Mr. Paul Clement, representing the challengers, opened the afternoon arguments.  Mr. Clement’s allotted 30 minutes ran over, as Justices continued to fire questions well after the time had expired. The majority of Mr. Clement’s argument was spent on the coercion question, which suggests that because the federal government has the option of pulling all the state’s Medicaid funding if a state doesn’t want to participate in the law’s Medicaid expansion, states will thus be coerced to participate in the expansion.

Solicitor General Donald Verrilli followed, representing the Obama Administration.

To end the ACA oral arguments, Chief Justice Roberts gave Mr. Clement 5 minutes to make a final rebuttal.

Mr. Paul Clement, representing the challengers, opened this morning’s arguments.  Mr. Edwin Kneedler followed, presenting the government’s position.  Mr. Kneedler argued that if the individual mandate is stricken from the ACA, two other provisions would have to fall as well.  The first prohibits insurers from turning away individuals due to pre-existing conditions.  The second provision limits how insurers can set rates.  The government takes issue with the aforementioned provisions because if applied in the absence of the mandate, the insurance market would crater.  Apart from these insurance regulations, however, the government argued that every other aspect of the law could stand in the absence of the individual mandate.

Following Mr. Kneedler’s argument was Mr. H. Bartow Farr, a court appointed lawyer, who argued that all other provisions of the law should remain in place even if the Justices strike the minimum coverage provision.

Mr. Clement returned for a four-minute rebuttal to close the morning session.

The oral argument dates are shown below:

• Monday, March 26: Department of Health and Human Services et al., v. Florida et al.–Anti-Injunction Act – 1 hour beginning at 10 a.m.
• Tuesday, March 27: Department of Health and Human Services et al., v. Florida et al.–Minimum Coverage Provision – 2 hours beginning at 10 a.m.
• Wednesday, March 28: National Federation of Independent Business v. Sebelius, Secretary of HHS et al. and Florida et al., v. Department of Health and Human Services et al.–Severability – 90 minutes beginning at 10 a.m. AND Florida et al., v. Department of Health and Human Services et al.–Medicaid – 1 hour beginning at 1 p.m.The amici, former US DOJ officials, “believe that the minimum coverage provision of the Patient Protection and Affordable Care Act is an unprecedented and unconstitutional expansion of federal power under the Commerce Clause.” Their conclusion is “[b]ased on their decades of combined experience representing the United States”. They have concluded that that the provision has no foundation in the text, history, or purpose of the Commerce Clause, and impermissibly intrudes on the right of individuals to decide for themselves whether to enter into a commercial transaction.

Spotlight on: Reply Brief of the United States on the Anti-Injunction Act

The Affordable Care Act represents a valid exercise of Congress’ taxing power as well as its power to regulate commerce.

But the fact that the Act represents a constitutional exercise of Congress’s taxing powers is not dispositive of whether review of the constitutionality of the minimum coverage requirement is barred by the Anti-Injunction Act (AIA). In this case, both “the text and structure of the Code” generally, and the minimum coverage provision in particular, demonstrate that the AIA does not act as a bar to court jurisdiction over the case. This is because while the Act amends the Internal Revenue Code, failure to secure minimum essential coverage, results in the imposition of a penalty rather than payment of a tax. As a result, “the procedural instruction to the Secretary of the Treasury to assess and collect the minimum coverage penalty in the same manner as a tax is not a directive to courts dictating that the AIA bars adjudication of suits like respondents’ challenge. . .”.

When the AIA applies, it results in a jurisdictional limitation on the power of courts to hear cases. But in this case, the power of the courts is not limited, because the provision operates as a penalty and an instruction on the Secretary of the Treasury rather than as a tax on individuals.

But if the AIA should be found to apply, the U.S. argues that the challengers cannot avoid the consequences of its application by attempting to reframe their claims as one in opposition to a Commerce Clause-based mandate. If the AIA applies, it applies, and the case must be dismissed.

Spotlight on: United States on the Anti-Injunction Act

The Anti-Injunction Act (AIA) does not bar the suit challenging the minimum coverage provision. While the parties agree on this point, the Court must review the matter to determine whether deciding the merits of the case does not exceed its jurisdiction.

The AIA is a limitation on the power of the courts to hear a claim. The AIA goes to the jurisdiction (i.e., the power) of the courts to hear a claim. As such the “jurisdictional limitation is consistent with the primary purpose animating the AIA: enabling the prompt and efficient assessment and collection of taxes” on which the operation of the government depends.

The AIA does not “foreclose the exercise of jurisdiction to consider the constitutionality of the minimum coverage provision.”

The AIA is jurisdictional in nature as evidenced by the Act and subsequent Congressional amendments.

In this case however, the AIA does not bar exercise of court jurisdiction because the minimum coverage requirement is expressed as a “penalty” rather than a “tax.” At the same time, this language is not relevant in determining whether the minimum coverage requirement is a valid exercise of Congress’ Article I Taxing powers, because the label is not relevant. As such, the provision should be upheld as an exercise of Congressional power.

The minimum coverage requirement “does not specify that the minimum coverage penalty is to be treated as a ‘tax’ for all statutory purposes, including the AIA.” Indeed, “Congress specified only that the penalty was to be ‘assessed and collected in the same manner as an assessable penalty’ under a separate provision of the Internal Revenue Code.” This Congressional directive means that “Congress determined not to apply to full panoply of statutory rules governing ‘taxes’, including the AIA, to the minimum coverage penalty.”

Should the Court conclude that the minimum coverage penalty qualifies as a “tax” and thereby within the scope of the AIA, “respondents cannot evade the jurisdictional bar by recharacterizing their claim as a challenge solely to the provision governing minimum essential coverage and not the accompanying provision prescribing a penalty for failure to maintain such coverage.” By challenging the requirement to maintain coverage, respondents necessarily challenged the penalty as well, since the two provisions are “inextricably intertwined.” The consequence of not maintaining minimum essential coverage is payment of a penalty. The minimum coverage requirement is the “predicate for the penalty.”

Finally, the U.S. argues the state respondents have no standing to challenge the minimum coverage requirement if the private respondents are barred from mounting a challenge as a result of the AIA.

Spotlight on: Former U.S. DoJ Officials on Minimum Coverage Provision

The amici argue that the Court of Appeals for the Eleventh Circuit was correct in holding that the minimum coverage provision exceeds Congress’s Commerce Clause powers. “The Commerce Clause gives Congress the authority to “regulate Commerce,” not to compel Americans to engage in commercial transactions against their will.”

When the Constitution was written, the concept of “to regulate” meant “to formulate and adjust the rules governing existing entities and activities.” The definition of “regulate” was sharply different from the terms “compel” and “mandate.” “Indeed, the Constitution itself uses the terms “regulate” and “compel” in a manner that reinforces the distinction between the two concepts”.

The correspondence between the Framers, as well as records of state ratification debates, the writings of early legal scholars, and the popular press all underscore that “the word ‘regulate’ consistently referred to making or adjusting rules for an activity that was already taking place.”

As a result, the framers would have “recognized the incongruity of ‘regulating’ commerce in health insurance by forcing unwilling Americans to purchase insurance.”

The purpose of the Commerce Clause was “to remove barriers to existing trade among the States— not to authorize Congress to mandate the involuntary consumption of goods and services.” “In fact, until now, Congress has never attempted to force commerce on unwilling Americans. Nor has this Court ever suggested that the commerce power extends so far. A decision upholding this unprecedented expansion of Congress’s authority under the Commerce Clause would disregard the text, history, and purpose of that provision, and eliminate any meaningful.”

Spotlight on Thomas More Law Center et al. Amicus Brief on Minimum Coverage Provision

Thomas More Law Center and several individuals insured and uninsured, filed an amicus brief in the Supreme Court, urging the Court to strike down the minimum coverage provision because Congress exceeded its Commerce clause authority in requiring individuals to purchase minimum health benefits. Thomas More Law Center is, according to the brief, a national public interest law firm based in Ann Arbor, Michigan, and was the principal plaintiff in Thomas More v. Obama, in which the 6th Circuit found that the minimum coverage requirement is Constitutional. In the amicus brief, the authors argue that, while the Court has found that Congress has the authority to regulate economic activity that substantially affects interstate commerce, plaintiffs in the case are not engaging in economic activity, but instead have made a conscious decision not to engage in any activity, economic or otherwise.

The brief’s authors citing two Supreme Court cases (U.S v. Morrison and U.S. v. Lopez), argue that Congress’s authority under the commerce clause does not reach non-economic , local activity, even if that activity in the aggregate might materially impact interstate commerce. The Morrison and Lopez decisions respectively struck down federal legislation permitting a federal civil remedy for victims of gender-based violence, and prohibiting individuals from knowingly carrying a gun in a school zone, which the Court held in both cases, did not meet the test of having substantial affects on interstate commerce. The brief also distinguished the minimum coverage requirement from two Supreme Court Cases (Wickard v. Filburn and Gonzales v. Raich) which permitted federal regulation of individuals growing their own wheat and marijuana in violation of federal law. In those cases, the Thomas More brief argues, unlike the requirement to purchase health insurance, Congress legitimately regulated economic activities.

Spotlight on: Health Law and Policy Scholars & Prescription Policy Choices on Medicaid expansion

The amici are scholars who study and teach health law and policy in the U.S. and a nonprofit educational and public policy organization providing objective research and expertise on prescription drug policy. Their brief is in support of the Respondents.

Petitioners claim that ACA §2001(a)(1)(C) is an “extreme and unprecedented abuse,” changing the fundamental nature of Medicaid. But imposing new Medicaid mandatory provisions on States as part of a national health policy agenda is not unusual. Since the beginning, Medicaid has been part of larger Congressional health policy programs. Also since the beginning, Medicaid has imposed mandatory eligibility, services, and administrative requirements on participating States. For example, Congress has previously added new mandatory eligibility categories to Medicaid; Congress has expanded mandatory Medicaid benefit categories as part of broader national child health policies; Congress has imposed mandatory Medicaid reimbursement rules as part of larger efforts to develop and sustain a health care safety net for medically underserved communities; Congress has imposed new mandatory quality standards for long-term care in Medicaid as; and Congress has imposed new mandatory Medicaid requirements on States as part of Medicare Part D prescription drug coverage.

Congress has exercised its spending power in a clearly constitutional manner. The Medicaid amendments satisfy existing precedent and the reasoning of the Court of Appeals below is sound.

The mandatory Medicaid amendments are not coercive: the allegedly partisan nature of the Act is not evidence of coercion; the mandatory Medicaid amendments are not a novel feature of the act; and the federal government bears about 95% of the cost of the mandatory Medicaid amendments.

Petitioners fail to identify any constitutionally infirm text in the mandatory Medicaid amendments. The ACA’s provisions expanding Medicaid eligibility are entirely consistent with the recognized scope of congressional spending power and the longstanding cooperative nature of the Medicaid program. The ACA amendments to Medicaid do not warrant a departure from established precedent and practice.

Spotlight on: David Satcher et al. on Medicaid expansion

Amici are former Surgeon General David Satcher and a diverse group of child welfare, disability, education, health care, women’s sports, veterans, and other organizations who are concerned that if petitioners’ argument that the ACA’s Medicaid expansion is coercive is adopted, it would put at risk an array of federal statutes in which amici have an interest. Their brief is in support of the Respondents.

The large amount of money the federal government offers the states under Medicaid cannot make the conditions attached to that program unconstitutionally coercive. To hold that it did would render the Medicaid Act – even before the Affordable Care Act’s amendments – unconstitutional, and it would put at constitutional risk an array of federal education, child welfare, and other statutes enacted pursuant to the Spending Clause. For the financial inducement offered by Congress to become unconstitutionally coercive, that inducement must, at a minimum, deprive the state of something to which the state is otherwise entitled.

That “the Medicaid funds used to induce the States come from their own taxpayers” is of no constitutional moment. Petitioners’ argument to the contrary, which would render coercive any conditional spending paid for by general federal taxes, is inconsistent with basic principles of federalism. When the federal government collects taxes from people, it does not tax them as a state’s residents. It taxes them in their individual capacities. In our federal system constructed according to these principles, the fact that the federal government taxes the same people as do the states does not deprive the states of anything to which they are entitled. Accordingly, it cannot be held to coerce the states into accepting conditional federal grants.

That Congress has imposed new, purely prospective conditions on the acceptance of Medicaid funds does not make the conditions coercive. Congress was under no obligation to give states funds to provide Medicaid in the first place, and those funds do not become any less a gift or gratuity because Congress as provided them for a long period of time. Petitioners’ argument that the states are so dependent on existing Medicaid funding that they have no choice but to accept any conditions on continued receipt of that funding is inconsistent with basic principles of federalism and governmental accountability. Moreover, it would render Medicaid unconstitutional even in the absence of the changes Congress effected in the Affordable Care Act.

That Members of Congress may have expected all states to continue to participate in Medicaid does not bespeak coercion. All states participated in Medicaid before the Affordable Care Act expanded coverage, and, wholly independent of coercion, it would not be surprising that all would continue to participate in the program once the statute’s nearly-fully federally-funded coverage expansion went into effect.

Spotlight on: the Commonwealth of Massachusetts on the Minimum Coverage Requirement

The Attorney General of Massachusetts filed an amicus brief in HHS v. Florida asking the Supreme Court to uphold the minimum coverage requirements of the Affordable Care Act (ACA), using the Commonwealth’s experience with an individual requirement to purchase coverage. First, Commonwealth argues that by requiring residents of Massachusetts to maintain health insurance coverage, the Commonwealth has been able to control costs and reduce financial burdens on health plans and free care pools (noting that free care for the uninsured and underinsured dropped 33 percent from fiscal year 2006 to 2010). As such, the Massachusetts experience adequately demonstrates that drawing upon the experience from one state, Congress had a rational basis for concluding that the uninsured, taken in the aggregate, have a substantial effect on interstate commerce. The brief notes that four years after enactment of the individual mandate, Massachusetts’s efforts to stop healthy individuals from opting out of the purchase of health insurance has decreased premium growth.

Second, the Commonwealth’s brief argues that the minimum coverage requirement is authorized under the Necessary and Proper Clause, which permits Congress to enact legislation pursuant to an enumerated power. Arguing that even if the minimum coverage requirement does not fall within Congressional Commerce Clause authority, the requirement is a “rational requisite of implementing other components of federal law” permitted by the Commerce Clause. In addition, the brief argues that the “broader machinery of the ACA,” designed to increase access to care, control costs and eliminate waste, was drafted to “regulate measures o f the interstate marketplace.” Finally, the amicus brief points to aspects of federal law regulating health insurance markets that are in the “exclusive domain” of the federal government, such as the Employee Requirement Income Security Act, and that state actions have consequences beyond state borders, demonstrating the interstate character of the health care marketplace and the need for a federal approach to its regulation.

Spotlight on: Court-appointed Amicus Supporting Complete Severability

Because parties in NFIB v. Sebelius and HHS v. Florida et al. argue that, the Affordable Care Act (ACA) should be struck down in its entirety, should the Supreme Court determine that the minimum coverage provisions are unconstitutional, the Court appointed H. Bartow Farr, III of Washington, DC to file an amicus brief in support of severing the minimum coverage requirement from the ACA, and permitting the rest of the law to remain in effect. First, the brief argues that when the Court has ruled that a single provision of a law is unconstitutional, the Court traditionally has not invalidated provisions of law that are constitutional. Citing a string of Supreme Court decisions ranging from Marbury v. Madison, which was decided in 1803 to Free Enterprise Fund v. Public. Co. Accounting Oversight Board, decided in 2010, the brief argues that the Court should refrain from invalidating more of a statute than is necessary.

Further the author argues that under Court precedent other provisions of the law should remain in force unless it is clear that Congress would not have enacted those provisions without the invalid ones, or in other words, whether Congress would prefer what is left of the statute to no statute at all. At issue in these cases is whether Congress would want insurance market reforms in the Act, specifically guarantee issue and community rating provisions to remain in effect, without the minim coverage requirement. In concluding that Congress would prefer to retain the insurance market reforms, the author notes that the intent of the reforms is to “open the health insurance markets to millions” who have not had access to affordable coverage, and that it is doubtful that Congress would want to return to the old system of coverage denials.

