U.S. Supreme Court Hears Oral Arguments about Constitutionality of Affordable Care Act

Earlier this week, the U.S. Supreme Court heard an unprecedented three days of oral arguments in the lawsuits brought by 26 states and others challenging the constitutionality of the Patient Protection and Affordable Care Act (ACA).  The court focused on four issues: jurisdiction, the minimum coverage requirement (or individual mandate), severability, and the expansion of the Medicaid program.

The first technical issue was whether the courts had to wait until the implementation of key provisions of the ACA in 2014, such as the minimum coverage requirement and the operations of the state health insurance exchanges, before considering any legal challenges.  From the oral arguments on Monday, it seems that the justices are ready to make a decision about the law and will likely find that it does have jurisdiction to decide the lawsuits now.

The second issue is the central legal challenge to the ACA, the requirement that almost all Americans demonstrate that they have health care insurance coverage, or pay a penalty when they file their federal tax returns.  Congress’ constitutional authority to create and enforce this requirement is based both in its power to regulate interstate commerce and its taxation power.  There was much argument about whether “heath care” or “health care insurance” was the “commerce” being regulated, and whether a consumer’s “inactivity”, or failure to purchase health care insurance could be regulated.  The justices pressed the lawyers to define the limits of Congress’ power, asking whether Congress could require Americans to eat broccoli (because it is good for nutrition), or to purchase memberships in health clubs (because it is good for physical activity).

The U.S. Solicitor General defending the law did reference the existing, unchallenged, Congressional regulation of much of the health care and health care insurance market through laws such as HIPAA (regulating exchange and privacy of health information) and ERISA (regulating health insurance coverage offered as part of certain retirement plans) [and COBRA extending employer-based health insurance coverage after leaving employment]. He also noted that no one is challenging Congress’ authority to require “guaranteed issue” (no exclusions for pre-existing conditions or other reasons) of health care insurance or to establish uniform premium levels (community ratings) [or require a minimum “medical-loss ratio”, or the percentage of a health insurance premium that an insurer has to spend on direct medical care].

However, many of the justices were troubled by the extension of Congressional power to the consumer side of the market, requiring the purchase of health care insurance.  The Solicitor General’s best response was that it was simply moving the timing of when the purchase could be required from the “point of service” or consumption (when health care might be needed) to an earlier point in time, that would then support regulation that seeks to spread the risk (and costs) among more persons, including those uninsured who are now healthy (and therefore less costly).  The justices seemed particularly troubled by this argument, and therefore, may be the basis for overturning at least this section of the ACA.

If this minimum coverage requirement is indeed overturned, then the next issue of “severability” becomes more important: whether the rest of the ACA can survive legal challenge.  There is a principle in constitutional law that when a court overturns legislation, it should do so as narrowly as possible, preserving as much of the law as possible.  Here, the federal government argues that if the minimum coverage requirement is overturned, then the guaranteed issue and community ratings requirements also have to be overturned, but that all other parts of the ACA should continue to be implemented.  The challengers to the law argued that the minimum coverage requirement is so central to the law that the entire law must be overturned, and alternatively (humorously championed by Justice Antonin Scalia), that the ACA is so complex that the court cannot determine what is not severable from the minimum coverage requirement, and so should just overturn the entire ACA and let Congress “start over”.

The final argument by the challengers is that the expansion of eligibility for Medicaid to almost all individuals under age 65 who are below 133% of the federal poverty level (regardless of family status) is “coercive” to the states because there is some state matching funding required for the expansions.  However, Congress has changed the eligibility requirements for Medicaid in the past, and the matching requirements are relatively minimal (no state funds required for the years 2014-2016, and then gradual requirements of up to 10% state funds beginning in the year 2020).  While most legal observers doubt that the court would overturn this Medicaid expansion (no lower court agreed with the challengers on this argument), it is noteworthy that the Supreme Court asked for written and oral argument on this issue.

A decision by the U.S. Supreme Court is expected by June 2012.

This entry was posted in Health Care Reform, The iBau Blog. Bookmark the permalink.

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