Health Care Reform
comprehensive health care reform in March 2010 after over a year of debate in both the Senate
and the House of Representatives
. The Patient Protection and Affordable Care Act
(ACA) is aimed at reforming the private health insurance market and ensuring greater access to health insurance coverage. It was signed
into law by President Barack Obama on March 23, 2010. President Obama also signed the Health Care and Education Reconciliation Act of 2010
the following week, reconciling the House
versions of the reform legislation.
The issue of federal health care reform has been politically charged for years. It was a prominent topic during the 2008 presidential election, and was touted as a major initiative during President Obama's first year in office. The legislation's passage was highly controversial, and garnered unanimous opposition from the Republican members of Congress. Following the November 2010 midterm elections, the new Republican majority in the House passed legislation which would have repealed ACA in its entirety. However, the legislation, titled the Repealing the Job-Killing Health Care Law Act, failed to pass the Senate. Disagreement over the projected effects of ACA, and the legality of its provisions, have led to numerous legal challenges in the federal and state arenas.
According to estimates from the Congressional Budget Office (CBO), the ACA will eventually extend coverage to nearly 32 million uninsured Americans, leading to a net reduction in the uninsured population of 22 million. The legislation includes numerous provisions scheduled to take effect over an eight-year period. Some of its major provisions, along with their implementation dates, are enumerated below:
Effective Upon Passage:
Effective on June 21, 2010:
- Created the non-profit Patient-Centered Outcomes Research Institute to independently research the effectiveness of different medical treatments.
Effective on July 1, 2010:
- Adults with pre-existing medical conditions became eligible to join a temporary "high-risk pool" of insurance applicants after uninsured for six months.
Effective on September 23, 2010:
- Created the National Prevention, Health Promotion and Public Health Council.
Effective on January 1, 2013:
- Insurers prohibited from imposing lifetime dollar limits on essential benefits.
- Dependents permitted to remain on their parents' insurance plan until the age of 26.
- Insurers prohibited from excluding pre-existing medical conditions for children under 19.
- Insurers prohibited from dropping policyholders once they become ill.
- Implementation of mandatory appeals processes for coverage and claims on all new health insurance plans.
Effective on January 1, 2014:
- Additional income tax of 0.9 percent levied against single individuals making in excess of $200,000, in excess of $250,000 if married and filing jointly, or in excess of $125,000 if married filing separately.
Effective on January 1, 2017:
- Insurers prohibited from discriminating against, or charging higher rates for, any individual based on pre-existing medical conditions.
- Individuals who do not obtain health insurance subject to annual penalty of the greater of $95 or 1 percent of their income. The fine then rises to the greater of $695 or 2.5 percent of income by 2016 with an established "family" penalty limit of $2,085. Exemptions on the basis of financial hardship or religious objection allowed.
- Deadline for the state establishment of public health insurance exchanges to trade and buy policies.
- Subsidization of insurance premiums available for individuals with income up to 400 percent of the poverty line.
- Expansion of Medicaid availability to all individuals with income up to 133 percent of the poverty line.
- New excise taxes levied against pharmaceutical companies based on market share, most medical devices, and health insurance companies based on market share.
Effective on January 1, 2018:
- States may apply to the Secretary of Health and Human Services for a waiver of certain sections of the law (including the individual mandate) provided that the state develops an alternative plan that "will provide coverage that is at least as comprehensive" and "at least as affordable" for a "comparable number of residents."
- All existing health insurance plans must cover approved preventive care and checkups without co-payment by the policyholder.
- 40 percent excise tax on high-end insurance policies introduced.
