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The Healthcare Reform Law Challenge: Broccoli or Sour Grapes?

By Dr. David C. Pate, News and Community
March 6, 2012

With the United States Supreme Court poised to consider the constitutionality of the 2010 law, I thought I’d look at the issues and share my perspective.

What is the Healthcare Reform Law?

This is the Patient Protection and Affordable Care Act, sometimes referred to by its initials, “PPACA,” or as the Affordable Care Act, or as “Obamacare,” often by opponents of the law. 

The law was enacted in March of 2010, and while some provisions have taken effect, most parts of the law will not go into effect until 2014. 

What is the issue?

There are actually four questions to be considered by the Court:

  • Is the “individual mandate” (minimum coverage provision) unconstitutional?
  • If the “individual mandate” is unconstitutional, can other parts of the law be left in place, or must the entire law be overturned?
  • Is the law’s expansion of state Medicaid program eligibility unconstitutional?
  • Does the Anti-Injunction Act prevent the Court from having jurisdiction before enforcement has occurred?
The Court agreed to take the case on Nov. 14, 2011, and will hear oral arguments March 26 – 28. A decision is expected to be issued in June.

What is the individual mandate?

This is a provision in the law that requires most everyone to have insurance coverage or pay a penalty.  

Why is this case being decided by the Supreme Court?

Because lower courts of appeals had decided cases involving the law and came to opposite decisions. 

The Sixth Circuit Court of Appeals held that the individual mandate was constitutional in a 2-to-1 decision on June 29, 2011. On Aug. 12, the Eleventh Circuit Court of Appeals decided, based on a 2-to-1 vote, that the individual mandate was unconstitutional, but that this did not result in the need to invalidate the entire law, just that part of the law that imposed the individual mandate. 

Because of the split of authority between the Circuits, the Supreme Court could choose to hear the case, and did so in November.

Is the state of Idaho involved in this case?

Yes, Idaho is one of 26 states that are a part of the case, heard by the Eleventh Circuit Court of Appeals, which will now be decided by the Supreme Court.  

What are the arguments as to whether the individual mandate is constitutional?

The key provision of the United States Constitution at issue is the Commerce Clause, which permits the federal government to regulate matters involving interstate commerce. Just how far does this power extend? Questions have to do with whether the uninsured are participating in interstate commerce and if so, whether Congress can require people to buy something, like insurance. 

Opponents of the law argue that the uninsured are not participating in interstate commerce – they simply have not purchased insurance. Proponents of the law argue that millions of uninsured people still participate in interstate commerce because they receive health care services (which the Court has previously held affects interstate commerce), they just don’t pay for it. Their failure to pay for health care services further impacts interstate commerce, in that health care providers pass these unpaid costs on to the government and commercial insurance companies, which in turn pass the costs on to employers, which in turn pass a portion of these costs along to their employees.

But where is the limit to this power? As one judge asked, if the government can force you to buy insurance because your failure to do so raises the health care costs for others, why can’t the government require Americans to purchase broccoli so that they will be healthier and lower health care costs for everybody?

What happens if the Court determines that the individual mandate is unconstitutional?

The Court could send the case down to a lower court to determine whether the rest of the law survives, or alternatively, the entire law must be invalidated; or the Court may make that determination. The Court also must determine whether Congress would have intended the other parts of the law to survive and operate independent of the individual mandate. Congress often inserts a clause at the end of a law indicating that if one part is found to be unconstitutional, the other parts are to survive. Congress did not do this in this case, and the Court will have to review the Congressional record in its attempt to determine legislative intent.

St. Luke’s hopes that the Court will go ahead and decide the issue because of the uncertainty that will result if it does not, and because other parts of the law are scheduled to go into effect in 2014, and we need answers soon. 

What else is in the law that will have to be reviewed to determine whether it survives if the individual mandate is found to be unconstitutional?

  • A guarantee issue provision, which requires health plans to offer health care insurance to any individual who applies for it, regardless of health or risk factors.
  • A prohibition on excluding pre-existing conditions, which would keep health plans from turning down anybody because of a pre-existing condition.  It also prohibits imposing a waiting period before coverage becomes effective.
  • An adjusted community rating system, which significantly reduces the variation in rates health plans could charge based on applicants’ medical history and risk factors.
  • Provisions that would impose cuts on hospital providers based on the thinking that as more people become insured, less government money would be necessary to cover the uninsured.
How does the law impact state Medicaid programs?

