JURIST Guest Columnist Sallie Sanford of the University of Washington School of Law says that to understand the ongoing health care reform litigation, it is important to keep certain points in mind, and provides an in-depth preview to the issues to be argued, what they might mean and several resources to be aware of...
he party and amicus
briefs are stacking up in advance of the five-and-a-half hours of oral argument on the constitutionality of the Patient Protection and Affordable Care Act
(ACA) to be held March 26-28. The following provides an overview of this historic constitutional challenge. I have expressed my views in previous JURIST articles about the constitutionality of the Affordable Care Act
, and have joined the health law professors' amicus
brief in support of government's position. This piece, though, is in the nature of a guide. A guide to what is sure to be a complex and riveting oral argument with lasting reverberations.
The ACA and Its Contested Provisions
The Patient Protection and Affordable Care Act of 2010 is an extensive, wide-ranging and controversial effort at health reform. Befitting its broad aims of expanding access to health care, curbing its cost and increasing its quality, the statute has 10 titles and hundreds of discreet provisions. Two are primarily at issue in the Supreme Court litigation. Both focus on reducing the number of uninsured, which most estimates put at close to 50 million people throughout the country.
The "shared responsibility" requirement, more commonly known as the "individual mandate" requires that starting in 2014 most citizens maintain reasonable health insurance coverage (through Medicare, Medicaid, an employer plan or individual purchase). Exemptions apply for religious objection, financial hardship and other bases. Those who are required to have insurance and do not will be assessed a penalty, administered by the federal tax system. The rate ratchets up over time to reach $695 per person or 2.5 percent of household income, whichever is greater. Sliding scale subsidies will be available for those with incomes between 133 and 400 percent of the federal poverty level, currently about $14,500 for an individual and $29,700 for a family of four.
The other ACA provision primarily at issue here expands Medicaid to cover all citizens and legal residents with incomes below 133 percent of the federal poverty level. Medicaid is a joint federal-state program created in the mid-1960s as a companion program to Medicare. As the program is currently designed, states that chose to participate (as all do) receive matching federal funds (of between about 50 and 80 percent) to provide health insurance for categories of low-income people, primarily those over 65, pregnant women, children and individuals with qualifying disabilities. Beginning in 2014, then, the program will expand to require coverage of many more people, predominantly low-income adults. For these newly eligible, the federal government initially will provide a 100 percent match, reducing to 90 percent by 2020.
As soon as President Barack Obama signed the ACA into effect in March 2010, the lawsuits began. Ultimately more than two dozen cases challenged the law's constitutionality. Most of these focus exclusively on the individual mandate; and most were dismissed on jurisdictional grounds related to standing and ripeness. From the beginning, attention focused on the broader challenge filed by the Florida Attorney General, and ultimately resulting in a consolidated case involving 26 states, the National Federation of Independent Businesses and a few individuals.
Four federal court of appeals opinions, issued between June and November 2011, set the stage for the upcoming hearing and feature prominently in the parties' briefs. In June a divided panel of the US Court of Appeals for the Sixth Circuit held that the individual mandate was within Congress's power under the Commerce Clause. Later that summer, a divided panel of the US Court of Appeals for the Eleven Circuit ruling in the Florida case held the individual mandate is beyond the scope of Congress's power and thus unconstitutional. The court concluded that the provision was severable from the rest of the ACA. It upheld the other challenged provisions, notably the Medicaid expansion, as within Congress's power.
In September, a divided panel of the US Court of Appeals for the Fourth Circuit took a different tack, holding that the state of Virginia did not have standing to challenge the ACA. While certiorari petitions were pending on those three cases, a divided panel of the US Court of Appeals for the District of Columbia Circuit issued its opinion. That court upheld the individual mandate as within the scope of the Commerce Clause.
Issues and Logistics
Given this fractured circuit split, few doubted that the Supreme Court would hear the case. Indeed, the parties filed much of their paperwork early, setting up the case for consideration in the current term. The Court agreed to take the Florida case and, in a surprise to many scholars, to hear the Medicaid issue. The Court agreed to hear four issues: does the Anti-Injunction Act (AIA) present a jurisdictional bar; is the individual mandate within Congress's authority; if the individual mandate is ruled unconstitutional, is it severable from the rest of the act; and is the Medicaid expansion unconstitutionally coercive of the states?
The Court granted an extraordinary five-and-a-half hours of oral argument, to be heard over three days, March 26, 27 and 28. Indeed, the government has a pending request to extend this by a half-hour. One hour per case is typical now, and you have to go back to the arguments in Miranda v. Arizona for any of this length. The case is also unusual in that amici have been appointed to brief and argue two positions. None of the parties now argues that the AIA presents a jurisdictional bar, or that the individual mandate is fully severable. So those positions will be articulated by two Court-appointed private attorneys.
