Oral argument: March 27, 2012

Appealed from: The United States Court of Appeals for the Eleventh Circuit (Aug. 12, 2011)

HEALTH CARE, PATIENT PROTECTION AND AFFORDABLE CARE ACT, MINIMUM COVERAGE PROVISION

The Patient Protection and Affordable Care Act’s (“Health Care Act”) minimum coverage provision requires that all eligible individuals purchase health care coverage. Beginning in 2014, any failure to purchase coverage will result in a fine. Respondents, two individual citizens, twenty-six states, and the National Federation of Independent Business, claim that the Health Care Act’s minimum coverage provision is unconstitutional as it deprives individuals of the freedom to purchase what they choose, going beyond Congress’s authority under the taxing powers and the Commerce Clause. Petitioner, the United States government, maintains that the minimum coverage provision is a valid way to regulate the rising health care costs that limit many individual’s access to necessary health care services.

Question presented

Beginning in 2014, the minimum coverage provision of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029, will require non-exempted individuals to maintain a minimum level of health insurance or pay a tax penalty. 26 U.S.C.A. 5000A. The question presented is:

1. Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.

Petitioners also suggest that the Court direct the parties to address the following question:

2. Whether the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act is barred by the Anti-Injunction Act, 26 U.S.C. 7421(a).

IN ADDITION TO QUESTION 1 PRESENTED BY THE PETITION, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE FOLLOWING QUESTION: “WHETHER THE SUIT BROUGHT BY RESPONDENTS TO CHALLENGE THE MINIMUM COVERAGE PROVISIONS OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT IS BARRED BY THE ANTI-INJUNCTION ACT, 26 U.S.C. §7421(A).”

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Issue

Does Congress have the power to enact the minimum coverage provision under the Necessary and Proper Clause, Commerce Clause, or under Congress’s independent power to levy taxes?

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Facts

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (“Health Care Act”) into law. The Health Care Act contains a minimum coverage provision (“individual mandate”), which states that all eligible individuals must have the “minimal essential” level of health care coverage. See 26 U.S.C. § 5000A. Under this provision, individuals must purchase and maintain a minimum amount of health care coverage for themselves and their dependents. See id. § 5000A(a). Exemptions to the mandate are available for undocumented immigrants, incarcerated individuals, those unable to pay under certain requirements, or those with religious objections. See id. § 5000A(d)–(e). Beginning in 2014, those who fail to purchase coverage are required to pay a flat penalty fee, which will increase from 2014 to 2016, or a percentage of their income if it is higher than the penalty fee. See id. § 5000A(b)(1),(c). Employers who do not offer their employees health care coverage are subject to similar penalties. See 26 U.S.C. § 4980H.

Soon after President Obama signed the Health Care Act into law, Mary Brown and Kaj Ahlburg, the National Federation of Independent Business, and twenty-six states (collectively “NFIB”) filed suit in the U.S. District Court for the Northern District of Florida against the Department of Health and Human Services, Department of the Treasury, and Department of Labor (collectively “HHS”). See Florida v. Dep’t of Health & Human Servs., 780 F. Supp. 2d 1256, 1263. Among other things, NFIB challenged the Health Care Act’s individual mandate. See id. at 1265. The district court granted summary judgment to NFIB on issue of the individual mandate’s constitutionality, stating that that provision is not a valid use of Congress’s authority under the taxing powers or the Commerce Clause. See id. at 1306–07. The district court also held that the individual mandate could not be severed from the Health Care Act, and therefore the entire Health Care Act is unconstitutional. See id. On appeal, the United States Court of Appeals for the Eleventh Circuit reversed the grant of summary judgment, agreeing that the individual mandate was not permissible under Congress’s taxing power but maintaining that the individual mandate could be severed from the rest of the Act. See Florida v. Dep’t of Health & Human Servs., 648 F.3d 1235, 1328. Thus, according to the Eleventh Circuit, the Health Care Act’s constitutionality does not turn on the validity of the individual mandate. See id. The Supreme Court granted certiorari on November 14, 2011 to consider, among other questions, whether Congress has the power to enact the Health Care Act’s individual mandate. See Dep’t of Health & Human Servs. v. Florida, 132 S. Ct. 604 (2011).

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Discussion

Private Respondents, Mary Brown, Kaj Ahlburg, and the National Federation of Independent Business (collectively “NFIB”), and State Respondents, comprised of twenty-six states, argue that the Patient Protection and Affordable Care Act’s (“Health Care Act”) minimum coverage provision within the individual mandate is unconstitutional because it requires individuals to enter into financial contracts without considering individual needs. Petitioners, the Department of Health and Human Services, the Department of the Treasury, and the Department of Labor (collectively “HHS”), argue that the individual mandate is constitutional and necessary to an effective health care system, because without it, individuals would drive up health care costs by waiting to purchase coverage.

Fears of a Centralized Government

NFIB argues that the individual mandate deprives citizens of the freedom to choose their financial relationships and requires individuals to enter into financially disadvantageous contracts. See Brief for Private Respondents at 13, 61–62. According to the States, there is no difference between requiring individuals to purchase health care insurance and requiring individuals to purchase a car, because in both situations Congress could justify the requirement under the premise that individual decisions, when aggregated, affect interstate commerce. See Brief for State Respondents at 27–28. NFIB notes that compelling commerce in this way would create a centralized government, which could mandate the purchase of goods by characterizing the failure to buy as an “economic decision” that hurts the relevant market. See Brief for Private Respondents at 33–34. This problem is exacerbated, the States argue, because there is no clear boundary in determining what decisions have sufficient effects on interstate commerce to justify government regulation. See Brief for State Respondents at 29–30.

A number of health law professors argue that the individual mandate should not be scrutinized without considering health care’s unique place in society—it’s an expansive industry with which nearly every American interacts, but health care costs on the individual level are much less predictable than costs in comparable markets. See Brief of Amici Curiae 104 Health Law Professors in Support of Petitioners at 9, 14–15. Health care is also different, law professors note, due to the considerations for human life that trump an inability to afford the care. See id. at 11–13. Because the health care market is so different from any other market, the American Hospital Association (“AHA”) argues that Respondents’ “slippery slope” argument fails. See Brief of Amici Curiae American Hospital Association et al. in Support of Petitioners at 23. AHA states that the individual mandate does not force people to buy health care; rather, the mandate regulates the market so that individuals cannot use free health care services and require paying individuals to absorb the costs. See id. at 23–24.

Allocation of Costs

The States argue that the individual mandate imposes costs on all individuals by requiring everyone to purchase of health care insurance, regardless of need. See Brief for State Respondents at 25. NFIB contends that health care is not a unique “near-universal” business because many of those who are currently uninsured will not actually need health care services, but will have to pay annual insurance costs anyway. See Brief for Private Respondents at 54–55. The American Center for Law & Justice asserts that insurance costs are now being imposed on the entire population based only on the possibility that some individuals will obtain future health care services without insurance. See Brief of Amici Curiae American Center for Law & Justice, et al. at 21. Oklahoma argues that these health care concerns are better left to the judgment of the states, which are currently divided over the individual mandate’s necessity, because a state can more easily mold its laws to reflect its people’s will. See Brief of Amicus Curiae State of Oklahoma in Support of Respondents at 10–11.

HHS argues that the Health Care Act’s individual mandate is necessary to prevent individuals from driving up health care costs by waiting to purchase coverage until they need medical services. See Brief for Petitioners at 29. Congressional leaders assert that when uninsured individuals use health care services, which 94% of them do, those costs are shifted to the insured in the form of higher premium costs. See Brief of Amici Curiae Senate Majority Leader Harry Reid, et al. in Support of Petitioners at 21. Young Invincibles notes this problem is especially relevant for individuals ages eighteen to thirty-four, as almost 30% are uninsured due to high coverage costs. See Brief of Amicus Curiae Young Invincibles in Support of Petitioner at 10, 13. HHS contends the mandate also assists in lowering health care premiums for all by increasing insurer competition. See id. at 31. Several states argue that the problems of underinsured citizens and high health care costs plague every state, and that states cannot cure these problems on their own. See Brief of Amici Curiae States of Maryland, California, et al. in Support of Petitioners at 8, 11–12.

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Analysis

At issue is the minimum coverage provision within the individual mandate contained in the Patient Protection and Affordable Care Act (“Health Care Act”). The individual mandate provides that taxpayers who do not obtain the required health insurance coverage for themselves or their dependents are subject to a penalty for each year that the taxpayer fails to meet the requirement. See 26 U.S.C. 5000A. The Health Care Act also contains a guaranteed-issue provision, which prohibits the denial of insurance based on pre-existing medical conditions, and a community-rating provision, which stops insurers from charging increased premiums based on pre-existing medical conditions. See 42 U.S.C. § 300GG-1; 42 U.S.C. § 300GG-4.