The most controversial provision of ACA is undoubtedly the "individual mandate" portion of the law, which requires all citizens to obtain health insurance and inflicts a monetary civil penalty on those who opt not to. Although the provision was not scheduled to take effect until January 1, 2014, it was easily the most litigated and contested issue following the passage of ACA.
any states took legislative action to prevent the enforcement of ACA within their borders by either nullifying the "individual mandate" portion of ACA or invalidating the law in its entirety. However, the legitimacy of these legislative actions is questionable, given the potential conflict between the Supremacy Clause of the US Constitution, which dictates that federal law preempts state law when the two conflict, and the Tenth Amendment, which reserves for the states those powers not granted to the federal government.
The first legislative challenge to enforcement of ACA began in Virginia on March 11, 2010, twelve days before ACA became law. The Virginia Health Care Freedom Act bans any federal mandate that individuals must purchase health insurance, and provides that no individual shall be held liable for refusing to do so. Following Virginia's opposition, Arizona and Oklahoma voters approved state constitutional amendments prohibiting enforcement of the individual mandate, while Colorado rejected a similar bill on the same day.
On November 8, 2011, Ohio voters passed a referendum [PDF] that forbids enforcement of the ACA's individual mandate and prohibits the imposition of fines on individuals for failing to purchase health insurance. As of November 2011, Alabama, Florida, Georgia, Louisiana, Kansas, Missouri, New Hampshire, Utah, and Wyoming have also passed legislation that challenged the ACA in some form.
Several states also began pursuing legislation that would create an interstate Health Care Compact (HCC) that, if adopted by enough states and approved by the US Congress, would give the states primary authority to regulate health care and insurance. Spearheaded by the Health Care Compact Alliance, the final language of HCC was released [PDF] on February 23, 2011. Although such compacts have traditionally been used to address interstate conflicts such as border disputes and conflicting state agency guidelines, Georgia, Missouri, Oklahoma, and Texas adopted the HCC by November 2011. Similar proposals were also passed by the legislatures of Arizona and Montana and vetoed by their respective governors.
In addition to legislative initiatives, there have also been direct gubernatorial actions to invalidate the law. On April 20, 2011, Idaho Gov. CL "Butch" Otter issued an executive order barring his state from establishing any program or rule implementing provisions of ACA, accepting funding tied to the law, or assisting federal employees with its implementation. Before issuing the order, Otter vetoed a bill that would have nullified ACA's application in Idaho because he feared it would have prevented the state from legally creating its own insurance exchange.
n the day President Obama signed the legislation into law, several lawsuits were filed in federal courts nationwide challenging its constitutionality. These lawsuits raised many different arguments, but the central claims underlying all of the cases are enumerated below under Major Legal Arguments
Virginia was one of the first states to challenge the health care legislation. Filed by Virginia Attorney General Kenneth Cuccinelli in the US District Court for the Eastern District of Virginia, Virginia v. Sebelius [PDF] resulted in Judge Henry Hudson ruing that the individual mandate was unconstitutional. The decision in Sebelius created a split at the district court level, as the US District Court for the Western District of Virginia had dismissed a similar challenge just two weeks earlier. The US Department of Justice (DOJ) appealed Judge Hudson's ruling to the US Court of Appeals for the Fourth Circuit, which heard oral arguments in the case in May 2011. The Fourth Circuit rejected Virginia's lawsuit in September 2011, ruling that the state lacked standing to sue.
The Fourth Circuit also presided over Liberty University v. Geithner, which originated from the US District Court for the Western District of Virginia and was similarly dismissed for lack of standing in September 2011. The court ruled that it could not address the issues raised in the lawsuit because it dealt with tax law issues that would not be ripe until the individual mandate took effect in 2014. Liberty University petitioned the US Supreme Court for certiorari in October 2011.
Numerous other challenges to the ACA were also dismissed for lack of standing by federal district courts in Missouri, the District of Columbia, New Jersey, New Hampshire, and Mississippi.