The brief notes that in these cases, the party opposing severing the unconstitutional language must demonstrate Congressional intent, and argues that there is no evidence to support the position that Congress would prefer no law to the ACA without the minimum coverage requirement. The brief argues that the lack of a severability clause is insufficient, citing Court precedent in finding that “congressional silence not an indicator of congressional intent.” Also, the author notes that both the House and Senate legislative drafting manuals state that severability clauses are unnecessary, since the Court provides a presumption in favor of severability.

In addition, although petitioners’ arguments rely on language in the Act stating that the minimum coverage requirement is “central” health care reform, the findings were drafted not to provide evidence that Congress opposed severing the minimum coverage requirement, but to support the argument that the provision is “essential” as part of a “broader regulatory scheme” for the purposes determining whether the provision is a reasonable exercise of Congressional authority under the Commerce clause. The brief also argues that contrary to statements by petitioners, the lack of a minimum coverage requriement would not result in so substantial an increase in insurance premiums as to cause dysfunction in the insurance market. As evidence, the brief cites the substantial federal subsidies that will be available to lower-income individuals under the law. Finally, the brief argues that numerous other provisions of the ACA can function independent of the Act, including Medicaid expansions.

Spotlight on Montana Shooting Sports Association on Minimum Coverage Requirement

Amicus is the Montana Shooting Sports Association (MSSA) is a non-profit Montana corporation, whose purpose is to “support and promote firearm safety, the shooting sports, hunting, firearm collecting, and personal protection using firearms, to provide education to its members concerning shooting, firearms, safety, hunting and the right to keep and bear arms, own and/or manage one or more shooting facilities for the use of its members and/or others, and to conduct such other activities as serves the needs of its members.” The aims of the MSSA have been continuously challenged by federal laws and their application, and the MSSA seeks for Montana to reassert a more constitutionally appropriate relationship with the federal government. The amicus’ interest “furthers MSSA’s interest in asserting Montanans’ opposition to the federal government’s now-massive burden of laws and regulations based on Interstate Commerce Clause power, which have been imposed on Montana through political processes in distant Washington which give disproportionate political power to states and regions which do not share Montana’s high regard for individual liberty.”

The Ninth and Tenth Amendments to the U.S. Constitution, placed in the Constitution in 1791, supersede the Commerce Clause, the Necessary and Proper Clause, and the Supremacy Clause. The United States Supreme Court, for the past 75 years, has ignored the extent to which both amendments alter the Congressional scope of powers under Article I §8.

Although respondents assert that the minimum coverage requirement exceeds Congressional powers under the Commerce Clause, amici “go much further” and argue that Congress lacks the scope of powers that the Court has attributed to it in prior rulings.

The Ninth Amendment “preserves the right of individuals to choose to buy or not buy health insurance, and the Tenth Amendment preserves the power of the states to interdict a congressional mandate that would strip state citizens of their rights under the Ninth Amendment”

Not only should the individual mandate of the Affordable Care Act be rejected as impermissibly beyond congressional power, but the Court should seize this opportunity to correct the obvious and misleading “jury-rigging” that has occurred to expand the scope of the Interstate Interstate Commerce Clause in and since Wickard v. Filburn, 317 U.S. 111 (1942).”

“The Affordable Care Act amounts to a vast departure from historical lawmaking by Congress. For the first time ever, Congress presumes power to require individual citizens to shell out hard-earned money to purchase a type of private product selected by Congress.”

“The Affordable Care Act extends into the realm of state jurisdiction and violates the liberties of individuals within the jurisdictions of the states. Montana officially entered into statehood via the mechanism of a contract, known as The Compact with the United States (Montana Constitution, Article I). There is nothing in that contract which authorizes Congress to compel the citizens of Montana to purchase health insurance, or any other private product. Thus, the congressional mandate for individuals to purchase health insurance under the Affordable Care Act is a unilateral, and therefore impermissible, amendment to or modification of a significant contract.”

Spotlight on the Economists on the Minimum Coverage Requirement

A group of 215 economists submitted an amicus brief urging the Supreme Court to find the minimum coverage requirement unconstitutional because it does not substantially affect interstate commerce, and therefore is not authorized by the Commerce Clause. The brief rejects arguments by the government that uninsured individuals who receive health care services cost-shift to those who have coverage, by as much as $43 billion. The brief argues that those individuals affected by the minimum coverage requirement are primarily healthy individuals that choose to forgo purchasing coverage.

The brief goes on to argue that despite the Governments assertions, the health care market is not particularly unique when compared to other markets and that the “cost-related externalities cited by the Government” are not intrinsic to the health care market, but rather are “distortions” in the market caused by federal law. Pointing to a federal database of health care expenditures, the brief argues that the cost of health care for the uninsured are well below average and that the total amount attributable to uncompensated care is closer to $12.8 billion, or .5 percent of the nation’s health care costs. In addition, the brief asserts that the Government provides no evidence that the “average” uninsured individual cannot afford to self-insure, bearing the approximately $6,300 in health care costs incurred by the average American each year.

The brief goes on to argue that the justification for the minimum coverage requirement has little to do with uncompensated care, but instead is needed to bring younger and healthier individuals into a risk pool created by the insurance market reforms. These reforms, they argue, “prevent health insurers from making the basic actuarial decisions that they make in every other insurance market.” The brief argues that instead of Congress exercising the power to regulate how health care consumption is financed, as argued in the Government’s brief, the minimum coverage requirement “compel[s] the voluntarily uninsured to purchase insurance at a disadvantageous price, as a quid pro quo to existing health insurance market participants in exchange for the deleterious effect of the new federal requirements.”

Spotlight on: State of Virginia and Republican Governors Amicus on Minimum Coverage Requirement

The principle arguments made by the State of Virginia and Republican governors against the minimum coverage requirement are that the Affordable Care Act should be overturned because the law did not pass under regular order, that Congress has never required individuals to purchase anything, and that the minimum coverage requirement is not consistent with the original meaning of the Constitution. Pointing to a late night party line vote in the Senate, and as a product of “back room deals,” authors argue the ACA was not subject to committee hearings or reports, and that Congress “took no hard look at its own authority.” The brief also argues that the fact that Congress has never claimed the power to require a citizen to purchase a good or service “tends to negate the existence of that power.” Citing a Congressional Research Service and Congressional Budget Office reports noting that the minimum coverage requirement is a “novel issue” or “unprecedented federal action,” the amicus brief notes that Congress knew that there was no historical precedent prior to passage. Finally, authors cite The Federalist and point to historical facts around the time of the drafting of the Constitution to argue that minimum coverage requirement is not supported by the text of the Commerce clause.

Spotlight on: the CATO Institute amicus on the Anti-Injunction Act

The Cato Institute, a self-described nonpartisan public policy research foundation advancing individual liberty, free markets and limit government, filed an amicus brief in the upcoming Supreme court consideration of the Department of Health and Human Services, et al. v. State of Florida et al. on the issue of whether or not the Anti-Injunction Act (AIA) bars court consideration of the minimum coverage requirement. In the brief CATO urges the Supreme Court to find that the AIA does not apply to the penalty imposed on individuals failing to maintain minimum health insurance coverage under the Affordable Care Act. The AIA bars federal courts from hearing cases that seek to prevent the federal government from imposing a tax before the tax goes into effect.

Noting that all parties in the litigation agree that the AIA does not apply, the CATO brief raises four arguments as reasons that the AIA should not apply, but notes that the organizations arguments will focus on whether the minimum coverage requirement is a “tax” for purposes of the AIA. The remaining three arguments raised are that the AIA can be waived by petitioners, that the challenge is to the coverage requirement, not to the tax itself, and finally that because some individuals will not be subject to the tax, they would have no other opportunity to challenge the requirement to purchase coverage.

The brief urges the Court to reject the findings of the Fourth Circuit holding in Liberty University, Inc. v. Geithner and by the Circuit of the District of Columbia in Seven-Sky v. Holder, which the amicus brief characterizes as an erroneous finding by the courts that all penalties assessed under the Internal Revenue Code are taxes. In arguing that the minimum coverage requirement is not a tax the CATO amicus asserts that the Court has a long history of distinguishing between taxes and penalties for the purposes of applying the AIA. The brief goes on to argue that, where the courts have found that the AIA applied to penalties, the penalties at issue were expressly defined as taxes, noting that in the single exception to the rule, Mobile Republican Assembly v. United States, was a penalty that enforced a substantive provisions of tax law. CATO amicus asserts that no cases have been found that apply the AIA in situations other than where penalties expressly defined as taxes or penalties to enforce a substantive tax provision. In conclusion, the brief argues that since the penalty applied to enforce the minimum coverage requirement is not expressly defined as a tax in the statute, and because the penalty does not enforce a tax law provision, the AIA should not apply.

Spotlight on House Speaker John Boehner on the Minimum Coverage Requirement

John Boehner, Speaker of the U.S. House of Representatives filed an amicus brief arguing that when Congress passed legislation enacting the minimum coverage requirement provisions of the Affordable Care Act, Congress acted without constitutional authority damaging its institutional legitimacy and causing severe conflicts between the state and federal governments. Specifically, he argued that the Necessary and Proper Clause of the Constitution does not provide the authority for Congress to enact the requirement.

In his brief, Speaker Boehner argues that the Department of Justice (DoJ) in its briefs in HHS v. Florida, has adopted an interpretation of the Necessary and Proper Clause that would permit Congress to enact any legislation that it believes is necessary to “alleviate the supposed negative effects of other legislation.” Instead, citing Supreme Court precedent established under McCulloch v. Maryland and subsequent cases, the Speaker argues that the Necessary and Proper Clause permits Congress to determine the means of implementing a specific enumerated power under the Constitution. The brief argues that if the minimum coverage requirement is a legitimate exercise of congressional Commerce Clause authority, reliance on the Necessary and Proper Clause would be unnecessary.

The Speaker argues that, while the insurance market reforms fall within the scope of the Commerce Clause, the purpose of the individual mandate, in effect, is to protect consumers from the harmful consequences of those reforms. The Necessary and Proper Clause does not grant Congress to power to avert the negative results of otherwise Constitutional provisions of the ACA, namely the insurance market reforms. Finally, the Speaker argues that the DoJ’s interpretation of the Necessary and Proper Clause, as characterized in his brief, would cause “serious, widespread, and long-lasting damage to the Constitution,” giving Congress authority not found in the Constitution leading to less accountability between Congress and the American people.

Spotlight on: State Legislators on Medicaid expansion

Amici, legislators from all 50 states, the District of Columbia, and Puerto Rico, have a direct interest in representing the needs of their constituents and presenting their views on the proper allocation of power between the states and the federal governments.

Petitioners’ Medicaid “coercion argument has little to do with the Constitution, and far more to do with a desire to obtain a judicial “do-over” on the Affordable Care Act, trying to get this Court to craft a health care reform law that is more to the Petitioners’ liking.” This “effort belongs in the political arena, not in the courts.”

As a matter of law, the argument is fundamentally flawed, because states have the ability to opt out of Medicaid. Their concern over doing so is well-founded, but it is not relevant to the constitutional question of whether Medicaid remains voluntary.

This case is not about coercion. Medicaid remains voluntary, and the program is hardly an unfunded mandate; indeed, its funding and supports will be an enormous aid to the states. Indeed, the Medicaid expansion is absolutely essential to solving the problem of the uninsured in America, remains a voluntary program, and is consistent with principles of federalism.

Petitioners’ claims of coercion are “unprecedented and wrong-headed” and are o inconsistent with the appropriate reading of Congress’s spending powers under the Constitution. The need for a federal government that could address national concerns was central to the fashioning of Congress’s Spending Clause powers. “This historical foundation explains why the Spending Clause is the first and one of the most sweeping powers the Constitution confers upon Congress.”

Petitioners ask for “myriad” new restrictions on Congress’s powers that are “newfangled” and that have no basis in Court precedent, including limits on spending blocks of funds, limits on spending funds that restricts Congress to spending only what residents of any state pay, “heightened scrutiny” on “massive” programs, and a presumption of unconstitutionality “ when “Congress assumes the continued participation of States in a program that they have participated in for decades, and where Congress is offering to pay for the vast majority of the new aspects of the program”

Petitioners simply desire to avoid the political consequences of opting out of Medicaid, but these political issues do not amount to a Constitutional matter. The “temptation to accept federal funds does not amount to coercion.” Congress’ power to impose conditions on federal funding creates politically difficult choices for states, but this is the reality of the federal relationship. This may require elected State officials to face some difficult decisions, but “[i]n the tension between federal and state power lies the promise of liberty.” Gregory v. Ashcroft, 501 U.S. 452, 459 (1991). The interplay between principles of federalism and Con-gress‟s Spending Clause authority leaves to “the residents of the State” the “ultimate decision whether or not the State will comply” with conditions placed on federal funds. New York v. United States, 505 U.S. 144, 166-67 (1992).

Spotlight on: National Health Law Program on Medicaid expansion

The amici are consumer and provider organizations that have worked extensively with Medicaid.

Petitioners’ coercion claim is supported by neither the history nor structure of the Medicaid Act. Medicaid historically has set minimum standards for state Medicaid programs, while providing options to do more.

As with past Medicaid expansions, the ACA expansions neither force states to participate in Medicaid nor individuals to enroll, and the program remains voluntary for states and individuals alike.

Since its inception, Medicaid always has offered states an attractive “deal” of between 50% and 83% of program funding, and the ACA Medicaid expansions are even more attractive, offering 100% initially, reduced to 90 percent thereafter.

In addition, maintenance of effort provisions have historically been used in Medicaid during periods of transition, and the federal government historically has had the discretion to only partially deny funding to states that fail to adhere to statutory minimums.

Although petitioners claim that the Medicaid expansions are “onerous,” the 26 states that have petitioned the Court have used their flexibility to extend coverage to population groups in addition to the statutory minimum, while 18 out of the 26 states have received permission from the federal government to extend Medicaid to at least some low income, non-disabled adults. Far from causing “damage,” the ACA will financially assist states rather than hurting them.

Spotlight on: Justice Department on Medicaid expansion

Congress has the constitutional power under Article 1 to expand Medicaid. Petitioners’ challenge “lacks any support in this Court’s precedents, invites standardless decisionmaking and intractable problems of administration, and is wrong as a matter of constitutional principle.”

Congress’s Article I spending power includes the “power to fix the terms on which it will disburse funds to the States.” Under South Dakota v Dole, 483 U.S. 203 (1987), such spending must promote the general welfare and set terms that are clear and unambiguous. Apart from these restrictions, Congress has the power to set the terms of federal spending in order “to further federal policy objectives.”

Medicaid sets terms of funding, including “requirements concerning the categories of needy persons eligible for assistance and the categories of benefits to which they are entitled.”

The Affordable Care Act fills gaps in Medicaid coverage by “extending eligibility to additional low income individuals. Petitioners do not claim that this amendment exceeds the Dole restrictions on Congressional powers, and no such claim is possible given the fact that specifications of needy individual coverage categories is a “foundational term” of the Medicaid program. Nor does the expansion violate “structural principles of federalism by compelling states to implement a federal program.”

Petitioners’ assertion that the Affordable Care Act “worked an unprecedented transformation of the Medicaid program rests on a series of mischaracterizations.” From the outset, Congress has “specifically reserved the right” to alter, amend, or repeal any provision of the Medicaid Act” and Congress has exercised this reserved authority on numerous occasions, often requiring States to accept expansion as a condition of continued Medicaid participation.

In the ACA, Congress took additional steps to reduce the “burdens on the States” through federal funding at rates “far exceeding usual Medicaid matching rates.” “The resulting additional cost to the States represents less than a 1% increase over their baseline spending and will be more than offset by cost reductions resulting from the” ACA. Moreover, states remain free to adjust their spending on optional coverage.

This is not a Congressional directive to implement a federal regulatory program but is simply a “decision to condition the receipt of federal funds on compliance with federal policy” and as such respects principles of federalism. States remain free to decide whether “federal policy is “sufficiently contrary to local interests” to justify declining federal money. New York v United States, 595 U.S. 144, 168 (1995)

Petitioners contend that the sheer size of the program means they have no practical ability to turn Medicaid down. Under this theory, the more the federal government is willing to defray the cost of financing health care for needy persons, “the less say Congress has in defining the features of its spending program.”