Congressional Power Pursuant to the Necessary and Proper Clause and the Commerce Clause

The Department of Health and Human Services, the Department of the Treasury, and the Department of Labor (collectively “HHS”) argue that the individual mandate falls within Congress’s powers under the Necessary and Proper Clause. See Brief for Petitioners at 21. HHS contends that the Necessary and Proper Clause gives Congress the broad power to pass federal legislation in order to further a legitimate purpose. See id. at 22–23. HHS points out that the Health Care Act serves a legitimate purpose—to reform the health care market—and the individual mandate is crucial to the viability of the Act. See id. at 23–24. HHS argues that without this mandate, other key provisions of the Act, such as the guaranteed-issue and community-rating provisions, would fail. See id. at 24–25. HHS elaborates that the mandate provides the financing for the anti-discriminatory practices that the guarantee-issue and community-rating provisions seek to accomplish. See id. at 28–30. The individual mandate, HHS argues, prevents individuals from increasing insurance costs by waiting to purchase health insurance until a medical need arises, thereby exploiting the guarantee-issue and community-rating provisions. See id. at 29. Because the mandate is necessary for the success the Health Care Act’s other provisions, HHS asserts that it falls within the realm of Congress’s power pursuant to the Necessary and Proper Clause. See id. at 32. HHS also contends that the mandate fall under Congress’s power pursuant to the Commerce Clause because it regulates the purchase of healthcare, which is “commercial and economic in nature.” See id. at 33. HHS insists that this type of activity affects interstate commerce because it has financial implications for many other industries. See id. at 33–34. Congress has validly employed its commerce power to regulate this industry, HHS argues, by incentivizing uninsured citizens to purchase insurance and stop passing the costs onto those who are insured. See id.

Private Respondents, two individual citizens and the National Federation of Independent Business (collectively “NFIB”), contend that the Necessary and Proper Clause does not create Congressional power, but rather limits Congress to enacting legislation that is necessary to implement one of the specifically enumerated constitutional powers. See Brief for Private Respondents at 11–12. NFIB insists that the individual mandate cannot be upheld under the Necessary and Proper Clause because it exceeds Congress’s power by compelling individuals to subsidize the costs generated by the Health Care Act’s regulations. See id. at 43. NFIB points out that the individual mandate off-sets the high costs that the Health Care Act incurs by passing those costs onto healthy taxpayers, who then have to pay a premium exceeding their actuarial risk. See id. at 40–41. Moreover, NFIB contends that the Commerce Clause only gives Congress power to regulate economic activity that directly relates to a legitimate interstate goal; however, NFIB insists, the failure to obtain health insurance is not an economic activity. See id. at 21–23. NFIB argues that, under the Commerce Clause, Congress can only regulate noneconomic activity if it undermines the regulation of commerce, which, NFIB contends, the failure to purchase health care insurance does not. See id. at 25. Similarly, the States contend that the Commerce Clause gives Congress the power to regulate commerce, not the power to create commerce. See Brief for State Respondents at 15. The States assert that Congress does not have the power to compel taxpayers to engage in commerce by requiring the purchase of health insurance via the individual mandate. See id. at 15–17. State Respondents also contend that because individual mandate regulates individual financial decisions, not interstate commerce, Congress lacks the authority to mandate the purchase of health insurance. See id. at 26.

Congress’s Power to Collect Taxes

HHS maintains that the individual mandate also falls within Congress’s independent power to levy taxes. See Brief for Petitioners at 52; Art. I., § 8, Cl. 1. HHS contends that although the individual mandate’s language states that it imposes a “penalty” upon taxpayers who fail to obtain the required health insurance coverage, the penalty effectively functions as, and should be considered, a tax. See Brief for Petitioners at 52, 56. The mandate’s penalty provision, HHS argues, has the essential elements of tax law—it is part of the Internal Revenue Code and enforced by the IRS, it will raise substantial money, and the consequences are directed only towards those who fail to comply with the individual mandate. See id. at 52, 56–58. HHS asserts that if a taxpayer fails to meet the individual mandate’s requirements and falls subject to the penalty, the individual will be subject to tax consequences that are based on their household income and reported in their federal income tax return. See id. at 53, 57. HHS maintains that because the penalty can reasonably be interpreted as part of the tax laws, and this interpretation is not clearly against congressional intent and will uphold the mandate’s constitutionality, the mandate should be treated as a tax. See id. at 59. The mandate, HHS argues, is meant to be read in context with the associated penalty provision, as the mandate itself does not create an “independently enforceable legal obligation.” See id. at 60–61. HHS asserts that the proper reading is to view the mandate only as a “predicate” for the tax assessed by the penalty provision. See id. Ultimately, HHS argues, the mandate is constitutional under Congress’s power to levy taxes. See id.

NFIB insists that the individual mandate falls outside the realm of the Congress’s taxing power. See Brief for Private Respondents at 63. NFIB contends that the mandate and penalty are separate, and because the mandate is a requirement that cannot itself be construed as part of the tax law, the penalty arising from a failure to comply with the mandate cannot be upheld as a tax law. See id. at 63–64. NFIB points out that Congress intentionally structured the mandate’s penalty as a sanction. See id. at 64. The States elaborate that the way in which the mandate’s penalty operates meets the exact definition of a penalty—it punishes for violations of “a separate legal command,” the mandate. See Brief for State Respondents at 57. NFIB also poses another problem that characterizing the penalty as a tax would impose: what category the tax would fall under. See Brief for Private Respondents at 65–67. NFIB points out that even if the penalty were categorized as a direct tax or as non-direct tax, each designation would create its own constitutionality issues. See id. Because the penalty is more accurately considered a sanction, and characterizing it as a tax would lead to unconstitutional results, NFIB contends that Congress can not enact the individual mandate pursuant to its taxing power. See id. at 64–65. State Respondents contend that including the penalty as part of the tax code is not determinative of its nature. See Brief for State Respondents at 60–61. This is clear, State Respondents argue because other revenue-generating measures, including comparable civil penalties, have not been considered taxes because of their location in the tax code. See id.

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Conclusion

The Patient Protection and Affordable Care Act’s minimum coverage provision requires that all eligible individuals purchase health care insurance, and those who fail to obtain coverage must pay a penalty. Respondents, two individual citizens, twenty-six states, and the National Federation of Independent Business, assert that Congress does not have the power to enforce the individual mandate and that the mandate infringes on the freedom to refrain from certain business relationships. Petitioners, the Department of Health and Human Services, Department of the Treasury, and Department of Labor, maintain that the minimum coverage provision is constitutional and necessary to lower the costs of health care insurance, making it more accessible to many individuals, and to effectively regulate a problematic health care system.

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Authors

Prepared by: Jenny Liu and Lisa Schmidt

Edited by: Jacqueline Bendert

Additional Sources

• Jurist, Michael Haggerson: “US Government Defends Health Care Minimum Coverage Requirement” (Jan. 7, 2012).
•  American Constitution Society for Law and Policy, Jeremy Leaming: “It’s All About the Minimum Coverage Provision, At Least for This Panel of Experts” (Feb. 16, 2012).

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Oral argument: March 26, 2012

Appealed from: United States Court of Appeals for the Eleventh Circuit (Aug. 12, 2011)

HEALTH CARE, ANTI-INJUNCTION ACT, PPACA, JURISDICTION, TAX LAW

One issue that the Supreme Court will resolve regarding the Patient Protection and Affordable Care Act (“Health Care Act”) is the Tax Anti-Injunction Act’s (“AIA”) applicability to the challenge against the minimum coverage provision. The Tax Anti-Injunction Act (“AIA”) bars suits seeking to restrain the assessment or collection of any tax. Though not a specific argument from any party, the Court has shown interest due to the impact that AIA applicability may have on challenges to the health care law, as well as the effect of any decision on the AIA’s scope. While the parties agree that the AIA only applies to taxes, and the minimum coverage provision provides for a penalty, the parties disagree on the scope of the AIA’s application. Court-appointed amicus Robert Long argues that the minimum coverage provision falls within the ordinary meaning of a “tax.” The government believes the AIA applies to states and private parties’ claims because it is jurisdictional and is implicated by the mandate’s potential tax collection consequences. Private parties, several states, and National Federation of Independent Business rejoin by noting that the AIA is not jurisdictional and their claims only run to the constitutionality of the minimum coverage provision, not its penalty.

Questions presented

Beginning in 2014, the minimum coverage provision of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029, will require non-exempted individuals to maintain a minimum level of health insurance or pay a tax penalty. 26 U.S.C.A. 5000A. The question presented is:

1. Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.

Petitioners also suggest that the Court direct the parties to address the following question:

2. Whether the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act is barred by the Anti-Injunction Act, 26 U.S.C. 7421(a).

IN ADDITION TO QUESTION 1 PRESENTED BY THE PETITION, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE FOLLOWING QUESTION: “WHETHER THE SUIT BROUGHT BY RESPONDENTS TO CHALLENGE THE MINIMUM COVERAGE PROVISIONS OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT IS BARRED BY THE ANTI-INJUNCTION ACT, 26 U.S.C. §7421(A).”

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Issue

Does the Anti-Injunction Act bar courts from considering the merits of a constitutional challenge to the Patient Protection and Affordable Care Act’s minimum coverage provision, which mandates individuals to obtain minimum health insurance coverage and permits the Internal Revenue Service to collect a penalty for failure to comply?

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Facts

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (“Health Care Act”), an immense piece of health care reform that, among other things, reshaped aspects of the private and public health insurance sectors, lowered the costs of Medicare, and generally expanded health care access. Few other portions of the law have drawn the same level of attention as the minimum coverage provision within the individual mandate. The individual mandate is an addition to the Internal Revenue Code that requires all individuals to maintain a minimum level of health insurance coverage or suffer a “penalty” that is administered by the Internal Revenue Service (“IRS”) and appended to each malfeasant’s tax return. See 26 U.S.C. § 5000A.

