The Vindication of John Roberts

At the time of this writing, six “Gruber videos” have been released and “gone viral,” as they say in YouTube land.  These are the videos of course, in which “Obamacare architect” Jonathan Gruber lets the cat out of the bag on the process of enacting the Patient Protection and Affordable Care Act, aka Obamacare, aka The Greatest Consumer Fraud Perpetrated on the American People, Ever.

Of the many Gruber quotes burning up the internet, I was especially struck by this one, to which Charles Krauthammer refers in a recent article:

Gruber said, the bill’s authors manipulated the nonpartisan Congressional Budget Office, which issues gold-standard cost estimates of any legislative proposal:  “This bill was written in a tortured way to make sure CBO did not score the mandate as taxes.”  Why?  Because “if CBO scored the mandate as taxes, the bill dies.”  And yet, the president himself openly insisted that the individual mandate – what you must pay the government if you fail to buy health insurance – was not a tax.

Obviously, writing a bill “in a tortured way” to prevent scoring the individual mandate as a tax is to admit that the individual mandate is, in fact, a tax.

But the Gruber quotation did something else, too, which was to trigger a memory of another, earlier quote (emphasis mine, citation omitted):

In answering that constitutional question [of whether the Affordable Care Act’s individual mandate is a tax], this Court follows a functional approach, “[d]isregarding the designation of the exaction, and viewing its substance and application.”

Such an analysis suggests that the shared responsibility payment [i.e.¸ the individual mandate] may for constitutional purposes be considered a tax.

That quote, of course, comes from the infamous (to conservatives, anyway) John Roberts-authored opinion in National Federation of Independent Business et al. v. Sebelius, Secretary of Health and Human Services, et al. and for which Roberts has been the object of much criticism (to put it mildly) for concluding what Obamacare’s “architect” freely admits in the video clip that Krauthammer quotes.

When competing in the marketplace of ideas with our friends on the left, it is important that we conservatives avoid the logical traps into which our opponents all too often fall.  One such trap is human but nevertheless unfortunate urge to rationalize a circumstance or set of facts – in this case, the Roberts opinion – because of their effect on the achievement of some desired conservative policy objective.

In the case of Obamacare, this writer was, like so many of my fellow conservatives, disappointed in the Supreme Court’s decision upholding the individual mandate.  Like so many conservatives, I realized immediately the practical result of that decision – that the Supremes would not strike down Obamacare in its entirety, that implementation of the ACA would continue.

But unlike many of my friends on the right, I also realized, after reading the opinion, that Roberts got it right, as illustrated by the following example.

Suppose that the IRS calls you in for an audit, and the IRS agent conducting the audit tells you that you owe an additional $1,000 in tax, payable by a certain date, and if you miss that date, you will be assessed a five-percent penalty.  In other words, you can pay $1,000 by the due date or let the date pass and pay $1,050.  Clearly, the extra $50 is a penalty for not paying the $1,000 you are legally required to pay.

But suppose, instead, that the IRS agent tells you that your must pay $1,000 by the due date or $50 if you are late.  Never mind the IRS; given the choice of paying the $1,000 or $50 for anything, what sensible person would consider $50 in lieu of $1,000 to be a penalty?  But that is precisely what happens under the ACA.  Even the maximum “penalty” of $695, when it kicks in, is less, and probably far less, than the cost of insurance.  Actually, the “penalty” would be the higher of $695 (adjusted, in future years, for inflation) or 2.5% of income.  However, there is a cap:  The maximum “penalty” “cannot exceed the national average premium for a Bronze plan [the cheapest plan] offered on a health insurance exchange.  But in any case, per Roberts:

[F]or most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.

Which is not to say that the individual mandate’s purpose is not to persuade individuals to buy insurance.  But, as Roberts notes:

... taxes that seek to influence conduct are nothing new.  Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic industry.

And, to take a more recent example, cigarettes are taxed up the yin-yang to discourage people from smoking.

And finally, there is the question of illegality, a point that many, if not most of Roberts's critics do not address.  But Roberts does (emphasis mine, citations omitted):

While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful.  Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. …

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. ... We would expect Congress to be troubled by that prospect if such conduct were unlawful.  That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws.

And indeed, from the Healthcare.gov website (emphasis mine):

What happens if I don't pay the fee?

