'Obamneycare' Revisited: Tax Penalties Most Similar Part, Expert Says

When Mitt Romney was still battling last fall to become the GOP candidate for president, we compared the health care plan he implemented as governor of Massachusetts to the one President Obama signed into law in 2010.

At the time, Romney's role in signing state legislation that required residents to buy health insurance was being used against him by his Republican primary opponents.

They characterized his support as governor of an "individual mandate" as anathema to the party's hard-line opposition to Obama's plan. (Former Minnesota Gov. Tim Pawlenty, now believed to be on Romney's running mate short list, tagged the Massachusetts law "Obamneycare.")

Now that the Supreme Court has weighed in, finding Obama's plan constitutional by viewing the mandate as a tax, constitutionally applied by Congress, we thought we'd revisit that comparison.

And we're looking at Romney's assertion on CBS News that even though the court found that the mandate in Obama's law is a tax, the finding doesn't apply to the state law because ... well, here's how he explained it to the network:

"Actually, the — chief justice, in his opinion, made it very clear that, at the state level — states have the power to put in place mandates. They don't need to require them to be called taxes in order for them to be constitutional. And — and as a result, Massachusetts' mandate was a mandate, was a penalty, was described that way by the Legislature and by me. And so it stays as it was."

We looked at what Chief Justice John Roberts wrote, and believe these may be the sections on which Romney was hanging his argument that even though the Massachusetts mandate is essentially the same as the federal mandate (a penalty assessed on those who have an ability to buy health insurance but don't, and collected by the taxing authority), it isn't a tax because the high court has not weighed in.

The first reference comes after Roberts goes to some length noting the differences between the powers of the federal government and those conferred on the states. Roberts says the federal government "has expanded dramatically over the past two centuries, but it still must show that a constitutional grant of power authorizes each of its actions." And he follows with this:

"The same does not apply to the States, because the Con­stitution is not the source of their power. The Consti­tution may restrict state governments — as it does, for example, by forbidding them to deny any person the equal protection of the laws. But where such prohibitions do not apply, state governments do not need constitutional au­thorization to act. The States thus can and do perform many of the vital functions of modern government — punishing street crime, running public schools, and zoning property for development, to name but a few — even though the Constitution's text does not authorize any government to do so. Our cases refer to this general power of govern­ing, possessed by the States but not by the Federal Gov­ernment, as the 'police power.' " See, e.g., United States v. Morrison, 529 U. S. 598, 618–619 (2000).

Several pages later, as part of his dismissal of the argument that the health care law is constitutional under the Commerce Clause, he again references the "police power" vested in states:

"Everyone will likely participate in the markets for food, clothing, transportation, shelter or energy; that does not authorize Congress to direct them to purchase particular products in those or other markets today. The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. Any police power to regulate individuals as such, as opposed to their activities, remains vested in the States."

When we put together our comparison of the Romney and Obama plans, we spoke with John McDonough, director of Harvard's Center for Public Health Leadership. He played a key role in both the Massachusetts health care law and the effort to implement the national legislation.

He said this about similarities/differences in the Massachusetts and federal mandates:

"Of the four [key pillars of the Massachusetts plan], the mandate is perhaps the most similar, and it's not really a 'mandate' in either law. It is a tax penalty, enforced by the respective federal or state tax-collection entity, which is imposed on those who can afford to buy insurance and who do not do so. Both have religious exemptions, and neither is imposed on low-income uninsured persons. The dollar penalties vary, though not by a lot. Both are strikingly similar."

We followed up with McDonough Thursday to get his take on the latest in the debate over health care, and here's what he had to say:

On police power, taxes, and the Massachusetts law:

"States have police powers, and states have nearly unlimited powers to tax. They can do both. There's no need to rely on the police power. If you look at the Massachusetts health reform law, there's no delineation either way. The Roberts ruling says if it walks like a tax and talks like a tax, its close enough to be considered a tax for the purposes of this case.

The Massachusetts law is structured similarly to the ACA. The ACA's requirement is managed by the IRS. The Massachusetts individual mandate is managed by the state department of revenue. You demonstrate your compliance with the mandate in the ACA, and the Massachusetts law when you do your taxes. And the tax penalty is assessed on you as part of filing your tax return."

The chief justice, I think, was being post-modernist. He said, 'you can see this as not a tax, and you can see this as a tax. Legal precedent says it's the job of the Supreme Court to defer to congress.' He didn't say it is a tax or a penalty. He said it's plausible to view it as a tax. Because it's plausible, that's what he felt compelled to do."

On Romney's CBS comments:

"Roberts didn't define the Massachusetts individual mandate as a penalty or a tax. He did not ascertain the nature of the Massachusetts individual responsibility requirement at all."

On the debate over tax vs. not a tax:

"This is one of the dumbest conversations we've had all year about health reform. Each side has done multiple shifts to frame this to their advantage. During the legislative process, Republicans said it was a tax, and Democrats said it wasn't. During the Supreme Court process, Democrats said it was a tax, and Republicans said it wasn't. Post-decision, Republicans now say it is a tax, and Democrats say it isn't. It's completely nonsensical. And, of course, Mitt Romney says that it is, and it isn't a tax. There is no real point to it except political posturing."

On to our comparison of the plans.

Using our own research, as well as that from PolitiFact and the Kaiser Family Foundation, we came up with five ways the two plans are similar — and five ways they are different. The analysis post-Supreme Court decision stands largely unaffected, with one notable change in the ability of the federal government to impose on the states an expansion of Medicaid.

Similarities

  • Both have individual mandates that impose a tax penalty on people who have the financial ability to buy insurance but don't. Federal penalties start at $695 annually, or 2.5 percent of income, whichever is higher. In Massachusetts, penalties range from $228 to $1,212, depending on family size and income.
  • Both require health care "exchanges" (in Massachusetts, the exchange is called the "connector") designed to create a competitive health insurance market that gives individual and small business consumers a choice of private plans, rules that facilitate price comparison and plan transparency.
  • Both leave intact employer-provided insurance systems, Medicare plans for the nation's seniors, and Medicaid for poor and low-income citizens.
  • Both would fine companies that don't offer employee heath insurance, with exceptions for small businesses. Massachusetts requires companies with more than 10 employees to offer insurance; the national law sets the limit at 50 employees.
  • Both provide subsidies to low-income individuals and families to help pay for health insurance coverage.

Differences

  • The federal plan has a stated goal of attempting to lower health care costs; Massachusetts had no such stated goal.
  • The federal plan includes a patients' bill of rights, and provisions designed to promote public health.
  • The federal plan includes the so-called CLASS Act, a voluntary insurance program offered to workers for long-term care in the event that they become disabled when they get older. (The Obama administration has delayed the program's rollout because it isn't financially self-sustaining as designed.)
  • The federal plan would expand Medicaid to cover poor, able-bodied adults who are not parents in addition to poor children, elderly, pregnant women and those with disabilities. [The recent Supreme Court decision gives states the option to opt out of the Medicaid expansion without penalty.] The Massachusetts plan expands Medicaid coverage to more children.
  • To pay for the new coverage, the federal plan imposes taxes on a variety of sectors, from drug and medical device makers to health insurers. Massachusetts relies largely on federal matching funds.