Soon after the Health Care Act passed, private claimants Mary Brown and Kaj Ahlburg, twenty-six states, and the National Federation of Independent Business (collectively “NFIB”) brought suit in the U.S. District Court for the Northern District of Florida challenging the Health Care Act’s constitutionality and, in particular, the individual mandate’s constitutionality. See Florida v. Dep’t of Health & Human Servs., 716 F. Supp. 2d 1120 (2011). The district court found against the Department of Health and Human Services, Treasury Department, and Labor Department (collectively “HHS”) and determined the individual mandate was beyond Congress’s authority under the taxing power, the Commerce Clause, and the Necessary and Proper Clause. See id. at 1162–64. The district court refused to identify the individual mandate as a “tax,” thus removing the challenge from the purview of the Tax Anti-Injunction Act (“AIA”). See id. at 1143–44. HHS appealed to the United States Court of Appeals for the Eleventh Circuit; however, the Eleventh Circuit affirmed that the individual mandate exceeds congressional power. See Florida v. Dep’t of Health & Human Servs., 648 F.3d 1235, 1311, 1317 (11th Cir. 2011). The Eleventh Circuit did not address the issue of the applicability of the AIA. The Supreme Court granted certiorari on November 14, 2011. See Dep’t of Health & Human Servs. v. Florida, 132 S. Ct. 604 (2011).

Though the focal point of this case is the Health Care Act’s constitutionality, the Supreme Court instructed the parties to argue an issue that was abandoned during the appeals process—whether the AIA bars the challenge against the individual mandate. See Dep’t of Health & Human Servs. v. Florida, 132 S. Ct. 604 (2011). The AIA blocks any court, with a few exceptions, from hearing challenges brought to “restrain[] the assessment or collection of any tax” before the government has attempted such assessment or collection. See 26 U.S.C. § 7421. The AIA’s applicability was settled in 1962 when the Supreme Court determined that the statute’s purpose was to facilitate effective tax assessment and to avoid time-consuming pre-enforcement suits. See Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7–8 (1962). The AIA was first implicated in the district court when, in response to NFIB’s arguments that the individual mandate represents an unconstitutional tax, HHS contended that the suit itself would be barred in such a scenario. See Florida v. Dep’t of Health & Human Servs., 716 F. Supp. 2d 1120, 1130 (2011). As noted above, the district court refused to call the individual mandate a tax. See id. at 1143–44. On appeal, neither the parties nor the court revived the AIA argument.

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Discussion

This dispute concerns the applicability and potential effect of the Tax Anti-Injunction Act (“AIA”) on the challenge to the Patient Protection and Affordable Care Act’s (“Health Care Act”) minimum coverage provision within the individual mandate. The Supreme Court’s finding could halt all judicial proceedings regarding the individual mandate until the government attempts to implement the penalty provision.

What Effect will AIA Application have on the Court System?

The Cato Institute points out that the majority of courts to face this issue have concluded that the AIA does not apply to suits attempting to enjoin the individual mandate’s penalty provision. See Brief of Amicus Curiae Cato Institute in Support of Respondents at 22–23. The Center for the Fair Administration of Taxes (“CFAT”) contends that, if the Court were to rule that the AIA does apply to the individual mandate’s penalty, the decision would open the floodgates for taxpayer cases challenging penalties assessed against them. See Brief of Amicus Curiae Center for the Fair Administration of Taxes Opposing Vacatur at 21–22. CFAT argues that the same flood of individual mandate-related challenges would occur if the Court allowed Executive Branch to waive AIA application in situations such as this, where the Health Care Act would otherwise bar suit. See id. at 22–23. The States urge the Supreme Court to decide on the individual mandate’s constitutionality regardless of AIA applicability because Congress, by labeling the individual mandate as a penalty, should have to defend the constitutionality of such a decision. See Reply Brief for State Respondents at 22–23.

Mortimer Caplin and Sheldon Cohen, former IRS Commissioners, argue that if the AIA does not apply here, it would create an exception that would allow a mass of different claims against the individual mandate, clogging the courts and causing delays. See Brief of Amici Curiae Mortimer Caplin and Sheldon Cohen Urging Vacatur in Support of Neither Side at 27, 36. This flood of lawsuits, Caplin and Cohen contend, would begin because taxpayers could challenge individual mandate assessments in court, rather than availing themselves of tax code administrative procedures. See id. at 27–28. Robert Long, a court-appointed amicus curiae, notes that the AIA’s application here will prevent this premature judicial interference with the prompt administration of the tax system. See Brief of Court-Appointed Amicus Curiae Robert A. Long in Support of Vacatur at 26–28. Long also contends that the AIA applies to lawsuits challenging “any” tax, and therefore its application is not foreclosed by the fact that no taxes have been levied under the individual mandate to date. See id. at 34–35. Finally, Long argues that, as a general policy matter, courts should avoid deciding constitutional issues unless they prove unavoidable, a goal facilitated in this case by AIA application. See id. at 58.

What Effect will AIA Application have on the AIA’s Purpose and the Tax Law?

The American Center for Law and Justice (“ACLJ”) points out that this challenge to the individual mandate’s constitutionality does not justify AIA application because the suit poses no interference to the efficient administration of the tax system. See Brief of Amicus Curiae American Center for Law & Justice in Support of Respondents at 11–12. Citing the “unique restrictions” that Congress placed on the government’s ability to collect proceeds from the individual mandate’s penalty, CFAT asserts that Congress did not intend the AIA to apply to penalty challenges; therefore, allowing the challenge to go forward would not damage the AIA’s credibility or effectiveness. See id. at 11–12, 15. ACLJ further notes that Congress’s intended result vis-à-vis the individual mandate is to create effective health insurance markets, a goal that should not implicate the AIA. See Brief of ACLJ at 8–9. The States, along a similar vein, argue that Congress purposely used the label “penalty” because, rather than raise revenue, Congress hoped to reach widespread health coverage and punish those who fail or refuse to comply. See Reply Brief for State Respondents at 22.

Caplin and Cohen assert that if the individual mandate does not fall into the AIA’s purview, this would interfere with the orderly collection of taxes and circumvent the AIA’s very purpose. See Brief of Caplin and Cohen at 19–22. Various tax law professors reiterate the argument that the function of the AIA is to facilitate the “pay first, litigate later” tax regime that allows for the efficient administration of the tax system. See Brief of Amici Curiae Tax Law Professors in Support of Vacatur at 21. The tax law professors also note that AIA inapplicability at the outset would leave the IRS with a slim arsenal of collection tools as compared to the scenario in which the taxpayer first paid the penalty and then sued. See id. at 28, 30–31. The Department of Health and Human Services, Department of the Treasury, and Department of Labor (collectively “HHS”) contend that the relevant distinction for AIA purposes lies in the consequences flowing from a provision; therefore, the AIA applies regardless of the term employed (tax or penalty) because the individual mandate operates in conjunction with the penalty provision and creates “only tax consequences.” See Brief for Petitioners at 40–41.

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Analysis

The Tax Anti-Injunction Act (“AIA”) bars suits seeking to restrain the assessment or collection of any tax. See 26 U.S.C. § 7421. The minimum coverage provision within the individual mandate of the Patient Protection and Affordable Care Act requires individuals to obtain qualified health insurance or pay a penalty on their annual tax returns. See 26 U.S.C. § 5000A. The parties to this case all argue that the AIA does not apply to the individual mandate, but there is disagreement on the scope of the AIA and the reason why it does not apply. Robert Long, an amicus curiae appointed by the Supreme Court, argues that the AIA does apply and that it limits the Court’s jurisdiction to hear the underlying case.

Is the Individual Mandate’s Penalty Provision a Tax?

The Department of Health and Human Services, Department of the Treasury, and Department of Labor (collectively “HHS”) argue that the AIA only applies to cases involving taxes, whereas the individual mandate provides for a penalty. See Brief for Petitioners at 20. HHS contends that while labeling may not be determinative when resolving constitutional questions, Congress’s choice to refer to a statutory provision as a tax or penalty should control whether the AIA applies to challenges involving that statute. See id. at 21–22. Private Respondents, two individual citizens and the National Federation of Independent Business (collectively “NFIB”), add that “taxes” and “penalties” are treated as distinct legal concepts throughout the tax code. See Brief for Private Respondents at 29–30. The States assert that the individual mandate’s penalty must be something other than a tax because Congress specifically directed the IRS to collect the penalty in the same manner as a tax, language that Congress would not have included if the penalty itself was intended as a tax. See Brief for State Respondents at 52–53.

Long counters that the penalty at issue is a tax subject to the AIA because the provision falls within the broad ordinary meaning of “tax,” which Congress intended and the Court has previously recognized. See Brief of Court-Appointed Amicus Curiae Robert A. Long in Support of Vacatur at 37–39. Long contends that the penalty also falls under the tax category of “assessable penalties,” which are penalties included under the definition of a tax for the purpose of assessment and collection. See id. at 39–41. Finally, Long asserts that the argument over whether this is a tax or a penalty is not relevant to AIA application because Congress only used the term “penalty” to imply expected compliance with the mandate. See id. at 41–42. Long counters that the individual mandate’s penalty is a tax subject to the AIA because of Congress’s direction that the penalty be assessed and collected as a tax. See id. at 24–26. Long argues that this can only happen if the AIA applies to the mandate’s penalty because the AIA affects how taxes are assessed and collected—free of judicial restraint. See id.

Does the Suit contest the Coverage Mandate or the Penalty Provision?

