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The health care grants: In Plain English

On Monday morning, at exactly ten o’clock, the Court released its list of orders resulting from the Justices’ private Conference at the end of last week.  That list contained, it is safe to say, one of the most highly anticipated set of orders in recent memory:  the Court’s announcement whether it would become involved in (and, if so, on what terms) the litigation over the constitutionality of the Patient Protection and Affordable Care Act (ACA) – also known more colloquially as, simply, “health care reform.”

The list lived up to its billing.  The Court granted review in three of the petitions that were currently pending before it, setting aside a whopping five-and-a-half hours of oral argument time in March to consider a broad range of questions relating to the Act.  We will break down the cases and the issues in Plain English, but we will start with a little bit of background first.

On March 23, 2010, the President signed the ACA – which is commonly regarded as his signature legislative achievement – into law.  As Lyle Denniston explained in his post on Monday, the Act was intended to fundamentally change the health care industry and the way that Americans pay for their health care:  among other things, the ACA makes it easier for adult children to stay on their parents’ insurance policies and imposes a variety of new taxes (including one on indoor tanning, which has already taken effect) to finance all of the changes imposed by the Act.  For our purposes (as well as those of the Court), however, a few provisions of the Act are most relevant.

First and foremost is the so-called “individual mandate,” which goes into effect on January 1, 2014:  it requires virtually all Americans to obtain health insurance or pay a fine.  The government’s ability to require everyone to buy insurance depends in part on another provision of the Act that goes into effect at the same time, which requires health insurance companies to provide affordable insurance for everyone – even people who had previously been unable to obtain insurance because they suffer from the dreaded “pre-existing conditions.”

Second, the Act makes more people eligible for Medicaid, the program that provides health care to low-income Americans.  Medicaid programs are administered by the states, which rely heavily (although not exclusively) on federal funding; in the Act, Congress required states to comply with all of the new Medicaid rules or risk losing all of their federal funding for the program.

As the ink from the twenty-two pens that the President used to sign the bill was drying, challengers were (literally) heading to court, seeking to have the law overturned.  One of the first out of the box was Ken Cuccinelli, the attorney general of Virginia, who filed in a federal trial court in that state; the lawsuits that followed included ones filed by Florida and a group of twenty-five other states, Liberty University, a group of small businesses, and the Thomas More Law Center (a Christian non-profit law firm).

At first, the conventional wisdom was that the Act was clearly constitutional, although the Supreme Court might ultimately get involved nonetheless.  However, as several district courts agreed with the challenges and struck down the law, the suits gained considerable credibility.

The first intermediate appellate court to weigh in on the Act was the U.S. Court of Appeals for the Sixth Circuit, which is based in Cincinnati, in Thomas More Law Center v. Obama.  A divided panel of that court rejected the Center’s broad argument that the individual mandate can never be constitutional – an argument known as a “facial challenge.”  In an opinion by Judge Jeffrey Sutton, a highly regarded conservative judge who once clerked for Justice Antonin Scalia, the court held that the individual challengers in the case (who had joined the Center as plaintiffs) would have to wait until the law actually went into effect in 2014 and then argue that requiring them specifically to buy insurance would be unconstitutional.

About six weeks later, the Atlanta-based U.S. Court of Appeals for the Eleventh Circuit reached the opposite conclusion from the Sixth Circuit in the case brought by Florida and a group of twenty-five other states, along with the National Federation of Independent Business (NFIB), agreeing with the challengers that the mandate is unconstitutional.  The court did not go as far as the challengers would have liked, however:  it held that even if the individual mandate was unconstitutional, the rest of the ACA could still go into effect – a legal concept known as “severability” (or, in this case, the lack thereof).  And to the challengers’ further disappointment, the court also found no problem in the ACA’s expansion of Medicaid eligibility.

In early September, the U.S. Court of Appeals for the Fourth Circuit, based in Virginia, held that neither of the two cases before it could continue.  In Liberty University v. Geithner, two judges appointed by Democratic presidents threw out the case on a ground that the Obama Administration had disavowed:  the fine that the Act levies on people who don’t buy health insurance is a tax, which – because of a federal law known as the Anti-Injunction Act – the individuals in the case cannot challenge until they are actually forced to pay it, in 2014 or later.  And Virginia v. Sebelius, the court explained, should be dismissed on the rationale that the only plaintiff in the case – the Commonwealth of Virginia – had no legal right to bring a lawsuit because the individual mandate affects only individuals.

The stage was thus set for a flurry of petitions for review to the Supreme Court, from all sides:  the federal government (challenging the Eleventh Circuit’s decision that the individual mandate is unconstitutional) and the challengers in the Sixth and Fourth Circuit cases, as well as the National Federation of Independent Business and the group of states led by Florida – who prevailed in the Eleventh Circuit on the individual mandate issue but urged the Supreme Court to review the lower court’s holdings that the rest of the Act, including the provision expanding Medicaid coverage, could still stand.  And just a few days before the Court was set to consider five of those petitions at its private Conference on November 10, a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit added to the suspense surrounding the litigation when it too upheld the constitutionality of the individual mandate.  As in the Sixth Circuit, the decision was as significant for its author as its outcome:  the main (but brief, at thirteen pages) decision rejecting the constitutional challenge came from Senior Judge Laurence H. Silberman, a well-respected Reagan appointee with impeccable conservative credentials. And although another conservative judge, Judge Brett Kavanaugh, dissented, he did so on the ground that – as the Fourth Circuit had held in the Liberty University case – the Anti-Injunction Act barred the lawsuit at this point in time.

