Preview of U.S. Supreme Court Arguments on Federal Health Reform

March 2012

Later this month, the U.S. Supreme Court will examine the constitutionality of the Affordable Care Act (ACA), potentially producing a landmark decision. For most cases, the Supreme Court allocates one hour for oral argument — 30 minutes for each side. For the health care reform case, the Court has scheduled six hours for oral argument — the most time devoted to a case in more than 45 years. These arguments will take place March 26, 27, and 28, and the Court’s ruling will probably be announced in June. In this preview, PHLP has compiled materials explaining the issues raised by the cases, answering some of the key questions about the parties’ legal arguments, and considering potential effects of the Court’s decisions.

Background

Setting the foundation for the largest expansion of health care coverage since Medicare was established in 1965, the ACA will reach approximately 32 million Americans (including 1.5 million Pennsylvanians) who are now uninsured. It will do so in two ways: First, beginning in 2014, the ACA’s “individual mandate” requires most citizens and legal residents whose income is above the threshold for filing federal income taxes to maintain health insurance or pay a financial penalty — with exemptions for those who cannot afford coverage, have incomes below 100% of the federal poverty level, or lacked coverage for less than 3 months of the year. Individuals with incomes between 100% and 400% of the poverty level will qualify for income-based federal subsidies. The individual mandate, when fully implemented in 2016, is expected to add 16 million people to the rolls of the insured. Second, the ACA extends Medicaid eligibility to all citizens and certain legal residents with incomes of up to 133% of the poverty level, making an additional 16 million people (including 800,000 Pennsylvanians) eligible for the federal-state program. States not complying with the expansion risk losing all federal Medicaid funds. The federal government will pay 100% of Medicaid coverage for the newly eligible for the first two years and gradually reduce its contribution to 90% in 2020. Challenges to both of these ACA provisions will require the Court to apply the principle of federalism, which recognizes the division of power between the federal and state governments. The U.S. Constitution assigns enumerated powers to the federal government, reserving the rest “to the states respectively, or to the people.” The nine justices will be the final arbiters in determining whether, in crafting the ACA, Congress exceeded its powers. See Supreme Court Review of the Health Care Reform Law in the New England Journal of Medicine (February 29, 2012), 10.1056 NEJM 1114933.

Of Particular Interest: The Constitutionality of the Medicaid Expansion

The Court will consider whether the ACA’s Medicaid expansion is constitutional and whether states can be required to comply with it in order to remain eligible for federal Medicaid. The principal point of contention is whether the ACA requirements “commandeer” or “coerce” state functions in a way that exceeds federal authority. Twenty-five state plaintiffs, including Pennsylvania, argue that the Medicaid expansion unconstitutionally coerces the states by conditioning their receipt of federal Medicaid funds on their provision of coverage to an additional mandatory eligibility group, adults under age 65 with household incomes up to 133% FPL ($14,856 per year for an individual in 2012). Although the lower federal courts have consistently rejected this argument, the Supreme Court opted to review it. The federal government will argue that states operate Medicaid programs voluntarily, contributing their own funds in order to receive federal funding, and that Congress has broad power under the Constitution’s Taxing and Spending Clause to require state compliance as a condition of receiving federal funding. The Court’s decision about the constitutionality of the Medicaid expansion could have effects far beyond whether that particular provision of the ACA is implemented, because no court to date has invalidated federal Spending Clause legislation on the basis that it is unduly coercive of states. Any developments in this area of constitutional law could extend to the wide range of Spending Clause legislation, including civil rights statutes that prohibit discrimination on the basis of race, gender and disability and federal laws in a myriad of areas, such as education, transportation, and national security. See The Health Reform Law’s Medicaid Expansion: A Guide to the Supreme Court Arguments, Kaiser Family Foundation (March 2012) (a policy brief examining the legal and policy arguments related to the Medicaid expansion).

Looking Ahead

There is no set timeframe within which the Court must act, but it is likely to issue a written opinion before the close of the current term in June, 2012. However it rules, the implications for health care in the United States will be profound. The Court could strike down the entire ACA, implicitly endorsing a more limited role for the federal government in the regulation of health care and other areas. On the other hand, the entire law could be upheld. Intermediate rulings, such as striking the mandate but upholding the Medicaid expansion, are of course also possible.

Amicus Briefs

Dozens of amicus (“friend of the court”) briefs have been filed in the case. Two of note: Upholding the Minimum Coverage Provision (also called the individual mandate or individual responsibility provision), authored by the National Senior Citizen Law Center Upholding the Medicaid Expansion, authored by the National Health Law Program

More Briefs

For more briefs, including the main briefs filed by the federal government, the state attorneys general and private parties opposing the law, and many amicus briefs, check the ACA Litigation Blog.

For More Information:
Health Care Act Offers Roberts a Signature Case New York Times, March 11, 2012
Perspective: Supreme Court Review of the Health Care Reform Law New England Journal of Medicine, Feb. 29, 2012
A Guide to the Supreme Court’s Review of the 2010 Health Care Reform Law Kaiser Family Foundation, Feb. 1, 2012
Graphic: Legal Questions And Answers That Will Decide The Health Law’s Fate Kaiser Health News, Nov. 18, 2011

 

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