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U.S. Supreme Court to Consider Validity of National Health Care Reform

March 26, 2012

During the week of Mar. 26, 2012, the U.S. Supreme Court heard several hours of oral argument on the constitutionality of the Patient Protection and Affordable Care Act (PPACA) of 2010, commonly called National Health Care Reform (or derisively referred to as “Obamacare”). The cases before the Court arise from the 11th Circuit Court of Appeals, most notably a legal challenge initiated by Florida’s attorney general and later joined by 25 additional states (including Pennsylvania). Given the massive substantive and political stakes – in a presidential election year, no less – many consider the challenge to the PPACA to be among the most significant challenges to the legitimacy of a federal law in decades.

Here is a brief primer on the issues argued before the Court:

Individual Mandate and the Commerce Clause. The primary challenge to the PPACA concerns the Act’s “individual mandate,” a provision effective in 2014 that requires individuals either to buy health insurance or face financial penalties. Opponents of the PPACA argue that Congress lacks authority under the Commerce Clause of the U.S. Constitution (Article 1, Section 8) to force individuals to purchase any particular product, including health insurance. Supporters claim that if Congress cannot regulate health care – the nation’s largest single industry – then its constitutional power to regulate interstate commerce is hollow. This is the key legal issue in the case and the main political issue as well – can Congress legitimately require a U.S. citizen to purchase a specific product, even for the greater good?

Medicare Expansion and the 10th Amendment. A less-publicized, but equally important aspect of the PPACA is the 2014 expansion of Medicare coverage to all citizens within 133 percent of the federal poverty threshold, which is estimated to add more than 10 million new Medicare recipients. While the federal government will initially cover 100 percent of the added costs related to that expansion, over time the states may be required to bear up to 10 percent of the new costs or risk losing all federal Medicare funding. Opponents of the law have challenged the new Medicare costs and violating the states’ rights under the 10th Amendment to the Constitution, notwithstanding that the states will retain the choice whether to participate in the expansion (albeit subject to penalties).

Severability and the Tax Anti-Injunction Act. Many experts have opined that the PPACA will survive the Supreme Court’s review, but in the event that provisions are deemed unconstitutional, what happens then? In other words, may the offending provisions be “severed” from the rest of the law, which would remain intact, or must the court invalidate the entire statute in one fell swoop?  Interestingly, the Supreme Court itself has appointed outside counsel to address the severability issue, which may indicate some level of concern about the aftermath of its decision.

Finally, there is also a chance that the Court could simply elect not to address the constitutionality of the PPACA at all. If so, the Court would be relying on the federal tax anti-injunction act, which prohibits any court from enjoining imposition of a federal tax until the tax has been collected. As applied to the PPACA, any tax penalties related to a person’s failure to meet the individual mandate to buy health insurance are not slated for collection until April 2015. In theory, the anti-injunction act could be read to prohibit the Court from invalidating the individual mandate until after it has been placed in effect in 2014 and penalties collected in 2015. Many who believe that the Court will seek to avoid taking a position on this hottest of hot button issues in the middle of a presidential election year feel that the anti-injunction act provides the Court with an easy out.    

The suspense over the manner of resolution of each of the above issues will continue for the next several months. The Court is not expected to issue any decision until after completion of the spring term, in late June 2012. Until then, politicians, talking heads and virtually everyone else will be entitled to their opinions and nothing more on the future of one of the most significant and controversial pieces of federal legislation in 50 years.

If you have questions about National Health Care Reform, and how to approach bargaining in the current health care environment, please contact the Employee Benefits Department at Willig, Williams & Davidson.

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