On Monday the Court announced that it would decide four questions relating to the health care litigation.  First, the Court will review the Anti-Injunction Act question:  whether the challenges to the individual mandate can be in court at all right now.  This dispute centers at least in part around whether the penalty that people who don’t buy insurance will have to pay is a tax.  Two things are interesting about the Court’s decision to take up this question.  The first is that the issue could provide the Court with a way to avoid deciding the potentially divisive substance of the main constitutional challenge during the midst of the 2012 presidential campaign.  (And in fact, some have argued that if the Justices did choose this option, they ultimately might never need to get to the substance of the case; if Republicans were to take over both the White House and Congress in 2012, the law is all but certain to be repealed.)  Second, the Court’s decision to consider this issue illustrates its broad power to set its own agenda:  although it did not grant review of the Fourth Circuit’s decision dismissing Liberty University’s lawsuit on this ground, it still decided to take up the question.  And because none of the parties to the cases in which the Court did grant review would argue that the AIA prohibits their suits – the challengers want the Court to invalidate the Act now, while the government wants the Court to uphold the law now – the Court will appoint a lawyer who is not already involved in the case to brief and argue this question.

Second, if the Court determines that the Anti-Injunction Act does not bar the lawsuits challenging the individual mandate, it will consider whether the individual mandate is in fact constitutional.  This issue boils down to whether Congress has the power to enact a law requiring everyone in the United States to buy health insurance or pay a penalty.  The Obama Administration argues that it does, under a provision of the Constitution – known as the Commerce Clause – that authorizes Congress to “regulate Commerce . . . among the several States.”  The government’s primary argument is based on the idea that an individual’s decision not to buy health insurance affects interstate commerce because that person will inevitably wind up needing medical care, for which he will be unable to pay; the costs will be absorbed by health care providers, who will then pass at least some of them on to the insurance companies, who in turn pass them on to the people who do buy insurance.  The challengers take a very different view:  they characterize the individual mandate as an unprecedented effort by Congress to regulate inactivity (in the form of the refusal to buy health insurance).  If Congress can require everyone in the United States to buy insurance, they argue, there would be virtually no limits to what Congress can rely on the Commerce Clause to do.

The third question that the Court agreed to review was the issue of “severability” – whether the rest of the Act can remain in effect even if the individual mandate is unconstitutional.  This could be an issue of enormous practical significance for the health insurance industry, which the Act requires to provide insurance at reasonable prices to everyone, including people who either could not get insurance at all or could only do so at very high rates because they had pre-existing medical conditions.  This expanded coverage is only economically feasible, the argument goes, if everyone is required to buy insurance, which would allow the additional costs from providing insurance to less healthy people to be offset by the additional insurance premiums from the (presumably) healthier people who – without the individual mandate – would not buy insurance at all.  Here too the Court is likely to appoint a lawyer to brief and argue this question, as the federal government has itself argued that the individual mandate cannot be completely severed from other provisions of the Act.

The final question that will be before the Court – whether the Act’s expansion of the Medicaid program violates the Constitution – has largely flown under the radar screen so far, including because even the Eleventh Circuit agreed that it did not.  This is an issue that is near and dear to supporters of states’ rights, who argue that in cases like this one Congress oversteps its authority when it uses the threat of taking away all federal funding for Medicaid as a stick to get the states to do something that it otherwise couldn’t do, such as expand eligibility for Medicaid in all of the states.  Defenders of the Medicaid expansion provision argue, by contrast, that states can decide whether they want to participate in Medicaid on the terms outlined in the Act; if they decline to do so, they have plenty of time to come up with an alternative plan.

Two final notes about the health care litigation.  First, although there had been pressure from groups on both ends of the ideological spectrum for Justices Thomas (due to his wife’s activities in groups opposing the Act) and Kagan (based on her role as the Solicitor General in the Obama Administration at the time the bill was enacted) to recuse themselves from considering any challenges to the Act, the fact that both Justices apparently voted on whether to grant certiorari shows that both are going to participate fully in the cases.  But just as there is no reason to expect that either Justice will recuse him- or herself from the litigation, there is also no reason to expect the drumbeat of recusal calls to subside; if anything, the calls are likely to increase as the March argument draws closer.

Second, this case would be an historic one in any year, as the Court will now be weighing in on fundamental questions regarding the division of authority between states and the federal government.  But this is not just any year.  Instead, the Court will be issuing its decision on the constitutionality of a sitting president’s principal legislative achievement just a few months before voters go to the polls in a hotly contested re-election campaign.  And although the Act’s constitutionality isn’t likely to replace the economy as the primary focus of that re-election campaign, the Court’s decision – however it rules – is likely to cause the public to focus on the Court in a way that it hasn’t in nearly twelve years, when the Rehnquist Court issued its decision in Bush v. Gore.   For those of us who follow the Court on a regular basis, it doesn’t get any better than this.  Stay tuned . . . we’ll continue to provide coverage of the litigation in Plain English.

[Disclosure:  The law firm of Goldstein & Russell, P.C., in which I am a partner, represents the AARP in Supreme Court proceedings related to health care, but I am recused from that work.]

Recommended Citation: Amy Howe, The health care grants: In Plain English, SCOTUSblog (Nov. 17, 2011, 1:00 PM),