HHS argues that if the individual mandate’s penalty provision is a tax subject to the AIA, then the Court can not hear the case because the challenges to the individual mandate implicitly include challenges the penalty provision. See Brief for Petitioners at 38–39. HHS contends that any decision invalidating the individual mandate will automatically affect the assessment and collection of the penalty provision. See id. at 39. HHS asserts that because parties may only contest a statute’s consequences, and not its phrasing, in court, the parties may not make a legal claim exclusively against the individual mandate where the mandate is not independent of its penalty. See id. at 40–41.

NFIB, however, argues that the AIA does not bar this suit because the claim concerns the individual mandate, and not the penalty. See Brief for Private Respondents at 10. NFIB asserts that the individual mandate itself is a substantive legal obligation on which they may sue. See id. at 11. NFIB contends that it seeks relief only from the mandate to purchase health insurance. See id. at 11–12. The penalty provision is irrelevant to this claim, NFIB argues, because if the individual mandate is found to be constitutional then its members will comply, thereby avoiding the penalty provision entirely. See id. at 13.

The States argue that their claim is also against the mandate itself because the States’ injury comes from future increased enrollment in state Medicaid programs and not from a penalty that does not apply to the States. See Brief for State Respondents at 43–45. The States contend that the individual mandate may be legally challenged separately from the penalty provision because what they request is not relief from the taxation of uninsured persons, but relief from the increased burden on state programs that results from the mandate itself. See id. at 45–48.

Long, however, argues that previous Supreme Court cases have held similar arguments regarding the AIA as “circular” and “unpersuasive.” See Brief of Court-Appointed Amicus Curiae at 45–47. Long asserts that the mandate and the penalty are tightly coupled because the penalty is the only method available to enforce the mandate. See id. at 48. Additionally, Long contends that the claims themselves do attack the penalty provision directly because the suit “seeks an injunction against ‘enforcement’ of the [Health Care] Act”—enforcement that is achieved through the penalty provision. See id. at 44–45.

How does the AIA apply to Lawsuits brought by States?

HHS argues that the AIA applies to states in the same manner as an individual. See Brief for Petitioners at 42. HHS contends that, as courts have found when applying other internal revenue laws, states are “persons” under the AIA. See id. at 46–47. HHS further asserts that the addition of “by any person” to the AIA’s language was intended to clarify that the AIA applies to third parties, like states, and not to limit the AIA from suits involving states. See id. at 47–48.

The States counter that the AIA does not apply to them because states are not “persons” under a statute unless Congress clearly intends to include states within that term. See Brief for State Respondents at 37–38. Additionally, the States rely upon South Carolina v. Regan, which held that the AIA did not apply to aggrieved parties who had no alternative forum to litigate claims. See id. at 34–36. The States argue that they are exempted from the AIA under Regan because they are aggrieved parties without any other recourse, as neither the mandate nor the penalty applies to them directly. See id. at 35–36. The States assert that the AIA is not intended to block States’ suits where there is no other available remedy. See id.

Long retorts that the States are not aggrieved parties under Regan. See Brief of Court-Appointed Amicus Curiae at 52. Unlike in Regan, Long contends, the individual mandate does not directly injure the States because they are not liable for the penalty and they are not authorized to sue on their citizenries’ behalf. See id. at 52–53. Without this direct injury, Long asserts that the States are not aggrieved parties and cannot avoid AIA application to their suit. See id. at 52–53, 57.

Are the AIA’s Limits Jurisdictional?

HHS argues that the AIA limits jurisdiction and restricts a court’s authority to hear cases. See Brief for Petitioner at 8. For support, HHS points to Supreme Court precedent that has regarded the AIA as a jurisdictional limitation on the courts. See id. at 11–13. Long adds support by comparing the AIA to the Tax Injunction Act, a related statute modeled on the AIA that the Supreme Court found jurisdictional. See Brief of Court-Appointed Amicus Curiae at 17–18. Long argues that the AIA’s language demonstrates that it is jurisdictional because the text bars suits in “any court.” See id. at 19. Long asserts that barring the suit in any court speaks directly to the power of the courts and not to the rights of any party. See id.

NFIB counters that the AIA is not jurisdictional because Congress did not clearly provide for such. See Brief for Private Respondents 42–43. NFIB argues that the AIA’s lack of jurisdictional language and its location in the tax code’s procedure and administration sections indicate that Congress did not intend for the AIA to be jurisdictional. See id. at 43–45. NFIB asserts that these factors distinguish the AIA from related jurisdictional statutes, which both contain jurisdictional language and are placed in the tax code’s jurisdiction section. See id. at 46–47. The States further argue that the AIA is merely a claims-processing rule, speaking to litigants’ rights and not to a court’s authority to adjudicate. See Brief for State Respondents at 14–15.

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Conclusion

In this case, the Supreme Court will decide whether the Tax Anti-Injunction Act (“AIA”) prevents the Court from considering the constitutionality of the Patient Protection and Affordable Care Act’s minimum coverage provision. While the parties agree that the AIA should not apply because the challenged provision is a penalty and not a tax, they differ on the extent to which the AIA applies for cases challenging the mandate, instead of the penalty provision, and whether the AIA’s limitations are jurisdictional. However, Court-appointed amicus Robert Long argues that the AIA should apply in this case because the mandate is a tax subject to the AIA. Long further contends that the AIA imposes jurisdictional limitations on the courts. The Court’s decision will affect the on-going litigation regarding the individual mandate’s constitutionality, as well as the claimants’ ability to challenge the assessment of tax code penalties, which may have lasting effects on the efficient administration of tax laws.

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Authors

Prepared by: Brandon Bodnar and Milson Yu

Edited by: Jacqueline Bendert

Additional Sources

• Kevin C. Walsh: The Anti-Injunction Act, Congressional Inactivity, and Pre-Enforcement Challenges to Section 5000A of the Tax Code

• Michael C. Dorf & Neil Siegel: ‘Early-Bird Special’ Indeed!: Why the Tax Anti-Injunction Act Permits the Present Challenges to the Minimum Coverage Provision

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Oral argument: Mar. 28, 2012

Appealed from: United States Court of Appeals for the Eleventh Circuit (Aug. 12, 2011)

AFFORDABLE CARE ACT, MEDICAID, SPENDING POWER, FEDERALISM

Congress established Medicaid in 1965 as way to provide health care to needy individuals in the United States. The program set forth several categories into which potential enrollees could fall. The categories took into account income level, existing medical conditions, and various other factors. The federal government imposes certain conditions on individual state-run Medicaid programs in exchange for federal funding for those programs. In 2010, President Obama signed the Patient Protection and Affordable Care Act, which will expand Medicaid to cover all persons below 133% of the poverty line, regardless of other factors. Florida and several other states filed a lawsuit arguing that this expansion represented an unconstitutional act beyond the scope of Congress’s spending power. Florida argued that the size of the program and lack of a specific alternative to participation effectively coerces states into complying with federal government’s conditions to funding. The Department of Health and Human Services argues that each state has the legal right to abstain from the program, and that the size of the program and the amount of funding involved should not determine whether the conditions are coercive. The Supreme Court’s decision in this case will affect access to health care for needy individuals, the expansiveness of state sovereignty, and the financial burden imposed on the states.

Question presented

Does Congress exceed its enumerated powers and violate basic principles of federalism when it coerces States into accepting onerous conditions that it could not impose directly by threatening to withhold all federal funding under the single largest grant-in-aid program, or does the limitation on Congress’s spending power that this Court recognized in South Dakota v. Dole, 483 U.S. 203 (1987), no longer apply?

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Issue

Whether Congress, through its spending power, has the authority to impose conditions on funding that force states to choose between accepting those conditions and receiving federal funding and not accepting those conditions and forfeiting all federal Medicaid funding.

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Facts

The Medicaid Program Prior to Expansion

Congress established Medicaid in 1965 to provide federal reimbursement to states that voluntarily funded certain types of health care for specified categories of low-income residents. See Florida v. U.S. Dept. of Health & Human Services, 648 F.3d 1235, 1262 (11th Cir. 2011); 42 U.S.C. §1396. While the federal government established  categories of eligible individuals, states were initially left to their own discretion to establish eligibility requirements for participation. See Brief for Petitioner, Florida et al. at 2. While not all states initially chose to participate, Medicaid participation increased considerably over the first few years of the program’s existence. See id. at 3.

Congress altered Medicaid for the first time in 1972 when it established the Supplemental Security Income for the Aged, Blind, and Disabled (“SSI”), which created a single federal program that replaced state-run programs for the aged, blind, and disabled. See id. This shift meant that, in some states, a greater number of individuals would be eligible for SSI assistance than had been eligible for care under state-run programs. See id. at 4. Congress did not mandate that states adopt these eligibility criteria; instead it gave states the option of either expanding coverage to all individuals then eligible under SSI, or maintaining the coverage as it existed under the then current Medicaid plan. See id. Following the establishment of SSI, states’ Medicaid participation and coverage continued to expand to the point that the Supreme Court recognized that the federal component was essential to a state’s ability to adequately provide healthcare to its residents. See id.

By the 1980s, every state was participating in Medicaid, and Congress continued to expand the scope of Medicaid coverage. See Brief for Respondent, Dep’t. Health and Human Services at 6–7. The expansions included the imposition of mandatory requirements on the states; for example, coverage of children and pregnant women was required for continued state participation in Medicaid. See id. Congress also encouraged states to expand coverage by increasing the available funding. See Brief for Petitioner at 6. In most categories, however, Congress continued to allow states the discretion to choose the extent of the coverage they would provide. See id.

