Supreme Court to Hear State Challenges to Federal Health-Care Overhaul

By NCSL staff

On Monday, November 14th the United States Supreme Court agreed to hear arguments regarding the constitutionality of certain provisions of the Patient Protection and Affordable Care Act (PPACA). One of the more controversial provisions of the Act and one of the central issues to the constitutional challenge is the provision that requires most Americans to obtain health care coverage or to pay a penalty that would be levied by the Internal Revenue Service. This is commonly referred to as the “individual mandate.” The legal question here is whether the Congress’ overstepped its authority under the Commerce Clause of the Constitution when it imposed the mandate.

Another controversial provision of the Act requires states to provide health insurance coverage to more people through the Medicaid program. While the Act provides for increased federal matching payments for some of the new enrollees, states believe the expansion will require substantial new state financial resources. The lower courts have ruled that the state’s argument regarding the Medicaid program were not persuasive because Medicaid is a voluntary program and the federal government has provided additional financial assistance to help states provide for the expanded Medicaid population. The Courts decision on the Medicaid coercion issue will be significant for all states.

Most federal laws include a “severability clause,” a provision that would allow a portion of a law to be stricken, but would save other parts of the law that are not directly affected. The PPACA does not have a severability clause. The court will consider if part of the law is found to be unconstitutional, whether the entire Act, certain provisions in the Act or just the unconstitutional provision will be overturned. The severability question is important to states because in addition to the provisions in the Act related to health reform are provisions that amend Medicaid, Medicare and public health laws and that provide funding for states in a variety of areas that may be changed if the entire Act is found to be unconstitutional.  Finally, under current federal law, the Tax Anti-Injunction Act prohibits a taxpayer from challenging a tax before it has been paid. The court will review whether the challenge to the “individual mandate” is premature because the individuals are challenging the levy of the penalty if they choose not to obtain the health care coverage required under the Act. Since the individual mandate requirement does not become effective until January 1, 2014 and that penalties would not be levied until the 2015 tax year, a strict reading of the Tax Anti-Injunction Act may delay a consideration of the constitutionality of the individual mandate until someone challenges the penalty when it is levied in 2015.

In this video: NCSL’s Richard Cauchi, a state health policy expert.

 

The cases accepted for review are:

• FLORIDA, ET AL. V. DEPT. OF H&HS, ET AL (26 States) (link to Dick’s Chart or name states)
• NAT. FED’N INDEP. BUSINESS V. SEBELIUS, SEC. OF H&HS, ET AL.
• DEPT. OF H&HS, ET AL. V. FLORIDA, ET AL.

In the meantime, states must decide whether to wait for the Court to decide or to move forward on a key provision of the PPACA, the establishment of American Health Benefit Exchanges, a one-stop-shopping portal for the individual and small group health insurance markets, including Medicaid and the Children’s Health Insurance Program (CHIP).

States are split on which way to go. States that wait will lose access to federal funds that have been appropriated to help states to plan and establish the exchanges. In addition, if the law is upheld, states that fail to establish their own exchange will have an exchange established and run by the federal government.

The 2012 legislative session is the last chance for states to establish an exchange for the January 1, 2014 effective date. States that choose to establish a state operated exchange beyond 2014 will have to do so with state funds. On the other hand….the law may be overturned or partially overturned and other options will be available.

(updated to this posting were made on Nov. 17, 2011)

Comments

[Karen Callies]

I just pray to GOD that the Supreme Court Justices first demand that Kagan recuse herself from the case and that the Supreme Court holds that Obamacare is UNCONSTITUTIONAL!