Health Care Law Blog

Supreme Court to Hear Challenges to Health Care Reform Law

In late 2011, the Supreme Court of the United States announced that it would take up four issues regarding the Patient Protection and Affordable Care Act ("PPACA").  The Court is expected to hear oral arguments in late March of 2012 and provide a decision in June of 2012.

Three of the four issues to be reviewed by the Court center around PPACA's Individual Mandate.  The Individual Mandate (also known as the minimum coverage provision) requires that, beginning in 2014, individuals who fail to maintain a minimum level of health insurance coverage for themselves and their dependents pay a penalty, calculated in part on the basis of the individual's household income as reported on the individual's federal income tax return.  This is likely the most controversial provision of PPACA.

The four issues to be considered by the Court are as follows:

1.  Anti-Injunction Act Issue

The Anti-Injunction Act issue is expected to be the first issue heard during oral arguments.  As stated above, an individual who violates the Individual Mandate beginning in 2014 will be subject to a new penalty, reportable on his federal income tax return.  The Anti-Injunction Act generally bars legal challenges to new tax law provisions until those tax law provisions have been enforced.  The Individual Mandate's penalty provisions will not be enforced against any individual until 2014 at the earliest, but more likely not until 2015.  The Court will have to determine whether the Individual Mandate's penalty is just that, a penalty, or whether it is really a tax.  If the Court determines that it is a tax, then a decision on the constitutionality of the Individual Mandate may be delayed until after the Individual Mandate takes effect. 

2.  Individual Mandate Issue

Assuming the Court determines that the Individual Mandate is not a tax, the next issue before the Court is whether Congress has the authority to require individuals to buy health insurance.  The Obama administration has argued that Congress had the authority under the Commerce and Necessary and Proper Clauses of the United States Constitution to enact the Individual Mandate.  The administration has also argued that Congress's taxing power provides an independent ground with which to uphold the Individual Mandate.  The twenty-six states challenging the constitutionality of the Individual Mandate submit that while the Constitution grants Congress the power to regulate commerce, it does not grant Congress the power to compel individuals to enter into commerce through the requirement to purchase health insurance.   

3.  Severability Issue

If the Individual Mandate is deemed unconstitutional, the Court will then have to determine whether the unconstitutional Mandate can be severed from the rest of PPACA, leaving remaining PPACA provisions in place, or whether PPACA as a whole should be struck down.  The Obama administration has argued that even if the Court finds the Mandate unconstitutional, the entire law should not be invalidated.  Challengers to PPACA argue that without the Individual Mandate, Congress would not have enacted many of the other PPACA provisions and that PPACA should be invalid in its entirety.   

4.  Medicaid Issue

PPACA amended the Medicaid program to require that states make their Medicaid benefits available to individuals with incomes up to 133% of the federal poverty level.  A state that declines to expand its Medicaid program accordingly risks losing all federal Medicaid funding.  Prior to this, states had some discretion to determine Medicaid eligibility. 

Challengers of this provision have argued that this expansion is unconstitutionally coercive. Conversely, the Obama administration has argued that it is not forcing any state to expand its Medicaid program because a state, at any time, can voluntarily opt out of Medicaid.  The last time that the Court addressed an issue of this nature was in the 1980s when the Court held that a federal law that required states to raise their legal drinking age to 21 in exchange for continued federal transportation dollars was constitutional. 

It remains to be seen how the Court will rule on each of these four issues.  But even if the Court finds in favor of the law in all respects, a Republican victory in the upcoming presidential election would likely place PPACA's future in jeopardy again.

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(This article will appear in the April 2012 issue of the Michigan Defense Quarterly.)

Categories: Health Care Reform, Health Insurance Exchange, Regulatory