However attractive the offer of federal funding, the decision whether to participate belongs to the states. “Petitioners’ claim of coercion is nothing more than an argument that the citizens of their States would hold them politically responsible for either the reduction in benefits that would result from opting out of Medicaid or for the increased taxation needed to fund those benefits entirely at the state level.” Such an argument “turns notions of political accountability and state sovereignty upside down, for it rests on the assumption that States lack the capacity or the will to accomplish on their own what their citizens desire, and therefore have a right under the Constitution to have courts dictate the terms on which the federal government provides assistance.”

Courts cannot substitute their judgment for that of states as to whether expenditures can be justified, because they are “ill-equipped to second guess state officials’ judgments about matters of budget, revenue, and policy.” Even more “critically, there is no logical stopping point to petitioners’ argument,” which calls into question not only the ACA Medicaid expansions but all federal Medicaid requirements, “not to mention an unspecified number of other federal spending programs whose terms grant recipients may find coercively generous.”

Petitioners argue that the Court need not articulate new coercion standards in this case, since the ACA is inherently coercive in its premise that states cannot leave Medicaid. That argument is premised on a mistaken theory, namely, that the ACA penalizes the poor who do not enroll in minimum essential coverage. But no penalty attaches to individuals who are poor and who fail to enroll. Furthermore, the absence of a federal fallback in the event that a state elects to leave Medicaid is not proof of coercion. “All States have participated in Medicaid for decades, and Congress had no reason to anticipate that would change, particularly given that the federal government has assumed nearly all of the costs of the eligibility expansion. But Congress’s expectations do not, in any event, bear on the constitutional analysis. States remain free to opt out of Medicaid if they so choose, and Congress can then adjust other statutory programs as appropriate.”

Spotlight on: Disability Rights Legal Center on Medicaid expansion

The Disability Legal Rights Center advocates for persons with disabilities through education, advocacy, and litigation, including health care advocacy. The Disability Legal Rights Center has a particular interest in cancer advocacy through its Cancer Legal Resource Center (CLRC) program, and access to Medicaid is particularly important to people with cancer.

Cancer offers a powerful example of the importance of the Medicaid expansion, since the expansion will allow lower income uninsured people to have access to the preventive services that can help lower cancer rates and costs. Medicaid is essential to early detection and treatment before a medical emergency arises.

Aside from lowering spending, preventing early deaths from cancer represents a “rational” reason for Congress’s exercise of its Spending Clause powers to expand Medicaid. It is well established that Congress has the power to set the terms of federal spending for the purpose of achieving federal policy objectives, including objectives that Congress cannot achieve directly through regulation. Fullilove v. Klutznick, 448 U.S. 448, 474 (1980).

Spotlight on: Senate Majority Leader Harry Reid on Medicaid expansion

Amici, Members of Congress, write to defend the constitutionality of the Patient Protection and Affordable Care Act, a “landmark” which “brings to fruition a decades-long effort to guarantee comprehensive, affordable, and secure healthcare insurance for all Americans.” Amici “paid careful attention to careful attention to Supreme Court precedents defining the proper bounds of Congress’s constitutional authority and relied upon these established rules in formulating, debating, and voting on the Act.”

In addition, amici “believe that the legal theories advanced by the Act’s challengers, if embraced by the courts, would seriously undermine Congress’s constitutional authority and its practical ability to address pressing national problems. Congress regularly relies on its enumerated powers to protect American consumers and workers, to keep families safe, and to ensure civil rights.”

In enacting the Patient Protection and Affordable Care Act, opinions diverged sharply about the correct policy response to the problem of the uninsured. The debate was long and arduous, finally won by a majority. Opponents now seek to “reverse the result of this democratic process and put the nation back on the path of an ever-growing number of uninsured Americans.”

Congress made a major policy judgment that Medicaid would be part of the solution, because Medicaid is such an established approach to covering the poor. While the law gives states a wide array of choices, the statute also sets certain minimum requirements. The ACA establishes minimum eligibility and coverage requirements to assure coverage of all low-income non-elderly persons. The enhanced federal contribution levels to support these expansions “have almost no precedent in Medicaid policy.”

Medicaid remains voluntary with the states, and Congress assumed that states would participate because of the high federal contribution level, the crisis of uninsured poor Americans within the states, and the fact that “credible” estimates show that the Act eventually will reduce states’ overall health care burden. These savings will come from (1) savings on state-funded programs for indigent and low income people who will gain Medicaid or Exchange eligibility; (2) state high risk pools; and (3) reductions in state and local employee premium costs as cost-shifting declines.

Congress was aware of the political objections to Medicaid expansion on the part of some states. It hoped, but did not require, that states would remain in the program and realized that they were free to leave. Furthermore, {[i]n debating and ultimately adopting the ACA, Congress had no reason to expect that anything in the Constitution barred elected federal officials from making a policy judgment to expand coverage under Medicaid—which Congress had previously expanded repeatedly over the years.”

The challengers do not dispute that under Supreme Court precedent, “Congress may, under the Spending Clause, “fix the terms on which it shall disburse federal money to the States,” New York v. United States, 505 U.S. 144, 158 (1992), and also may “condition[] receipt of federal moneys upon compliance … with federal statutory and administrative directives,” South Dakota v. Dole, 483 U.S. 203, 206 (1987).” Challengers also do not dispute the assertion that the Medicaid amendments satisfy the Dole requirements. Instead, “the challengers’ novel “coercion” theory—never previously applied by any court to invalidate an act of Congress—depends entirely on the claim that even though the States’ participation in Medicaid remains entirely voluntary under the ACA, in practice they have no choice but to participate.”

The Court should reject petitioners’ arguments. First, it would be a mistake “even to accept the existence of a so-called ‘coercion doctrine’” since to do so “would necessarily drag federal judges into policy debates that ought not be addressed in litigation because attempting to draw a line between permissible persuasion and impermissible coercion would inevitably raise political questions that ought not be resolved by the courts.” Such decisions would “ require the courts to resolve intractable factual questions that vary from State to State as a result of different policy choices made by different state governments about how much healthcare to provide and how to pay for it.” A “court-enforced coercion doctrine would also usurp Congress’s core role as the entity elected by citizens to make difficult policy decisions.”

Second, even if the Court accepts a coercion doctrine, it should not adopt the doctrine in a form that supports the challengers because they are wrong that states have ‘“no choice”; but to remain with the Medicaid program, and logically incorrect that Congress’s failure to provide for the eventuality that a State might drop out means that Congress understood the States to have no choice.” Congress considered Medicaid such a good deal that it assumed that states would be unlikely to turn it down, but states remain entitled to do so.

Third, accepting the argument made by challengers “could have far-reaching unintended Consequences” since it “might also call into question other federal programs, because Congress routinely conditions the receipt of federal funding on the States’ agreement to fulfill congressional requirements. And such a decision would make it difficult for Congress to legislate going forward, while also harming the States by making Congress less able to adopt programs that would provide financial assistance to the States.”

Spotlight on: Mortimer Caplin and Sheldon Cohen Brief on the Anti-Injunction Act issue

Amici, who are both tax attorneys and former Commissioners of the Internal Revenue Service (IRS), filed a brief in January 2012 urging vacatur on the anti-injunction act issue. Amici, using their extensive tax administration experience to assist the Court, argue that the Court lacks jurisdiction to decide the constitutional questions regarding the individual mandate and thus individual respondents’ claims must be dismissed.

Amici contend that in order for individual respondents to have standing under an Article III case or controversy, respondents are required to show that any future injury must be “certainly impending.” Amici argue that since the individual mandate does not apply to anyone until 2014 and payments assessed under it do not apply until 2015, it is impossible to predict at this time whether or not respondents will be subject to or have to make payments under the individual mandate. Amici contend that this situation leaves too much uncertainty as to any “injury” therefore; the Court should dismiss respondents’ claims regarding the individual mandate.

Amici further argue that even if respondents’ case met the Article III tests for standing, the Anti-Injunction Act (AIA) (26 U.S.C. § 7421) would prevent their claims from going forward. According to amici, the AIA applies to all lawsuits involving the tax code unless expressly excluded by the AIA or the law. Respondents’ claims do not fall within any of the exemptions listed in the AIA nor does the individual mandate provision or the Affordable Care Act create an express or implied exception to the AIA. Amici also contend that the AIA applies to the amount due under the mandate regardless that it is labeled a “penalty” because, in general, “taxes” under the AIA include penalties and furthermore, precedent shows that the AIA has been broadly construed to include a broad range of payments under the Internal Revenue Code, including those amounts labeled penalties. As such, amici request the Court to dismiss the complaint for want of subject matter jurisdiction.

Spotlight on: American Hospital Association on Medicaid expansion

Amici represent “virtually every hospital and health system in the country” and have elected to participate because of the threat posed by petitioners’ coercion theory. This theory would “handcuff” Congress “in its attempt to innovate and ensure that Medicaid operates effectively for health care providers and their patients.”

It is important to understand the practical consequences of the States’ argument that the ACA Medicaid reforms are coercive because they cannot afford to turn down Medicaid funding. Congress has made “dozens of” mandatory modifications to the Medicaid program over the decades, and were the States to prevail in their arguments, “Congress could not make any modifications to the Medicaid program—or to any other significant cooperative federal-state program— unless every participating state agreed to the proposed change.”

“This heckler’s veto flips the Constitution on its head. See M’Culloch v. Maryland, 17 U.S. 316, 330 (1819) (rejecting suggestion “that congress can only exercise its constitutional powers, subject to the controlling discretion, and under the sufferance, of the state governments”). And it has the potential to wreak havoc on hospitals and their patients.”

The States’ coercion arguments should be rejected, and the ACA’s Medicaid provisions should be found constitutional for three reasons: (1) “The “coercion doctrine,” always more a whisper than a doctrine, is unworkable” and has been superseded by the anti-commandeering principle, developed by the Court in recent years. This principle “the necessary work to safeguard federalism” and “the Court should abandon any separate coercion inquiry, recognizing, as it has in other contexts, that there is a distinction of constitutional magnitude between encouragement—no matter how persuasive—and direct legislative command.” (2) Even if the coercion principle still exists, it should be limited to Congressional attempt to “regulate activities outside “the scope of national policy and power.” Steward Mach. Co. v. Davis, 301 U.S. 548, 590 (1937).” Coercion has no place in cases, like this, “where Congress regulates within a longtime federal sphere. In such cases, the only concern should be to ensure that Congress is not commandeering the states “by directly compelling them to enact and enforce a federal regulatory program.” New York v. United States, 505 U.S. 144, 161 (1992)” (3) Even were the Court to recognize a coercion doctrine and apply it to this case, it should affirm the Eleventh Circuit’s ruling because states are free to leave Medicaid. Although the states argue otherwise, in fact “legislators from some of the Petitioner states have recently, and publicly, considered dropping out of the Medicaid program.” States may “face difficult political decisions about whether and how to participate in Medicaid, but they cannot show actual “coercion.”

Spotlight on: The National Federation of Independent Businesses (NFIB) on the Applicability of the Anti-Injunction Act

The National Federation of Independent Businesses (NFIB) filed a petitioners’ brief in the Department of Health and Human Services v. Florida, et al., arguing that federal courts have jurisdiction to rule on the Constitutionality of the Affordable Care Act’s minimum coverage requirement because the federal statute that limits the federal courts’ jurisdiction (the Anti-Injunction Act or AIA) would not apply in this instance. NFIB argues that the purpose of the AIA is to bar litigation that has a “purpose” of blocking implementation of a federal tax. Because the purpose of the litigation in this case is to bar implementation of a substantive federal requirement to purchase health insurance or pay a penalty, baring court jurisdiction here runs counter to the intent of the AIA. NFIB argues that they are not challenging the penalty, but the legal duty to purchase health insurance. The petitioners also argue that the enforcement penalty for those who do not comply with the requirement, is not a tax but rather a non-tax penalty imposed as a punishment for an unlawful act or omission, and that the Court has never held the AIA to apply to those types of penalties or monetary sanctions. NFIB argued that using the AIA to prevent challenges to substance provisions of the law would force individuals to violate the law, pay the penalty and seek refund, which they argue is unfair to citizens and perversely undermines Congressional intent by forcing individuals to engage in conduct that Congress sought to ban.

NFIB also argues that the AIA should not apply because the Solicitor General expressly agreed that it should not bar court jurisdiction, and that the AIA is not a jurisdictional statute, since it does not speak to the power of the courts and is not located in the jurisdictional section of the U.S. Code. As such, the Court has consistently treated the AIA as a non-jurisdictional statue and has accepted express waivers of the law by the Government.

Spotlight on: Professor James F. Blumstein on Medicaid expansion

Amici is a professor of law at Vanderbilt University, who speaks for himself rather than his institutional affiliations.  His brief pertains to the constitutionality of the Medicaid expansion

Medicaid is “much in the nature of a contract; in return for federal funds, the states agree to comply with federally imposed conditions.” Pennhurst State School and Hosp. v. Halderman, 451 U.S. 1 (1981) The law distinguishes between contract formation and contract modification. While contracting parties have maximum freedom at the point of contract formation, at contract modification, “concerns about excessive leveraging significantly constrain the behavior of the contracting parties. The law limits opportunistic/predatory behavior.”

Because the anti-commandeering principle bars the federal government from compelling states from entering into such contracts or from unilaterally imposing conditions, the constitutional principle is whether the state voluntarily and knowingly accepts the terms of the contract under Pennhurst.

The Affordable Care Act is coercive at the contract modification stage, but the obligation to provide clear notice accrues at the contract formation stage. Because states that entered into Medicaid nearly 50 years ago could not know the “nature, scope, and magnitude of their potential financial obligations under the program,” the clear notice rule in South Dakota v. Dole, 483 U.S. 203 (1987) is not satisfied. “Providing notice of substantial and unforeseeable changes to Medicaid as effected by PPACA at the contract-modification stage, does not satisfy the federal government’s clear-notice obligation under Pennhurst.”

The “clear notice rule is not satisfied when states are lured into a federal-state relationship on one set of expectations and then informed that, through contract modification, the fiscal implications of remaining in the program have been substantially and unforeseeably ratcheted up.” As a result, “[p]roviding states with notice of their right of ‘exit’ from an ongoing, already formed relationship – mandating affirmative enactment of state legislation to exit the federal-state program – is not a substitute for enabling states to ‘exercise their choice’ of entering into a federal-state contract ‘cognizant of the consequences of their participation.’”

Neither traditional Medicaid nor PPACA satisfies Pennhurst’s clear notice requirement. States could not reasonably foresee in 1965 that they would be required to cover all low income nonelderly adults. PPACA establishes this new standard or requires states to exit Medicaid entirely. This notice comes too late, after states already “have made the decision to implement a Medicaid program based on the terms and conditions at the contract formation stage.”

Spotlight on: AARP, Center for Medicare Advocacy, Inc., National Medicare Rights Center, National Committee to Preserve Social Security and Medicare, National Council on Aging, and National Senior Citizens Law Center on Severability

The organizations collectively engage in advocacy on behalf of a broad range of populations including persons ages 50 and older (AARP), older adults and persons with disabilities (Medicare Rights Center and the Center for Medicare Advocacy, National Council on Aging), older Americans and their families (National Committee to Preserve Social Security and Medicare), and low-income older adults (National Senior Citizens Law Center). The amici share concerns regarding the impact of the Supreme Court’s decision on the accessibility and quality of care for Medicare and Medicaid beneficiaries.

The Affordable Care Act is designed to address “numerous inadequacies in America’s multifaceted health care system, in which individuals secure access to services and medicines primarily through insurance.”

Nothing in the Act suggests that Congress intended the numerous reforms aimed at Americans ages 65 and older to be contingent on a finding that the reforms for the under-65 population were constitutional. Reforms aimed at improving the quality of care, bringing down the cost of prescription drug coverage, enabling individuals to live independently, and preventing people from languishing in institutions exist independently of the minimum coverage requirement.