In June 2011, the US Court of Appeals for the Sixth Circuit upheld the individual mandate in Thomas More Law Center v. Obama. That lawsuit was originally brought by the Thomas More Law Center (TMLC) and was dismissed by the US District Court for the Eastern District of Michigan. The parties had held oral arguments before the court earlier that month. The Sixth Circuit's ruling was described as "devastatingly convincing" by former US Solicitor General and JURIST Guest Columnist Charles Fried in Forum. TMLC became the first party to an ACA lawsuit to file a petition for certiorari in the US Supreme Court in July 2011.
In August 2011, the Eleventh Circuit held that the individual mandate is unconstitutional in Florida v. HHS [PDF]. Originally spearheaded by Florida Attorney General Bill McCollum, the coalition grew from 13 to 26 states and eventually included South Carolina, Nebraska, Texas, Michigan, Utah, Pennsylvania, Alabama, South Dakota, Louisiana, Idaho, Washington, Colorado, Georgia, Indiana, North Dakota, Mississippi, Nevada and Arizona. The lawsuit was also joined by a coalition of 13 state attorneys general and the National Federation of Independent Businesses (NFIB), who originally filed suit in the US District Court for the Northern District of Florida. District Judge Roger Vinson ruled the ACA unconstitutional in January 2011, striking down the law in its entirety. The Eleventh Circuit ruling narrowed this, however, finding the individual mandate unconstitutional and severable from the rest of the legislation.
Following the Eleventh Circuit's ruling, both sides of the lawsuit petitioned the US Supreme Court for certiorari in late September 2011. Those petitions immediately followed the Obama administration's decision to not seek en banc review from the Eleventh Circuit, which effectively cleared the path for an expedited appeal. The Supreme Court granted certiorari on November 14, 2011, agreeing to review the Eleventh Circuit's ruling in Florida v. HHS [PDF], National Federation of Independent Business v. Sebelius [PDF], and HHS v. Florida [PDF] on a consolidated basis. It was the first ACA challenge to be granted certiorari. The federal government then filed a brief [PDF] in defense of the mandate as part of the larger health care regulatory scheme of ACA. Twenty-six states filed a brief [PDF] supporting the government's argument.
The Court set aside five-and-a-half hours on March 26-28, 2012 for oral arguments in the case. In anticipation of the legal arguments, the government filed a brief [PDF] requesting an additional half hour of time for its argument in February 2012. Over the three days of oral argument in front of the Court, US Solicitor General Donald Verrilli agreed with challengers of the ACA that the Anti-Injunction Act of 1867, prohibiting lawsuits challenging a tax until that tax is collected, does not prohibit the Court from hearing the challenge.
Verrilli also argued that the ACA falls within Congress's Commerce Clause power, despite Chief Justice Roberts's observation that use of the power to require people to purchase services would be an unprecedented use. Washington attorney Paul Clement argued for the 26 states that the Court must strike down the entire ACA if it finds the individual mandate provision unconstitutional because the provision is integral to the law's regulatory scheme, and that the expansion of the Medicaid program under the ACA amounts to unconstitutional coercion of states (exceeding Congress's Spending Power) to participate in the regulatory scheme.
JURIST Guest Columnist Nicole Huberfeld expressed concern in Forum regarding the Court's understanding of Medicaid:
Medicaid remains the black sheep of the health care reform litigation. Before the six-and-a-half hours of oral argument at the end of March, commentators focused primarily on whether Congress may require a minimum level of health insurance coverage. Even the number of amicus briefs filed (about 23 on the Medicaid issue versus about 78 on the "individual mandate") indicates lack of attention to the spending question in Florida v. US Department of Health and Human Services. Both Solicitor General Donald Verrilli and Paul Clement referred to Medicaid as Medicare, a blunder that may be natural after three days of arguments. But, such stumbles suggested a lack of understanding of both spending doctrine and the Medicaid expansion and do not bode well for the Court's decision-making processes.
