Supreme Court Hears First Issue: Jurisdiction

Seen by supporters as the Obama administration’s signal achievement, the Affordable Care Act was challenged the day it was signed, March 23, 2010. Within months of its passage, 30 separate lawsuits had been filed against it, several involving states as plaintiffs. One — brought by Florida and joined by 25 other states and the National Federation of Independent Businesses — was accepted on appeal by the Supreme Court last November. 

The process that begins with today’s arguments may lead to a clear decision by the end of June. That is, unless the court rules that the centerpiece of the law, the so-called individual mandate, is not ripe for a decision until 2015. It is this jurisdictional question that will dominate today’s initial court consideration.

Anti-injunction

At issue is a 19th century anti-injunction statute that bars courts from litigating a tax case until the tax in question has been levied. Without that law, experts say, citizens would cry foul every time a new tax law was enacted. If judges enjoined every tax law upon enactment, the federal government would be unable to raise revenues. So courts must wait until the tax is in effect.

The Supreme Court’s schedule

March 26: 10:00 to 11:30
Issue: Can the court decide the constitutionality of the health law’s individual mandate provision now?

March 27: 10:00 to 12:00
Issue: Is the health law’s individual mandate provision, which requires nearly everyone to have health insurance, constitutional?

March 28: 10:00 to 11:30
Issue: If the individual mandate provision is found unconstitutional, can the rest of the health law stand?
1:00 to 2:00
Issue: Does the federal government have the constitutional authority to call for expansion of Medicaid to 16 million more people?

Audio recordings and unofficial transcripts of the oral arguments will be posted on the Supreme Court’s Web site no later than 2:00 p.m. each day for arguments heard in the morning, and 4:00 p.m. for the argument to be heard in the afternoon of March 28.
http://www.supremecourt.gov/Default.aspx

Why is this an issue in the health law case? Because, to enforce a legal requirement that everyone have a health insurance policy, the law amends the federal tax code to include a monetary sanction on those who don’t buy one. The sanction will not be applied until one year after the individual mandate takes effect in January 2014.

Although the issue is technical in nature, it goes to the heart of the opposition to the law. A tax by any other name is still abhorrent to many Americans.

Arguments on this issue will hinge on the narrow question of whether the sanction is a “tax” or a “penalty”. If it is characterized as a tax, the anti-injunction law applies, and resolution on the individual mandate would be delayed nearly three years. If it is considered a penalty, the high court can rule now. 

When the Obama administration first started defending the law in lower courts, it argued repeatedly that the “penalty” for failing to buy health insurance was indeed a “tax” and therefore not ripe for litigation. But since it became clear that the Supreme Court would hear the case, the administration has argued that the anti-injunction act is not a barrier to determining the constitutionality of the law.

Although neither the administration nor health law opponents currently assert that the anti-injunction law applies, the court is considering the issue to determine whether it has jurisdiction to decide the individual mandate question. To aid its decision making, the court appointed outside counsel to argue in favor of applying the anti-injunction statute.

Other issues

While the individual mandate will occupy the court for much of the first two days of oral argument, it is another mandate — requiring the expansion of Medicaid to about 16 million people with incomes below 133 percent of poverty — that may be most critical for states.

Medicaid, the joint federal-state program for low-income citizens, is commanding an increasing share of states’ budgets. It covers about 60 million people and costs the states and federal government together more than $400 billion annually. Every year, the price tag goes up. If the Medicaid portion of the health law is upheld, the work of expanding Medicaid access will be squarely on states’ shoulders, although the initial financial burden will be primarily on Washington.

States have already been laying the groundwork for the Medicaid expansion, because waiting until the court decides would mean missing the law’s deadlines. For the same reason, most states have been developing so-called health insurance exchanges, the law’s central mechanism for extending health care access to millions of uninsured Americans.

If the high court strikes down the individual mandate alone, while leaving intact the Medicaid provisions, the direct impact on states would be small. That’s because enforcement of the individual mandate is the federal government’s job. Still, a ruling against the individual mandate could spur congressional action to amend or repeal the entire health law, creating more uncertainty for states.

The final question is whether a ruling against the mandate means the entire law must be struck down. Plaintiffs argue that the entire law should fall if the mandate is overturned, because the remainder of the law would not function as Congress intended it.

The administration has argued that only two other provisions would need to fall if the mandate is struck down: a requirement that insurance companies cover everyone, even those already sick; and a requirement that insurance companies charge the same rates to everyone within a given market regardless of health status.

Since none of the parties is arguing that the mandate could fall and the entire remaining law still stand, the court appointed outside counsel to argue that position.

Lower court rulings

Before the high court accepted the case, four circuit courts of appeals handed down decisions on the health law, addressing one or more of the issues now under consideration. (Three other circuit courts ruled that the plaintiffs did not have standing and dismissed the case.)

The 4th Circuit Court of Appeals in Richmond, Virginia, ruled that the anti-injunction act applied, prohibiting a ruling on the individual mandate until 2015. The case was sent back to a lower court.

The 6th U.S. Circuit Court of Appeals in Cincinnati upheld the individual mandate provision. On the anti-injunction act the court wrote that Congress’ choice of words was the deciding factor. A “penalty” is a penalty, the court wrote, not a tax.

The 11th U.S. Circuit Court of Appeals in Atlanta ruled that the individual mandate is unconstitutional, but upheld the Medicaid expansion. It also found that the rest of the law could stand on its own and was therefore “severable.”

The Court of Appeals for the District of Columbia upheld the individual mandate. As for the anti-injunction issue, the court wrote that Congress “deliberately” used the word “penalties.”

Only one lower court ruled that the individual mandate could not be severed from the rest of the law. U.S. District Court Judge Roger Vinson, in Pensacola, Florida, declared the individual mandate unconstitutional and ruled that it was so integral to the law that the entire statute was invalid.