Numerous provisions of the ACA that “greatly benefit” persons ages 65 and older do not depend on the minimum coverage requirement. A careful review demonstrates that the ‘policies Congress sought to advance by enacting’ these provisions affecting people age 65 and older can be effectuated without any reliance on the minimum coverage provision.

These provisions consist of a substantial reduction in the prescription drug coverage gap (the “donut hole”), the elimination of cost sharing for preventive services, curbing higher charges by Medicare Advantage (MA) plans for services such as chemotherapy and dialysis, quality incentives for MA plans, curbing MA spending on administrative expenses, incentives to decrease institutional spending and increase community care, improvements in nursing home quality and safety, and improving the coordination of care for dual enrollees receiving both Medicare and Medicaid.

Spotlight on: The United States Chamber of Commerce Brief on Severability

The United States Chamber of Commerce (the Chamber) filed an amicus brief January, 2012, in support of the reversal of the severability issue, arguing that individual mandate is non-severable from the remainder of the Affordable Care Act (ACA).

The Chamber contends that without the individual mandate, the ACA reforms cannot operate as Congress intended. Citing Congress, the Chamber argues that the myriad of regulations for the private insurance market instituted by the ACA makes the requirement that individuals maintain insurance essential in order to prevent adverse selection and a much-higher-than-anticipated increase in premiums that would occur with implementation of the new insurance requirements (particularly the requirements of guaranteed issue and community rating) without an individual mandate. In addition, the Chamber contends that the Exchanges created by the ACA and the subsidies created to help pay for insurance within those Exchanges are highly interdependent on the requirement that individuals maintain minimum essential coverage. Thus, the Chamber argues that because the requirement for individuals to maintain insurance is intended to be the “central pillar” of the ACA, if such requirement is deemed unconstitutional, then the ACA should be invalidated in its entirety or at the very least the individual mandate should be found non-severable from the guaranteed issue and community rating provisions of the ACA.

Spotlight on: 104 Health Law Professor on Minimum Coverage Provision

Amici are 34 scholars who study the history of health care policy in the U.S. The scholars believe that the Eleventh Circuit decision overturning the minimum essential coverage requirement fundamentally mischaracterizes “important facts regarding the historical role of the federal government in health care.” “It is vital for this Court to understand that the role established for the federal government by the provisions of the Affordable Care Act (ACA) – including the minimum coverage requirement – is consistent with, and not different in kind from, the historical role of the federal government in health care.”

The Eleventh Circuit characterized the minimum coverage provision as “an encroachment upon. . . areas of traditional state concern.” Florida v. U.S. Dept. Health and Human Services, 648 F. 3d 1235 (11th Cir., 2011). It also claimed that the requirement was “wholly novel.” But federal intervention in the nation’s health care system is not new. “Congress has long intervened to support and regulate the provision of institutional and professional health care in the U.S.” “Congress also has an extensive history of using its constitutional authority to affect the supply of and demand for health insurance and the amount individuals pay for that insurance.”

American health care has evolved in tandem with federal health policy. “Although our health care delivery system remains largely private, it would look very different but for the federal support and regulation during the second half of the 20th century.” Federal expenditures “historically have been accompanied by federal regulation. Indeed, use of federal authority has played a key role in sustaining private health insurance and private health care markets, and continued federal engagement is necessary to sustain them in the future.”

In four ways, federal support and regulation have played “a vital role” in the development of employer-sponsored health insurance and public insurance. First, federal support has been vital in the development of the supply side of the health care system, such as hospital construction, medical education, and research. Second, federal support “has driven the development of the demand side, both through direct spending via public insurance [programs and through tax subsidies that have fostered the provision of private insurance.” Third, federal regulation through the Spending Clause has dramatically altered the health care system” through both EMTALA and civil rights laws. Finally, federal regulation through the Commerce Clause “has long been pervasive, governing employee benefit plans, privacy of medical records, and procedures doctors may use to perform abortions.”

Despite the advances of federal regulation, a growing number of Americans remain uninsured. Uninsured Americans “regularly receive substantial amounts of health care, much of the cost of which is ‘shifted’ to the federal and state governments or to those persons who have private insurance – the existence of which flows largely from the federal government’s policies.” The ACA seeks to expand access to affordable insurance and to protect persons who are already insured from bearing the burden of cost-shifting by the uninsured who can afford insurance. “It thereby fills a critical gap in the existing scheme of federal statutes and regulations that already have extended health care coverage to most Americans. Viewed in this context, “there is nothing ‘wholly novel’ about the minimum coverage requirement.”

The minimum coverage requirement also is not ‘wholly novel.’ Medicare, like the PPACA, “requires Americans to pay in advance for insurance to cover services they will likely receive in the future and requires eligible beneficiaries to enroll promptly or pay a significant penalty.” Indeed, the minimum coverage requirement, far from being a “takeover” of the health care system, has been espoused as a conservative idea in the past.

Spotlight on: Association of American Physicians and Surgeons and Individual Physicians on Medicaid expansion

Amicus is dedicated to upholding the “sanctity of the patient-physician relationship.” Individual amici include past presidents of the New York State Medical Association and the Massachusetts Medical Society.  Amici believe that the Medicaid expansions exceed Congressional powers and that if the minimum coverage requirement is found unconstitutional, the Act should be struck down in its entirety as inseverable.

The Medicaid expansion is unconstitutional “federally compelled state spending.” The Constitution “explicitly recognizes the continued vitality of the individual states.” The strings attached to the Medicaid expansion are onerous, and states risk the loss of all Medicaid funding if they fail to meet its requirements. The “mandate is all the more serious because will further deteriorate the already precarious financial condition of many States.”

Medicaid is predicated on a partnership theory and as such, “the federal government breached its fiduciary duties to its partners” by (1) imposing “onerous conditions on its partners” (2) by failing to obtain an unqualified opinion from the federal government’s own financial auditors,” and (3) “by failing to consider that under the Constitution Congress lacks authority to spend beyond the end of its own term.”

The phrase “provide for the general welfare” in Article I §8 operates solely as a limitation on Congressional taxing powers and not as an independent source of spending powers.” Congress lacks any independent power to spend under the Constitution. The Constitution “does not once use the word ‘spend’ or ‘spending.’” The structure of Article I, §8, cl.1 is such that the clause “provide for the general welfare” should be understood only in the context of Congress’s power to tax and not as an independent basis of power to engage in spending.

The Medicaid expansion provisions put federal spending “on autopilot for years to come” and thereby “violate the Constitution’s Separation of Powers doctrine.” The expansions take “spending decisions from future Congresses” and leave future Congresses with less than all legislative powers and future Presidents with less than all their veto powers. Where the Medicaid expansions are concerned, Congress and the President enlarged their own spending power by encroaching upon the legislative and veto powers of future Congresses and Presidents, respectively. Such behavior violates the separation of powers provisions of the Constitution and its “diffusion of powers” over the federal and state governments. New York v. United States, 505 U.S. 144, 181-182 (1992). The “temporal limit on the legislative franchise” is one of the ways in which the Constitution’s diffusion of powers aims are realized. These temporal limits are expressed not only in the Constitution’s provisions specifying fixed terms of office, but also through its procedural requirements and the requirement that all laws rest on an enumerated power.

“Expressed in real estate terms, the Constitution does not permit holdover tenancies by members of Congress or the President. By spending beyond the expiration of its term, the 111th Congress has become a 'holdover' Congress.”

Spotlight on: The Family Research Council et al. Brief on Severability

The Family Research Council together with 30 members of the U.S. House of Representatives filed an amicus brief on October 27, 2011, arguing that the individual mandate is non-severable from the Affordable Care Act (ACA) and that the ACA should be found unconstitutional in its entirety.

Amici argue that the Eleventh Circuit misapplied the law of severability when it permitted severability of the individual mandate provision from the rest of the ACA. The brief contends that if a statute does not expressly include a severability clause, then the Court must inquire into the legislative intent of the statute as a whole to determine if “it is evident that the Legislature would not have enacted those provisions…independently of that which is [invalid].” Amici contend that the legislative intent is clearly stated in the ACA statute as the provision itself states that the individual mandate is “essential to creating effective health insurance markets in which improved…products that are guaranteed issue and do not exclude coverage of pre-existing conditions” and that the Eleventh Circuit ignored the legislative intent of the ACA . The brief’s authors further contend that because there is not an express severability clause in the ACA and that Congress removed the severability clause originally contained in the House passed version of the ACA, then clearly Congress did not believe the mandate could be severed from the ACA. Finally, amici implore the Court to resolve the severability issue if any provision of the ACA is found to be unconstitutional.

Spotlight on: NAACP Legal Defense Fund, the ACLU, and the Leadership Conference on Civil Rights on Minimum Coverage Provision

The NAACP, ACLU, and Leadership Conference engage in advocacy on behalf of liberty and equality for all Americans, including racial and ethnic minority individuals, women, and the most vulnerable segments of society. The organizations support the Affordable Care Act as a law that recognizes that access to health care is a “fundamental human and civil right” of all Americans. The organizations believe that “[b]y addressing the huge disparities in both access to and quality of care, the Patient Protection and Affordable Care Act takes a momentous step toward ensuring that all Americans can benefit from affordable, high-quality health care.”

The economic decision to forego health insurance is not a neutral one. “When aggregated across the population,” such a decision “both limits the personal liberty of others to choose health insurance and has the effect of reinforcing harsh economic and social disparities that threaten our country’s democratic foundation and the cohesion of our society.”

The Affordable Care Act “promotes opportunity for millions of uninsured persons to participate in the life of our nation. It achieves this objective by making health insurance and, ultimately, health care itself more affordable. This, in turn, alleviates the severe financial burdens that fall on the uninsured, which have a disproportionate negative impact on disadvantaged populations. By reducing the exclusionary, harmful effects of the current system, the minimum coverage provision – the corner-stone of ACA – enables covered persons to lead healthier, freer, and more productive lives, thereby advancing the twin goals of liberty and equal opportunity.”

The Act does not impede individual liberties in “ways that require this Court to curtail federal power,” because the liberty interest to self insure is not a recognized interest and disregards “the countervailing liberty interests of individuals whose access to health insurance will be constrained in the absence of such a provision due to cost-shifting from the uninsured to the insured.” Indeed, the challenge to the minimum coverage provision based on asserted liberty interest “echo arguments made during the Lochner era about laws that purported to interfere with the right to contract.” See Lochner v. New York, 198 U.S. 45 (1905). The Court has long since abandoned such a notion.” By 1937 the Court had established “the now familiar principle that the government may reasonably regulate private economic decisions to advance the public interest.” The Act plays a positive role in people’s lives.

The amici argue that the minimum coverage requirement is constitutional under both longstanding Commerce Clause principles and the Necessary and Proper Clause of the Constitution, because the facts and evidence show that it is essential to regulation of health insurance, specifically, the guaranteed issue and community rating provisions, according to express Congressional findings.

Spotlight on: Lamba Legal Defense and Education Fund et. al. on Minimum Coverage Provision

Amici are nonprofit organizations that advocate on behalf of people living with HIV. At the time of enactment of the ACA, nearly 30 percent of people living with HIV were uninsured, and only 17% had private health insurance. This coverage gap carries “severe economic consequences for society at large” and “undercuts public health efforts to combat the national HIV/AIDS epidemic.”

The minimum coverage requirement represents a national response to a “broken” health insurance system and the consequences of this breakdown are emblemized in the national response to HIV. “The HIV/AIDS epidemic provides a powerful case study of how quintessentially economic activity by health insurers and consumers has led to devastating consequences for the over 1.2 million Americans living with HIV and for society at large.

The private health insurance market excludes hundreds of thousands of persons with HIV, and they are ineligible for government insurance. “Private insurers have employed numerous devices, including pre-existing condition exclusions, excessive premiums, annual and lifetime benefit limits, and, in some cases, outright deceit to remove individuals with HIV from their rolls.” Without health insurance, persons with HIV cannot afford the cost of effective treatment.

Congress has undisputed powers under the Commerce Clause and the Necessary and Proper Clause to both regulate the insurance industry by banning pre-existing condition exclusions and requiring community rating and couple these market reforms with a coverage requirement to create a healthy risk pool. The Massachusetts reforms show both the centrality of the minimum coverage requirement and the positive health impact of providing persons living with HIV with greater access to care.

Spotlight on: Indiana State Legislators, the James Madison Institute, and Chris Conover on Medicaid expansion

Amici are Indiana state legislators from both the House and Senate. The James Madison Institute advances principles of limited government and individual liberty, personal responsibility, and federalism. Christopher Conover is a Medicaid researcher and professor at Duke University.  The brief supports the states’ challenge to the constitutionality of Medicaid expansion.

Despite the fact that federalism is a “cornerstone of our constitutional system,” the Act denies “States a meaningful choice on whether to expand their Medicaid programs.” The Medicaid expansion violates South Dakota v. Dole, 483 U.S. 203, by forcing states to expand Medicaid or risk loss of all federal funds. Because of Medicaid’s size and the “Act’s all-or-nothing penalty provisions,” the Act “is uniquely suited for scrutiny under the coercion doctrine.”

Congress designed the Act to prevent states from having a meaningful choice, and if the coercion doctrine is “ever to have any role in protecting the principles of Constitutional federalism, the Act must be deemed invalid.” The Act compels “the states to spend tens of billions of dollars over the next decade and beyond” and “enroll millions of additional persons in Medicaid and bear a range of administrative costs.” Prior to the Act, states had substantial discretion in determining Medicaid eligibility under the federal poverty level, but the expansion for adults beginning in 2014 mean that “in most places, states will have to provide Medicaid for adults without dependent children for the first time ever,” and also will “have to increase the income eligibility level for parents.” These obligations will “dramatically reshape” state budgets.

States have no meaningful ability to opt out, and the Act assumes state participation in its extension of the minimum coverage requirement to all individuals, including the poorest Americans, without offering an alternative means of securing affordable coverage other than Medicaid.

Spotlight on:The American Nurses Association et al. Brief on Minimum Coverage Provision

The American Nurses Association along with the American Academy of Pediatrics, American Medical Student Association, Doctors for America, National Hispanic Medical Association, and the National Physicians Alliance filed an amicus brief in January 2012 in support of upholding the minimum coverage provision under the Affordable Care Act (ACA) as constitutional and as an “essential part of a larger regulation of economic activity.”

Amici argue that financing health costs is an economic activity that “substantially affects interstate commerce.”Citing statistics and studies, amici argue that uninsured Americans frequently delay health care which can lead to a more serious illness that requires more expensive care.According to the brief, this likelihood of delay of care results in driving up medical costs for Medicare due to previously uninsured patients with serious illnesses reaching Medicare age, and for private insurance plans due to uncompensated care and cost-shifting .

Amici further contend that the minimum coverage requirement is necessary to prevent the adverse selection spiral and significant increase in premiums that would occur from the private market insurance reforms, such as the ban on pre-existing conditions exclusion. Citing Supreme Court precedent, amici argue that even if adverse selection was not itself found to substantially affect interstate commerce, the minimum coverage requirement must be upheld because it is an “essential part of a larger regulation of economic activity.”

In addition, amici argue that the Eleventh Circuit Court of Appeals was incorrect when it struck down the minimum coverage provision because it believed that any decision upholding this law would “lack[] cognizable limits.” The brief points out that upholding the minimum coverage requirement as a valid regulation of economic activity of adverse selection would not raise the specter of a federal policy power because adverse selection is an activity peculiar to the insurance market.The brief’s authors counter the Eleventh Circuit’s belief that the minimum coverage provision is an “unprecedented exercise of congressional power” andthat past decisions of this Court “all involved attempts by Congress to regulate preexisting, freely chosen classes of activities” by arguing that for over a century, public health laws (such as quarantine laws) which regulate “inactive individuals”, have been found by the Court to fit within Congress’ commerce authority.”

Spotlight on: The American Academy of Actuaries on Severability

The American Academy of Actuaries provides independent and objective information and education for sound policy, in particular policies whose formulation is tied to the actuarial sciences.