A coalition of news organizations requested that the US Supreme Court allow live audio and video recording of the announcement of the decision. Two members of the US Senate Judiciary Committee, Patrick Leahy and Charles Grassley, also sent a letter to Chief Justice Roberts asking that the Court consider televising a live broadcast of its decision. The Supreme Court has never allowed immediate release of a recording of an announced opinion, and also refused to do so in this case.
A group of 90 women filed suit against Washington Attorney General Rob McKenna in state court for his participation in the Supreme Court challenge. The complaint alleged that his opposition to the ACA prevented women from accessing full medical coverage and sought a court order requiring McKenna to amend his pleadings to request that the Court uphold the women's health provisions of the ACA. King County Superior Court Judge Sharon Armstrong denied the plaintiffs' request for a preliminary injunction against McKenna.
On June 28, 2012, the US Supreme Court ruled that the ACA is constitutional, upholding almost the entirety of the law In the majority opinion [PDF] by Chief Justice Roberts, the Court held that the individual mandate was an invalid use of Congress's Commerce Clause powers. The Court upheld the individual mandate, however, based on the federal government's argument that the penalty levied against those who do not comply with the individual mandate can appropriately be classified as a tax. The decision also limited the new law's Medicaid requirements, preventing the federal government from withholding existing funds from states that choose not to opt in to the ACA's expanded coverage.
The decision immediately became the center of media attention, as lawmakers and interested parties made their opinions heard on all sources of major news. President Obama held a press conference that same day, praising the Court for "reaffirm[ing] a fundamental principle that here in America — in the wealthiest nation on Earth — no illness or accident should lead to any family's financial ruin." Several of the losing parties and lawmakers expressed unhappiness with the decision, including Speaker of the House John Boehner, who vowed to repeal the ACA.
awsuits challenging the enforcement of ACA have argued that the law violates various portions of the Constitution, most notably the Commerce Clause
(Art. 1, Section 8, Clause 3), the Tax and Spending Clause
(Art. 1, Section 8, Clause 8), the Supremacy Clause
(Article VI, clause 2), and the Tenth Amendment
Interstate Commerce Clause
Challenges based on the Commerce Clause, which enumerates power to Congress to regulate interstate and foreign commerce, allege that Congress acted beyond the scope of its authority in attempting to use the regulation of the health insurance markets as justification for implementing the ACA's "individual mandate" provisions. JURIST Guest Columnist Ilya Somin of the George Mason School of Law explains the argument in Forum:
The [Commerce] Clause gives Congress authority to regulate "Commerce ... among the several states." But the individual mandate regulates that which is neither commercial nor interstate. Virtually all purchases of health insurance are intrastate because a combination of state and federal law makes it illegal to purchase health insurance across state lines. Moreover, the object of the mandate is not even commerce at all. Instead of regulating preexisting commerce, the bill forces people to engage in commercial transactions they would have otherwise avoided. ... The fact that most people eventually use health care does not differentiate health insurance from almost any other market of any significance. If you define the relevant "market" broadly enough, you can characterize any decision not to purchase a good or service exactly the same way. Notice that he government does not argue that everyone will inevitably use health insurance. Instead, they define the market as "health care." The same bait and switch tactic works for virtually any other mandate Congress might care to impose.
However, proponents of the "individual mandate" claim that the pervasive importance of health care in the US economy, and Justice Scalia's opinion in Gonzales v. Raich
, provide justification for the law. JURIST Guest Columnist Sallie Sanford
of the University of Washington School of Law articulates the federal government's stance on the individual mandate in Forum:
Health care constitutes a huge portion of our nation's economy, currently constituting more than 17 percent of the GDP. Both health care and health insurance indisputably impact interstate commerce. [As explained in his] concurrence [in Gonzales v. Raich], Justice Antonin Scalia maintains, "the authority to enact laws necessary and proper for the regulation of interstate commerce is not limited to laws governing intrastate activities that substantially affect interstate commerce. Where necessary to make a regulation of interstate commerce effective, Congress may regulate even those intrastate activities that do not themselves substantially affect interstate commerce." Under the structure of the new health reform law, the requirement to have insurance is integral to Congress' overall approach to regulating insurance practices and attempting to stabilize the insurance market.
