Health Center Federal Policy

The Supreme Court & Health Reform: An Overview of the Oral Arguments

by Olivia Szwalbnest, Regulatory Affairs Intern

On March 26, 27, and 28, the U.S. Supreme Court heard constitutional challenges from 26 states to the Patient Protection and Affordable Care Act (ACA) (which turned 2 years old on March 23).  This landmark health care case, Florida v. Department of Health & Human Services, lasted six hours over a three day stretch, making it the longest argument heard by the Court in 45 years.

Instead of considering the Act as one single issue, the Court broke down the argument into four issues: (1) jurisdiction, (2) the individual mandate, (3) severability, and (4) Medicaid expansion.

First, the Court considered whether the Court had jurisdiction to hear the case at this time.  The issue was whether the federal Anti-Injunction Act of 1867 prohibits the Court from having jurisdiction over the issue of the Act.  Under the Anti-Injunction Act, courts cannot strike down a tax law before it takes effect.  The Act’s penalties do not begin until 2015.  Because both the defendant and the plaintiff argued that the mandate is not a tax, the Court appointed an outside lawyer to argue on its behalf.

The second issue was whether the Act’s individual mandate, which requires nearly all Americans to carry health insurance, is a permissible regulation under the Commerce Clause.  The Commerce Clause gives the federal government the power to regulate interstate activity.  In arguing against the Act, the plaintiff asserted that because the decision not to buy health insurance is economic inactivity rather than activity it therefore does not fall under the scope of what the federal government can regulate.   Defending the Act’s constitutionality, on the other hand, the Administration’s attorney argued that the decision not to purchase health insurance has an economic effect (because at some point everyone will need health care and the costs of going to an emergency room for free care increases the costs of care for everyone else who does purchase insurance), it is within the federal government’s powers to regulate under the Commerce Clause.

The Court then focused its attention on the third issue, severability.  The question of whether different provisions of the Act are “severable,” or, can still stand even if the individual mandate is struck down, is an important one.  In his argument, the plaintiff stated that if the individual mandate is struck down then the entire Act must be struck down as well.  Without the mandate, he argued, the Act would merely be a “hollow shell.”  The Administration countered that argument by stating that even if the individual mandate is found unconstitutional, judicial restraint would require a limited approach.  Thus, instead of striking down the entire Act, the Court should only eliminate the guaranteed-issue and community-rating provisions, the two provisions that truly depend on the mandate for financing.

Finally, the Court examined the issue of Medicaid expansion under the Act.  This provision would change current Medicaid eligibility requirements, resulting in an estimated 16 million newly-eligible people whose income is below 133% of the federal poverty level and who are not in the current Medicaid eligibility categories of pregnant women, children, or disabled individuals.  The newly eligible would be paid for in substantial part with federal money given to the states  The issue of contention is whether the law would unconstitutionally coerce states into expanding their Medicaid programs because the Federal government has the power to withhold all of the state’s Medicaid funding if it does not comply.  While the plaintiff argued that it was coercion because the states could lose all Federal Medicaid money if they refused to comply with the new rules, the Administration’s attorney argued that the Medicaid expansion was merely an exercise of the spending clause and was in no way coercive, or any more coercive than it ever has been since Medicaid by definition is a voluntary state and Federal partnership.

The audio of the oral arguments can be found here, here, and here.  Stay tuned for the Court’s final determinations in just a few short months.

1 Comment

  1. It is interesting to think about how health centers might be affected by the ultimate Supreme Court decision expected in June. For example, if the court strikes down the entire law including the Medicaid expansion, this could have a profound impact upon the anticipated payor mixes and the financial stability of health centers.

    The perfect storm could end up being this: On the one hand, health centers are poised to expand and to meet the needs of people newly seeking health care. On the other hand, health centers may actually end up caring for more uninsured and sicker patients if the law is struck down in its entirety.

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