U.S. Supreme Court

Chemerinsky: SCOTUS Tackles Law and Politics of the Health Care Act


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Erwin Chemerinsky

Without question, the most important issues before the U.S. Supreme Court this year concern the constitutionality of the Patient Protection and Affordable Care Act. The Supreme Court is devoting an entire week of oral arguments, six hours over three days, to United States Department of Health and Human Services v. State of Florida and National Federation of Independent Business v. Kathleen Sebelius.

The potential consequences socially, legally and politically are enormous. The outcome could very well shape how health care is provided in this country for decades to come. If the court invalidates this law–and one of the issues is whether the entire act should be struck down–it will be the first time since the New Deal that a major federal regulatory statute has been declared unconstitutional. And there is little doubt that whatever the court decides could have an impact on the outcome of the November presidential election.

The court has granted review on four questions that have been briefed and that will be argued separately. First, the court will face the question of whether the minimum coverage requirement–often called the individual mandate–should be regarded as a tax and, if so, whether the federal Anti-Injunction Act precludes the federal courts from considering its constitutionality at this time. The individual mandate requires that individuals either purchase health insurance or pay a penalty to be collected by the Internal Revenue Service.

The Anti-Injunction Act provides that “no suit for the purpose of restraining the assessment or collection of any tax may be maintained in court by any person.” This provision is meant to keep federal courts from interfering with the collection of taxes. Its effect is to require that a person pay a tax and then bring a challenge to its constitutionality, rather than being able to seek an injunction in advance. Actually, the court has to decide a threshold question: is the Anti-Injunction Act a limit on the subject matter jurisdiction of the federal courts? Neither party has raised it and the court therefore can address whether the Anti-Injunction Act applies only if it is deemed jurisdictional.

If the court holds that the Anti-Injunction Act is jurisdictional, it must then consider a host of legal issues. Is the individual mandate properly regarded as a tax or, more precisely, does the Anti-injunction Act apply to the type of penalty provided for in the Affordable Care Act? The challengers to the Affordable Care Act say that they are not seeking to restrain the assessment or collection of the penalty, but only of the requirement that people buy insurance. Is that a meaningful distinction? Also, the Anti-Injunction Act bars suits by “any person.” Is a state government a person for purposes of the act?

The 4th U.S. Circuit Court of Appeals held last year in Liberty University v. Geithner that the Anti-Injunction Act is jurisdictional and that it bars constitutional challenges to the Affordable Care Act. If the Supreme Court agrees, then federal courts will not be able to rule on the constitutionality of the individual mandate until 2015.

The second issue before the Supreme Court is whether the individual mandate is within the scope of Congress’s power either to regulate commerce among the states or to tax and spend for the general welfare. As for the former, since 1995 the Supreme Court has said that Congress can act under the commerce clause in three circumstances: it can regulate the channels of interstate commerce; it can regulate the instrumentalities of interstate commerce and persons or things in interstate commerce; and it can regulate economic activities which taken cumulatively have a substantial effect on interstate commerce.

It is the third prong of this test that is relevant in evaluating the constitutionality of the individual mandate. The 11th U.S. Circuit Court of Appeals held that individuals who choose not to purchase insurance are not within commerce; the court said that their actions are “marked by the absence of a commercial transaction.” On the other hand, everyone in the United States will need health care at some point and everyone therefore is engaged in economic activity either by self-insuring or purchasing insurance. The health insurance industry is $850 billion and health care costs are $2.5 trillion or 17 percent of the gross domestic product.

The United States argues in the alternative that even if the individual mandate is not within the scope of the commerce power, it still can be upheld as a tax within Congress’s power to tax and spend for the general welfare. Since 1936, no tax has been struck down as exceeding the scope of Congress’s authority. If the court reaches this question it will need to decide whether there is a meaningful distinction between a tax and a penalty, the term used in the Affordable Care Act, and whether it matters that the president did not call it a tax, though many members of Congress did.

