Tip Sheets

Affordable Care Act & the Supreme Court: What you need to know

On March 26, the Supreme Court starts six hours of oral arguments over three days – its longest case in years – on four separate legal questions arising from the Affordable Care Act. A decision is expected in late June. We talked to T.R. Goldman, a longtime legal journalist who has written about the case.

As Goldman noted, for court watchers, “the ruling could be one of the most important in years – or one of the most anti-climactic” – the latter if the court decides that it can’t rule on the individual mandate before it actually goes into effect. But whether the court upholds part of the law, all of the law, or decides it’s barred by statute from ruling right now on the case, the court’s decision will impact health care coverage, cost and delivery for governments, businesses and individuals. And it will reverberate in the 2012 elections. In fact, Goldman said, that’s why “the early betting is that the Court will conclude that it can rule on the mandate – the case is simply too important, both politically and economically, to punt.”

We are including some links to further reading, webcasts and health and legal blogs that may be useful. So far, the court has given absolutely no sign that it will deviate from its usual practices. No television. No real-time audio. A transcript will be available after the hearing. The briefs and documents are available online.

The five questions we asked Goldman to address are:

1. Is the individual mandate’s “minimum coverage provision” that requires most people to obtain health insurance constitutional?

2. If not – will the court strike the whole law down, or just certain sections (“severability”)?

3. What role does Medicaid expansion play in the legal case?

4. Can the court decide on the constitutionality of the mandate now, or under the Anti-injunction Act does it have to wait until mandate penalties are imposed in 2015?

5. What are some tips for health reporters trying to cover this – particularly those covering from afar?

Q: What are the key issues behind the constitutionality of the mandate?

When the Constitution was written, the framers gave Congress certain specific powers, known as “enumerated” powers. One of those was the so-called “Commerce Clause,” which gives Congress the power to “regulate commerce … among the several states.” That power was bolstered by the Constitution’s “necessary and proper” clause, which quite simply allows Congress to pass laws “necessary and proper” for carrying out those enumerated powers.

The question before the court is whether requiring, or mandating, an individual to buy health insurance goes beyond Congress’ commerce clause powers. Opponents of the mandate argue that if Congress can order people to buy health insurance, why can’t it order them to eat broccoli as well?

The Supreme Court has been interpreting both the commerce clause and the necessary and proper clause since at least 1819, including as recently as 2005 in Raich v. Gonzales. In that case, the Court decided that the federal government had the power to criminalize the use of home-grown marijuana even if a state had approved its medicinal use. Another famous commerce clause case the court will look to, Wickard v. Filburn, was argued in 1942 after a wheat farmer who exceeded his government-mandated quota was ordered to destroy his extra wheat and pay a fine. Filburn sued, arguing that the extra wheat he had grown was for personal use and did not involve interstate commerce. The Court was not persuaded and ruled that Congress’ ability to regulate commerce was so broad that even a single farmer’s decision, however local, had a small but measurable impact on the interstate wheat market.

Q: We hear that the commerce clause is usually about economic activity – but critics of the health law say this case is about “economic inactivity.” Can you explain that?

That’s an important point: whether not buying health insurance counts as economic activity. Twice in recent years, 1995 and 2000, the Court has placed limits on Congress’ reach when it invalidated two federal laws because they relied on the commerce clause to regulate non-economic activity.

Anticipating this argument, the drafters of the Affordable Care Act incorporated lots of economic data in the language of the law itself, noting that health care makes up 17 percent of the national economy and that, in 2008, some $43 billion in uncovered health care costs for the uninsured were “cost-shifted” to others, mostly in the form of higher premiums. The drafters of the law were trying to pre-empt any arguments that not buying health insurance was economic inactivity and hence could not be regulated by the commerce clause. They argue that not buying health insurance is inactivity in name only, and that it actually has big and measurable economic repercussions.  The law’s backers got support on this point from a conservative, Reagan-appointed appeals court Judge Laurence Silberman of the D.C. Circuit. He made clear that he didn’t like the health law – but that not liking something doesn’t make it unconstitutional. “[W]e think Congress can also regulate instances of ostensible inactivity inside a state. The aggregate effect of that behavior, after all, is just as injurious to interstate commerce,” he wrote, upholding the government’s key point about economic activity.

Q: What does “severability” mean and how does it relate to the Supreme Court case?

Severability means that if one part of the law is ruled unconstitutional, it can be “severed,” leaving the rest of the law intact.

The severability issue will only arise if 1) the court decides it can rule on the mandate before it goes into effect and 2) it rules the mandate itself is unconstitutional.

There are three different takes on this:

The 26 states that filed the suit believe there is no severability, and that without the mandate, the whole Affordable Care Act is rendered invalid.

The federal government believes that only two parts of the Affordable Care Act cannot work if the mandate is ruled unconstitutional: the guaranteed-issue provision, which requires insurance companies to cover everyone, regardless of any pre-existing conditions, and community-rating, which guarantees the same rates to everyone within a given geographic area regardless of their medical history. (In short, the government argues, cutting the mandate but leaving those provisions in would let people not get insurance until they get sick – skewing the risk pool and making insurance prices soar.)