The plaintiffs in the pending lawsuits argue, however, that the individual mandate is different because it attempts to regulate inactivity. By definition, they maintain, a person who declines to purchase health insurance is not engaging in commerce at all. A gamble to remain uninsured does, however, impose economic costs in at least two ways. The first is when an uninsured person seeks medical treatment. Because of a federal emergency care law, state legal requirements, hospital mission obligation, and actions rooted in medical ethics, that care is sometimes mandated and is often provided. Particularly when the patient comes in through the emergency room, as is not infrequently the case, costs are substantial and often go unpaid, either because of a decision at the outset to provide "charity care" or because the patient does not pay the bill. Findings in the new law estimate the costs of providing uncompensated care at $43 billion in 2008. While many of these costs are ultimately borne by federal, state, and local governments (in the form of subsidies to hospitals and clinics), a substantial amount is shifted to insured patients. Findings in the new law estimate that $1,000 of the cost of an employer-provided family insurance premium (out of an average of about $13,000) is attributable to uncompensated care.
The second way that being uninsured imposes economic costs is by shifting the insured risk pool. Among the approximately one in seven United States citizens who lack insurance, a significant percentage is young and healthy. By not participating in the insurance market, by gambling that they will not need expensive health care (or that if they do, someone else will pick up the tab), they skew insurance pools towards an older and sicker population, raising the premium costs. Thus, this sort of inactivity or non-participation does have an economic impact, and certainly a far more substantial economic impact than the growing of marijuana for personal, medical use [as seen in Raich].
An opinion that garnered a great deal of attention was that of Judge Jeffrey Sutton's opinion
upholding the constitutionality of the individual mandate in the US Court of Appeals for the Sixth Circuit. Sutton, a former clerk to Justice Antonin Scalia, is considered one of the leading conservative jurists in the US and his opinion has served as a legal rallying point for supporters of ACA. However, JURIST Guest Columnists Ilya Shapiro
and Trevor Burrus
from the Cato Institute argue that Sutton's opinion is inherently flawed:
A former clerk to Justice Antonin Scalia who was appointed to the bench by President George W. Bush, Sutton is considered one of the leading conservative jurists in the country. Many are hailing Sutton's opinion as an admirable example of non-partisan judicial reasoning because of this reputation. In reality, Judge Sutton's opinion is an unfortunate blend of factual supposition and judicial abdication. While seeming to call out the Supreme Court for failing to articulate a significant and meaningful limit on federal power, Sutton simultaneously engages in a type of reasoning that would eviscerate any such limit. Sutton makes two crucial errors in what is otherwise a masterfully crafted opinion: he consistently reads the "substantial effects" doctrine (the outermost bound of federal power in this area) as solely requiring economic calculation, and he defends a hypothetical statute rather than the one Congress actually passed.
Tax and Spending Clause
There were also numerous legal challenges targeting the civil forfeiture imposed on those who refuse to comply with the "individual mandate." The government has argued that the Tax and Spending Clause affords them the necessary authority to levy the forfeiture, which they characterize as a tax for the general welfare. However, opponents maintain that the government's "tax" is actually a financial penalty. JURIST Guest Columnist Ilya Somin of George Mason School of Law again explains this opposition stance in Forum:
The federal government has also argued that the mandate is constitutional because it is a tax authorized by congressional power to impose taxes for the "general Welfare." All ... federal judges who have ruled on this claim so far have rejected it, including [those] who [have] concluded that the mandate is constitutional under the Commerce Clause. They correctly recognized that the mandate is a financial penalty for refusing to comply with a federal regulation. ... As recently as 1996, the Supreme Court reiterated the crucial distinction between a penalty and a tax. It ruled that "[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government," while a penalty is "an exaction imposed by statute as punishment for an unlawful act" or--as in the case of the individual mandate--an unlawful omission. The individual mandate is a clear example of a penalty, where Congress requires people to purchase health insurance, and then punishes them with a fine if they fail to comply.