The third matter before the court is whether other provisions of the Affordable Care Act are severable if the minimum coverage provision is declared unconstitutional. In other words, if the Supreme Court finds that the minimum coverage provision exceeds the scope of Congress’s powers, should only that provision be declared unconstitutional or should the entire Affordable Care Act be declared unconstitutional?

The Affordable Care Act is a large statute, doing many things. For example, one aspect of the act is to provide tax credits for small businesses to increase the subsidy for employee health coverage, while at the same time imposing a tax liability on large employers that do not provide adequate coverage to full-time employees. Another part of the act increases Medicaid coverage–the constitutionality of which is one of the separate issues before the court–seeking to add as many as 10 million individuals to the Medicaid rolls in the next decade.

Additionally, the act regulates many aspects of the market for health insurance. For example, insurers are generally required to provide family coverage to include adult children until age 26. Also, the act bars insurers from denying coverage to individuals because of pre-existing medical conditions. The act also changes aspects of Medicare payment rates and reimbursements so as to significantly reduce the costs of the Medicare program to the government.

The act also has a number of other provisions that are not directly related to regulating the provision of insurance, but relate to the health care system. For example, the act requires chain restaurants to disclose nutritional information about standard menu items, establishes a National Prevention, Health Promotion, and Public Health Council, amends an aspect of the False Claims Act, and reauthorizes the Indian Health Care Improvement Act.

The 11th Circuit ruled that these provisions are independent of the individual mandate and upheld them while striking down the individual mandate. The challengers argue that the individual mandate is “the very heart of the act” and that the law would not have been adopted without it. Ultimately, the question of severability is one of congressional intent. The question that the court will need to decide if it strikes down the individual mandate is whether-–as the court said in the 2006 ruling, Ayotte v. Planned Parenthood of New England–Congress would “have preferred what is left of the statute to no statute at all.”

The final issue before the Supreme Court is whether the increased burden on the states for Medicaid funding violates the Tenth Amendment. The Affordable Care Act expands Medicaid eligibility by requiring coverage to those with incomes up to 133 percent of the federal poverty level. Under the act, the federal government provides additional funds: it will pay 100 percent of the cost of coverage of newly eligible individuals until 2016, and this will gradually decrease to 90 percent in 2020.

The states argue that the sheer size of the Medicaid program leaves them no choice but to participate and that the additional requirements are so onerous as to be compulsion that violates the Tenth Amendment. But the United States argues that no state is required to participate in the Medicaid program and that if they do so, they are required to meet its conditions. The United States says that there is an important distinction between states facing a hard choice over whether to forgo federal Medicaid funding and states being commandeered and coerced. The Supreme Court granted review on this issue even though every lower court has rejected the Tenth Amendment challenge.

Thus, the legal issues before the Supreme Court are many and complex. Underlying it all, of course, is the political context. Every Republican in Congress voted against the Affordable Care Act. Every judge who has the reached the merits who was appointed by a Republican president, with two exceptions (6th Circuit Judge Jeffrey Sutton and District of Columbia Circuit Judge Laurence Silberman), has voted to strike it down. Every judge who has reached the merits who was appointed by a Democratic President, with one exception (Eleventh Circuit Judge Frank Hull), has voted to uphold it. Will the Supreme Court justices see it any differently?

Erwin Chemerinsky, Dean and Distinguished Professor of Law at the University of California, Irvine School of Law, is one of the nation’s top experts in constitutional law, federal practice, civil rights and civil liberties, and appellate litigation. He is the author of seven books, the latest being The Conservative Assault on the Constitution (Simon & Schuster, 2010). His casebook, Constitutional Law, is one of the most widely read law textbooks in the country. Chemerinsky has also written nearly 200 law review articles in journals such as the Harvard Law Review, Michigan Law Review, Northwestern Law Review, University of Pennsylvania Law Review, Stanford Law Review and Yale Law Journal. He frequently argues appellate cases, including matters before the U.S. Supreme Court and the U.S. Court of Appeal, and regularly serves as a commentator on legal issues for national and local media. He holds a J.D. from Harvard Law School and a B.S. from Northwestern University.

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