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Supreme Court Begins Review of Affordable Care Act

Supreme Court Begins Review of Affordable Care Act

03/26/12

MONDAY, March 26 (HealthDay News) -- The U.S. Supreme Court on Monday began its review of the constitutionality of the controversial and massive health-reform initiative known as the Affordable Care Act. And the justices gave every indication that a little-known 19th century tax law wouldn't keep them from hearing the case.

The Affordable Care Act -- the most ambitious government health-care initiative since the Medicare and Medicaid programs of the 1960s, and the legislative landmark of President Barack Obama's presidency -- is the first federal effort to rein in health-care costs. It aims to extend insurance coverage to more than 30 million Americans through an expansion of Medicaid and a provision that people buy health insurance starting in 2014 or face a penalty.

The nine justices began the unprecedented three days of legal arguments with a 90-minute discussion of whether the high court has the right to hear the case at this time. At issue: whether the court can consider tax challenges before they take effect. Some, including a federal appeals court in Richmond, Va., have contended that the provision in the health-reform law that people pay a penalty if they don't have insurance is, in reality, a tax.

But the justices' questions Monday morning suggested that they did not think the insurance penalty was tantamount to a tax. An obscure 1867 law prohibits legal challenges to a tax until it has been collected. The penalty for not having health insurance wouldn't take effect until 2014, with payment due in 2015, the Washington Post reported.

Although the insurance penalty is "being collected in the same manner of a tax doesn't automatically mean it's a tax," said Justice Stephen Breyer, the Post reported.

Justice Antonin Scalia seemed to agree. The courts should not be deprived of jurisdiction in cases unless the reasoning is very clear, he said, adding, "I find it hard to think this is clear, whatever else it is," the newspaper reported.

Attorneys for both the Obama administration and challengers to the law were united on one issue Monday -- the Supreme Court could hear the case now, The New York Times reported.

The key sticking point in the constitutional challenge is whether Congress exceeded its authority with the 2010 health-care law's so-called "individual mandate," which requires almost all adult Americans to maintain health insurance or risk a financial penalty.

The individual mandate -- scheduled to take effect in January 2014 -- is the pivotal piece of the law.

"The requirement that people purchase insurance is the key to having health insurance be there for everyone when they need it," said John Rother, president of the National Coalition on Health Care, which works to achieve reform of the U.S. health-care system.

Opponents call the mandate a stunning government intrusion into the private lives of Americans and argue that Congress has no right to tell an individual to buy a certain product.

Grace-Marie Turner, president of the Galen Institute, a conservative public policy group, and a critic of the new law, was heartened that the High Court agreed to hear challenges to the legislation.

"This case is before the Supreme Court in record time. Two years from the law being enacted to the case being heard is really remarkable," Turner said. "And you have 26 states -- the majority of states -- challenging the law."

The Supreme Court will also hear arguments this week on whether the law is unconstitutional for requiring states to either comply with an expansion of Medicaid to cover more lower-income people without health insurance, or lose federal matching funding. At issue is the concept of "federalism," the division of powers between the federal and state governments.

Finally, the court will address "severability" -- that is, whether the individual mandate can be struck down while leaving the rest of the law intact.

"There are 50 million people in this country who don't have health insurance. The Affordable Care Act will probably extend coverage to an estimated 30 to 32 million of those people," said Renee Landers, a professor at Suffolk University Law School in Boston.

In a recent New England Journal of Medicine commentary, Landers described arguments for and against severability.

Opponents have said that provisions of the legislation are too intertwined for the law to stand without the individual mandate. The Obama administration has said the law can still work without the mandate, but provisions such as prohibiting insurance companies from denying coverage to people with preexisting conditions would be greatly compromised without the mandate.

Budget office sees savings; opponents skeptical

Here's how the health-reform law is designed to provide health insurance to uninsured Americans:

  • Individual mandate. It requires most adults to purchase health insurance or pay a penalty. By 2016, the phased-in penalty will reach either $695 or 2.5 percent of yearly taxable income, whichever is greater. People with incomes below tax-filing thresholds will be exempt from the provision. Up to 16 million people are projected to join the rolls of the insured under the mandate.
  • Medicaid expansion. This would increase eligibility to all people under age 65 with annual incomes up to 133 percent of the federal poverty level -- about $14,850 for a single adult and $30,650 for a family of four in 2012. Non-disabled adults under 65 without dependent children were previously ineligible. Another 16 million people are estimated to gain insurance under the expansion.
  • State-run insurance exchanges. They will be created to help small businesses and individuals purchase insurance through a more organized and competitive market.