The IRS will hold back the amount of the fee from any future tax refunds.  There are no liens, levies, or criminal penalties for failing to pay the fee.

And so we come, full circle, back to the Gruber video, where, again, the “architect” of Obamacare confirms what Roberts said and what this writer believed from the get-go: Roberts got it right.  The individual mandate is a tax.

That’s the bad news for Obamacare opponents.  Now here’s the good news: however disappointing the Roberts opinion was, and is, to Obamacare opponents, it is, nevertheless, a decision we should not condemn and indeed should applaud.  To see why, let’s revisit the Roberts statement I quoted earlier (emphasis mine, citation omitted):

In answering that constitutional question [i.e., whether the individual mandate is a penalty or a tax], this Court follows a functional approach, “[d]isregarding the designation of the exaction, and viewing its substance and application.”

In NFIB v. Sebelius, that meant that if it walks like a tax and quacks like a tax, it’s a tax.  And for the upcoming arguing of King v. Burwell, it means that “an exchange established under Section 1321” of the Affordable Care Act is not “an exchange established under Section 1311.”  It means that a “Gruberesque” writing of legislation “in a tortured way” to make a tax or any other legislative element appear to be, and to be scored by the CBO as, something different from what it actually is will not get far in the Supreme Court, or at least not with John Roberts.

Presumably, then, the odds are good that the chief justice will not be amused when the government argues, in King v. Burwell, that an exchange created under Section 1321 of the ACA Care Act is an exchange created under Section 1311.

On the other hand, this writer will be greatly amused as he savors the delicious irony (and watches liberal heads explode in the White House and on MSNBC) as the very logic that was instrumental in saving the individual mandate in NFIB v. Sebelius leads, ultimately, in King v. Burwell, to the collapse of the entire ACA.

In the meantime, those who castigated John Roberts for his opinion calling the individual mandate a tax, an opinion that the “architect” of the ACA has now confirmed, might want to consider an apology, along with a heaping helping of crow.

Gene Schwimmer is a New York licensed real estate broker and the author of The Christian State.  Follow Gene Schwimmer on Twitter.

At the time of this writing, six “Gruber videos” have been released and “gone viral,” as they say in YouTube land.  These are the videos of course, in which “Obamacare architect” Jonathan Gruber lets the cat out of the bag on the process of enacting the Patient Protection and Affordable Care Act, aka Obamacare, aka The Greatest Consumer Fraud Perpetrated on the American People, Ever.

Of the many Gruber quotes burning up the internet, I was especially struck by this one, to which Charles Krauthammer refers in a recent article:

Gruber said, the bill’s authors manipulated the nonpartisan Congressional Budget Office, which issues gold-standard cost estimates of any legislative proposal:  “This bill was written in a tortured way to make sure CBO did not score the mandate as taxes.”  Why?  Because “if CBO scored the mandate as taxes, the bill dies.”  And yet, the president himself openly insisted that the individual mandate – what you must pay the government if you fail to buy health insurance – was not a tax.

Obviously, writing a bill “in a tortured way” to prevent scoring the individual mandate as a tax is to admit that the individual mandate is, in fact, a tax.

But the Gruber quotation did something else, too, which was to trigger a memory of another, earlier quote (emphasis mine, citation omitted):

In answering that constitutional question [of whether the Affordable Care Act’s individual mandate is a tax], this Court follows a functional approach, “[d]isregarding the designation of the exaction, and viewing its substance and application.”

Such an analysis suggests that the shared responsibility payment [i.e.¸ the individual mandate] may for constitutional purposes be considered a tax.

That quote, of course, comes from the infamous (to conservatives, anyway) John Roberts-authored opinion in National Federation of Independent Business et al. v. Sebelius, Secretary of Health and Human Services, et al. and for which Roberts has been the object of much criticism (to put it mildly) for concluding what Obamacare’s “architect” freely admits in the video clip that Krauthammer quotes.

When competing in the marketplace of ideas with our friends on the left, it is important that we conservatives avoid the logical traps into which our opponents all too often fall.  One such trap is human but nevertheless unfortunate urge to rationalize a circumstance or set of facts – in this case, the Roberts opinion – because of their effect on the achievement of some desired conservative policy objective.