The Health Care Act’s Expansion of Medicaid

In 2010, President Obama signed the Patient Protection and Affordable Care Act (“Healthcare Act”), which expanded the Medicaid program to require states to provide healthcare to individuals under the age of 65 receiving income below 133% of the federal poverty level. See Florida v. U.S. Dep’t. Health and Human Services, 780 F.Supp. 2d 1256, 1262. The Health Care Act provides that the federal government will initially cover the entire cost of care for newly eligible individuals. See id. at 1263. After 2016, the amount of federal coverage will decrease slightly each year until 2020, at which point federal cost coverage will remain steady at 90% of the cost of care for individuals made newly eligible under the Healthcare Act. See id.

Lower Court Proceedings

After the passage of the Health Care Act, Florida and twenty-five other states (“the States”) filed suit, arguing that the expansion of Medicaid was unconstitutional because it violated the Spending Clause of the Constitution and the Ninth and Tenth Amendments. See Florida v. U.S. Dep’t. of Health and Human Services, 780 F.Supp. 2d at 1264. The United States District Court for the Northern District of Florida granted summary judgment to the government, holding that the Medicaid expansion is constitutional. See id. at 1240–41. The States appealed the ruling on the Medicaid claim, but the Eleventh Circuit affirmed the district court, holding that the States failed to demonstrate coercion. See id. at 1328.

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Discussion

Florida and its supporters argue that the Medicaid expansion coerces the states into accepting its new requirements by making it financially unfeasible to opt out of Medicaid, and therefore is an abuse of Congress’s spending power and an encroachment on state sovereignty. See Brief for Petitioner at 31–32. Supporters of the Department of Health and Human Services, on the other hand, insist that the expansion of Medicaid merely enables, but does not force, the states to expand health coverage at a minimal cost to the states themselves. See Brief of Amici Curiae the States of Oregon et al. (“Oregon”) in Support of Respondents at 9, 12.

Access to Affordable Healthcare and the Financial Burden on the States

A group of state legislators praise the expansion of Medicaid, and contend that it will allow for an immense reduction in the number of uninsured Americans, with little or no cost to the states. See Brief of Amici Curiae State Legislators from the 50 States, the District of Columbia, and Puerto Rico (“Brief of State Legislators”) at 11. Oregon contends that the Health Care Act sets a higher bar for all states by extending mandatory eligibility requirements. See Brief of Oregon at 19. Oregon argues that Medicaid expansion is a positive development because the Health Care Act facilitates and furthers the ability of leading healthcare states to experiment with different methods of providing health care. See id. at 10–11.

Florida argues that states that fail to meet the onerous requirements of the new Medicaid face the potential loss of billions of dollars of federal aid. See Brief for Petitioner at 39. In support of Florida, the Association of American Physicians (“Physicians”) adds that health care spending threatens the financial stability of states more than any other factor. See Brief of Amicus Curiae Association of American Physicians (“Physicians”) at 5. The Physicians argue that essentially mandating that states increase health care spending through the expansion of Medicaid places unavoidable fiscal pressure on the states when many of them already struggle financially. See id.

Oregon, on the other hand, maintains that the Medicaid expansion can be a financial boon to the states. See Brief of Oregon at 13. According to Oregon, the Health Care Act Medicaid expansion is necessary because without it, states could face increased enrollment without the advantage of a proportional increase in federal funding. See id. at 12–13. Oregon argues that without national reform, states would be practically unable to expand their own Medicaid programs for fear of overburdening their system with applicants from other states that provide fewer health care benefits. See id. at 7. Oregon contends that if Medicaid is expanded across all participating states, enrollment can increase without costs falling to just a few states. See id. at 7–8.

Federalism and State Sovereignty

On behalf of Florida, the American Civil Rights Union (“ACRU”) insists that Congress’s imposition of mandatory requirements on the states directly threatens federalism. See Brief of Amicus Curiae American Civil Rights Union (“ACRU”) at 11, 16. The ACRU argues that Congress’s coercion of the states into participation in the expanded Medicaid program interferes with state sovereignty. See id. at 11, 15. The ACRU argues that the Health Care Act’s expansion of Medicaid disrupts this balance, overreaching the limits of Congress’s power by removing the states’ discretion in their application of Medicaid. See id. at 15–16.

The Department of Health and Human Services (“HHS”) and its supporters agree that Congress’s spending power, if unconstrained, could undermine State authority and local policy preferences. See Brief of Oregon at 7. However, HHS argues that Medicaid expansion does not exceed the constitutional limits of Congress’s spending power, which includes the power to set conditions with which the states must comply in exchange for the benefit of federal funds. See Brief for Respondent at 21–22. Similarly, Oregon insists that the Health Care Act’s expansion of Medicaid does not usurp the flexibility and autonomy of the states. See id. at 9–10. In fact, Oregon argues, far from crippling the power of the states, federal action can aid the states in pursuing their desired policies. See id. at 7–8. A group of state legislators argue that Medicaid expansion actually furthers cooperation between the federal government and the states by allowing states that want to make health care more widely available achieve their goals through voluntary partnership with the federal government. See Brief of State Legislators at 6. Oregon contends that the Court’s acceptance of Florida’s coercion argument would halt this federal and state cooperation, freezing Medicaid in time and preventing it from meeting changing healthcare needs. See Brief of Oregon at 27.

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Analysis

Constitutional Limitations on the Congressional Spending Power

Florida argues that the Supreme Court should reaffirm the limitations of Congress’s spending power by declaring the Medicaid expansion contained in the Health Care Act unconstitutional. See Brief for Petitioner, Florida et al. at 24, 32. Florida asserts that if the Supreme Court fails to rule in its favor, the court will have failed to limit the spending power in any way. See id. at 32. Florida argues that because this case involves a particularly serious abuse of the spending power, the precedent set by a ruling against Florida would mean future spending power acts would never fall outside of constitutional limitation. See id. Florida maintains that in United States v. Butler, the Supreme Court held that Congress may not use its spending power as an “instrument for total subversion of the governmental powers reserved to the individual states.” See id. at 26. Florida maintains that upholding the Medicaid expansion provision would represent an unprecedented increase in Congressional power and would violate the holding of Butler. See id. at 32. Florida argues that the expansion of Medicaid is the federal government commandeering tax dollars to coerce the states. See id. at 40–41. The federal government is prohibited from taking such actions to use state governments to accomplish what would be unconstitutional for the federal government to do itself. See id. at 29. If such action is upheld, Florida argues, all measures to restrict the power of the federal government will become meaningless. See id. at 32. Florida argues that with this as precedent, Congress will have the ability use the spending power to circumvent constitutional restrictions. See id. at 59. Florida argues that the anti-coercion doctrine must be taken seriously and should apply here to prevent a limitless federal government. See id.

In contrast, the Department of Health and Human Services (“HHS”) argues that the Congressional spending power is broad, and that the expansion of Medicaid falls within this power. See Brief for Respondent, Department of Health and Human Services at 20, 24. HHS argues that the restrictions on the spending power of Congress enumerated in South Dakota v. Dole allow Congress to spend to promote the general welfare, as long as conditions on funding are made clear and unambiguous and the conditions are related to the federal program. See id. at 21–22. HHS contends that as long as Congress complies with the restrictions, Congress has broad power to advance its policy objectives through the use of the spending power. See id. at 22. HHS maintains the expansion of Medicaid is a valid use of this very power. See id. at 25. It argues that the expansion states clear objectives with which states must comply in order to receive funding from the federal government. See id. at 24–25.

Medicaid Expansion as use of Spending Power

Florida contends that provisions in the Health Care Act that expand Medicaid exceed the limitations on the spending power of Congress. See Brief for Petitioner at 32–33. Florida maintains that although under the spending power Congress can place conditions on the funding it provides, Congress cannot use that power to coerce the states into a course of action. See id. at 25, 27. Florida contends that conditions on federal funding are only valid when a state can voluntarily accept or reject the terms and the funding. See id. at 27. Florida argues that by enacting both the Medicaid expansion and the individual mandate at once, Congress has clearly set forth a mandatory course of action for each state. See id. at 33. Florida maintains that the individual mandate requires all individuals to have health insurance, but the only program through which they can obtain it is Medicaid. See id. As a result, Florida argues, the very existence of needy individuals in each state forces states to accept the Medicaid expansion, and the conditions on federal funding in order to comply with the individual mandate. See id.

HHS argues that the expansion of Medicaid merely fills gaps in the original act that created the Medicaid program. See Brief for Respondent at 23. Because the initial Medicaid act fell within Congress’s spending power, HHS maintains that the content of the Health Care Act’s Medicaid eligibility extension falls within it as well. See id. at 23–24. HHS argues that this extension is set forth in clear, unambiguous terms, complying with the requirement for exercising the spending power set forth in Dole. See id. at 24. HHS asserts that the expansion set forth in the Health Care Act is not unprecedented. See id. at 26–27. HHS contends that Congress retained the ability to expand, contract, or otherwise alter Medicaid. See id. at 39–40. Congress has exercised this right several times throughout the history of Medicaid. See id. at 26–27.