In February 2011, the Congressional Budget Office estimated that savings from the Affordable Care Act would cut the federal deficit by $210 billion during the next decade.

But opponents say that the cost-cutting provisions probably won't work.

Devon Herrick, a health economist at the free-market National Center for Policy Analysis, said the law sets up a "slippery slope" that will increase costs, not lower them.

"If Congress and company have the legal authority to decide the minimum coverage you must have, all manner of lobbyists and special interests and providers for specific diseases will descend on Washington and state capitals, as they always have, to make sure that their respective services are covered by that mandate," Herrick said.

The law's supporters argue that without the requirement that people have insurance coverage while they're healthy, there won't be enough money in the risk pool to pay to take care of them when the need for health care eventually -- and inevitably -- arises.

"If people don't feel like paying, then get sick and go to the emergency room or the hospital, those people's costs will be added on to our insurance bills as they are today, which makes it much more expensive," Rother said.

Lower courts, different interpretations

The trail of legal challenges leading up to the Supreme Court has involved more than two dozen lawsuits and appeals.

Last June, the Cincinnati-based 6th Circuit Court of Appeals ruled that the individual mandate was valid because of the Constitution's Commerce Clause, which allows Congress to regulate commerce that takes place among states.

In August, a district judge in Florida ruled that the individual mandate was unconstitutional. However, the 11th Circuit Court of Appeals, which reviewed his decision, rejected that argument and found that the Affordable Care Act could stand even if the individual mandate provision were removed, Landers said.

Then in November, the U.S. Court of Appeals for the District of Columbia also upheld the individual mandate based on the Commerce Clause.

The U.S. Supreme Court chose to review the Florida case, which now includes 25 other states as plaintiffs, along with the National Federation of Independent Business.

The law has been controversial since it was passed by Congress and signed by Obama in March 2010. Poll after poll has found that Americans don't like the individual mandate. But a recent Harris Interactive/HealthDay poll revealed that people are starting to warm up to certain key provisions of the law -- such as the ban on insurance companies turning away applicants with preexisting health problems.

Some popular provisions -- including allowing children to stay on their parents' health plans until age 26 -- are already in place.

Other provisions meant to help older Americans began in 2011, with changes to continue through 2020.

Medicaid expansion a vital component of the law

States must comply with the Medicaid expansion no later than 2014. But some worry that a big influx of new enrollees could strain medical specialties such as obstetrics/gynecology, pediatrics and family practice.

Dr. Peter Carmel, president of the American Medical Association, called the expansion "an important step in the right direction," even though many "physicians are currently unable to accept Medicaid patients due to low reimbursement rates."

Added Dr. Glen Stream, president of the American Academy of Family Physicians: "For the time being, [the new law] seems like the best option to get everyone covered with health insurance. Otherwise, people are carved out from good primary-care services, good preventive care and wellness services, and care of their chronic illnesses until sometimes it's too late."

The Supreme Court ruling is expected in June. The court could go one of several ways:

  • It could rule the individual mandate is unconstitutional and the entire law invalid.
  • It could rule the mandate is constitutional and the entire law can stand.
  • It could reach a middle ground: that the individual mandate is unconstitutional but the rest of the law can stand.
  • It could decline to rule on the case and the health reforms would proceed.

Whatever the court decides, it will provide plenty of fodder for the 2012 elections. And even if the Affordable Care Act survives the legal challenge, Landers said, "with upcoming elections -- a new Congress -- it doesn't mean that everything is set for all time."

More information

The American Bar Association website links to briefs filed with the U.S. Supreme Court case on the Affordable Care Act.

For legal experts' best guess on how the Supreme Court will rule on the Affordable Care Act, click here.

To learn more about the expansion of Medicaid under the Affordable Care Act, click here.

To learn more about the importance of the individual mandate to the Affordable Care Act, click here.

Copyright © 2012 HealthDay. All rights reserved.

Please be aware that this information is provided to supplement the care provided by your physician. It is neither intended nor implied to be a substitute for professional medical advice. CALL YOUR HEALTHCARE PROVIDER IMMEDIATELY IF YOU THINK YOU MAY HAVE A MEDICAL EMERGENCY. Always seek the advice of your physician or other qualified health provider prior to starting any new treatment or with any questions you may have regarding a medical condition.

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