Supreme Court Agrees to Rule on ACA Individual Mandate

November 14, 2011

November 14, 2011 — The US Supreme Court has agreed to provide the last word on whether healthcare reform's requirement for individuals to obtain insurance coverage or else pay a penalty is constitutional.

The decision to take up the issue, which has yielded conflicting opinions in lower federal courts, was posted today on the high court's Web site. Based on their usual timetable, the justices could hear oral arguments next spring and issue a ruling next summer that, regardless of the outcome, promises to affect the presidential election in November 2012.

A decision voiding the individual mandate would weaken, if not gut, the rest of the Affordable Care Act (ACA). As the Obama administration has acknowledged in court, key provisions that require insurers to provide coverage and charge premiums without regard to preexisting conditions depend on every American being in the insurance risk pool, as opposed to putting off coverage until needed.

US Supreme Court

The Supreme Court had received 6 different petitions to rule on the individual mandate from various winners and losers of federal appellate cases. It has chosen to combine 3 of them, all springing from the US Court of Appeals for the Eleventh Circuit in Atlanta, Georgia. In August, that court declared that the individual mandate exceeds the authority of Congress to regulate interstate commerce, as granted by the Constitution's Commerce clause. In so many words, it said the government cannot force someone to buy a product or service.

The appellate court in Atlanta affirmed a thumbs down on the mandate from US District Judge Roger Vinson in Pensacola, Florida, in a case brought by officials from 26 states and the National Federation of Independent Business. However, the appellate court said that Vinson erred when he ruled the entire law unconstitutional because of the tainted requirement to obtain insurance coverage.

The Obama administration appealed the invalidation of the individual mandate to the Supreme Court, and the state officials and the National Federation of Independent Business each filed petitions asking the court to strike down the entire law, undoing the appellate decision on that point. The Supreme Court stated today that it will rule on whether the mandate is severable from the rest of the law.

Appellate Courts Have Split on the Issue

The Supreme Court typically intervenes when appellate courts reach opposing conclusions on a legal question, and that has happened with the ACA litigation. Unlike their counterpart in Atlanta, appellate courts in both Washington, DC, and Cincinnati, Ohio, declared that the individual mandate is a constitutionally sound means of correcting the problem of cost-shifting caused by the uninsured, who often receive free or discounted care. Yet another appellate court in Richmond, Virginia, voided 2 lower-court decisions, one against the individual mandate and the other for it, on jurisdictional grounds.

In one of those voided cases, the appellate court in Richmond said a law called the Anti-Injunction Act prevented it from ruling on the merits of the individual mandate. That law prohibits legal attempts to restrain the assessment or collection of a tax. The plaintiffs in that particular ACA lawsuit had alleged that the penalty imposed on people foregoing insurance coverage is an improper tax.

In its appeal, the Obama administration asked the Supreme Court to decide whether the Anti-Injunction Act should block legal challenges to the ACA. The administration has argued that it should not. The Supreme Court said today that it also will take up this question.

Medicaid Eligibility, Coverage Levels on Agenda

The court's agenda includes 1 more ACA-related question — the expansion of Medicaid eligibility and coverage thresholds to insure an additional 16 million more Americans.

The officials from the 26 states contend that the federal government is coercing them into enlarging their Medicaid programs — at a crippling cost to the states — by threatening to withhold all federal Medicaid contributions if they do not. Such coercion, they argue, is an unconstitutional use of congressional spending power because it runs roughshod over state sovereignty.

The Obama administration counters that Congress long ago expressly reserved the right to define the terms of the Medicaid program and that it has repeatedly done so. Furthermore, the ACA puts nearly all the cost of an expanded Medicaid program on the federal tab, according to the administration.

The state challengers to the ACA lost their Medicaid argument at both the district and appellate court level. They hope that the high court will break this streak.

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