During the Affordable Care Act debate, the Academy took the position that guaranteed issue and community rating were inseverable from the minimum coverage requirement. The minimum coverage provision “was an integral part of the reforms to the health insurance market mandated by the Act.” As a result, “from an actuarial perspective, a decision invalidating only the individual-mandate provision would impose an unsound regulatory regime on the American health-insurance market—a regime that Congress would not have intended.”

Were the individual-mandate provision struck down but the guaranteed-issue and community-rating provisions left intact, “the ultimate result would be less stable health-insurance pools, higher premiums, and a greater-than-projected number of uninsured Americans than if the individual mandate were retained—thus undermining the basic purposes of the Act.”

Spotlight on: The American Cancer Society on the Minimum Coverage Provision

The American Cancer Society along with several other prominent organizations dedicated to fighting cancer, diabetes, heart disease and stroke, filed an amicus brief on January 12, 2012, in support of reversing the Eleventh Circuit decision overturning the minimum essential coverage requirement.

Amici contend that the “activity-inactivity” distinction argued by plaintiffs in Florida v. U.S. Dep’t of Health and Human Services implying that Congress’s authority under the Commerce Clause is limited to activity involving or substantially affecting interstate commerce overlooks the unique characteristics of the health care market. Health care is different from any other consumer good or service because there is a “lack of substitute for health care and the inevitable need for it.” Amici argue that it is the uniqueness of health care that led Congress to require that under certain circumstances health care providers must provide health care regardless of whether the patient can pay or not. Citing congressional findings, amici further contend that this requirement to provide medical services often leads to uncompensated care which results in cost-shifting to third parties, unlike a result from an individual’s decision not to purchase other consumer goods such as a car. As such, amici argue that health care has substantial economic effects that impact interstate commerce.

Finally, amici argue that Congress implemented certain provisions in the ACA, specifically the prohibition of discrimination based on health status to determine premiums and the ban on pre-existing condition exclusions, to address the failures of the health insurance market in providing adequate, affordable health care especially for those individuals with serious and chronic conditions such as cancer, diabetes, heart disease and stroke. These provisions are critical to improving access, coverage and outcomes to individuals with serious, chronic condition and cannot be successful and effective without the minimum coverage provision. Thus, amici argue that the minimum coverage requirement is necessary and proper to implement Congress’s broader regulatory scheme under the ACA.

Spotlight on: America’s Health Insurance Plans and Blue Cross Blue Shield Association on Severability

Amici are the national trade association representing companies that provide health insurance coverage to more than 200 million Americans, as well as 38 independent health insurance companies that collectively provide healthcare coverage for nearly 99 million people “in every zipcode in the United States, the District of Columbia, and Puerto Rico.”

Health insurers “are among the entities most directly and extensively regulated” by the Affordable Care Act. The Amici “share comprehensive information that they and their members possess about how the health insurance market operates, the changes that will be made by the Act, and the consequences that would follow from decoupling the Act’s minimum individual insurance coverage provision from certain insurance-market reforms.”

The ACA is a “voluminous statute with a multitude of interlocking and interdependent provisions.” Some of the Act’s “most significant reforms are aimed at the health insurance market. These four basic insurance market reforms include: guaranteed issue provisions; a prohibition on pre-existing condition exclusions; a prohibition on waiting periods; a prohibition of health status-related coverage eligibility rules; and the use of community rating rules that prohibit rates based on medical history and that limit rate adjustments to age, rating areas, and tobacco use. Prior to the ACA, federal regulation under the Health Insurance Portability and Accountability Act (HIPAA) was limited only to groups and to certain individuals “exiting prior group coverage” and there were no restrictions on premium rates that could be charged to individuals based on health status or age.

Specific Congressional findings link the minimum essential coverage requirement to the prohibition on pre-existing condition exclusion and the “health status-related eligibility determinations.” Congress concluded that the minimum essential coverage provision “is ‘essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of preexisting conditions that can be sold.”

The Eleventh Circuit erred in concluding that the “ACA could structurally be operative or enacted as a law without the minimum essential coverage provision.” Under Alaska Airlines Inc. v. Brock, 480 U.S. 678 (1987) “severability turns on whether the remaining portions of the law ‘will function in a manner consistent with the intent of Congress.’ Congress adopted its insurance market reforms “together with the mandate as a package deal.” The “statutory text and legislative record establish that Congress would not have intended those insurance market reforms to operate on their own, without the vital counterbalance of the minimum individual coverage mandate there to prevent the skyrocketing premiums that would otherwise arise due to crippling adverse-selection and cost-shifting problems.”

The Congress enacted the ACA precisely because it had “already seen the failed consequences of state efforts to impose similar guaranteed, issue, preexisting condition, health status discrimination, and adjusted community rating reforms in the insurance market without a minimum individual insurance coverage mandate.” In the absence of the minimum essential coverage requirement “those reforms would dramatically skew the insurance pool by eliminating the price incentives for young and healthy people to purchase coverage, leading to a higher-cost mix of individuals in the insurance pool.” Such a change “would further increase premium prices, driving still more healthy individuals out of the insurance market. The result would be a market wide adverse-selection death spiral’ that would thwart rather than advance Congress’s goal of expanding affordable health care.”

For this reason, the mandate was the “antidote” to such an outcome in order to create a “stable and balanced insurance-risk pool and without the adverse selection and cost-shirting problems that would otherwise arise if insurance could be easily purchased only when needed.” Were the mandate invalidated “those interdependent legislative provisions would be torn apart and the ‘essential’ counterbalance stripped away, leaving the insurance-market reforms incapable by themselves of functioning as Congress intended.”

Spotlight on: The National Women’s Law Center et al. on the Minimum Coverage Provision

The National Women’s Law Center together with 60 organizations dedicated to protecting women’s rights and removing discriminatory barriers to obtaining health insurance and health care filed an amicus brief on January 13, 2012, in support of upholding the minimum essential coverage requirement of the Affordable Care Act (ACA).

Amici argue that the minimum essential coverage requirement is necessary to effectuate the key measures in the ACA, specifically the ban on pre-existing condition exclusions and the guaranteed issue requirement, both which were enacted specifically to address the discriminatory insurance practices faced by women in obtaining health care insurance and medical care. In addition, amici includes an explanation for the Supreme Court of other ACA policies essential to improving women’s access to health insurance and care, namely: ending gender rating; requiring maternity and newborn care to be covered as an “essential health benefit”; prohibiting discrimination based on sex in health programs receiving federal assistance; expanding Medicaid; supporting nursing mothers; providing pap tests; and making private health insurance more affordable.

Amici contend that the focus and impact of the ACA (i.e., “protecting the right to fair treatment and equal access to services fulfilling basic needs”) is similar to that of the Civil Rights Act and thus should fall within the category of federal antidiscrimination legislation. Citing United States v. Allen and other civil right cases, amici argue that courts have recognized a variety of civil rights laws “as appropriately enacted under the Commerce Clause” and that “civil rights … are traditionally of federal concern” and as such, the ACA is an appropriate exercise of the Commerce Clause.

Finally, the brief’s authors argue that because the minimum coverage provision is a necessary part of Congress’s comprehensive plan to address a national crisis in the health insurance market and in particular the gender discrimination within that market, the provision is within Congress’s power under the Commerce Clause. Citing Seven-Sky v. Holder (citing Heart of Atlanta Motel), amici argue that “to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local-or seemingly passive-their individual origins.” The ACA was designed to address a national economic health care crisis with a particular focus on gender discrimination and that addressing this crisis is within Congress’s power under the Commerce Clause.

Spotlight on: NFIB on Severability

The brief filed by the National Federation of Independent Businesses on January 6, 2012, argues that should the Supreme Court find the minimum coverage provisions of the Affordable Care Act (ACA) unconstitutional, the remaining provisions of the law should be struck down. In determining whether to strike down an entire law, NFIB argues that the Court should examine Congressional intent, specifically, “ whether Congress would have enacted the bill absent the stricken provision, or whether omission of the provision would have scuttled legislative bargains or undermined statutory objections.” NFIB urges the Court to consider whether, if the minimum coverage provision is severed from the law, the remainder of the act would operate as Congress intended (citing Congressional findings that the mandate is essential to creating effective health insurance markets), and whether Congress would have enacted the insurance market reforms without the minimum coverage requirement (examining the burdens placed on the insurance industry and the mitigation of these burdens by the requirement).

Citing Supreme Court precedent in Regan v. Time, Inc., NFIB acknowledges the reluctance of the Court to “frustrate the intent of the elected representatives of the people,” by invalidating more of the statute than is necessary, but also notes that retaining the remainder of the law without the minimum coverage provisions would result in judicial creation of a law that Congress would not have enacted (i.e., insurance market reforms without a minimum coverage requirement), which would have the same effect of frustrating Congressional intent. NFIB further argued that this argument is supported by the fact that Congress failed to include a severability clause in the legislation, and that as a result, the entire Act should be invalidated.

Spotlight on: The Health Law Professors on the Minimum Coverage Provision

Amici are 104 professors of law who teach in schools of law, medicine, public health, and management. Because these professors are experts in health law rather than constitutional doctrine, the purpose of this brief is to document facts about health care for the Court.

Amici support the position of the Solicitor General that “[b]ecause of human susceptibility to disease and accident, we are all potentially never more than an instant from the ‘point of consumption’ of health care.”

The U.S. market for health care operates on a national level. Almost everyone uses health care on a regular or “semi-regular basis throughout their lives.” Only “3.1% of Americans go longer than 5 years without seeing a health professional, and only 1% never see a professional in their lives. In any given year a majority of health care resources go toward treating a minority of patients who become seriously ill or gravely injured. “It is not possible to predict in advance who will fall into that category in any given year, and hen injury or illness does strike, it is very difficult for the affected individuals to estimate or control the costs of their care.”

Despite the fact that they cannot pay for it, the uninsured receive care. Law and ethics require that hospitals and physicians furnish care. American health policy therefore “takes as a starting point that people in need will receive care – which is to say, they will participate in the market for health services. The hard question is how best to pay the resulting unavoidable costs.”

No other part of the national economy, and certainly none remotely as large, has features that resemble the market for health care. Virtually every person in society during a given period will enter one or more segments of that market. Not only are urgent medical costs unpredictable and uncontrollable, but patients are not ordinary consumers, and they rarely make decisions contrary to medical advice.” The result is a complex regulatory challenge regarding how to deal with costs, particularly costs that individuals incur but cannot pay.

Insurance is the principal way that the U.S. finances health care costs. Many Americans spend some of their lives without health insurance. “Usually this is not a voluntary choice.” Because the uninsured use less care than they need, they are more prone to preventable illness and premature death.

PPACA represents a comprehensive regulatory effort to improve the functioning of the national market for health care in the U.S. by providing nearly all Americans with a means of access to health insurance. Underlying its public and private insurance reform provisions is an understanding that “health insurance is both a means of protecting individuals by spreading the risk of unpredictable illness and injury and an important structural mechanism that ensures stable and predictable payment for services that virtually all Americans use.

Spotlight on: The U.S. Solicitor General on Severability

Congress enacted the Affordable Care Act “to expand access to affordable health care and to improve the functioning of the national market for health care by regulating the terms on which insurance is offered, controlling costs, and rationalizing the timing and method of payment for health care services. The Act also contains numerous provisions concerning other aspects of health care and a variety of other subjects.”

The ACA builds on “decades” of Congressional reforms aimed at making employer insurance more affordable through the tax laws, improving Medicare and Medicaid, improving public health, combating fraud and abuse, and other matters. The ACA “fills the gap in the regulatory scheme” for health insurance by requiring the guaranteed issue of coverage and the use of community rating, and establishes a minimum coverage requirement as an essential element of these two regulations. Without the minimum coverage provision, Congress determined that many individuals would wait to purchase health insurance until they needed it, thereby driving up costs. Congress found that the minimum coverage provision was “essential” to passage of these two reforms.

Many other provisions of the Act address issues such as Medicaid expansion, Medicare reforms, public health, fraud and abuse, and other matters. These issues are separate and independent from the minimum coverage provisions, and many provisions already have taken effect.

Petitioners lack standing to challenge the numerous provisions of the Act that address matters other than the minimum coverage requirement. “Petitioners may not challenge the myriad provisions of the Act that do not apply to them” and may not assert the rights of third parties who are not themselves parties to the action.

The minimum coverage requirement should be upheld as constitutional, but if the Court overturns the requirement, it should conclude that only the guaranteed issue and community rating provisions of the Act are inseverable. Out of respect for other branches of government, the Court should, after “excising the nonconstitutional provision” of an Act of Congress, leave the remaining parts in place unless “it is evident that Congress would not have wanted the remaining provisions to stand.”

In the Affordable Care Act, Congress “used a number of tools to improve the national market for health care” including Medicaid expansions, regulating the terms on which insurance is offered, and regulating the timing and amount of payment for health care. “Each of these provisions can operate independently of the minimum coverage provision and would advance Congress’s goal of expanding affordable coverage if that provision were invalidated. Moreover, many provisions of the Act, focused on controlling costs, improving public health, and other objectives, have no connection to insurance coverage at all. And Congress directed that much of the Act take effect several years before the minimum coverage provision’s effective date, further demonstrating that Congress intended those provisions to operate independently.

“By contrast, the minimum coverage provision is essential to ensuring that the Act’s guaranteed issue and community rating reforms advance Congress’s goals.” Without the minimum coverage requirement, these provisions “would create an adverse selection cascade without a minimum coverage provision, because healthy individuals would defer obtaining insurance until they needed health care, leaving an insurance pool skewed toward the unhealthy. Premiums would increase significantly under that scenario, and the availability of insurance would decline – exactly the opposite of what Congress intended in enacting the Affordable Care Act. The guaranteed issue and community rating provisions are therefore inseverable from the minimum coverage provision.”

Spotlight on: The Center for Constitutional Jurisprudence/Pacific Legal Foundation on Medicaid expansion

The Center for Constitutional Jurisprudence is the public interest law arm of the Claremont Institute, whose mission is to “uphold and restore the principles of the American Founding to their rightful and preeminent authority in our national life, including the foundational proposition that the powers of the national government are few and defined, with the residuary of sovereign authority reserved to the states or to the people.” The Pacific Legal Foundation is “widely recognized as the largest and oldest nonprofit legal foundation representing the views of thousands of supporters nationwide who believe in limited government, individual rights, and federalism.” The Cato Institute is a “nonpartisan public policy research foundation dedicated to advancing the principles of individual liberty, free markets, and limited government. Congressman Rehberg serves as Chairman of the United States House of Representatives Committee on Labor, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies. Dr. Colyer is a practicing physician and Lieutenant Government of the state of Kansas and oversees its Medicaid program.

Congress’ spending clause power is limited and was never intended to allow expansion of programs to the magnitude reflected in the ACA Medicaid expansion. “Where, as with the case of the expanded Medicaid program under consideration here, the federal government grabs tax revenues from a state’s own citizens, then returns some portion of those revenues to further police power purposes that fell within the state’s jurisdiction in the first place, meanwhile, attaching to that ‘gift’ some regulatory condition that the federal government lacks power to impose direction, the transaction is inherently coercive.” Congress is using its power to collect and spend taxpayer funds to compel states to act, through spending legislation, in ways that Congress cannot directly compel under its own powers, and in doing so, it crosses the line between inducement and coercion.

Collectively the states are threatened with loss of “more than a quarter trillion in existing federal funding annually, more than 25% of their total general revenue budgets and would have to increase their general revenue budgets by 39% in order to replace the federal Medicaid funding that would be lost if they do not comply with the ACA Medicaid expansion. “If penalties of that magnitude do not cross the line from ‘inducement’ to ‘coercion’ and trigger the anti-coercion prong of this Court’s Spending Clause analysis in South Dakota v Dole, 483 U.S. 203 (1987), nothing ever will.”

Beyond “the sheer magnitude,” there is something deeply troubling, from a structural federalism perspective, about a federal government grown so large that it can take over entire swaths of the states’ policy power under the guise of conditions on federal spending.” What began with small steps to provide federal aid during the Depression “has metastasized into wholesale usurpation of [states’] police power[.]” “Just as the Commerce Clause has outer limits. . . the Spending Clause also has limits that must be enforced.”

