The Supreme Court surprised a lot of people last month when it upheld the President’s healthcare law. Almost no one knew what the justices would decide. Not President Obama. Not the parties in the case. Even the odds-makers at InTrade.com guessed wrong — they put the chances of reversal at around 70 percent.
For companies and industries whose fortunes rise and fall with big court decisions like this one, it’s very difficult to live with that sort of uncertainty. That’s because businesses correctly try to take the guesswork out of what they do. Before they merge, companies send armies of investigators and lawyers to look at each other’s books. Investors scrutinize SEC filings and annual reports before they commit their resources to a stock or a startup. Good corporate leaders need transparency and information to make their decisions. Unfortunately for all of us, no one can see through the thick marble walls at the Supreme Court.
And even after courts announce their decisions, there are still questions that linger. Take, for example, the healthcare case National Federation of Independent Business v. Sebelius. To be sure, the Court answered some big questions. It decided that the Constitution allows the federal government to require people to buy health insurance. And the Court also rolled back the section of the healthcare law that gave states an all-or-nothing choice on Medicaid, the federal program that gives insurance coverage to people who are disabled or living in poverty. The healthcare law forced states to either accept federal funds for a bigger program, or lose all Medicaid funds across the board. Now, states can refuse the Medicaid expansion without giving up money for existing programs. It’s important for companies, individuals and governments to have answers on those issues.
But the decision left behind question marks, too. Now that the federal government can’t always dictate terms to the states, how will that play out? Will the reasoning that the Court used to answer the question on Medicaid apply to other areas? For instance, will contractors that local governments hire have some additional security since the federal government can’t interfere with the terms of their contracts? Will the Court’s decision to base the health insurance part of its opinion on one part of the Constitution –– the federal government’s power to tax –– instead of another part of the Constitution –– the federal government’s power to pass laws over interstate commerce –– affect any other laws already on the books? Or was this case so unique that it’s not possible to take the reasoning that the justices used and apply it to other situations?
If there’s no way to know what the Court will do before it hands down a decision, or all the effects that a decision will have after the Court makes up its mind, there’s at least one area where sunshine is lighting up the courtroom. In two decisions made not long before the healthcare case, the Supreme Court struck down attempts to apply agencies’ rules to companies, because the rules weren’t clear enough. In FCC v. Fox, the Supreme Court held that the Federal Communications Commission couldn’t sanction television networks for broadcasting vulgarity or nudity. According to the Court, “The Commission failed to give Fox or ABC fair notice.” And in a second case, Christopher v. SmithKline Beecham Corp., the Court held that certain employees at a drug company did not qualify for overtime pay, in part because the Department of Labor had changed its mind on which employees should get overtime. Whether or not you agree with what the agencies were trying to do, there’s no denying that clear rules help everyone. And it looks like the Supreme Court agrees.
But courts can give only so much clarity. The laws that they ultimately consider come from government officials, and from the world of politics. With the upcoming election in November, the fate of the healthcare law might get decided once and for all. And, while politicians waited with the rest of us before the decision to find out the outcome of the healthcare decision, when it comes to elections, the judges have no better a crystal ball than anyone else.
–Cross-posted at ACC In-house Access.