By Melissa Hart
From the moment the Patient Protection and Affordable Care Act (ACA) was signed into law, it has been headed for the Supreme Court.
Suits challenging the law’s constitutionality were filed in courts all over the country. Most of the prominent Supreme Court litigators have already taken part in the case by authoring one of the dozens of amicus curiae briefs filed in the courts of appeals. The courts themselves reached their decisions much more quickly than they often do, understanding that theirs would not be the final word on the ACA. So it was no surprise when the Supreme Court announced that it would take the case.
What was somewhat surprising was that the court granted more than five hours of argument time in the case. Without question, the court’s decision will be one of enormous magnitude. The ACA has become the lightning rod for extremely divisive policy and political questions, and the outcome of this case will be viewed as a political victory for one side or the other. The politicization of any outcome will be heightened by the fact that a decision is most likely to come late in June, 2012, when the presidential campaign will be in full frenzy.
The Supreme Court, however, must consider not the political issues but the legal questions presented by the dispute. Those legal questions are actually relatively straightforward.
- Does the Anti-Tax Injunction Act prohibit consideration of the merits of the case until after 2014, when the challenged provisions of the law take effect?
The Fourth Circuit Court of Appeals concluded that the Anti-Tax Injunction Act bars pre-assessment review of any monetary payment—whether it is called a “tax” or a “penalty”—mandated by the Internal Revenue Code. The District of Columbia Court of Appeals rejected this view, observing that the Anti-Tax Injunction Act has not traditionally applied to limit review of exactions that the tax code deems “penalties,” as it does the payment that would be required of an individual who failed to obtain health insurance as required by the ACA.
Regardless of one’s views of the merits of the ACA, it would be very unfortunate if the court decides to delay resolution of the constitutional question in this manner. One of the reasons the ACA pushed many of its effective dates out to 2014 was to give states, insurers and individuals the opportunity to do the planning and work that would be necessary to have a system of full insurance and expanded coverage up and running. If the legal uncertainty that surrounds the law today continues, people will quite reasonably be hesitant to spend the time and money on the necessary infrastructure.
2. Is the ACA’s requirement that every individual have health insurance (the so-called “individual mandate”) within the scope of Congress’s power to legislate pursuant to the Commerce Clause?
On this issue, the Courts of Appeals are split, but with only one court concluding that Congress lacked authority to enact the individual mandate as part of the ACA’s broad regulation of the health care and health insurance markets. While the Eleventh Circuit took this view, the D.C. Circuit and the Sixth Circuit Court of Appeals both concluded that the law was constitutional. While the public debate about the ACA seems often to split along ideological lines, the decisions from these courts are notable in part because well-respected conservative jurists in both the D.C. Circuit and the Sixth Circuit have concluded that the act is constitutional.
The arguments for and against Commerce Clause authority in this context have been very extensively briefed in courts, written about in judicial decisions and opined on in law review articles.
Those who believe the act goes beyond what the Commerce Clause permits argue that the individual mandate does not regulate commerce because the choice not to buy health insurance is not economic activity but economic inactivity. While Congress may be able to require a range of behaviors from people who have chosen to participate in a national market, this law attempts to force certain conduct on people who do not want to participate in that market. The Commerce Clause does not give Congress the power to force individual citizens to buy a product they choose not to buy. If the Commerce Clause permits this regulation of inactivity, there is no logical stopping point to the reach of the federal government’s power.
On the other hand, those who believe the Commerce Clause does authorize Congress to require individuals to obtain health insurance as part of a larger regulatory plan note that the choice not to purchase health insurance is not a decision that avoids participation in the health care market, but is simply a decision about when and how to pay for the costs of health care. Those who do not purchase insurance to cover the costs of their medical care end up paying for that medical care—or passing the costs of the care onto the public—after they have received it. Thus, the decision to eschew health insurance coverage is an economic choice, with economic consequences, under even a limited definition of “commercial” or “economic.” Even if the decision to defer medical costs until after they were incurred, and the concurrent decision to shift the risk of individual inability to pay for these costs to the broader market, were somehow construed not to be an economic activity, the individual mandate would still be within congressional authority to enact as a “necessary and proper” part of a complex regulatory scheme. The Supreme Court observed just last year that Congress has the authority to use any “means that is rationally related to the implementation of a constitutionally enumerated power.” The Commerce Clause empowers Congress to regulate both the insurance industry and health care services, and an extensive record demonstrates that the individual mandate is more than just rationally related to effective national regulation of the market for health care. In fact, the individual mandate is an essential component of the Affordable Care Act. The act’s ban on pre-existing conditions and its requirement that insurance companies cover those who seek insurance will not work without the full participation that the individual mandate seeks to ensure. In states that have tried to enact the former without the latter, costs of insurance have skyrocketed. Under such a regulatory regime, people who are healthy forgo insurance until they are sick and purchase insurance just at the moment when the insurer will have to spend most on their care, without having previously paid premiums that would cover some portion of these costs. In order to make up for these losses, insurance companies must substantially increase premium rates for everyone. When premiums increase, there is even greater incentive for healthy individuals not to purchase insurance, leaving only the truly sick in the insurance pool. The requirement that all individuals obtain health insurance regardless of their current health status is thus a necessary part of an effective national health care law. (Given how central this provision is to effective enforcement of remaining provisions of the law, it is hard to see how the individual mandate can reasonably be severed from the rest of the ACA. That question is another one the Court will have to consider in reaching its decision next year.)
While these arguments are by now well-established, which side the court’s majority will take is far from certain. As noted above, several well-respected conservative judges have written extensively on the issue, explaining why the individual mandate falls within Commerce Clause power. Ideally, the court will similarly separate policy preferences concerning national regulation of health insurance from the legal issues presented by the case.
3. Are the spending conditions that the ACA’s Medicaid provisions impose on the states effectively “coercive,” such that they amount to an impermissible commandeering of the states?
Even those who have been following the ACA cases carefully as they have made their way through the lower courts were surprised by the court’s decision to take this question. There is no lower court split on the issue, and it has not been part of the extensive briefing by both parties and amici curiae. The basic premise of the argument is that Congress is using its Spending Clause authority to force states to take on the huge financial burdens of an expanded Medicaid program and that this use of the Spending Clause goes beyond what the Constitution permits. Up to now, the federal government has been able to condition receipt of federal funds on state willingness to participate in, or find acceptable alternatives to, federal programs. If the court were to conclude that the ACA went too far in using the Spending Clause, it would mark a very significant change in current law. While it has gotten little or no attention up to this point, it may be this issue that will make next year’s decision from the court a blockbuster decision. The legal issues presented by this question, however, are so complex that they are unlikely to become the stuff of prime time political posturing during the 2012 election cycle.