The “notion of political process federalism” recognized in Garcia v San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), cannot rescue the Medicaid expansion, because the process does not apply to commandeering cases such as this one, where the state is not merely a regulated entity but an enforced agent of the federal government. Furthermore, the political controversy surrounding enactment of the ACA deprives the government of defending on the basis of political process federalism.

Spotlight on: The American Hospital Association (AHA) on the Minimum Coverage Provision

Amici are the AHA, the Association of American Medical Colleges, the Federation of American Hospitals, the Catholic Health Association, the National Association of Children’s Hospitals, and the National Association of Public Hospitals and Health Care Systems. The AHA represents 5000 hospitals, the AAMC represents 300 “major non-federal teaching hospitals, all 136 accredited medical schools, and the clinical faculty and medical residents who provide care to patients there.” The Federation represents “investor-owned or managed community hospitals and health systems” and has nearly 1000 member hospitals in 46 states and Washington D.C. NAPH represents 140 of the nation’s largest metropolitan safety net hospitals and health systems. The CHA represents more than 600 hospitals and 1,400 long term care and other health facilities in all 50 states. NACH represents 221 children’s hospitals.

The Court should affirm the constitutionality of the minimum essential coverage requirement because “the way uninsured Americans pay – or are unable to pay – for the health care they assume ‘substantially affects’ interstate commerce” under the Court’s precedents. The vast majority of uninsured Americans nonetheless receive health care “and that care costs tens of billions of dollars each year.” These costs are borne by hospitals, third parties, health care systems, and American taxpayers. As the D.C. Circuit Court of Appeals concluded, “‘Congress reasonably determined that as a class, the uninsured create market failures’ that justify regulating how they finance the health care they receive.” Seven Sky v Holder, 661 F. 3d 1 (D.C. Cir., 2011).

The challengers’ activity/inactivity distinction is meaningless, but even if upheld by the Supreme Court, it is clear that the uninsured engage in relevant economic activity: “They massive quantities of health care services for which they cannot or do not pay. The activity argument fails on its own terms.” The argument that if Congress can require the purchase of health insurance it can compel the purchase of broccoli “fall[s] flat because the purchase the ACA mandates – insurance – is a mere financing mechanism for another product the uninsured already consume – health care.” “Health care is unique [and this]case cannot be resolved based on facile comparisons to dissimilar markets.”

Spotlight on: Senator Reid and Congresswoman Pelosi on the Minimum Coverage Provision

Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, along with twenty other Democratic Senate and House Leaders filed an amicus brief on January 13, 2012 urging the Supreme Court uphold the minimum coverage requirement of the Affordable Care Act (ACA).

Legislators argue that Congress has the authority under the Commerce Clause to regulate interstate commerce, including the regulation of interstate health insurance markets. They argue that the minimum coverage requirement is part of a comprehensive regulatory plan designed to assure that affordable health insurance is widely available. According to the brief, the law regulates health insurance markets by barring insurers from refusing or rescinding coverage based on individual health status, and by requiring most individuals to maintain coverage or pay a tax. As such, the authors argue, the ACA is an exercise of congress’s Commerce Clause power to regulate interstate health insurance. They contend that there is no constitutional basis for the argument that the minimum coverage requirement regulates inactivity, rather than activity, and point out the challengers claim rests on a theory of economic substantive due process soundly rejected by the Supreme Court in Lochner v. New York more than century ago.

Legislators go on to argue that the Necessary and Proper clause provides a reinforcing and independent basis for the minimum coverage requirement, as a “means to the full and effective exercise of Congress’s regulation of interstate commerce, as well as being an integral part of Congress’s broader regulatory scheme of assuring affordable health insurance coverage for all Americans.”

Finally, the brief’s authors point to Congress’ s independent taxing authority as a third constitutional basis for upholding the minimum coverage provision, noting that the minim coverage requirement, is drafted and enforced through the internal revenue code and is a tax, despite being called a penalty under the law.

Spotlight on: The Blue Cross and Blue Shield Association of Massachusetts on the Minimum Coverage Provision

The minimum essential coverage requirements fall squarely within the historical understanding of Congress’s power to address interstate problems, in a comprehensive fashion, that no state can regulate alone. “ There can be no serious contention that existing defects in the markets for health care and health insurance – markets that accounted for 17.6% of the entire national economy in 2009 – are somehow local in origin, in scope, or in effect.”

A requirement that most Americans obtain a minimum level of insurance coverage through their employers, a state health insurance Exchange, or through Medicaid or another source of creditable coverage does not “unduly encroach [] on state authority or state prerogatives.”

The health care system’s problems are “systemic” and require national attention: the “large and growing number” of Americans without “health insurance or reliable access to basic health care;” employers’ increasing difficulties in providing insurance to their employees; health care costs; dependence on emergency rooms for primary health care, bankruptcies; and the impact on state budgets.

This crisis is national in scope, and under modern United States Supreme Court precedent dating back to 1937, Congressional power to act is clear. While states have taken important steps, they cannot solve this problem. Indeed, contrary to the position taken by the states that challenge the constitutionality of the law, the presumption is that Congress has such powers, that such powers are “plenary,” and that these powers are as great as states’ police powers within their borders. This power includes the power to regulate individual conduct. T his power “exists precisely to allow Congress to address problems – like those that plague the nation’s health care system – that do not respect state boundaries and that states cannot fully and effectively address on their own.”

The “factual premise” of the states that challenged the constitutionality of the minimum coverage provision “ignores reality by supposing that there are a meaningful number of citizens who will never affect the country’s healthcare economy.” Indeed, “the health care market is unique” as the Court of Appeals for the D.C. Circuit noted in its decision in Seven Sky v Holder, 663 F. 3d 1, 18 (D.C. Cir., 2011), because everyone enters it and the uninsured have such power to harm it in ways that affect everyone. In this regard, rather than harming state sovereignty, the Affordable Care Act is “an indispensable aid to states in their own efforts to tackle the healthcare problems their citizens face.”

Spotlight on: The Economists on Severability

The economists believe that the Affordable Care Act “will likely exacerbate, rather than constrain, the inflation in healthcare costs that pose a serious long-term challenge to the U.S. economy.” A separate brief also will address the ACA’s Medicaid expansion.

The Eleventh Circuit erred in holding that the minimum essential coverage requirement could be severed from the remainder of the Act and that the Medicaid expansion was constitutional. Both the minimum essential coverage requirement and the Medicaid expansion will impose “substantial costs” on private insurers that cannot be severed from the rest of the Act. Because of the “true centrality” of the minimum essential coverage requirement and the Medicaid expansion, the provisions cannot be severed.

“. . . Congress would not have intended the economic effects of the Act without the mandate.” Many of the Act’s provisions “impose significant costs on health care market participants, primarily health insurance companies.” Congress would not have imposed these requirements “without the countervailing benefits provided by the individual mandate, not just as a matter of politics, but because such an imposition would undermine the central goal of the Act, to make health care more affordable.”

For this reason, “the ACA fails the severability test of whether the Act would function ‘in a manner consistent with the intent of Congress’ absent the individual mandate.” Alaska Airlines, Inc. v Brock, 480 U.S. 678 (1987)

The Act depends on the individual mandate to provide a significant portion of the benefit necessary to counterbalance the enormous costs the Act otherwise imposes on health insurance providers.” The best available economic data show that the Act will impose total net costs of $360 billion on health insurance companies from 2012 through 2021. By contrast, the mandate would have resulted in a net gain of $6 billion over that same time period.

The Government “concedes that certain provisions of the act, namely the community rating and guaranteed issue reforms, must stand or fall with the individual mandate.” But numerous provisions of the ACA are also implicated and Congress understand that the individual mandate would counterbalance “a broader set of impositions in the insurance industry” such as the “Cadillac tax” on high-cost health plans.

Beyond insurance companies, others are affected because of the higher costs that insurers would charge consumers and because of the cost of compliance with “highly burdensome” regulatory provisions. These costs would “strip away the provision of the Act, that is essential to enable private insurers to provide consumers with anything close to affordable insurance.” Without the individual mandate, “the ACA’s reforms, including but not limited to guaranteed issue and community rating, would cause a steep increase in premiums – the opposite of Congress’s express intent.”

The Act also “includes trade-offs for other actors in the health care system.” Hospitals and drug manufacturers gave up reimbursement under Medicare “on the understanding that they would benefit from increased demand for health care manufactured by the individual mandate.” As a result, they can assume that they will be forced to pass along these losses to other health care consumers. This expectation, which is “reasonable,” directly contravenes Congressional expectations.

Because “the individual mandate is the key to the economic viability of so many provisions of the Act,” the Court “should not engage in a line-by-line analysis of whether the particular individual provisions of the 2,700 page Act are or are not sufficiently independent from the individual mandate to be severed from it.”

Spotlight on: The ACLJ and members of Congress on Severability

Amici are “dedicated to the founding principles of a limited Federal Government and the belief that the Constitution contains meaningful boundaries that Congress may not trespass – no matter how serious the nation’s health care problems.” The Constitution does not “empower Congress to require Americans to purchase and maintain health insurance from a private company for the rest of their lives or pay an annual penalty.” The Amici are “deeply troubled by the fundamental alteration to the nature of our federalist system of government that would be required to recognize a novel Congressional power to mandate that citizens buy a product from a private company.”

The unconstitutional minimum essential coverage provision cannot be severed from the remainder of the Act, because it is “the essential component of the ACA’s reforms to the health insurance and health care markets, as the Federal Government has conceded.” Congress “would not have passed the ACA absent the individual mandate.” Without the minimum essential coverage provision, the ACA’s remaining provisions cannot function properly.” Severability is an issue that turns on “underlying legislative intent” and whether the balance of the legislation “is incapable of functioning independently.” Congressional intent on non-severability is evidenced by the fact that the House bill, H.R. 3962, contained a severability clause, and leaving the remainder of the bill results in an “inoperable or counterproductive regulatory scheme.”

The federal government has conceded that the minimum essential coverage requirement is essential to a “comprehensive” regulatory scheme and the “overall operation of the ACA,” and as a result, the entire Act should be overturned.

Spotlight on: The Court-Appointed Amicus on the Anti-Injunction Act

One of the four issues to be heard by the Supreme Court is whether the Anti-Injunction Act (AIA) precludes consideration of the individual mandate in federal court. For a complete discussion of all questions to be heard by the Supreme Court in the ACA, click here.

Robert A. Long, Jr., who was appointed by the Supreme Court to argue that AIA bars consideration of the constitutionality of the individual mandate, filed a court-appointed amicus brief. The Supreme Court appointed an attorney to argue this point because none of the parties in the case argue that the AIA bars consideration, and the Supreme Court wanted to hear arguments on this point. The brief argues that the AIA bars court consideration because Congress specified that the penalty for failing to maintain coverage is assessed and collected in the same manner as taxes, and that the penalty is a “tax” within the meaning of the AIA. Since the AIA bars federal courts from hearing cases that are brought for the purpose of “restraining the assessment or collection of any tax,” the brief urges the Court to vacate the decision on the individual mandate in Florida v. HHS and remand (or send the case back to the Eleventh Circuit Court of Appeals) for dismissal.

Spotlight on: The States’ Brief on Severability

In a brief filed January 6, 2012 by the 26 states that were parties to Florida et al. v. HHS et al., the states urged the Supreme Court to strike the Affordable Care Act (ACA) in its entirety, should the Court find the minimum coverage provisions of the law unconstitutional. In the brief, the states characterized the ACA as legislation passed by the Senate “a mere 35 days after it was introduced,” and only “through unusual procedural machinations and by the barest of margins.” In urging the Court to conclude that entire Act should stand or fall on the constitutionality of the minimum coverage requirement (rather than requiring an independent analysis of whether the law would work independently of the mandate), states argue that the question is not whether the remainder of the law can function without the requirement, but whether Congress would have enacted the law without the individual mandate.

States characterize the ACA as “intertwined provisions,” which would not have been enacted without the minimum coverage requirement, and a “legislative bargain” through which “Congress sought to ensure an adequate supply to meet the artificial demand forcibly created by the individual mandate, all in service of the ultimate goal…of near-universal coverage.” Citing arguments made by the Department of Justice and Congressional findings that provisions were designed to “work in tandem,” and that the minimum coverage requirement was essential to the law, states urged the Court to invalidate the entire statute, should requirement be found unconstitutional.

Spotlight on: The States of Maryland et al. on the Minimum Coverage Provision

The minimum essential coverage requirements fall squarely within the historical understanding of Congress’s power to address interstate problems, in a comprehensive fashion, that no state can regulate alone. “ There can be no serious contention that existing defects in the markets for health care and health insurance – markets that accounted for 17.6% of the entire national economy in 2009 – are somehow local in origin, in scope, or in effect.”

A requirement that most Americans obtain a minimum level of insurance coverage through their employers, a state health insurance Exchange, or through Medicaid or another source of creditable coverage does not “unduly encroach [] on state authority or state prerogatives.”

The health care system’s problems are “systemic” and require national attention: the “large and growing number” of Americans without “health insurance or reliable access to basic health care;” employers’ increasing difficulties in providing insurance to their employees; health care costs; dependence on emergency rooms for primary health care, bankruptcies; and the impact on state budgets.

This crisis is national in scope, and under modern United States Supreme Court precedent dating back to 1937, Congressional power to act is clear. While states have taken important steps, they cannot solve this problem. Indeed, contrary to the position taken by the states that challenge the constitutionality of the law, the presumption is that Congress has such powers, that such powers are “plenary,” and that these powers are as great as states’ police powers within their borders. This power includes the power to regulate individual conduct. T his power “exists precisely to allow Congress to address problems – like those that plague the nation’s health care system – that do not respect state boundaries and that states cannot fully and effectively address on their own.”

The “factual premise” of the states that challenged the constitutionality of the minimum coverage provision “ignores reality by supposing that there are a meaningful number of citizens who will never affect the country’s healthcare economy.” Indeed, “the health care market is unique” as the Court of Appeals for the D.C. Circuit noted in its decision in Seven Sky v Holder, 663 F. 3d 1, 18 (D.C. Cir., 2011), because everyone enters it and the uninsured have such power to harm it in ways that affect everyone. In this regard, rather than harming state sovereignty, the Affordable Care Act is “an indispensable aid to states in their own efforts to tackle the healthcare problems their citizens face.”

Spotlight on: The American Hospital Association (AHA) on Severability

Amici are the AHA, the Association of American Medical Colleges, the Federation of American Hospitals, and the National Association of Public Hospitals and Health Care Systems. The AHA represents 5000 hospitals, the AAMC represents 300 “major non-federal teaching hospitals, all 136 accredited medical schools, and the clinical faculty and medical residents who provide care to patients there.” The Federation represents “investor-owned or managed community hospitals and health systems” and has nearly 1000 member hospitals in 46 states and Washington D.C. NAPH represents 140 of the nation’s largest metropolitan safety net hospitals and health systems. Together the hospital associations represent “the vast majority of the nation’s hospitals and health systems.” They also have filed briefs in support of the government on the individual coverage requirement.

The Court should affirm the constitutionality of the individual coverage requirement and need not reach severability because it is “perfectly obvious that the uninsured ’substantially affect’ the interstate markets in health care and health insurance.” Even “if petitioner’s activity/inactivity distinction were coherent, it would fail because the uninsured are ‘active’ in both the health care market – because they obtain care – and in the health insurance market – because even those who do not seek access to that market in a given year obtain the present benefit of an insurance-funded infrastructure that will care for them when they need it.”

But if the Court reaches the severability issue, it should decide it rather than remand the case for “further fact-finding.” A remand would mean uncertainty and would be “deeply damaging.” In this regard, the ACA’s Medicare and Medicaid spending cuts cannot be severed from the minimum essential coverage requirement because they “slash the reimbursements that hospitals receive.” Furthermore, hospitals must “engage in extensive additional spending to meet new ACA mandates.” “To leave them in place absent the mandate would impose massive additional burdens on hospitals, depriving them of resources to meet the needs of their patients.” These provisions are “intimately bound up with the individual mandate and would not have been enacted without it.”