Noting the high level of public interest and the case's historic nature, C-SPAN wrote a letter [PDF] to the justices requesting permission to televise the proceedings. The cameras would be unobtrusive, C-SPAN promised, and the live video feed would be freely available to all others in the media with an interest in carrying it. As cameras have never been allowed in this courtroom, the request seems unlikely to be granted. Perhaps the audio recording will be made available at the end of each daily session, rather than the Friday following, as in the current practice. Oyez has a clear format for following these audio recordings.
If the Court follows its usual practice, its opinion will be released at the end of its term, likely in late June. The Republican primaries will be wrapping up (the last, Utah's, is scheduled for June 26), and most state legislatures will have completed their sessions. Campaigning for the November elections, state and federal, will be heating up.
Regardless of the Court's ruling, the ACA is sure to be a key topic, and the closely divided Court itself may emerge as a campaign issue. Opposition to "Obamacare" has been a central component of the Republican primary campaigns, posing particular challenges for former Massachusetts governor Mitt Romney and former Speaker of the House of Representatives Newt Gingrich, both of whom have previously expressed support for similar systems, including an individual mandate. Apart from the Court's ultimate decision, the outcome of the November elections, federal and state, could impact the pace and content of health reform.
The Anti-Injunction Act and Other Jurisdictional Issues
At the outset the Court will determine whether it has jurisdiction over the case. Questions of general standing and ripeness will need to be addressed as the challenged provisions do not go into effect until 2014. The states and business organization (for itself and on behalf of its individual members) contend that they are impacted now by the need to prepare for a predictable future expense.
Beyond this general jurisdictional question is the specific one of whether the AIA precludes judicial consideration at this time. The first day of argument is devoted to this issue. This federal law, whose origins date to 1867, states that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court." If it applies here and if it is jurisdictional, a challenge to the individual mandate could not be brought until the "shared responsibility" payment is made to the Internal Revenue Service or enforcement action is taken to collect it. Thus, presumably the earliest court filing date would be April 15, 2015.
One line of argument that the AIA does not apply focuses on the statute's meaning of a "tax." This issue is potentially bound up with the next day's arguments. If the "shared responsibility payment" is or is not a tax for this purpose, what bearing does that analysis have on whether it is a tax for purposes of Congress's constitutionally authorized taxation powers? Another line of argument considers whether this lawsuit was brought "for the purpose of restraining" collection or assessment. If the purpose is broader or different, arguably there is no jurisdictional bar.
The Constitutionality of the Individual Mandate
The second day of oral argument is devoted to the constitutionality of the individual mandate. In lower court opinions and in law review articles, this is where most of the ink has been spilled. Despite the political rhetoric, the constitutional question is not whether people have a right to be free from this type of economic regulation as a matter of individual rights. The question is rather whether the federal government, as opposed to a state government, may regulate or tax in this way. Phrased another way, is the individual mandate an appropriate exercise of the federal government's express or implied powers? The Constitution grants Congress the power to regulate interstate commerce and to levy taxes; it also may do that which is "necessary and proper" for the exercise of these express powers.
Since the 1940s, the Court has given Congress a wide berth in regulating commerce, all the while maintaining that there are limits, and that the national legislative body does not have unlimited police powers. One case sure to get a workout at oral argument is the Supreme Court's 2005 6-3 decision in Gonzales v. Raich.
In Raich, the Court held that the federal government has the power to supersede state law, and to prohibit marijuana cultivation, even if grown at home for personal medical use and not for sale. "We need not determine whether respondents' activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a 'rational basis' exists for so concluding." Expect also to hear reference to Justice Scalia's concurrence in Raich. In it he writes that "[w]here necessary to make a regulation of interstate commerce effective, Congress may regulate even those intrastate activities that do not themselves substantially affect interstate commerce."
The government is likely to stress at oral argument that health care and health insurance are indisputably part of interstate commerce, indeed a substantial part of the national economy. The individual mandate is necessary, this line of argument goes, to make effective stabilizing regulation of the health insurance market. Thus it is well within established Commerce Clause jurisprudence.
Under this reasoning, a decision to remain uninsured impacts the markets in at least two ways. First, virtually everyone needs health care at some point and very few people have the resources to pay for a major illness or injury. Congress found that providing uncompensated care to the uninsured cost $43 billion in 2008, much of shifted to others in the form of higher premiums or taxes. Second, where younger, healthier people remain uninsured, the risk pool is skewed to an older, sicker population and thus more expensive and unstable. These problems would be exacerbated where citizens could wait until they are sick or injured and then buy community-rated insurance free from any pre-existing condition restrictions.