Florida argues that a lack of any alternative to compliance with the new Medicaid conditions reveals that Congress did not intend to give the states a meaningful choice in determining whether they would comply with the Medicaid expansion, in violation of Dole. See Brief for Petitioner at 34. Florida asserts that in other provisions in the Health Care Act, Congress has offered a meaningful choice to states whether to comply with its conditions and receive federal funding, for example by providing mechanisms to create a federal ‘health benefit exchange’ if the states decided not to create one. See id. at 35. Florida argues there is no meaningful choice with respect to the Medicaid expansion. See id. at 34. First, Florida contends that Congress did not intend for there to be a viable alternative to participation in the Medicaid expansion. See id. at 33–34. Florida maintains that Medicaid is the only program under which a needy individual forced to acquire health insurance can obtain such insurance. See id. at 34. Second, Florida argues that states electing not to participate in expansion will forego a sum of federal funding that will create significant budgetary problems. See id. at 39–40. Further, Florida asserts that, if a state wishes to refuse Medicaid expansion, it must refuse Medicaid altogether, thereby relinquishing funding that it already had been receiving under the old Medicaid program. See id. Florida argues that the lack of a serious alternative to compliance with the Medicaid expansion, coupled with the large amount of federal funding at stake effectively forces states to comply with its terms by threatening them with certain bankruptcy otherwise. See id.

In contrast, HHS maintains that the size of the program, the lack of an alternative funding source, and the amount of funding in question do not have any bearing on the constitutionality of the Health Care Act as an exercise of Congress’s spending power. See Brief for Respondent at 33–34. HHS argues that the determinative factor is whether the states have a legal choice to turn down federal funding. See id. at 25. HHS contends that this choice allows individual states to reject the federal program if it is against that state’s interest. See id. at 35. HHS contends that the size of the federal grant should not serve to limit the conditions Congress can place on funding. See id. at 36–38. Rather, the unusually large size of the federal grant attached to Medicaid expansion merely increases the incentive for states to participate in the program. See id. at 36. HHS asserts that Florida does not dispute that the states are legally free to opt out of the Medicaid program. See id. at 25. As a result, HHS contends that Florida’s coercion argument, that state representatives would face angry citizens because health care costs for needy individuals would rise if they turned down federal funding, is not the type of coercion the Court should be worried about. See id. at 35–36. HHS asserts that anti-coercion measures aim to protect against congressional acts that commandeer state governments to achieve what Congress itself cannot, not acts that give states a legal choice whether or not to participate. See id. at 21–22, 35–36. HHS argues that the lack of a specific alternative to Medicaid participation is not a dispositive indication of coercion, rather it is a reflection of the fact that all fifty states have taken part in Medicaid for many years, and there was no reason for Congress to believe that states would opt out, especially given how much of the expansion is funded by the federal government. See id. at 49–50. HHS contends that federal funding will cover all newly eligible enrollees for the first three years of the program extension. See id. This fact underscores the congressional intent that this program extension not create a burden for the states. See id. at 27.

Severability of the Medicaid Extension from the ACA

HHS argues that, if the Court determines the Medicaid expansion to be unconstitutional, it should not invalidate the remainder of the Health Care Act. See Brief for Respondent at 52. The Medicaid expansion is within the Social Security Act, which includes a severability clause, allowing the remainder of the Health Care Act to stand. See id. at 39, 53. Additionally, HHS argues that there is no indication that, if one part of the Medicaid expansion were found to be invalid, that the whole expansion would fall. See id. at 53. HHS contends those states that consent to the expansion should be permitted to participate and receive federal funds. See id.

Alternatively, Florida argues that invalidation of the Medicaid expansion should invalidate the entire Health Care Act. See Brief for Petitioner at 54–55. Florida contends that, because the Medicaid extension is such an integral part of the Health Care Act, and especially the individual mandate, it cannot be severed. See id. Finally, Florida asserts that in order to achieve the Healthcare Act’s goal of near universal coverage, the Medicaid expansion will be necessary to insure half of newly insured individuals under the Health Care Act. See id. This fact reveals its importance, and, in turn, the Congressional intent that the Health Care Act should not survive without the Medicaid expansion. See id.

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Conclusion

Florida argues that the Supreme court should reaffirm the limits on the Congressional spending power by declaring the Medicaid expansion of the Health Care Act unconstitutional. Florida contends that the spending power must not be used as tool to subvert the sovereignty of the states and coerce them into action. Florida argues that, because of the size of the program and the amount of funding at stake, states do not have a realistic choice to turn down participation in the program. In contrast, HHS argues that Congress’s spending power is necessarily broad. HHS maintains that, because the states may legally opt out of the program, the Medicaid expansion is not coercive and can be enacted by Congress pursuant its spending power. HHS contends that the size of the program and the amount of funding at issue should have no bearing on the constitutionality of the Medicaid expansion. The Supreme Court’s decision will affect access to health care for needy individuals, the financial burden undertaken by states to provide that care, and the extent to which states have a say in the terms on which they participate in Medicaid.

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Authors

Prepared by: Amanda Bradley and Brooks Kaufman

Edited by: Kelly Halford

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Oral argument: Wed., Mar. 28, 2012

Appealed from: United States Court of Appeals for the Eleventh Circuit (Aug. 12, 2011)

SEVERABILITY, HEALTH CARE, PATIENT PROTECTION AND AFFORDABLE CARE ACT, STANDING, CONGRESSIONAL INTENT

In 2010, Congress enacted the Patient Protection and Affordable Care Act (“Health Care Act”) and restructured the health insurance market. The Health Care Act contains a provision requiring individuals to carry a minimum amount of health insurance (“minimum coverage provision”).  The Supreme Court must decide whether the minimum coverage provision is constitutional. If the Court finds the minimum coverage provision unconstitutional, it must then determine whether it can be severed from the Health Care Act or whether the entire Health Care Act must be struck down. Petitioners, Florida, the National Federation of Independent Business, and various individuals contend that the minimum coverage cannot be severed from the Health Care Act because the intended outcome of the entire Health Care Act hinges on the economic effect of the minimum coverage provision. Respondents, the Department of Health and Human Services and Kathleen Sebelius, argue that the minimum coverage provision is severable, and the Health Care Act can function without it. A holding for the Petitioners would strike down the entire Health Care Act, whereas a holding for the Respondents would preserve the constitutional and functional sections.

Question presented

Congress effected a sweeping and comprehensive restructuring of the Nation’s health-insurance markets in the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 109 (2010) (collectively, the “ACA” or “Act”). But the Eleventh Circuit and the Sixth Circuit now have issued directly conflicting final judgments about the facial constitutionality of the ACA’s mandate that virtually every individual American must obtain health insurance. 26 U.S.C. § 5000A. Moreover, despite the fact that the mandate is a “requirement” that Congress itself deemed “essential” to the Act’s new insurance regulations, 42 U.S.C. § 18091(a)(2)(I), the Eleventh Circuit held that the mandate is severable from the remainder of the Act.

The question presented is whether the ACA must be invalidated in its entirety because it is non-severable from the minimum coverage provision that exceeds Congress’ limited and enumerated powers under the Constitution.

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Issue

If the minimum coverage provision of the Patient Protection and Affordable Care Act is held to be unconstitutional, must the entire Health Care Act be invalidated or is the minimum coverage provision severable from the Health Care Act?

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Facts

To reform systemic dysfunction in the health insurance industry and extend health care access to 50 million uninsured Americans, Congress passed the Patient Protection and Affordable Care Act (“Health Care Act”). See Florida v. U.S. Dep’t of Health and Human Services, 648 F.3d 1235, 1244, 1246 (11th Cir. 2011). The Health Care Act contains an individual mandate that requires that every individual purchase “minimum essential coverage” or pay a tax penalty (“minimum coverage provision”).  See id. at 1251. The Eleventh Circuit found the minimum coverage provision unconstitutional, severed it from the rest of the Health Care Act, and upheld the remainder of the Health Care Act without the minimum coverage provision. See id. at 1328. If the Supreme Court finds that the minimum coverage provision is unconstitutional, then it will determine whether and how the minimum coverage provision can be severed the Health Care Act.

The question of the severability of the minimum coverage provision first arose after Judge Vinson sitting in the United States District Court for the Northern District of Florida, struck down the entire Health Care Act holding that the minimum coverage provision was unconstitutional but necessary for the intended operation of the law. See Florida v. U.S. Dep’t of Health and Human Services, 780 F.Supp. 2d 1256, 1299–1300 (N. Dist. Fla. 2011). Judge Vinson stated that an unconstitutional provision is only severable if a court determines that the other provisions would function in the way Congress intended despite the severed provision. See id. at 1300–01. Judge Vinson found that Congress would not have passed the other provisions of the Health Care Act without the minimum coverage provision. See id. at 1300–01. Judge Vinson based this decision on the fact that, before passing the Health Care Act, Congress removed a severability provision from an earlier draft of the law. See id. at 1301. Further, Judge Vinson reasoned that, by removing the severability clause, Congress showed that the Health Care Act needed the minimum coverage provision to function properly. See id. Additionally, Judge Vinson found that the defendants, the Department of Health and Human Services, conceded that the minimum coverage provision was necessary for implementing the regulatory core of the Act to reform the health insurance industry. See id. at 1301–02. Against this legislative and litigation background, Judge Vinson held that the minimum coverage provision could not be severed. See id. at 1304–05.

The Eleventh Circuit affirmed the district court’s holding that the minimum coverage provision was unconstitutional; however, the Eleventh Circuit reversed on the issue of severability. See 648 F.3d 1235, 1322, 1328. The Eleventh Circuit found that the minimum coverage provision was severable, and the remainder of the Health Care Act was still valid and functional. See id. at 1322, 1327. The Eleventh Circuit held that the absence of a severability clause was insufficient to rebut the strong presumption in favor of severability. See id. at 1322–23.