Spotlight on: The States’ Brief on the Medicaid expansion

The States’ Medicaid brief, filed on January 10, 2012, argues that the ACA’s Medicaid expansion crosses the line between strong political and policy pressure and unconstitutional legislative coercion. The states argue that several United States Supreme Court precedents limit Congress’s use of its Spending Clause powers in order to avoid situations in which the federal government, through expenditures, coerces “states into bringing their police power to bear on subjects far outside Congress’s limited and enumerated powers.”

The states further argue that several factors make the ACA Medicaid expansions unique and unconstitutionally coercive compared to prior expansions. According to the states, the first factor is the lack of state flexibility to modify either eligibility standards or the level of coverage. The second factor is the fact that the Medicaid “expansion [is] critical to compliance with the individual mandate” since even poor individuals (other than persons falling within certain narrow exemption classes) must comply with the Act’s minimum essential coverage requirement. Medicaid is expressly recognized as a form of minimum essential coverage and the Exchange and premium assistance pathway to affordable coverage is not available to persons with incomes below 133 percent of the federal poverty level. As a result, the states assert, “Congress provided no fallback”, thereby converting the Medicaid expansion from voluntary to coercive. The states further point out that Congress’s assumption that states would have no choice but to participate is “unconstitutional but not unrealistic”, since the “ACA threatens the States with the loss of every penny of federal funding under the single largest grant-in-aid program in existence. . . if they do not capitulate to Congress’ steep new demand.”

Spotlight on: DoJ Brief on the Minimum Coverage Provision

One of the four issues to be heard by the Supreme Court is whether Congress has the authority under the Constitution to require individuals to maintain minimum insurance coverage as required under Section 1501 of the ACA. The Department of Justice filed a brief arguing that the “minimum coverage” provision of the ACA should be upheld by the Court as a reasonable exercise of Congress’s power under the Commerce and Necessary and Proper Clauses. Citing Supreme Court precedent, DoJ argued that, in enacting the minimum coverage requirement, Congress was regulating “activities that substantially affect interstate commerce,” because 1) the purchase of health insurance coverage is the primary means of financing health care costs, and 2) the cost of uncompensated care for those without coverage increases the cost of health insurance to other market participants. The government also argued that the provision is an “integral part of a comprehensive scheme of economic regulation,” and would be a reasonable exercise of congressional authority even if it is not found to be economic activity, since the requirement is a necessary part of a more general regulation of interstate commerce (i.e., insurance market reform). Finally, the DoJ argued that regardless of how the Court rules on the Commerce Clause authority, the Court’s legal precedents mean that the minimum coverage provision, which is enforced through the federal internal revenue code, constitutes a tax and thus is an reasonable exercise of Congress’s taxing power.

Introduction

On November 14, 2011 the United States Supreme Court agreed to hear arguments on four issues that have arisen as a result of more than two dozen legal challenges to the Affordable Care Act (ACA) that were filed upon or immediately following enactment. Eventually, four federal appeals courts ruled on multiple aspects of the challenges: whether the parties had standing (i.e., had demonstrated that they would be concretely affected by the Act) and their claims were ripe (i.e., ready to be heard); whether the federal courts have the power under the Anti-Injunction Act to hear claims regarding the constitutionality of the individual coverage requirement; whether the individual coverage requirement is constitutional; whether, if the coverage requirement is unconstitutional, it can be severed from the remainder of the Act; whether the obligations required of employers are constitutional; and whether the Medicaid expansions violate the Tenth Amendment and are unconstitutionally coercive.

In Florida et al. v United States Department of Health and Human Services,^[1] which was brought by 26 states,^[2] the United States Court of Appeals for the Eleventh Circuit overturned the individual coverage requirement as unconstitutional while upholding the constitutionality of the Medicaid expansions. Two other circuit courts found the individual coverage requirement constitutional (Thomas More Law Center v Obama^[3] and Susan Seven-Sky v Holder^[4]). A fourth appellate court decision, in Liberty University v Geithner,^[5] dismissed the individual coverage requirement claim on the ground that it was precluded by the Anti-Injunction Act.

Underscoring the seminal nature of the case, the Supreme Court itself has created a special website for briefs and related materials at http://www.supremecourt.gov/docket/PPAACA.aspx. Oral arguments are set for March 26-28, 2012, and a decision is expected by the end of the Court’s term near the end of June.

The Supreme Court will consider four issues: (1) whether Congress has the power under Article I of the Constitution to enact the coverage requirement; (2) if the coverage requirement is found unconstitutional, whether it is severable from the remainder of the ACA; (3) whether the ACA’s requirement that states expand Medicaid eligibility or risk losing federal funds is unduly coercive in violation of the Tenth Amendment; and (4) whether the individual coverage requirement is a tax for purposes of the Anti-Injunction Act, meaning that plaintiffs seeking to challenge the requirement must wait until it takes effect in 2014.

1. The constitutionality of the individual coverage requirement

The constitutionality of the individual coverage requirement raises questions regarding the scope and limits of congressional powers under both the General Welfare clause (which authorizes Congress’s taxing and spending powers) and the Commerce Clause.^[6] The ACA carries out the coverage requirement through amendments to the Internal Revenue Code, by imposing a “penalty” on applicable taxpayers who do not present evidence of “minimum essential coverage” (i.e., employer coverage, coverage purchased individually, Medicare, Medicaid, Tricare, veterans health care programs certified by the Secretaries of Health and Human Services and Veterans Affairs, and certain other forms of coverage).^[7] The penalty for failure to maintain such coverage phases in and ultimately is capped at $695.00, adjusted after 2016 for inflation or 2.5 percent of taxable income above the filing limit.^[8]

Congress’s taxing and spending powers. Although the Justice Department argued that Congress’ taxing and spending powers offered a basis for the coverage requirement, the Eleventh Circuit rejected this argument, concluding that the law was structured as a penalty rather than a revenue-raising tax, that Congress did not intend the law to operate as a tax, and that the minimum essential coverage requirement thus failed to meet the minimum essential elements of a tax under Supreme Court precedent. (“The government would have us ignore all of this and instead hold that any provision found in the Internal Revenue Code that will produce revenue may be characterized as a tax. This we are unwilling to do.”^[9]) In Thomas More,^[10] the Sixth Circuit reached a similar conclusion, while one of the judges on the Fourth Circuit (which dismissed the challenge on Anti-Injunction Act grounds) concluded that the individual coverage requirement could be upheld as a lawful exercise of Congress’s taxing powers.^[11]

Congress’s Commerce Clause powers. The appellate courts disagreed over whether the individual coverage requirement can be upheld as a constitutional exercise of Congress’ Commerce Clause powers. Their disagreement essentially boils down to two matters: First, whether an individual’s decision not to be insured (whether as a matter of choice or for reasons of affordability or access based on health status) is the type of activity that Congress can regulate under the Commerce Clause; and second, if so, whether the solution (i.e., a requirement to purchase private insurance) is a constitutional solution.

On both matters, the appellate decisions diverged sharply. The Thomas More and Seven Sky^[12] majorities (along with a particularly strong concurring opinion by Judge Jeffrey Sutton in Thomas More) found the requirement constitutional, while the Florida majority reached the opposite conclusion. In reaching opposite conclusions, the appellate courts agreed on the basic parameters of the Commerce Clause. But they disagreed on the meaning of key previous Supreme Court cases that ultimately will help shape the outcome.^[13] Under these precedents, the courts disagree as to whether Congress can regulate an individual’s decision not to buy health insurance, as well as whether the solution it has devised (a requirement to purchase private insurance) is constitutional. In effect, the lower courts have disagreed over whether Congress can reach the individual conduct at issue in this case (buying or not buying insurance) as well as whether Congress has chosen a constitutional means of assuring that the population is insured.

Appellate rulings in favor of constitutionality under the Commerce Clause. The appellate court opinions favoring the constitutionality of the individual coverage requirement concluded that the ACA’s fundamental focus is on stabilizing the health care system as a whole, and that this frame of reference is essential because all Americans need and use health care, and because the need is essentially unpredictable. The majorities upholding the coverage requirement focus on Congress’s lengthy findings (ACA §1501) regarding the impact of uninsured people on the health care economy (over $40 billion in bad debt that is passed along to everyone through higher insurance premiums), the problems created by having so many Americans attempting to self-insure by going without coverage and trying to pay for care at the point of service use, and the importance to any solution of a stable insurance system, which compels creation of a healthy insurance pool. These related findings, for the majorities favoring constitutionality, form a solid basis for Congress’s decision to regulate individual conduct because what is really at stake is the “when and how” of paying for health care; viewed in this light, millions of individual cases can be aggregated into a significant impact on commerce.

The Sixth and D.C. Circuit decisions upholding the individual coverage requirement also expressed no concern with its unprecedented structure; from their perspective, the modern Supreme Court has given Congress a wide berth to test out innovative solutions to complex problems of national policy (in his concurrence, Judge Sutton of the Sixth Circuit went back further, pointing to the creation of the first national bank as an example of Congressional innovation). In so doing, the favorable majorities also rejected the notion that individuals are being pushed into a marketplace they choose to avoid. Indeed, in his Thomas More concurrence Judge Sutton, who is noted for his conservative judicial philosophy, dismissed the assertion that not buying a product could be characterized as “inactivity” at all: “No one is inactive when deciding how to pay for health care, as self-insurance and private insurance are two forms of action for addressing the same risk. Each requires affirmative choices; one is no less active than the other; and both affect commerce.”^[14]

Furthermore, the Seven-Sky and Thomas More majorities found no problem with an individual requirement to buy private insurance as a solution to the problem. In their view, Congress devised a quintessentially American solution to an intractable problem in the market, one that reshapes the market and individuals’ relationship to it, no different from reshaping individual farmers’ relationship to the market for wheat in the case of Wickard v Filburn. In his Thomas More concurrence, Judge Sutton was clear in pointing out that such a solution is not unconstitutional because it had never previously been attempted, noting that any solution that hinged on a Medicare-like approach of extending public insurance to all residents through use of the taxing power, while clearly constitutional, had proved to be politically impossible, leaving Congress with no choice but to forge a new pathway.

Appellate ruling striking down the individual coverage requirement under the Commerce Clause. The court of appeals for the Eleventh Circuit came out the other way. In striking down the individual coverage requirement, the Eleventh Circuit majority (with one judge dissenting and writing in favor of the requirement) held that rather than reshaping the market for health care, the purpose of the law was to force Americans into a private insurance market that they did not choose to enter. In this respect, the Florida majority asserted, the Act could be distinguished from other cases such as Wickard v Filburn and Gonzalez v Raich, which, rather than forcing people into markets, simply reordered their relationships with markets the challengers already were members of (growing wheat and marijuana, respectively, for personal use). Rather than defining the market as one for health care that all Americans are part of, the Eleventh Circuit defined the market as one for private insurance products. What appeared to move the Eleventh Circuit decision into the “unconstitutional” column was not the challengers’ inactivity arguments, which it dismissed as unhelpful. Instead, it was the nature of the solution, the idea of forcing people to buy private insurance, or, as the majority put it, “a mandate that Americans purchase and maintain health insurance from a private company for the entirety of their lives.”^[15]

Even more important, perhaps, was the Florida majority’s conclusion that there is no relationship between a requirement to buy private insurance and the type of economic activity necessary to reaching individual behavior under Supreme Court precedents. Had Congress chosen to condition the receipt of health care on being insured, the Eleventh Circuit concluded that the law would be constitutional: “When the uninsured actually enter the stream of commerce and consume health care, Congress may regulate their activity at the point of consumption.”^[16] But short of conditioning use of health care on being insured, the Eleventh Circuit concluded that Congress lacks any basis to reach the fact of simply not being insured: “It is immaterial whether we perceive Congress to be regulating inactivity or a financial decision to forego insurance. Under any framing the regulated conduct is defined by the absence of . . . the production, distribution, and consumption of commerce.”^[17]

Because of the absence of any connection between the insurance requirement and commerce, the Eleventh Circuit placed the ACA into the same category as other acts of Congress struck down as unconstitutional because the laws had no connection between commerce and the individual conduct being regulated.^[18] In so ruling, it refused to defer to Congress’ own findings regarding the link between the broader health care economy and being uninsured. The majority concluded that it is not enough for Congress simply to assert a connection between conduct and commerce:

Here the decision to forego insurance similarly lacks an established interstate tie or any “case-by-case inquiry.” Aside from the categories of exempted individuals, the individual mandate is applied across-the-board without regard to whether the regulated individuals receive, or have ever received, uncompensated care — or indeed, seek any care at all either now or in the future. Thus the Act contains no language “which might limit its reach to a discrete set of [activities] that additionally have an explicit connection with or effect on interstate commerce.”^[19]

The Florida majority also was troubled by the lack of “limiting principles” for use of Commerce Clause powers to require the purchase of market goods: “If Congress may compel individuals to purchase health insurance from a private company, it may similarly compel the purchase of other products from private industry, regardless of the ‘unique conditions’ the government cites as warrant for Congress’s regulation here.”^[20] Finally, the majority rejected the notion that the individual coverage requirement was a necessary component of a broader regulatory scheme, ruling that Congress could regulate the insurance industry without question but that an individual purchase requirement is not necessary to that task. Acknowledging the insurance crisis that might arise from regulating the market without connecting the regulation to a stable purchasing pool, the majority concluded that this was not its problem.

2. Whether if it is unconstitutional, the individual coverage requirement can be severed from the rest of the Act

If it strikes down the individual coverage requirement as unconstitutional, the Supreme Court must decide whether the rest of the law must fail. The Eleventh Circuit majority ruled that the individual coverage requirement can be severed from the remainder of the Act and that numerous options remained available to Congress to address the Act’s constitutional deficiencies. Essential to its decision were several considerations: the weak penalties that attach to those who refuse to buy coverage; the fact that no severability clause was included in the Act; and the fact that the market reforms make no reference to the mandate. In finding severability, the Eleventh Circuit overruled the federal district court in the Florida case, which ruled that, because the individual purchase requirement was an essential and indispensable part of the ACA, it was not severable and thus declared the entire ACA unconstitutional.^[21]

Supreme Court precedent states that 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.^[22] The Eleventh Circuit, as noted, found that the individual coverage requirement was severable, thereby reversing the trial court decision in the case, which overturned the entire law. But in Virginia ex rel. Cuccinelli v Sebelius^[23] (ultimately dismissed by the United States Court of Appeals for the Fourth Circuit without reaching the merits, for lack of standing), a separate federal trial court that declared the individual coverage requirement unconstitutional was unwilling to overturn the entire law and instead did so selectively, focusing on key market reforms.^[24] Yet another trial court, this one in Pennsylvania, reached a similar conclusion regarding the ambiguity surrounding congressional intent but ruled that the guaranteed issue and pre-existing condition exclusion clauses must “rise []and fall[]” with the individual purchase requirement.^[25]

Arguments favoring severability. In its petition for certiorari,^[26] the Department of Justice argues against “wholesale invalidation” of the ACA on several grounds: 1) remedies for constitutional flaws should be limited to severing problematic portions and keeping the rest of the statue intact;^[27] 2) provisions may only be invalidated on non-severability grounds if Congress clearly would not have enacted the provisions in the absence of the individual mandate;^[28] and 3) the State petitioners have not demonstrated that each of the provisions they content is non-severable burdens them.^[29] DoJ has argued that the guaranteed issue and community rating provisions are non-severable but that many provisions of the law are unrelated to the individual coverage requirement and should be preserved.

Arguments opposing severability. The National Federation of Independent Businesses (NFIB), one of the litigants in the Eleventh Circuit case, argues, on the other hand, that the ACA should be invalidated in the event the individual coverage requirement is found unconstitutional. The NFIB contends that without the individual coverage requirement, the rest of the ACA cannot operate independently in a manner consistent with Congress’ original legislative intent.^[30] The NFIB also asserts that the individual requirement is tied directly to the insurance reforms, which together form the “heart” of the ACA and thus, striking down the coverage requirement necessarily torpedoes the entire statute.^[31]

The states argue that the Supreme Court should address the severability question in the event the Court invalidates the individual purchase requirement to resolve the “confusion” that has surfaced among the lower courts, but to date they have not addressed how the severability question should be answered.^[32]

3. Whether the Medicaid expansion is unconstitutionally coercive

The Coercion Doctrine

The states’ case, and the Eleventh Circuit decision, rest on a special legal theory known as the “coercion doctrine,” characterized as “amorphous” by the Eleventh Circuit. First set forth by the Supreme Court in the New Deal era, the doctrine relates to Congress’ Spending Clause powers and was most recently addressed by the Court in South Dakota v. Dole.^[33] In Dole^[34] Based on this doctrine, the states have argued that the Medicaid expansion amounts to unconstitutional coercion.

