Five Things to Know About the Supreme Court and Health Care Reform Act

 @DanRivoli
on November 15 2011 6:24 AM

The U.S. Supreme Court justices Monday decided to take on the 2010 U.S. health care reform act, formally known as the Affordable Care Act, already being dubbed the case of the century. The law is the centerpiece of President Barack Obama's domestic agenda, providing coverage to 32 million uninsured Americans.

The justices met on Thursday to examine which of five cases from the lower courts, if any, they would take. They chose three cases and set aside five and a half hours of oral arguments, with the bulk devoted to the heart of Obamacare: the individual mandate requiring most Americans to carry health insurance.

Here are five issues to know about the Supreme Court and the future of the Affordable Care Act.

1 More Than the Mandate

The individual mandate has drawn the biggest ire from opponents of the Affordable Care Act and, unsurprisingly, received the most attention in the courts.

But the high court decided to hear arguments on other pieces of the Affordable Care Act that are key to ensuring that the law fulfills its goals of insuring a large swath of Americans who are uncovered.

The issues the Supreme Court decided to hear include whether the law can remain intact without the mandate, a provision expanding Medicaid eligibility and whether the case is even ripe for the high court.

That the Court had large constitutional issues foremost in mind was reflected in the fact that it picked carefully among the issues presented to it in five separate appeals, then selected only those that bore most directly upon governmental power -- including its own authority to finally resolve this dispute between the national and state governments, wrote Lyle Denniston, a veteran Supreme Court reporter who blogs at SCOTUSblog.

2 Justices Can Punt on Mandate

The Obama administration ensured that the Supreme Court would take up the Affordable Care Act before the 2012 elections by taking steps to speed up the appeals process.

But the Supreme Court justices Monday provided themselves the opportunity to take a pass on deciding one of most crucial pieces of the health care reform law -- the individual mandate -- until 2014.

At issue before the court is the Anti-Injunction Act, a tax statute that was practically unknown before legal challenges to the health care law, which created a tax penalty to get Americans to comply with the insurance mandate. The act bars legal challenges to taxes before they are collected.

With the individual mandate going into effect in 2014, the justices could wait before acting on the provision's constitutionality.

The Obama administration had asked the court to consider this issue, but nonetheless believes the tax law is inapplicable to the Affordable Care Act.

They're very concerned with their jurisdiction as a general matter, Charles Rothfeld, special counsel at Mayer Brown, said of the Supreme Court. Obviously, in this case, there's a tremendous pressure on them to reach the case on their merits.

The courts of appeals are divided on the matter, with an appellate judge arguing in a dissenting opinion from the U.S. Court of Appeals for the District of Columbia last week that courts should hold off on Affordable Care Act challenges.

The majority opinion, however, decided that the penalty is just that, not a tax aimed at beefing up revenue.

3 Severing the Mandate

The individual mandate is certainly the most controversial piece of the Affordable Care Act. But the law also contains provisions that stop insurance companies from denying coverage based on pre-existing conditions and allows adult children to stay on their parents' plans longer.

These provisions, along with the rest of law, may go down with the individual mandate if the justices say they are inextricably linked. The justices could just as easily decide, as did one lower appeals court, that the law can stand without the mandate.

That issue of severability is a terrifically difficult one in this case because the act is so multifaceted, said Bruce Brown, partner at McKenna Long & Aldridge. The severability issue... could be the more politically intense issue because if the individual mandate is not severable, then those opposing the law are taking down very popular provisions of the law.

If the mandate falls without taking the Affordable Care Act with it, states and insurers would be in a difficult situation. For instance, without compelling healthy people who are less costly to cover to get insurance, companies will be forced to cover mostly sick or high-risk people.

Laws do come with severability clauses to give courts insight into their intention when drafting legislation. But the Affordable Care Act contains no such clause.

That leaves justices with deciding Congress' intent when deciding if striking down the individual mandate is fatal to the law as a whole.

If the legislative history or comments fails to clarify legislative intent, then the court has to try to put itself in the place of members of Congress and say how would they have voted had they been told they can't rely on [a certain provision], Rothfeld, of Mayer Brown, told the International Business Times. In that sense, it's an artificial situation.

4 Look to Congress for Fixes

Upholding health care reform while killing the mandate, slated to go into effect in 2014, would give lawmakers time to address the problem to ensure that the law works as intended, according to Parker Larson, an analyst at Leavitt Partners, a consulting group.

We essentially have a year, once the elections take place and there's been this turnover in Congress and potentially in the White House, to figure out another way to make provisions in the [Affordable Care Act] work, Larson told IBTimes.

Whether lawmakers and the White House figure out a Plan B to insure at a reasonable cost millions of Americans depends on the result of the 2012 elections.

Regardless of politics, there is no one sure-fire fix that has emerged as a consensus among policymakers.

It'll be interesting to see, in the absence of the mandate, what alternatives comes to the floor and how similar it looks to the mandate and how similar in its effect it is to the mandate, Larson said.

5 Medicaid Expansion Examined

Few court watchers thought that the Supreme Court would hear arguments on the constitutionality on the law's expansion of Medicaid eligibility. All of the lower courts were in agreement that the new requirements were constitutional, decreasing the likelihood that the justices will take the issue.

Under the Affordable Care Act, states must cover these new Medicaid enrollees. Though the federal government will cover the cost of the expansion, states will start kicking in 5 percent of the cost in 2017 and 10 percent in 2020.

In general, states cannot be forced to abide by federal laws, but they can be coerced with a promise that federal money will be revoked. For instance, states that impose lower legal drinking ages would lose federal highway funds.

Unlike highway funds, Medicaid is the single largest chunk of federal aid given to states, at 40 percent.

The states have been trying to get that issue in front of the Supreme Court for years, Brown of McKenna Long & Aldridge said in reference to Medicaid eligibility requirements.

The Supreme Court has upheld the federal government's ability to use funds to coerce states into complying with its laws. In an 1987 case relating to the legal drinking age, the court backed the federal government against South Dakota, which at the time allowed 19-year-olds to legally buy beer.

However, the court left itself wiggle room. Chief Justice William Reinquist wrote for the majority that Congress might be so coercive as to pass the point at which pressure turns into compulsion.

I think the court siding with the states on this issue is a long shot, Larson of Leavitt Partners said. [But] the implications of the court siding with the states would be huge.

Share this article

More News from IBT MEDIA