Reviewing the Supreme Court Decision on Healthcare Reform – Thoughts from a Lancaster Lawyer

June 29, 2012

I must admit that as a lawyer I pay very little attention to most decisions of the United States Supreme Court. Very few decisions seem to have an impact on my life or practice, and generally these cases tend to come down with little fanfare. Today was different, however, as I found myself tracking minute-by-minute the news coming in from the Court. I went to bed  thinking about the case, and it was the first thing I thought about in the morning. I realized that this case actually has an effect on my life and family, and I was watching one of the biggest Supreme Court decisions to come down in my lifetime. I counted down the time until 10 a.m. when the Court began reading the opinions that were released today from the Supreme Court building in Washington D.C.  From ten o’clock on I followed the SCOTUS blog. The first line I saw on the SCOTUS blog stated the individual mandate was a tax, then the next line stated that the law would be upheld. Who knew the United States Supreme Court could be so interesting as to keep me on the edge of my seat?

I was likely not alone as the interest over National Federation of Independent Business, et al v. Sebelius, Secretary, Secretary of Health and Human Services, et al, gripped a good part of the nation in anticipation. And now that the Opinion came down I enjoy looking back at all of the speculation that turned out to be incorrect. I think a lot of commentators learned that they can’t judge how the Court will rule based on the questions at oral argument. Much of this misguided speculation was due to the fact that this case captured national attention as it spoke to the broader question of the role of Congress in our lives, and it led many people to look for the first time at questions such as Congress’s power under the Commerce Clause and give their opinions.

I wanted to write an article on the case that wasn’t bogged down in legal theory, until I downloaded the opinion and realized it was almost a 200 page  document. That type of thing happens when the Court has a majority, concurring and two dissenting opinions (the dissenting opinion alone is 66 pages). I had to laugh at the many points in the opinions when the Justices commented on the length of the Patient Protection and Affordable Care Act, colloquially referred to as "Obamacare", in light of the length of their own opinion.   

Although the Act has been the center of controversy since the day it was signed, the United States Supreme Court made it clear that it was not determining whether the Act was good policy, but rather whether Congress had acted within its Constitutional powers in passing health care reform, in particular the individual mandate and expansion of Medicaid. Since so many news commentators and regular people found themselves opining as to what is and what was not constitutional about the law, here is a breakdown as to the Court’s decision:

 1. Did the Anti-Injunction Act prevent the court from deciding the case?

No, the Anti-Injunction Act did not prevent the Court from hearing the case. This isn’t really a constitutional question most people cared about, and I’m only pointing it out because the Anti-Injunction Act prevents federal courts from hearing cases regarding taxes until the taxes are actually paid and the challenger is seeking a refund. Here, the court stated that the individual mandate was not a tax.

2. Was the so-called individual mandate, which would require certain individuals who did not receive health insurance through a third party to purchase insurance or pay a penalty, a proper exercise of Congress’s power under the Commerce Clause?

No, the Act went beyond regulating interstate commerce. If you found yourself following the news you were sure to hear all about the Commerce Clause, because this was clearly the main argument the government relied on in the case. The Commerce Clause permits Congress to regulate commerce between the states. The Court held that since the individuals who would be required to purchase insurance are not involved in the commerce of health insurance, Congress could not regulate their non-purchase of insurance under this power. Essentially, the mandate pushed people refraining from commerce into commerce. You would think since the government lost on this argument it would have lost the case, not so.

3. Was the individual mandate a proper exercise of Congress’s Taxing Power?

Yes, Congress could properly impose the penalty under the individual mandate as a tax. But wait, I thought it wasn’t a tax? The Court said it wasn’t a tax for Anti-Injunction Act but it was under Congress’s Taxing Power. The Court was not overly concerned about the label. I actually appreciate how complex the argument is, but this determination is going to do nothing to quell the controversy surrounding the law. If this distinction doesn’t make sense, just remember, the Supreme Court can do whatever it wants, because no courts are left to overturn it. If people don’t like it, they’ll have to get their legislators to change it. Who would have guessed the government would have won on its backup argument?

4. Was the expansion of Medicaid a proper exercise of Congress’s Spending Power?

No, the threat by Congress to cut off all Medicaid funding to the states amounted to coercion and was therefore an unconstitutional exercise of its spending power. This was an issue fewer people paid attention to, but it was extremely significant. Essentially Congress told the states they needed to expand their Medicaid coverage, for which they’d receive more federal money, and if they didn’t the Secretary of Health and Human Services could cut off all Medicaid funds going to the state. Congress is permitted to tie federal funding for states to those states adopting certain policies (such as highway money for making the legal drinking age 21), but not when it amounted to impermissible coercion. The Court stated this went beyond coercion to holding "a gun to the head" of the states. The law now is that states can opt in and get the extra money, or opt out without losing the money they’re already receiving from the federal government for Medicaid. 

A 5-4 decision will likely cause this case to remain controversial to legal analysts and those on the right of the political spectrum, especially with the determination that the individual mandate was a tax and at the same time wasn’t a tax. Justices Alito, Scalia, Kennedy and Thomas dissented and their opinion will provide a narrative for protestors to follow. Recent polls, however, suggest that Americans are in favor of a majority of the Act’s provisions. The one sticking point was the individual mandate, now upheld as constitutional, won’t go into effect for another two years, and even when it does according to the opinion it is estimated to only apply to 6% of the population. The "penalty" is limited based on income and other factors, making it cheaper than actually buying the insurance.

Now that the Court upheld the Act, the only way it would be overturned is by Congress amending the Act or repealing it, and it will be hard to imagine seeing the law changed to allow insurance companies to deny coverage based on a pre-existing conditions in the future. History has shown that even when entitlements are enacted in controversy, they become very hard to take away.

Derek Dissinger is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, Pennsylvania. He received his law degree from Duquesne University and practices in a variety of areas.