The third take, being argued by an outside lawyer appointed by the court, is “complete severability,” that is, that the mandate is completely severable from every other part of the law, including the insurance regulations. The question, the lawyer argues, is congressional intent. Given a choice – would Congress would have preferred what is left of the statute (after the mandate is removed) to no statute at all? As a general legal principle, courts try to nullify as little of a legislature’s work as possible.

Of course, this whole problem, like the anti-injunction question, could have been avoided if Congress had exercised better statute-writing skills. Although in this case, that confusion arose in part from the complicated political context: The Senate bill didn’t include a severability clause, while the House version did. But the two versions were never melded into a final version – and the Senate bill became law.

Q: What’s Medicaid got to do with it?

A: The Court’s decision to consider the constitutionality of the health law’s Medicaid expansion came as a surprise to many. If the expansion is ruled unconstitutional, it could have far-reaching consequences affecting all sorts of government social programs. At the same time, legal scholars say, a ruling against the Affordable Care Act’s Medicaid expansion has the least chance of success.

Medicaid began in 1965 as a voluntary federal-state partnership, and has grown rapidly. Under the Affordable Care Act, Medicaid eligibility will be expanded in 2014 to all individuals under 65 with incomes up to 133 percent of the federal poverty level. The state plaintiffs say the expansion is unconstitutionally coercive because it compels or “commandeers” the states to enact without choice a federal regulatory program. They argue that while Medicaid is ostensibly voluntary, they will have no choice but to take part in the expansion because the federal government has not given them an alternative.

The government scoffs at that logic, noting that federal government will pay 100 percent of the extra costs associated with the expansion between 2014 and 2016, and 90 percent from 2020 and beyond. “No court has ever invalidated a federal funding condition on the coercion theory the states petitioners urge here,” the government has said. The states’ claim was dismissed by every lower court that examined the issue as well.

Q: Can you explain why the court may decide it can’t rule now?

A: The court could quite legitimately come to the conclusion that it’s barred by statute from ruling on the central legal question – the constitutionality of the mandate – under the Tax Anti-Injunction Act. That 145 year old tax law bars the court – any court, including the Supreme Court - from ruling on a tax until it’s imposed. Under our tax system, you pay first, then sue later for a refund. There’s a reason for this rule: the efficiency of the overall tax system. If every American could sue anytime they were taxed, and ask the court to enjoin that tax while the case was being heard, it would wreak havoc with the Internal Revenue Service. So the Anti-Injunction Act bars any lawsuit “for the purpose of restraining the assessment or collection of any tax.” Full stop.

But Congress didn’t use the word “tax” in the penalty section of the Affordable Care Act’s individual mandate requirement; instead, it used the word “penalty.” That made the decision easy for many lower courts, which ruled the Anti-Injunction Act does not apply because Congress called the punishment for failing to buy health insurance a “penalty.” If Congress has intended the penalty to be a tax, these courts reasoned, it would have called it one.

But there’s a slightly more complicated way to look at the word ‘penalty,’ also based on the language of the Affordable Care Act. Here’s how Judge Brett Kavanaugh of the D.C. Court of Appeals, arguably the most important of the 13 federal Appeals Courts, put it: “[A]s we learn in logic class, when A=B and B=C, then A=C. So it is here,” Kavanaugh explains. The language of the Affordable Care Act says that the “penalty” must be “assessed and collected” exactly like penalties in subchapter B of chapter 68. And guess what: penalties in chapter 68 subchapter B in turn must be ‘assessed and collected in the same manner as taxes.’ So, Kavanaugh concludes: “It follows that these Affordable Care Act penalties must be assessed and collected in the same manner as taxes.”

(It didn’t have to be that complicated; an earlier version of the health law did use the word “taxes,” but by the time the Senate got around to voting on the measure, it barely had the votes for passage, and the word “tax” was considered far more inflammatory than “penalty.”

The federal government isn’t the only one arguing for a decision now – the states that oppose the law also have sought to convince the Court that the Anti-Injunction Act does not apply. They say that the constitutionality question isn’t about the penalty but about the mandate itself. The mandate, they argue, exists “independently” of the penalty, a “substantive legal requirement that cannot possibly be characterized as a ‘tax.”

So the federal government wants an answer now. And the states want an answer now. And hospitals and insurers and other parts of the health system want an answer now.

But even though both sides of the case say the Anti-Injunction Act does not apply, the court is obligated to make up its own mind, and so it appointed an outside third party lawyer, Robert Long, to make the case that the Anti-Injunction Act does apply. The government and the states will both argue against Long.

Q: What tips do you have for health reporters covering this – who may not have a lot of legal writing experience?

Don’t assume anything! The working assumption of many court watchers is that at least five Justices will vote to uphold the mandate’s constitutionality. There’s really no way to know, however, what the court will do. And it doesn’t necessarily help to study the Justices’ lines of questioning, their facial expressions, and tones of disbelief when they pose certain questions during the oral arguments.

You can’t handicap. Most people think Justice Anthony Kennedy could be the decisive swing vote on the mandate, assuming the court’s four staunchly conservative justices believe the mandate unconstitutional. But that’s not a safe bet. Some of the other conservatives may agree with George W. Bush appointee Jeffrey Sutton in the 6th Circuit who wrote, in upholding the mandate: “Not every intrusive law is an unconstitutionally intrusive law.”

T.R. Goldman is a Washington, D.C., journalist who writes about health care and legal affairs.