After the Eleventh Circuit’s decision, twenty-six states, two private individuals, and the National Federation of Independent Business, filed two separate petitions asking the Supreme Court to reverse the decision regarding severability and reinstate the wholesale invalidation of the Act. See Petition for Writ of Certiorari, Twenty-Six States, Florida, et al. v. Dep’t of H&HS, et al. (No. 11-400) and Petition for Writ of Certiorari, NFIB, Nat’l Fed’n of Indep. Bus. v. Sebelius, et al. (No. 11-393). The Supreme Court granted certiorari and consolidated the two petitions. The Court allocated 90 minutes of oral arguments on the issue of severability. See Writ of Certiorari, Nat’l Fed’n of Indep. Bus. v. Sebelius, et al. (No. 11-393) and Florida, et al. v. Dep’t of H&HS, et al. (No. 11-400).

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Discussion

Petitioners, the twenty-six states (collectively “the States”), the National Federation of Independent Business, Kaj Ahlburg, and Mary Brown (collectively “NFIB”), argue that the Health Care Act cannot function without the minimum coverage provision. See Brief for Petitioners, Twenty-Six States (“State Petitioners”) at 35; Brief for Petitioners, National Federation of Independent Business (“Private Petitioners”) at 36–37. In contrast, Respondents Sebelius and the Department of Health and Human Services, et al., (collectively “HHS”) argue that, even if the minimum coverage provision is unconstitutional, the rest of the Health Care Act, with the exception of the guaranteed issue and community-rating provisions, can function effectively and should remain valid. See Brief for Respondents, U.S. Department of Health and Human Services and Kathleen Sebelius at 13–14.

Separation of Powers

Several senators contend that the minimum coverage provision cannot be severed from the Health Care Act. See Brief of Amici Curiae Members of the United States Senate in Support of Petitioners at 10. They argue that, without a severability provision in the Health Care Act, judicial severance would interfere with Congressional power to enact complex laws with interrelated goals. See id. in Support of Petitioners at 26–27, 38. The NFIB echoes the senators’ concern adding that severing the Health Care Act would construct a law that Congress had not passed. See Brief for Private Petitioners at 30. Together, the Texas Public Policy Foundation and the Cato Institute assert that the harsh lessons from state-level Health Care reforms that lacked a minimum coverage provision informed the Congressional decision to include the minimum coverage provision as the key to effective reform. See Brief of Amici Curiae Texas Public Policy Foundation and Cato Institute in Support of Petitioners at 29–30. The Texas Public Policy Foundation and the Cato Institute argue that disregarding the intricate dependency of the insurance regulations on the minimum coverage provision eviscerates Congress’s role in representing Americans by replacing the deliberations of elected officials with the wisdom of a few tenured justices. See id. at 12–13, 19.

In contrast, California and ten other states contend that invalidating the entire Health Care Act would not only unduly constrain the Congressional power to legislate but also thwart ongoing state-level efforts to comply with the Act. See Brief of Amici Curiae States of California, et al., in Support of Respondents at 13–14. For example, they argue that some states have already relied on the Health Care Act and constructed the infrastructure necessary to implement the Medicare and Medicaid provisions before the minimum coverage provision takes effect. See id. at 16–18. These states argue that Congress would have prohibited such state preparations had Congress anticipated that a court would invalidate the entire Health Care Act after finding one provision unconstitutional. See id. at 23–24.  Invalidating the entire Health Care Act would not only unduly interfere with Congress’s encouragement of state reforms but also needlessly waste state resources and harm the long-term health planning of private individuals. See id.  Highlighting the diversity of the provisions and regulatory aims in the Health Care Act, the American Medical Student Association argues that the presumption for severability protects Congress, working as the elected representatives of Americans, against a judicial intrusion into considerations and decisions that are largely political. See Brief of Amici Curiae American Medical Student Association, et al., in Support of Respondents at 13–14.

Adverse Selection in the Health Insurance Industry        

The American Civil Rights Union (“ACRU”) contends that severing the minimum coverage provision from the Act would trigger an unintended “death spiral” to health insurance markets by removing incentives for individuals to obtain insurance prior to becoming ill. See Brief of Amicus Curiae American Civil Rights Union in Support of Petitioners at 2, 4–5. The ACRU states that the prohibition on varying insurance premiums or denying insurance altogether based on preexisting health conditions requires a minimum coverage provision in order to to spread the cost of Health Care among a large population. See id. at 4–5. The ACRU argues that severing the minimum coverage provision but permitting the remainder of the Health Care Act to take effect would encourage people to discontinue their health insurance policies until they were in dire need of Health Care; this would then place the increased costs of providing health insurance on an ever-shrinking pool of insured people. See id. at 5. Similarly, a group of economists characterize the minimum coverage provision as a necessary subsidy for insurance companies to help offset the harsh economic effects of the Health Care Act. See Brief of Amici Curiae Economists in Support of Petitioners at 8–9. According to these economists, without the minimum coverage provision, insurance companies would face at least $715 billion in costs from 2012 through 2021 due to the Health Care Act. See id. at 9.

American Public Health Association (“APHA”) argues that striking down the entire Health Care Act would prevent Americans from receiving the benefits of Health Care reform that stand independently from the insurance reform. See Brief of Amici Curiae American Public Health Association, et al., in Support of Respondent at 24. APHA contends that the Health Care Act reforms Health Care far beyond insurance regulations, pointing to the creation of the National Prevention, Health Promotion and Public Health Council, the promotion of wellness and disease prevention, and national standards for evaluating diabetes programs. See id. at 20–21. Additionally, the American Association of Retired Persons (“AARP”) argues that striking down the Health Care Act because of the failure of an insurance provision would rob senior citizens of federal community-based programming, anti-abuse measures, and regulations of nursing homes. See Brief of Amici Curiae AARP, et al., in Support of Respondent at 28–29, 36–37. Emphasizing that not all provisions pertain to regulating insurance, Missouri adds that striking down all the provisions of the Health Care Act, including break times for nursing mothers, reforms on student loans, and standards for nutrition labeling at restaurants, would deprive Americans of benefits of Health Care reform already in effect. See Brief of Amicus Curiae Missouri Attorney General in Support of Respondent at 4, 5–6.

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Analysis

The Supreme Court will determine whether, if declared unconstitutional, the minimum coverage provision of the Patient Protection and Affordable Care Act (“Health Care Act”) can be severed from the remainder of the Health Care Act. Petitioners, twenty-six states (“States”), the National Federation of Independent Business (“NFIB”), and individuals, argue that the minimum coverage provision is not severable from the rest of the Act and if the minimum coverage provision is unconstitutional, the Court should invalidate the entire Health Care Act. See Brief for Petitioners, Twenty-Six States (“State Petitioners”) at 59; Brief for Petitioners, National Federation of Independent Business (“Private Petitioners”) at 61. Respondents, the Department of Health and Human Services and Kathleen Sebelius, Secretary of Health and Human Services (collectively “HHS”), contend that the States and NFIB do not have standing to put the issue of severability before the Court and also that the minimum coverage provision is severable from the remainder of the Health Care Act excepting the guaranteed-issue and community-rating provisions. See Brief for Respondents, U.S. Department of Health and Human Services and Kathleen Sebelius at 26.

Severability

NFIB and the States argue that the minimum coverage provision is not severable from the remainder of the Health Care Act. See Brief for Private Petitioners at 61; Brief for State Petitioners at 59. This is so, NFIB contends, because a court must look to legislative intent to determine severability. See Brief for Private Petitioners at 29. NFIB and the States argue that Congress’ focus on the minimum coverage provision during the legislative bargaining process and the central role the provision plays to offset the economic consequences of the rest of the Health Care Act show that the Congressional intent in this case was for the entire Health Care Act to fall or stand on the basis of the constitutionality of the minimum coverage provision. See id. at 36–41, 56; Brief for State Petitioners at 42–46.

HHS agrees that severability is determined by looking at the legislative intent. See Brief for Respondents at 42. However, HHS asserts that the fact that many of the provisions of the Health Care Act are already in effect already and functioning show that the remainder of the Health Care Act can make Health Care more affordable independent of the minimum coverage provision. and the legislature intended the entire Health Care Act to become operative regardless of whether the minimum coverage provision was declared unconstitutional. See id. at 13–14. HHS argues that the Health Care Act does many other things that are “wholly unrelated” to the minimum coverage provision, like better enforcing drug prices. See id. at 30–31. HHS concedes that if the minimum coverage provision is unconstitutional, the community-rating and guaranteed-issue provisions cannot function as Congress intended, but the rest of the Health Care Act should be implemented. See id. at 26. However, HHS contends that the minimum coverage provision is constitutional and argues that because NFIB and the States do not have standing, the Court should not make a decision on these provisions now. See id.

Standing

Before the Court can decide an issue of severability, the petitioners must have standing. HHS argues that the States and NFIB do not have standing to raise severability of the minimum coverage provision from the Health Care Act. See Brief for Respondents at 16. HHS contends that the States and NFIB must show that they are injured by each provision of the Health Care Act before they can attempt to invalidate the entire Act through a severability challenge. See id. HHS argues that merely being affected by one provision of the Act is not enough to provide the States and NFIB standing to challenge the entire Health Care Act. See id. at 14. HHS maintains that aside from the minimum coverage provision, the only other part of the Health Care Act that affects the petitioners is the Medicaid provision. See id. at 14–15. To strengthen their argument, HHS contends that an adversarial process is necessary to ensure that all issues are fully litigated and a truly adversarial process cannot be achieved unless the parties are injured by the entire Act, providing them motivation to strongly advocate their positions with respect to each provision. See id. at 18. HHS argues that without the injury requirement the Court’s resulting opinion advisory opinion, which is forbidden by Article III. See id. at 22.

