Healthcare Economist Michael Bertaut said the first issue was the "individual mandate" requiring all Americans to carry health care coverage, and the second was the mandate requiring all states to expand their Medicaid programs.
"Number one was that mandate that you have to have coverage," he said. "Does Congress have the authority to order me to buy something? That's the question."
Solicitor General, Donald B. Verrilli, Jr. argued the administration's case. He presented three justifications for the constitutionality of the congressional mandate that individuals must buy insurance, according to Bertaut. The first two arguments failed to sway the court.
"Number one – under the commerce clause of the Constitution, Congress has the authority to regulate commerce," Bertaut said. The first argument said that buying insurance amounted to commerce and therefore justified the mandate by the commerce clause, according to him.
Bertaut said Verrilli's logic was that uninsured people would need medical attention eventually. Somebody would then have to pay that person's medical bills. Therefore, even though they haven't bought anything directly, they are involved in commerce.
"The Supreme Court went, 'uh ... no, we don't buy that,'" Bertaut said. "So the commerce clause argument went away."
After the failure of that argument, he said Verrilli presented the next.
"The Necessary and Proper clause in the Constitution says when a problem gets very big, the president can do whatever's necessary to fix it," Bertaut said. The second argument was based on the monetary burden placed on hospitals due to treating the uninsured and how those hospitals offset the costs.
Verrilli's logic, according to Bertaut, was that hospitals then raise their rates to compensate for the expenses of treating the uninsured and those raised rates are a huge problem. Therefore, it is a huge problem and falls under the Necessary and Proper clause.
"And the Supremes said no, we don't buy that either," Bertaut said.
The final and successful argument according to Bertaut was the penalty for not getting health insurance is really a tax.
Verrilli's logic was that Congress has the power to levy taxes and PPACA in effect taxes the absence of insurance. Therefore, instead of ordering everyone to get health insurance they are actually levying a tax on people who don't have it.
"(Chief Justice John Roberts) let them define the mandate as a tax on the absence of health insurance, not an order to buy it," Bertaut said. "By changing the definition it became within Congress's power. The Supreme Court said the only way you have authority to do this is if it's a tax. So it is."
The other issue, brought by 28 states, was the fiscal burden of expanding their Medicaid systems.
"Medicaid's a partnership," Bertaut said. "The state pays a part and the fed pays a part. So if the federal government orders a state to expand Medicaid, it's putting a financial burden on the state that the state didn't have any say-so."
According to Bertaut, the federal government tried to deal with state concerns by offering to pay for 100 percent of the cost for the first three years, and to pay half of the administrative costs to go through the process of expansion.
"When states pushed back and said we don't want to expand Medicaid," Bertaut said, "the director of the Center for Medicaid and Medicare Services, who is an appointee of the president, told the states if you don't expand Medicaid, we're going to take away your existing Medicaid program.
"The states took that to the Supreme Court and said that's coercive," he continued. "The Supreme Court agreed with them and said, you're right the federal government cannot take away your existing Medicaid to force you to expand Medicaid."
The Supreme Court ruled that states could opt out of the Medicaid expansion without penalty.
"At the moment the (Bobby Jindal) administration is saying no to a state exchange and no to a Medicaid expansion," Bertaut said. "There are a lot of different things that can happen."
The federal government would set up the Louisiana marketplace, and is already doing so according to Bertaut. However, the difficulty of expanding Medicaid is more complicated.
Although the federal government is offering to pay a lot of the early expenses, the states are required to show that they can pay at least 10 percent of that cost before the feds will pay anything.
"So right now they don't have any guarantee they can get the money," Bertaut said. "So they're not expanding Medicaid until they know that they can pay our cut. Because you can't promise, you got to show them you can get the money."
Bertaut's analogy would be if someone is offered $100,000 but is required to show they have $10,000 on hand first. They don't have to pay out the $10,000, but they aren't getting the $100,000 without it.
"The argument is where do we get this 10 percent we need to make this Medicaid expansion go, without raising taxes or taking it away from prisons, hospitals, education or somewhere else?" Bertaut said. "Five years from now this could be 700 or 800 million dollars a year extra cost. Even though the fed's going to give you $4 billion, you can't use their $4 billion until you raise your state's $800 million."
The problem this creates for citizens, according to Bertaut, is that a group of people will remain uninsured.
"If you don't expand Medicaid, you have a gap," he said. "People who are working poor who will not have access to coverage except through the charity system. The problem with that is the act is going to remove 50 percent of financing from the charity system."
According to him, hospitals like Louisiana State University Health Services Center comprise the charity system.
"So even the money we would use to keep those hospitals open – a significant portion of their operating budget come from DSH (Disproportionate Share Hospitals) funds that have to be cut 50 percent in the next four or five years." Bertaut said. "So we're just going to have to figure out over the next couple of years what's going to happen with that."