Jones & Bartlett Learning Health Blog

    Health Reform and the Supreme Court Decision – Part 2

    Posted by Cassie Peterson on May 8, 2012 5:02:50 PM

    Jones & Bartlett Learning Author and Health Policy Expert Joel Teitelbaum Weighs in on the Health Reform Case Before the Supreme Court.

    During the final week of March, the United States Supreme Court engaged in an historic debate about the meaning and constitutionality of the Patient Protection and Affordable Care Act (known as Affordable Care Act, or ACA).  The culmination of some 30 legal challenges to the ACA, the Supreme Court heard oral arguments on a series of legal issues:

    1. Whether the ACA’s individual coverage requirement is a tax for purposes of the Anti-Injunction Act.
    2. Whether Congress has the power under Article I of the Constitution to enact the minimum coverage requirement.
    3. Whether, if the coverage requirement is found unconstitutional, it is “severable” from the remainder of the ACA.
    4. Whether the ACA’s requirement that states expand Medicaid eligibility or risk losing federal funds is unduly coercive in violation of the Tenth Amendment.

    In this blog post, the second of a four-part series, I focus on questions two and three.  The first post discussed Question One, , the third post will discuss the question concerning the Medicaid expansion, and the fourth post will describe the Court’s eventual ruling in the case, which is expected by the end of June.

    Whether Congress has the power under the federal Constitution to enact the minimum coverage requirement (also referred to as the “individual mandate”) was the headlining issue in the lead-up to the oral arguments.  The creation of the minimum coverage requirement has its roots in the fact that, unlike most other industrialized countries, the U.S. relies heavily on the private market to provide health insurance to the population.  However, because this private system resulted in serious market failure (namely, 50 million uninsured Americans), Congress looked in the ACA to remedy the failure while retaining an insurance system heavily reliant on private sellers.  The result: a requirement that all individuals purchase health insurance, with premium subsidies for certain individuals who lack the means to purchase it on their own and financial penalties for those who ignore the requirement.

    As a matter of constitutional law, the minimum coverage requirement raised two questions that divided the lower federal courts (and the Justices at oral argument): whether an individual’s remaining uninsured (either as a matter of choice or for reasons of affordability or access) is the type of activity that Congress can regulate pursuant to its Commerce Clause powers and, if so, whether the ACA’s coverage mandate is a constitutional solution.  In essence, those who argue that Congress exceeded its Commerce Clause authority in passing the coverage requirement argue that while the Constitution allows Congress to regulate commerce, it does not permit the legislature to force individuals to engage in commerce through the purchase of a private-market good.

    At oral argument, the debate broke along two very different views regarding what, exactly, the minimum coverage requirement aimed to do.  On one hand, the more liberal-leaning Justices seemed to view the requirement as a regulation of the overall health care marketplace, and that that marketplace is something in which all Americans already participate (because, at one time or another, everyone needs and uses health care services).  Viewed in this way, the ACA’s coverage requirement is a constitutionally valid regulatory response to an existing market that is functioning poorly and, many would argue, unfairly.  According to this approach, the individual mandate creates a more stable health insurance system that guarantees access to coverage (and thus, for many people, access to care) that is relatively affordable.

    Some of the more conservative-leaning Justices offered up a very different view of the minimum coverage requirement.  To them, the requirement does not regulate individual behavior in the health care marketplace but instead creates a new marketplace and then forces individuals to buy a product sold in that market.  Under this view, the requirement that individuals purchase insurance – i.e., the personal conduct being regulated -- lacks a sufficient connection to commerce to fall inside the scope of congressional Commerce Clause power that the Court has legitimized in the past.  To rule otherwise, according to this perspective, would mean that Congress could in the future create other markets for the purpose of regulating them, and there would exist no standard by which the Court could effectively restrain Congress’s Commerce Clause power.

    Were the Supreme Court to rule that the minimum coverage requirement is constitutional, there would be no need for it to address the third question about which it heard arguments – whether the requirement is “severable” (i.e., can be severed, or separated, from the rest of the ACA).  If it finds the mandate unconstitutional, however, it must grapple with the severability issue, since the ACA itself offers no direction about whether Congress anticipated that the remainder of the law would remain in effect if the mandate were invalidated.

    If it reaches the question of severability, the Court has three general responses at its disposal; these options were debated to varying degrees at oral argument.  The first option is to simply sever the minimum coverage requirement, leaving the rest of the ACA intact.  This perhaps is the option most consistent with Supreme Court precedent because, for statutes without a specific severability provision, the presumption has been in favor of striking down only the unlawful section of the statute (an unconstitutional provision may be severed from other constitutional parts of a statute unless it is “evident that [Congress] would not have enacted those provisions which are within its power independently” of the unconstitutional provision).  Furthermore, given that the great bulk of the ACA has little to do with private insurance regulation and that many ACA provisions have already gone into effect, this option carries both legal and practical weight in its favor.

    A second option at the Court’s disposal is to sever the coverage requirement along with other provisions that are intertwined with the coverage requirement.  The two sections most often debated in this context – and the ones the Obama Administration advocated for in the event the coverage requirement is found unconstitutional – are the “guaranteed issue” provision (which requires private insurers to sell to all-comers, regardless of individuals’ past or current health status) and the “community rating” provision (requiring insurers to set mainly uniform premiums, though some factors – such as age – could continue to be factored into rate-setting).  The reason these provisions are most often mentioned as possible severability targets is because they amount to the insurance requirement’s quid pro quo: if under the ACA most everyone must carry health insurance, it must be made easier for people who historically have been shut out of the private insurance market (say, based on disability) to gain access to coverage, and if the insurance industry is now being paid premiums by tens of millions of people who historically were not paying premiums, they must not target relatively high-risk consumers with higher premiums.  Thus, the argument goes, if one side of the deal (the mandate) collapses, the other side (guaranteed issue and community rating) must, too.

    A third option before the Court (and the one Justice Scalia seemed most in favor of) is to not sever the minimum coverage requirement at all – but instead invalidate the entire ACA along with the coverage requirement.  Although this could easily be described as the most “activist” position, and while the coverage requirement is hardly essential to the rest of the ACA as a whole, this approach has a lot of traction with certain segments of the general public and many states.  Furthermore, there is a consequence to striking down the entire ACA that may be attractive to certain members of the Court: by invalidating the whole statute on severability grounds, it obviates their need to decide whether the ACA’s requirement that states expand Medicaid eligibility or risk losing federal funds is unconstitutionally coercive.  This topic will be discussed in the next blog post.

    _________________________________________________________

    Joel Teitelbaum, JD, LLM is an Associate Professor and the Vice Chair of Academic Affairs in the Department of Health Policy at the George Washington University School of Public Health and Health Services. He also serves as Managing Director of the School’s Hirsh Health Law and Policy Program. Along with co-author Sara Wilensky, Professor Teitelbaum is the author of Essentials of Health Policy and Law from Jones & Bartlett Learning, which recently published in a Second Edition. (Qualified instructors are invited to request review copies here.  Professors Teitelbaum and Wilensky are also the authors of an eChapter on Health Reform which may be bundled with any Jones & Bartlett Learning text at no additional cost.

    Continue to Part 3...

     


    Topics: Commerce Clause, Constitution, Affordable Care Act (ACA), Author, Congress, health administration, Medicaid, Patient Protection and Affordable Care Act, Supreme Court, Tenth Amendment, Supreme Court Health Reform Decision

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