The States counter that they do have standing to raise the issue of severability before the Court. See Brief for State Petitioners at 27–28. The States point out that deciding whether parts of an act can be severed is a way for a court to provide a remedy related to a single provision—not a way of deciding the merits of a claim of injury about the rest of that act—so a party only needs to be affected by one part of an act to be able to address whether the others can stand alone. See id. at 27–29. Indeed, the States contend that the main purpose of allowing courts to decide on severability is to protect Congressional intent, and a party who raises severability merely helps the court determine legislative intent. See id. at 28–29. Because the States maintain that they have standing to challenge the constitutionality of the minimum coverage provision, they argue that this puts them in a position to help the Court determine Congress’ intent in enacting the Health Care Act—the States argue that it should not matter whether they are independently affected by the other provisions of the Health Care Act. See id. at 28–29. Their challenge to severability in this case is not actually a challenge to the other provisions of the Health Care Act, the States argue, but rather an argument about which remedy would best effectuate Congressional intent. See id. at 27, 34.

HHS argues that the Court’s prior holding in Printz v. United States demonstrates that the States and NFIB should not have standing in this case. See Brief for Respondents at 17, 20–21. HHS maintains that Printz requires the actual parties in interest to be before the court and that there is no exception to this requirement for severability. See id. at 17. Because the States and NFIB are not the parties in interest for the severability issue, HHS argues, Printz should preclude the Court from deciding severability in this case. See id. at 19–21.

The States counter that Printz’s holding should be limited to the facts of that case and allow the States to raise severability in the instant case. See Brief for State Petitioners at 31–32. In Printz, neither of the parties had raised severability at any stage of the proceedings, and it was thus an undeveloped issue when presented to the Court, and neither of the parties had an interest in severability. See id. at 31. The States argue that in contrast to Printz, the issue of severability has already been developed in the prior proceedings and that the parties have an interest in severability. See id. at 31–32.

Congressional Intent

NFIB argues that the relevant inquiry in determining whether an unconstitutional provision is severable from the rest of a statute is whether Congress would have chosen to enact the statute without that provision. See Brief for Private Petitioners at 30. NFIB contends that the mere fact that the rest of an act can function does not mean that Congress would have wanted to enact it without the unconstitutional provision. See id. at 30–31. NIFB argues that in determining whether a provision is severable a court must look to the nature of the provision, its role in the legislative bargaining process, the context in which the legislation was enacted, the economic connection between that provision and the rest of the act, and the impact of that provision on the main goal of the act to determine whether Congress would have enacted the statute in the same way. See id. at 31. NFIB maintains that courts should determine whether the unconstitutional provision is part of a “single, coherent policy” such that removing it would undermine the goals of the entire statute, and if it is, the court should invalidate the whole act. See id. at 29, 45.

In contrast, HHS argues that if a provision is invalidated, the Court should sever those unconstitutional provisions and retain those provisions that can function independently and promote Congress’ main goal in creating the Health Care Act. See Brief for Respondents at 27. HHS argues that the court must decide severability by engaging in statutory construction rather than trying to predict how the political process might have played out if Congress had attempted to pass the act without the unconstitutional provision. See id. at 41. HHS contends that the States and NFIB have the burden of showing that it is “evident” that Congress would have wanted the other provisions to fall if the minimum coverage provision was unconstitutional—HHS argues there is a presumption that the Act is severable unless petitioners can show otherwise. See id. at 28, 31–32. HHS argues that the States and NFIB have not met this burden. See id.at 27. HHS contends that the minimum coverage provision is not scheduled to come into effect until 2014, but a number of other provisions in the Act are already functioning, indicating that Congress intended the provisions to operate independently. See id. at 29.

NFIB argues that the Health Care Act cannot function as Congress intended without the minimum coverage provision. See Brief for Private Petitioners at 39–40. NFIB and the States argue that the objective of the Health Care Act was to make health care more affordable, and Congress achieved this goal by structuring the Health Care Act to create a delicate balance of supply and demand for health care. See id. at 36–37, 41; Brief for State Petitioners at 35. NFIB and the States argue that the minimum coverage provision increases the demand for health care, and the guaranteed-issue and community-rating provisions increase the supply by disallowing discriminatory pricing for people who are more likely to need medical treatment. See Brief for State Petitioners at 35; Brief for Private Petitioners at 36–38. The States and NFIB maintain that Congress’s goal can only be effectuated if both supply and demand increase together. See Brief for State Petitioners at 35; Brief for Private Petitioners at 36–37. As a matter of economics, the States and NFIB argue that insurance premiums will only decrease if the other provisions increase supply at the same time as the minimum coverage provision increases demand. See Brief for State Petitioners at 35; Brief for Private Petitioners at 36–37. NFIB further argues that the minimum coverage provision offsets the consequences of all the other provisions of the Act, not just the community-rating and guaranteed-issue provisions. See Brief for Private Petitioners at 41. Choosing to strike down these two provisions rather than any of the other provisions in the Act is a policy choice that the Court should leave to Congress to avoid overstepping its power. See id.

HHS argues that Congress’s real aim in creating the Act was to increase the availability of affordable health care, not merely to balance supply and demand. See Brief for Respondents at 32–33. HHS contends that only the guaranteed-issue and community-rating provisions cannot function without the minimum coverage provision—all the other provisions in the Health Care Act independently advance affordable coverage, and they do not rely on the minimum coverage provision to achieve this goal. See id. at 33–34, 54. As examples, HHS cites that the government has previously expanded Medicaid coverage without a corresponding minimum coverage provision, and employer-responsibility regulations have also previously been proposed without any discussion of a minimum coverage provision. See id. at 34–35. Additionally, HHS argues, the fact that Congress included so many provisions that advance its goal suggest that Congress is committed to keeping as many of those provisions as possible. See id. at 34.

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Conclusion

If the Supreme Court finds the minimum coverage provision unconstitutional, it will determine whether to strike down all or just one or several sections of the Patient Protection and Affordable Care Act. Petitioners argue that because the minimum coverage provision is essential for the functioning of the entire Health Care Act, all the provisions should fall together. In contrast, Respondents argue that, if the Supreme Court holds the minimum coverage provision unconstitutional, it should sever the provision from the Health Care Act and so preserve the provisions which Congress would have enacted regardless of the minimum coverage provision.

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Authors

Prepared by: Meredith Carpenter and Charlotte Davis

Edited by: Kelly Halford  

Additional Sources

• The Examiner: Historic Obamacare Battle at Supreme Court in 2012 (Nov. 2011)
• Grassroot Institute of Hawaii, Cody Hensarling: Severability & Obamacare (Jan. 9, 2012)
• Kenneth A. Klukowski: Severability Doctrine: How Much of a Statute Should Federal Courts Invalidate? (Fall 2011)

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The Legal Information Institute has set up this mini-website to provide straightforward, unbiased legal analysis for journalists, students, teachers, and anyone interested in the legal issues the Supreme Court will address in its review of the health care law.

This site’s content is by the LII Supreme Court Bulletin Editorial Board. For more Supreme Court analysis and timely case decision notification: Subscribe to the LII Bulletin.

Background

On March 23, 2010, President Obama signed a comprehensive health care reform bill into law: the Patient Protection and Affordable Care Act (PPACA). A number of states and organizations challenged the law in federal court.

Those lawsuits made their way through the courts, leading up to the current Supreme Court review of the law. Perhaps signaling the importance of the health care law to this Court, the Supreme Court has set aside an unprecedented three days, March 26-28, to hear arguments on both sides on the issues.

The Issues

Look for the Supreme Court to address the following major issues in its review of the law, and follow the links for deeper legal analysis:

• Issue 1: The Anti-Injunction Act (AIA). Can the Court even hear arguments about the “individual mandate” (below) now, or must it wait until 2014 when the law takes effect? Read our backgrounder on the Anti-Injunction Act and Dept. of HHS v. Florida AIA case preview.
• Issue 2: The Individual Mandate. The most controversial provision in the health care law requires everyone to have health insurance, or else be penalized. Can the government require individuals carry insurance? Read our Individual Mandate Backgrounder, and our Dept. of HHS v. Florida, Minimum Coverage case preview.
• Issue 3: “Penalty” vs. “Tax.” The legality of the individual mandate may hinge on the court’s interpretation of whether the law requires those without insurance to pay a “tax” or a “penalty.” Read our Penalty or Tax Backgrounder.
• Issue 4: The Guaranteed Issue Provision of the Act prevents health insurers from denying coverage based on a person’s health. But if the individual mandate is ruled unconstitutional and the rest of the Act remains in place, this guaranteed issue provision will greatly increase the cost of providing insurance. Can the Court invalidate the mandate and leave intact the rest of the law? Read our Gauranteed Issue Provision Backgrounder and Severability preview.
• Issue 5: Medicaid. The new health care law promises federal funds to states that adopt the law’s Medicaid expansion, and withholds funds from states that do not. Is the way in which the Act approaches Medicaid expansion within Congress’ power? Read our Medicaid Backgrounder and our Florida v. Dept. of HHS case preview.

More Resources on this Site:

The PPACA makes major changes to Medicare. While not specifically at issue for the Supreme Court, we have a Medicare Backgrounder that analyzes the law’s effects on Medicare.

We have also created a glossary of the legal terminology related to the health care reform legal debate.