The challengers will counter that those who decline to maintain insurance coverage are entirely outside the stream of commerce, and that there is no precedent for a law that forces people to engage in commerce by purchasing a private product. The many Commerce Clause cases, this line of argument runs, all involve situations where those regulated were already engaging in commerce (growing wheat, renting motel rooms, growing marijuana, and so on).
Under this reasoning, the individual mandate is an expansion of Congress's power and one that then has no limits. If Congress can require people to buy health insurance, could it require them to buy gym memberships or American-made cars or broccoli? There must be some distinction between what is truly local and what is truly national. Expect as to this point to hear discussion about whether the health insurance market is unique in ways that have constitutional bearing.
The challengers' arguments are well captured by this quotation from the Eleventh Circuit's ruling, the only federal court of appeals to date to find the mandate unconstitutional.
We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers.... [D]ecisions to abstain from the purchase of a product or service, whatever their cumulative effect, lack a sufficient nexus to commerce.
The government's arguments are well captured by this quotation from the DC Circuit, one of the federal courts of appeals that upheld the provision. "The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local or seemingly passive their individual origins."
The Supreme Court will also hear arguments on this second day as to whether the individual mandate is within Congress's taxation power. The Court has long upheld the ability of the federal government to regulate behavior through taxation. A key question will be whether the "shared responsibility payment" to be collected by the IRS is more in the nature of a tax or a pure penalty.
The Severability Question
If the Supreme Court nullifies the individual mandate, it will need to decide whether this provision is severable from the rest of the ACA. The statute does not have a severability clause. While its absence is not necessarily dispositive, it might indicate Congress's views. Or maybe not; the ACA's legislative history is a bit of a tangle. Key legal questions for oral argument will be what Congress would have wanted, and whether all or part of the statute works without the provision.
The Eleventh Circuit concluded that it was fully severable. The underlying opinion from the US District Court for the Northern District of Florida, by contrast, had analogized the ACA to a finely crafted watch, with its significant pieces inextricably interconnected; thus, that court voided the entire law. The government argues that the mandate is essential to the operation of other key health insurance reforms, pointing especially to the pre-existing conditions prohibition and the guaranteed issue requirement. If people could wait to buy community-rated insurance until they were expensively sick or injured, the reasoning goes, the individual market would collapse.
The Constitutionality of the Medicaid Expansion
While there was little doubt that the Supreme Court would agree to hear the individual mandate challenge, its acceptance of the Medicaid issue surprised many. Neither of the courts to consider the issue overturned the Medicaid expansion. Indeed, conditional spending is a common feature of federal programs.
A key precedent case is South Dakota v. Dole. In Dole, the Court upheld a federal law that withheld 5 percent of highway funds from any state that did not set its legal drinking age at 21. In upholding that conditional-spending arrangement, the Court stated that "in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion.'" To date, no court has identified such a circumstance.
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.
This summary cannot begin to address all of the litigation's fascinating aspects. For those wanting more, several websites oblige. The ACA Litigation Blog, which has tracked the lawsuits from their beginnings, includes case filings, amicus briefs, prior opinions, academic articles, commentary and more. SCOTUSblog, a reliably informative source for cases before the Court, features updates on ACA procedural questions and filings as well as Lyle Denniston's 10-part series on the key issues in the case. In an unusual move, the Court's own website had a section dedicated to the ACA litigation with court filings even before the certiorari grant; party and amicus briefs will continue to be filed with the Court until mid-March. Finally, for general information about the ACA and its implementation timeline, I recommend the Kaiser Family Foundation's section on Health Reform.
This Supreme Court case brings to the fore important and perennial questions about the meaning of the Constitution, the extent of federal power, and the role of the judiciary in reviewing the policy choices of elected officials. Moreover, the oral argument will occur during the lead-up to a presidential election in which the ACA and our health care system are key issues. All of this should make for a riveting three days of oral argument and a much-anticipated decision.
Sallie Sanford is an Assistant Professor of Law at the University of Washington School of Law. She teaches health law both at the law school and the School of Public Health. Her research interests include health care delivery systems, health administration law, Medicare and Medicaid, comparative health law, and medical and administrative ethics. Sanford has previously written on the issue of health care reform for JURIST.
Suggested citation: Sallie Sanford, Understanding the Health Care Reform Litigation, JURIST - Forum, Feb. 16, 2012, http://jurist.org/forum/2012/02/sallie-sanford-health-care.php.
This article was prepared for publication by Jonathan Cohen, the head of JURIST's academic commentary service. Please direct any questions or comments to him at firstname.lastname@example.org