On Monday, November 14, 2011, the U.S. Supreme Court agreed to review four key legal and constitutional questions arising out of the federal Patient Protection and Affordable Care Act:
1. Is the individual insurance coverage mandate constitutional?
2. If not, can the rest of the health care law survive without it?
3. Does the Tax Anti-injunction Act bar challenges to the individual mandate until it has gone into effect in 2014, and is actually enforced against a taxpayer?
4. Is the Medicaid expansion, which Congress is requiring states to shoulder, constitutional?
A total of four U.S. Courts of Appeals have examined the federal health care law to date; two have upheld it as a valid exercise of Congress’s constitutional power, one has dismissed challenges on jurisdictional grounds, and the fourth, coming from the 11th Circuit, held the key individual mandate portion of the law unconstitutional. It is this last decision that is the primary vehicle for the high court’s review.
The central issue in all of the challenges is whether Congress has the constitutional power to require individuals to purchase health insurance (the minimum coverage requirement) or face a penalty when they pay their income tax (the individual mandate). Only the United States Court of Appeals for the 11th Circuit has struck down the mandate.
That case, State of Florida, et al. v. HHS, et al, decided in August 2011, created a split in the Circuits and set the stage for the Supreme Court’s decision to review the law. Although the appeals court found that Congress exceeded its constitutional power under the commerce clause in enacting the individual mandate, it also found that the rest of the law could stand. This latter action reversed the lower court ruling declaring the whole law unconstitutional. The case was closely watched because it was brought by the attorneys general of 26 states.
The unconstitutional finding in State of Florida contrasted with the June 2011 decision from the 6th Circuit in Thomas More Law Center v. Obama, which upheld the minimum coverage/individual mandate. The Court affirmed the lower court decision and found the minimum coverage provision to be an economic regulation, rejecting the challenge that the provision was not economic and therefore beyond the reach of Congressional power.
The Fourth Circuit rejected two constitutional challenges to the individual mandate on jurisdictional grounds in September 2011. In the first, the Commonwealth of Virginia v. Sibelius, the court held the State of Virginia did not have standing to sue the federal government and ordered the case remanded and dismissed for lack of subject matter jurisdiction. Virginia tried to argue that its newly-enacted state law, The Virginia Health Care Freedom Act, conflicted with the federal law and gave it standing. The court rejected the argument because Virginia’s new law had no enforcement mechanism and regulated no state program, so there was no invasion of the state’s sovereignty. The law simply tried to immunize Virginians from the operation of federal law
In the second case, Liberty University v Geithner, the Court held the Tax Anti-Injunction Act divested it of jurisdiction. The Act prohibits pre-enforcement actions that seek to restrain the assessment of a tax. The Court found the individual mandate to be a tax, and concluded that a challenge can only be brought after an individual fails to buy health insurance and is required to pay the penalty. This approach would defer a decision on the individual mandate until at least 2014. The lower court had concluded the Anti-Injunction Act did not apply, and upheld the constitutionality of the individual coverage minimum.
Most recently, on November 8, 2011, the U.S. Circuit Court for the District of Columbia affirmed Congress’s constitutional authority to enact the individual mandate in Seven-Sky et al v. Holder et al. The majority held the mandate and the penalty are not tax provisions, so the Anti Injunction Act did not apply.
In Vermont, due to the implementation of Act 48, the health care legal framework is shifting even more than it has been for years under Catamount Health, the Blue Print for Health, and the annual adjustments to the public programs designed to cover more people through Medicaid, VHAP, Dr. Dynasaur, SCHIP and the pharmacy programs. Our Act 48 commits the State to developing a health insurance exchange and availing ourselves of the funding and waivers available to states under the Patient Protection and Affordable Care Act. Consequently, any changes in the federal law will affect how we proceed with state health care reform and need to be carefully tracked. If the individual mandate is struck down, it is not necessarily a killing blow to Vermont’s reform efforts. However, if the other parts of the law fall as well, there would be a significant impact on how we finance state reform.
Oral arguments are anticipated to be in March, with a decision expected in June.