The law requires all states to enroll everyone with an income at or less than 133 percent of the federal poverty program in their Medicaid programs. That requirement is expected to increase the number of Idahoans on Medicaid to 150 percent of what that number is today. 

While every state participates in the Medicaid program, participation is supposed to be voluntary.  States have argued that this new requirement makes participation mandatory, violating federal law and the Constitution. The Supreme Court also has agreed to hear this argument, even though no lower court found this provision to be unconstitutional. 

What does the Anti-Injunction Act have to do with all of this?

This act, in general, prevents a taxpayer from bringing suit to enjoin a law that imposes a tax before the tax has been enforced. Even more interesting and important is whether the mandate penalty is a tax. 

Why does it matter? Because if Congress had called it a tax, it almost certainly would have been constitutional, yet the President and many members of Congress went out of their way to emphasize that it was not a tax. That said, the penalty for not purchasing the minimum required coverage is a percent of income, reported on tax returns and collected by the Department of Treasury, all indications that the penalty was intended to be a tax.

What’s my take?

If the Court determines the penalty is a tax and that Congress passed this law under its taxing powers, game over. It is constitutional. But the lower courts decided the issue under the Commerce Clause, not Congress’ power to tax, and if the Court decides this case based on the Commerce Clause, and there is every indication that this is the direction in which it’s headed, I think we will end up with a split 5-4 decision.

But unlike the majority of legal experts, I believe the decision will be to find the individual mandate unconstitutional. Here’s why:

From the standpoint of constitutional law, the Court could determine that the uninsured do affect interstate commerce and that Congress was acting appropriately to impose the individual mandate as a means to regulate interstate commerce.

But our whole system of government is based upon a balance of powers between the executive, legislative, and judicial branches, and the Court is a huge proponent of the limiting principle.

If the Court were to allow Congress to require people to buy something because of its impact on interstate commerce, where does that power end? This is the broccoli argument: Can Congress require us to buy broccoli to improve our health so that we lower health care costs? 

One school of thought is, of course not and the individual mandate must be held unconstitutional. The other school of thought is, of course they can, but the limits are imposed not by the judicial branch, but by the electorate. That is to say, broccoli-haters would go to the polls and throw their representatives and senators out of office were they to enact laws like this. 

For several reasons, I think the Court majority will be in the first school of thought. I think the majority will continue with the limiting principle policy. And this is a conservative court, though only by the narrowest of margins, and will not embrace unbridled federal powers in which the Congress can act without limits.

The Court will almost always try to find a way to decide a case consistent with past precedent, but when it enters uncharted territory, as it is here, it is not immune from the social considerations of the day, and frankly, the majority of Americans hate the individual mandate. This makes it much easier for the Court to find this provision unconstitutional than if it enjoyed overwhelming public support and bipartisan Congressional support. 

And with Commerce Clause decisions over the decades, the Court has tended to swing back and forth, liberalizing the limits, reigning them in, and then again extending them. Recent jurisprudence has swung pretty far toward liberalization, and I think the Court will find it time to swing the pendulum back.  

If the Court finds the individual mandate unconstitutional, will they throw out the entire law? This is an even tougher question. Most scholars think not.

I am not so certain. It does seem clear that the individual mandate was the key part of this legislation.  The other insurance provisions do seem dependent upon the individual mandate, and so I think the Court would at least invalidate all of those portions of the law. 

But there are far-reaching tentacles that extend to the insurance exchange requirements and the hospital payment provisions, and I tend to think the Court will decide it is better for Congress to start over than eviscerate the law by removing so many different and important provisions. 

I did not support the PPACA, but for wholly different reasons. In my opinion it did little, if anything, to address the real problem: health care costs.

It’s not sour grapes. It doesn’t mean that I don’t think access is a real problem. I certainly do. 

But adding nearly 50 million people to a broken health care system in this country will only compound our problems and will drive costs up, not down. And there also are the additional financial burdens on the states. 

 I look forward to the day that everyone has health care access and coverage. I also think there is a right way and a wrong way to get there. 

And, by the way, I like broccoli.

About The Author

David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.