In the case of Obamacare, this writer was, like so many of my fellow conservatives, disappointed in the Supreme Court’s decision upholding the individual mandate.  Like so many conservatives, I realized immediately the practical result of that decision – that the Supremes would not strike down Obamacare in its entirety, that implementation of the ACA would continue.

But unlike many of my friends on the right, I also realized, after reading the opinion, that Roberts got it right, as illustrated by the following example.

Suppose that the IRS calls you in for an audit, and the IRS agent conducting the audit tells you that you owe an additional $1,000 in tax, payable by a certain date, and if you miss that date, you will be assessed a five-percent penalty.  In other words, you can pay $1,000 by the due date or let the date pass and pay $1,050.  Clearly, the extra $50 is a penalty for not paying the $1,000 you are legally required to pay.

But suppose, instead, that the IRS agent tells you that your must pay $1,000 by the due date or $50 if you are late.  Never mind the IRS; given the choice of paying the $1,000 or $50 for anything, what sensible person would consider $50 in lieu of $1,000 to be a penalty?  But that is precisely what happens under the ACA.  Even the maximum “penalty” of $695, when it kicks in, is less, and probably far less, than the cost of insurance.  Actually, the “penalty” would be the higher of $695 (adjusted, in future years, for inflation) or 2.5% of income.  However, there is a cap:  The maximum “penalty” “cannot exceed the national average premium for a Bronze plan [the cheapest plan] offered on a health insurance exchange.  But in any case, per Roberts:

[F]or most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.

Which is not to say that the individual mandate’s purpose is not to persuade individuals to buy insurance.  But, as Roberts notes:

... taxes that seek to influence conduct are nothing new.  Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic industry.

And, to take a more recent example, cigarettes are taxed up the yin-yang to discourage people from smoking.

And finally, there is the question of illegality, a point that many, if not most of Roberts's critics do not address.  But Roberts does (emphasis mine, citations omitted):

While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful.  Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. …

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. ... We would expect Congress to be troubled by that prospect if such conduct were unlawful.  That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws.

And indeed, from the Healthcare.gov website (emphasis mine):

What happens if I don't pay the fee?

The IRS will hold back the amount of the fee from any future tax refunds.  There are no liens, levies, or criminal penalties for failing to pay the fee.

And so we come, full circle, back to the Gruber video, where, again, the “architect” of Obamacare confirms what Roberts said and what this writer believed from the get-go: Roberts got it right.  The individual mandate is a tax.

That’s the bad news for Obamacare opponents.  Now here’s the good news: however disappointing the Roberts opinion was, and is, to Obamacare opponents, it is, nevertheless, a decision we should not condemn and indeed should applaud.  To see why, let’s revisit the Roberts statement I quoted earlier (emphasis mine, citation omitted):

In answering that constitutional question [i.e., whether the individual mandate is a penalty or a tax], this Court follows a functional approach, “[d]isregarding the designation of the exaction, and viewing its substance and application.”

In NFIB v. Sebelius, that meant that if it walks like a tax and quacks like a tax, it’s a tax.  And for the upcoming arguing of King v. Burwell, it means that “an exchange established under Section 1321” of the Affordable Care Act is not “an exchange established under Section 1311.”  It means that a “Gruberesque” writing of legislation “in a tortured way” to make a tax or any other legislative element appear to be, and to be scored by the CBO as, something different from what it actually is will not get far in the Supreme Court, or at least not with John Roberts.

Presumably, then, the odds are good that the chief justice will not be amused when the government argues, in King v. Burwell, that an exchange created under Section 1321 of the ACA Care Act is an exchange created under Section 1311.

On the other hand, this writer will be greatly amused as he savors the delicious irony (and watches liberal heads explode in the White House and on MSNBC) as the very logic that was instrumental in saving the individual mandate in NFIB v. Sebelius leads, ultimately, in King v. Burwell, to the collapse of the entire ACA.

In the meantime, those who castigated John Roberts for his opinion calling the individual mandate a tax, an opinion that the “architect” of the ACA has now confirmed, might want to consider an apology, along with a heaping helping of crow.

Gene Schwimmer is a New York licensed real estate broker and the author of The Christian State.  Follow Gene Schwimmer on Twitter.