Act that was passed in late 2017, Congress said, alright, OK, there’s still this individual mandate, the Obamacare penalty, but guess what starting in 2019, it’s zero dollars. So it effectively, for practical purposes, made the individual mandate obsolete, and this is what led to the current legal battle.
In February 2018, a group of twenty states, led by Texas, sued the federal government, they wanted the entire Affordable Care Act struck down as unconstitutional, long story short, they’re arguing that the individual mandate, which lost all its teeth due to the Tax Cuts and Jobs Act because the tax penalty was set to zero, they’re arguing that the individual mandate was an essential part of Obamacare and that without the tax penalty associated with the individual mandate, the individual mandate no longer produces at least some revenue for the federal government and therefore the individual mandate itself is unconstitutional and therefore the entire Affordable Care Act is unconstitutional.
Well, that’s a logical jump, why would the individual mandate producing at least some revenue for the federal government be related to its constitutionality? That is because in a previous Supreme Court Case, National Federation of Independent Business v. Sebelius, who was named as the defendant in this case because she was Secretary of Health and Human Services at the time, appointed by Obama, and one of the questions in this case was does Congress have the power to implement the individual mandate as it exists or existed in the Affordable Care Act.
The Supreme Court held that yes, Congress does have that power to implement the individual mandate under the Affordable Care Act because it found that the individual mandate is a tax, and Congress has the power under the Constitution to tax.
Why did the Supreme Court find that it is a tax, well, a few reasons, one, payment goes to the United States Treasury when taxpayers filed their tax returns, two, the amount of the penalty was determined by factors such as income, number of dependents, and filing status; three, the penalty was written in the Internal Revenue Code and enforced by the Internal Revenue Service; and four, the penalty produced some revenue for the government. So on that basis, in this previous case, National Federation of Independent Business v. Sibelius, the Supreme Court upheld Congress’ power to enact the individual mandate.
But now the penalty associated with the individual mandate is set to zero and now it does not produce revenue for the federal government, so the plaintiffs in Texas v. United States, now California v. Texas argue, that it is no longer a tax and thus Congress did not have the power to enact it, and therefore the individual mandate is unconstitutional and therefore the entire Affordable Care Act is unconstitutional, that entire ACA is not severable from the individual mandate itself.
So that’s the argument in a nutshell. All twenty of these states were either represented by a Republican attorney general or a Republibcan governor. Due to Democratic victories in the 2018 mid-term elections, Wisconsin and Maine withdrew from the lawsuit, leaving eighteen states left, these are the eighteen states in orange on this map right here.
Two individual plaintiffs, individual persons, eventually joined the lawsuit as well, claiming that the individual mandate forced them to buy health insurance that they would not otherwise purchase. So throughout 2018 and 2019 this case made its way through the courts, and finally in December 2019 the Fifth Circuit Court of Appeals issued a two-to-one decision finding that the individual mandate is in fact unconstitutional and sent the case back to the trial court that originally heard the case to look at whether the rest of the Affordable Care Act can survive, specifically if the individual mandate is unconstitutional, whether it can be separated from the rest of the Affordable Care Act or if the individual mandate is unconstitutional does that mean the entire Affordable Care Act is unconstitutional?
Although these questions were sent back to the trial court, the Supreme Court has agreed to review them, they will review whether the Tax Cuts and Jobs Act, which set the individual mandate penalty to zero, renders the individual mandate unconstitutional, as held by the Fifth Circuit, and if the mandate is unconstitutional, is the entire Affordable Care Act invalid and if so should it be unenforceable nationwide or simply unenforceable with respect to the provisions that injure the plaintiffs in the case at hand.
This case will be argued at the Supreme Court on November 10, two weeks from today, one week after the election, and the decision on this case could come as late as the end of term in June 2021. I hope this was helpful to you, you hear a lot right now, oh the Supreme Court is going to knock down Obamacare, but a lot of these articles they don’t really dig into the details of what’s going on, so that’s what I wanted to talk about today.
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.