Twenty-six states also filed a brief [PDF] to the Supreme Court arguing that the ACA's expansion of Medicaid exceeds congressional authority pursuant to the Spending Clause. JURIST Guest Columnist Sallie Sanford noted in Forum that the Court's "acceptance of the Medicaid issue surprised many":
The challengers argue that the Medicaid expansion is an unconstitutional compulsion that "commandeers" the states into the service of the federal government. They point to increased costs and expanded administrative burdens. Although states are technically free to drop out of this joint federal-state program, as a practical matter they are heavily reliant on matching Medicaid dollars to fund medical care for their poorest citizens. Federal Medicaid funding is a significant part of most states's beleaguered budgets.
The government counters that this is a proper exercise of Congress's ability to attach conditions to the receipt of federal funds. Congress reserved the right to amend the Medicaid conditions, and has done so numerous times over the years. Furthermore, with this expansion the federal government will assume most of the cost for the newly eligible. At the outset the federal match will be 100 percent, ratcheting down to 90 percent by 2020. Indeed, some non-party states have previously filed amicus briefs in support of the expansion, arguing that it will help financially stabilize their programs.
Supremacy Clause & Tenth Amendment
The last constitutional provision implicated in major arguments made against ACA is the Supremacy Clause, which mandates that state judges must follow federal law when it is enacted pursuant to constitutionally authorized powers. Essentially, opponents argue that ACA overextends the federal government's power to force states to comply with federal law. Similar claims have also been made alleging that the federal government illegally usurped states' rights to regulate health care on their own (a topic discussed more in-depth under State Legislative Action). JURIST Guest Columnist Steven Schwinn of the John Marshall Law School in Chicago finds these arguments unconvincing and ungrounded in Constitutional text when evaluating the Eleventh Circuit ruling that the individual mandate is unconstitutional in Forum:
Start with the text. Nothing in the original Constitution supports the theory that Congress cannot regulate in areas of traditional state concern. The two important exceptions, which address slavery, do not provide support for the court's principle of federalism today. In fact, the plain text of the original Constitution says the opposite. Under Article I, Section 8, Congress has plenary authority "[t]o make all Laws which shall be necessary and proper" to "regulate commerce ... among the several States," without regard to whether such laws or regulations touch on areas of traditional state concern. Moreover, several clauses throughout the text specifically restrict the states, suggesting that there is nothing sacrosanct about areas of traditional state concern. For example, Article I, Section 10 contains a list of restrictions on state action; Article IV, Sections 1 and 2 similarly contain restrictions on states. This is all punctuated, of course, by the Supremacy Clause in Article VI, which specifically contemplates an overlap between federal and state law in which federal law will prevail, and this article's Oath of Office Clause, which requires state officers to swear to support the Constitution.
Later amendments restrict state sovereignty to an even greater degree and thus undercut the theory that the Constitution protects areas of traditional state concern. The Thirteenth, Fourteenth, Fifteenth, Nineteenth, Twenty-Fourth and Twenty-Sixth Amendments prohibit states from violating various civil rights and authorize Congress to adopt legislation to protect these rights against state interference. The Sixteenth Amendment authorizes Congress to lay and collect an income tax "without apportionment among the several States." And the Seventeenth Amendment provides for the direct election of US Senators, ending their appointment by the state legislatures. The Tenth Amendment, the state-righters' perennial favorite, only provides that those "powers not delegated to the United States ... are reserved to the States respectively, or to the people." This says nothing about areas of traditional state concern or the extent of federal powers; it is merely a truism in a federal system like ours. Thus, the text and structure do not restrict congressional action based on areas of traditional state concern.