In Rashomon, the classic film exploration of truth, director Akira Kurosawa offers a meditation on the degree to which point of view colors reality.  A Rashomon of sorts played out during the second day of Supreme Court oral arguments on the Affordable Care Act.  For reasons that are not entirely clear other than pure sensationalism, early news reports out of the arguments used words like “train wreck” to describe the reception given the government’s case, clearly implying that the law’s opponents sailed through. But a more reflective summation of the day suggests that both sides experienced intense questioning by an extremely engaged Court.

The Justices appeared to be testing two fundamentally opposing views regarding the purpose and impact of the Affordable Care Act.  As with so much in life, he or she whose version of reality prevails wins the battle.  And without being naïve, I believe that it is far too early to know whose version of events will prevail with the Justices.  Both sides took their lumps, and both received strategic assists along the way; in this vein, Justice Kennedy and Chief Justice Roberts were particularly interesting to watch in their interactions.

Version of Reality #1: The Affordable Care Act Regulates the Health Care Market of Which We All Are a Part

The first version of reality – which reflects the Administration’s view and which drew consistent and energetic support from Justices Breyer, Kagan, Ginsburg, and Sotomayor – is that the Affordable Care Act is all about regulation of the health care marketplace.  Viewed in this manner, the Act becomes a response to several realities:

  • The unique nature of the market as one in which all Americans already participate, the need for which is unpredictable, and that is uncommonly costly, so much so that it is not possible to pay for almost any care any longer at the point of sale (Justice Sotomayor, Tr. pp. 20-21);
  • The spillover economic consequences for all of us when the uninsured use care (Justice Ginsburg, Tr. p. 14);
  • The degree to which American society would recoil from a law that simply excludes the uninsured from the health care market. (Tr. p. 20)
  • The practical and financial unworkability of a financial solution that kicks in only when one is in the ambulance on the way to the hospital and that pays only for immediate and catastrophic services (Justice Sotomayor, Tr. p. 21)

This version of reality leads one to a couple of possible solutions, all of which point to a comprehensive system of advance health care financing that separates the timing of financing from the actual use of health care. (Justice Kagan, Tr. pp. 64-65).  One solution might be a universal system of government insurance, a tried-and-true constitutional approach that essentially extended Medicare to everyone (Justice Kennedy, Tr. p. 24).

An alternative, represented by the Affordable Care Act, is a remedy that relies on a highly regulated private insurance system (thereby reflecting a conservative preference for market solutions) that is open to all and affordably priced.  To get to this second type of solution requires two basic reforms: guaranteed access to health insurance coverage regardless of health status; and prices that don’t discriminate against the sick.  Putting these two reforms into place in turn requires a stable risk pool.

This train of logic flowing from this problem definition results in a minimum coverage requirement that flows directly from the need to stabilize a vast market in health care, of which we are all apart.  The constitutional precedents under both the Commerce Clause and Necessary and Proper Clause are robust, as the government’s briefs and those of dozens of amici demonstrate, because the regulation rests on existing market participation.

Version of Reality #2: The Affordable Care Act Does Not Regulate Individuals’ Economic Conduct in the Health Care Market; Instead, it Forces People into a Vast,  Manufactured Health Insurance Market that Shifts the Cost of Other People’s Care Onto Them

In this version of reality, offered by the challengers and most actively pursued in the questions posed by Justices Alito and Scalia, the Affordable Care Act has nothing to do with regulating an existing economic market.  Instead, it forces the creation of a new market for private health insurance and then forces people into it.  Were the Act really about regulating the health care market, it would zero in on people who actually use health care, creating a narrowly tailored mechanism by which their care would be financed, and only at the point of use.  Furthermore, the financing mechanism used would be limited to the procedures they actually consumed.  In other words, insurance would not be a remedy at all; point-of care purchasing would be.

Because the remedy devised by the Affordable Care Act is one that follows the principles of insurance – the prepayment of care through a broad financing mechanism that covers a wide range of risks – and because the solution is one that establishes a newly regulated insurance product and then forces people into it, the impact of the law, in  this view of reality, goes well beyond the remedies that the Court has recognized as legitimate in the past.  The legal precedents cited by the government lose their relevance, because the solution is the creation of — and forced participation in — an insurance market, not the regulation of individuals’ relationship with the existing health care market:

  • JUSTICE ALITO: [I]sn’t it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume?  It is requiring them to subsidize the services that will be received by someone else. (Tr. p. 10)
  • JUSTICE ROBERTS:  [T]he policies you’re requiring people to purchase involve – must contain provision for maternity and newborn care, pediatric services, and substance use treatment.  It seems to me that you cannot say that everybody is going to need substance use treatment, substance use treatment, or pediatric services, and yet that is part of what you require them to purchase. (Tr. p. 31)
  • JUSTICE KENNEDY:  Can you create commerce in order to regulate it?  (Tr. pp. 4-5)

Furthermore, there is no stopping point once one buys the notion that Congress can create a market in order to regulate it, no limiting principle by which the Court can gauge in the future when Congress has gone too far.  Indeed, every regulated market can be justified as a response to the economic spillover effects of unregulated market practices.  (Chief Justice Roberts, Tr. pp. 38-39).   For this reason, the precedents relied on by the government really are of no use, because they all depend on an existing market, not the creation of a new market.

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What is hard to say after today’s arguments is whose version of reality will carry the day.  It is simply nonsense to spin the day as one side winning and the other side losing.  What emerged in both the transcribed and audio versions of the arguments was a group of intensely focused Justices trying to arrive at what they ultimately will conclude is the correct version of reality, so that legal precedents can be applied. Most interesting to listen to in this regard were Chief Justice Roberts and Justice Kennedy, who moved between the two opposing world views with care.

Editor’ note: Sara Rosenbaum signed two amicus briefs in support of the constitutionality of the ACA’s minimum essential coverage requirement, and was a joint author of a third brief in support of the constitutionality of the statute’s Medicaid expansion. For more on the debate over the constitutionality of the Affordable Care Act’s minimum coverage requirement — or individual mandate — and day two of the Supreme Court’s oral arguments concerning the ACA, see additional Health Affairs Blog posts by Marc Rodwin, William Sage, Alice Noble and Mary Ann ChirbaTimothy Jost, and Wendy Mariner.