The states’ argument: In their petition for certiorari,^[35] the states reject the Eleventh Circuit’s characterization of the law as non-coercive; they argue instead that the Medicaid expansion meets the coercion test because it is unprecedented in scope and “threaten[s] to withhold all federal funding under [Medicaid,] the single largest grant-in-aid program,” something that according to their brief has not happened before. As evidence of coercion, the states point to a number of factors: the fact that the ACA takes away their previous discretion under Medicaid to treat certain populations as optional as a result of the maintenance of effort provision; the fact that the ACA, in contrast to prior laws, would withhold all federal funding in the case of non-compliant states;^[36] the fact that the ACA couples the expansion with both a maintenance of effort requirement covering previously optional populations and new obligations to assure not just coverage but actual access to care; and finally, the fact that because the Medicaid expansions are part of a larger law that contains no other source of funding for the poorest Americans, Congress essentially has bootstrapped Medicaid into an offer that cannot be refused.^[37] According to the states, all of these factors, combined with an interpretation of the coercion doctrine by Judge Michael Luttig, a highly influential conservative judge on the Fourth Circuit Court of Appeals,^[38] make the Medicaid expansion unconstitutionally coercive.

The DoJ Response: In its response to the states’ petition, DoJ argues that the structure of the ACA Medicaid expansion is no different from previous Medicaid expansions of mandatory coverage groups, including expansions accompanying enactment of Supplemental Security Income in 1972 as well as those covering pregnant women and children.^[39] In all three instances, argues DoJ, Congress has conditioned states’ participation in Medicaid (and thus receipt of federal funding) on coverage of these populations.^[40] The Department of Justice also takes issue with the states’ characterization of the coercion doctrine and in particular with the Judge Luttig’s writings, which, according to DoJ, were remarks simply written in passing (known as “dicta”).^[41] In fact, DoJ points out that the Fourth Circuit explicitly rejected a Medicaid coercion challenge in West Virginia v. HHS.^[42] Indeed, DoJ continues, Judge Luttig has expressly written that “a valid coercion claim would lie [only] where the federal government withheld the entirety of a substantial federal grant on the ground that States refuse to fulfill their federal obligation in some insubstantial way.”^[43] The Department of Justice notes that by contrast, the Medicaid expansion could not be considered insubstantial since the Congressional Budget Office estimates that the provision will affect 16 million uninsured individuals.^[44]

4. Whether the Anti-Injunction Act bars consideration of the individual coverage requirement

The Supreme Court also agreed to hear arguments on whether the Anti-Injunction Act (AIA) bars federal courts from hearing a challenge to the individual coverage requirement until it goes into effect, a conclusion reached by both the Court of Appeals for the Fourth Circuit in Liberty University v Geithner and the D.C. Circuit Court in Seven-Sky v Holder.

Under the Constitution, Congress has the power to regulate the jurisdiction of the lower courts and thereby limit their ability to hear certain types of cases. The Anti-Injunction Act is just such a law, under which Congress has prohibited the federal courts from hearing suits that seek to bar the collection of federal taxes in advance of their imposition (but allowing people to challenge the legality of a tax at the point of collection).^[45] The heart of the matter, for Anti-Injunction Act purposes, is whether the penalty amounts to a tax and, if so, whether the courts thus are barred from hearing challenges until the tax actually is applied.

Appellate courts have issued conflicting decisions. In Florida and Thomas More, the courts held that the AIA did not bar federal court jurisdiction, since it does not bar legal challenges to what amount to “penalties” imposed for “substantive violations of laws not directly related to the tax code.”^[46] But in Liberty v Geithner, the Court of Appeals for the Fourth Circuit set aside the trial court ruling and dismissed the challenge, concluding that under Supreme Court precedents, even when a tax is merely secondary to the primary goal of a law, this does not mean that the law is not a tax.^[47] Citing several provisions of the Internal Revenue Code, the Fourth Circuit held that for the purposes of the AIA, Congress had made it clear that penalties are taxes, and that the AIA barred court jurisdiction.^[48]

The DoJ position. In its motion to dismiss the initial challenge to the law in Florida, the Department of Justice originally argued that the AIA bars the courts from hearing the case. But it is no longer taking this position. In its response to Liberty University’s request for a review of the Fourth Circuit’s ruling,^[49] DoJ has stated that the government no longer believed that the AIA should bar pre-enforcement challenges to the individual coverage requirement because^[50] for AIA purposes the law can be considered a penalty rather than collection of a tax. Since none of the parties in the ACA litigation now support the position that the AIA bars consideration of the individual mandate, the Supreme Court has appointed counsel to argue this position.

What Does All of This Mean?

Whatever the final result of this litigation, there are several levels of likely consequences.

From a constitutional perspective, a decision striking down the individual coverage requirement or the Medicaid expansion would have profound implications for the scope of congressional powers. As Judges Sutton (Sixth Circuit) and Kavanaugh (D.C. Circuit) point out, in the modern U.S. economy, Congress needs and possesses the power to devise market solutions to difficult problems. For example, one proposed solution to Medicare’s uncontrolled growth is to scrap the “traditional” government insurance program in favor of a compulsory insurance tax (the Medicare HI tax) coupled with a premium support solution. Would such a solution — typically advanced by conservative free-market thinkers — immediately be off the table since it would replace a public insurance system with compulsory participation in a market-based system?

The Medicaid coercion aspect of the case may be even more far-reaching. Congress might fashion a coverage incentive (voluntary enrollment, high penalties for non-enrollers) to take the place of an unconstitutional mandate, much like Medicare Parts B and D, both of which are voluntary. But if the Medicaid expansion is found to be unconstitutionally coercive, the fundamental structure of the program, along with those of other federal grant-in-aid programs, will be called into question, along with Congress’s powers to use federal spending to steer national policy. Perhaps the most eloquent statement on the consequences of such an outcome for Congressional lawmaking was offered by Senator Charles Grassley (R-IA) who, in an extraordinary Senate speech delivered on December 15, 2011, warned his colleagues of the meaning of a coercion ruling that adopts the states’ position:

Mr. President, if the Supreme Court rules the individual mandate unconstitutional, it will have the effect of striking down a new law that hasn’t been fully implemented. If the Supreme Court rules the Medicaid expansion in the Affordable Care Act unconstitutional, it has the potential to cause significant changes in a program that has been in operation for the last 46 years. [I]t is difficult to overstate the potential implications of this particular aspect of the Affordable Care Act case. A ruling for the states could affect future Medicaid policy, current Medicaid policy and broader federal-state partnerships. Mr. President, if the federal government cannot require expansion of the Medicaid program and pick up 92% of the tab, what can the federal government require? [I]f the current mandatory expansion of Medicaid is unconstitutional, what does that imply for previous expansions and policies? In 1989 and 1990, when Congress required states to expand eligibility for women and children, Congress did so without providing ANY additional funding for the states beyond the normal federal share. Mr. President, if the Supreme Court rules in favor of the states, will previous mandatory expansions of Medicaid be subject to challenge? [A] Supreme Court ruling on a coercion test necessarily has broader implications for all federal-state partnerships. It could threaten the fundamental structure of the Medicaid program by bringing into question all the requirements in the program today. It could require future Congresses to reconsider the structure of every federal-state partnership. If the Supreme Court accepts the states’ argument, a host of constitutional questions will surround the operation of many federal funding streams to the states. It would be difficult to overstate the significance of such a ruling.^[51]

From a health policy perspective, the meaning of the decision is more ambiguous. Regardless of the outcome, a new President and Congress could decide to repeal the Act in its entirety or to repeal major portions of the law, such as the individual coverage requirement, the Medicaid expansion, the market reforms, state Exchange structure and operations, and other provisions. Regardless of how the Supreme Court rules on the questions before it, in other words, its decision is not necessarily the final word, in part depending on the outcome of the 2012 election. Even were the Court to uphold the constitutionality of the Act’s individual coverage requirement and Medicaid expansion and thereby also dispose of the severability and AIA issues, the ongoing uncertainty around the final parameters of the Act could continue to slow state implementation.

At the same time, even with the political tensions surrounding the legislation, it should be remembered that during the most intense budget negotiations, neither side was willing to simply wipe out all of the Medicaid expansion funds and funding set aside for private insurance subsidies for low- and moderate-income families. This fact, coupled with the popularity of the insurance market reforms (both those that have taken effect and those to be implemented), suggest that the two central propositions of the ACA – that insurance should be accessible, and that insurance should be affordable – are ones that in fact are shared by both political parties, with the result that a way forward ultimately will emerge.

Individual Mandate—The Court granted cert in the case of Department of Health and Human Services, et al., v. Florida, et al., on the issue of “[w]hether Congress had the power under Article I of the Constitution to enact the minimum coverage provision (individual mandate).” The Court has allotted 2 hours for oral arguments on this issue.

Severability—The Court will consider whether the individual mandate (if determined to be unconstitutional) should be severed from the remainder of the ACA.  If the Court holds that it is not severable, the entire Act would be struck down. This issue was raised in cert petitions National Federation of Independent Business, et al., v. Kathleen Sebelius, Secretary of Health and Human Services, et al. and Florida, et al., v. Department of Health and Human Services, et al. The Court has allotted 1 hour for oral arguments on this issue.

Anti-Injunction Act—The Court requested arguments on whether the Anti-Injunction Act (AIA) bars the federal courts from ruling on the constitutionality of the individual mandate because the legal challenge is an effort to stop the imposition of a tax. Claims in federal court to prevent tax collections are expressly prohibited by Congress, which has the power to establish the jurisdiction of the lower federal courts.  This issue arose in Department of Health and Human Services, et al., v. Florida, et al. The Court has allotted 1-1/2 hours for oral arguments on this issue.

Medicaid Expansion—The Court will hear arguments on whether Congress exceeded its authority in requiring states to expand Medicaid coverage as a condition of participation. This is one of the issues raised in Florida, et al. v. Department of Health and Human Services, at al. The Court will allow one hour for arguments addressing the ACA’s Medicaid eligibility expansion.

Each party has 45 days to submit briefs supporting their positions. The Court will issue a decision by the end of the current term, which expires June 30, 2012.

Click here for an update on ACA legal challenges.

On September 28, 2011, the United States Justice Department (DOJ) asked the United States Supreme Court to review the decision of the court of appeals for the Eleventh Circuit striking down as unconstitutional what the DOJ terms the law’s “minimum coverage provision.” In seeking Supreme Court intervention, the DOJ sought review on two matters: first, whether Congress exceeded its Commerce Clause powers, as enhanced by the Necessary and Proper Clause; and second, whether the Anti-Injunction Act bars the challenges from proceeding in the first place. (For a review of the petitions for certiorari in the Florida case also filed by the National Federation of Independent Businesses (NFIB) and the states, see the Health Affairs blog by Timothy Stoltzfus Jost.

In requesting the Court’s intervention, DOJ argued that review has become essential: “[T]he court of appeals has held unconstitutional a central provision of the Affordable Care Act, which represents the considered judgment of the elected Branches of Government – after years of study and deliberation – on how to address the crisis in the national health care market.” In striking down the minimum coverage provision, the appellate court has denied “Congress the broad deference it is due in enacting laws to address the Nation’s most pressing economic problems and set tax policy” while creating a fundamental conflict with the June 2011 decision of the court of appeals for the Sixth Circuit, which found the minimum coverage provision to be constitutional in Thomas More Law Center v Obama, 2011 WL 2556039.

DOJ’s Commerce Clause Argument

In its petition, the DOJ pointed out that paradoxically, the Eleventh Circuit majority agreed about the central fact of the case where Congress’ Commerce Clause powers are concerned, namely “that individuals without health insurance participate in the health care market, and that as a class, they annually consume billions of dollars of health care services for which they do not pay.” The DOJ petition also stated that “the majority further acknowledged [and the respondents also conceded] that the Commerce Clause would plainly permit Congress to regulate the way people pay for health care services at the time that they obtain such services.” Thus, the DOJ argued, the Eleventh Circuit decision was based solely on their view that the law is unconstitutional because it “does not regulate behavior at the point of consumption.”

But this position, argued DOJ, ignores the crucial relationship between the minimum coverage provision and the law’s insurance market reforms. The DOJ asserted that the evidence presented by Congress in its findings (PPACA §1501), as well as other evidence presented to the court, shows that without the minimum coverage provision, a guaranteed issue requirement – the heart of the insurance market reforms – would cause the insurance market to collapse, since it would allow people to enroll only when they are sick.

In arguing for quick resolution, the DOJ laid out what it considers to be the major case law precedents that form the Constitutional basis for the Act. Particularly important, in the government’s view, is Gonzales v Raich, 545 U.S. 1(2005), which held that “[i]n reviewing the validity of Commerce Clause legislation, a . . . court need not determine whether the regulated conduct, taken in the aggregate substantially affects interstate commerce but . . . only whether a rational basis exists for so concluding.” In other words, the task of a court is not to second-guess Congress on the structure of an economic law but only to decide whether Congress had a rational basis for deciding to fashion the law it did. According to DOJ, this broad grant of power under the Commerce Clause is enhanced by the Necessary and Proper Clause, also found in Article 1 §8. Because the minimum coverage provision is part of a broader economic regulatory scheme, DOJ argued, it is constitutional. The Congressional findings make clear, in DOJ’s view, that the coverage provision is design to “directly [address] the consequences of economic conduct that distorts the interstate market for health care and health insurance – namely the attempt by millions of Americans to self-insure or rely on the back-stop of free care, and the billions of dollars in cost-shifting that conduct produces each year when the uninsured do not pay for the care they inevitably need and receive.” Because the Act rests on “direct, tangible, and well-documented economic effects on interstate commerce” the minimum coverage provision is Constitutional. Thus, in DOJ’s view, the appeals court overstepped its bounds by substituting its own judgment about how the law should be designed.

In arguing its position, the DOJ relied heavily on Judge Jeffrey Sutton’s concurrence in the Sixth Circuit’s Thomas More decision, which upheld constitutionality of the law. In response to the Eleventh Circuit majority’s assertion that the minimum coverage provision amounts to regulation of inactivity, the DOJ quoted Judge Sutton concurrence: “As Judge Sutton explained. . . ‘no one is inactive when deciding how to pay for health care, as self-insurance and private insurance are two forms of action for addressing the same risk.’” The DOJ also pointed to Judge Sutton’s dismissal of the timing issue focused on by the Eleventh Circuit, since, as he pointed out, requiring the purchase of insurance at the time that health care is needed would be even more coercive than a mandate disconnected from the need for care.

In addition to its Commerce Clause and “Necessary and Proper” arguments, the government also reiterated the status of the minimum coverage provision as a tax and thus, the independent Constitutional basis for the law as an exercise of Congress’ taxing powers.

The Anti-Injunction Act (AIA) Argument

The AIA bars the federal courts from hearing lawsuits “for the purpose of restraining the assessment or collection of any tax.” The question of whether the minimum coverage requirement is a tax that should have triggered the AIA bar has been an issue in several courts. For this reason, the DOJ also asked the Court to consider whether the AIA in fact precludes judicial review in this case until 2015 at the earliest, when the initial tax penalties first would be imposed on non-exempt people. Interestingly the government did not in fact rely on the AIA to argue for dismissal in the Florida case, although the government had raised the AIA at the district court stage and had lost. Indeed, when it was asked for its views on the AIA by the Fourth Circuit court of appeals in Liberty University v. Geithner, the government argued that it had reconsidered its views and that the AIA did not bar the court from hearing the case. But because the Fourth Circuit found that the AIA did act as a bar while the Sixth Circuit in Thomas More did not, the DOJ also sought resolution of this question. Because the DOJ is on record arguing that the AIA does not apply, it recommended that the Court appoint an amicus to brief and argue the opposite view.