What's at Stake?
In less than two weeks, the Supreme Court will hand down its decision on the constitutionality of the Patient Protection and Affordable Care Act. Signed into law in 2010 by President Obama, it's a cornerstone of his presidency -- in his words, the "most important piece of social legislation since the Social Security Act passed in the 1930s and the most important reform of our health care system since Medicare passed in the 1960s."
The justices have read hundreds of pages of briefs concerning the law, and they gathered at the end of March to hear more than six hours of oral arguments -- a modern-day record.
The case pitted Donald B. Verrilli Jr., the solicitor general of the Obama administration, against Paul D. Clement, representing 26 states that believe the signature legislative achievement of the Obama administration should be struck down.
Clement argued that Congress exceeded its authority in passing key provisions of the law and that the claim of federal power is both "unprecedented and unbounded."
The first issue with which the court will deal is whether a federal tax law, the Anti-Injunction Act (AIA), precludes the court from hearing a challenge to a key provision of the law until the provision actually goes into effect. The justices seemed to indicate at oral arguments that they thought the AIA does not apply and that they would move to the merits of the case.
Core Issue: The Individual Mandate
The government argument is that health care reform was passed, in part, because nearly 50 million individuals lacked health insurance in 2009. Costs of the uninsured were spiraling out of control and shifting to other market players: doctors, insurance companies and the insured. Individuals with pre-existing conditions were being denied coverage.
The government said the individual mandate is constitutional under the Commerce Clause and the Necessary and Proper Clause. Verrilli told the justices that the mandate is "a necessary component of a broader scheme of interstate economic regulation" and "the provision itself regulates economic conduct with a substantial effect on interstate commerce." Bottom line: Congress has the authority to regulate interstate commerce and the mandate is a means of accomplishing Congress' goal of comprehensive overhaul of the insurance market.
As a secondary argument, the government said the mandate is constitutional under Congress' tax power. While the penalty associated with the mandate is not generally referred to as a "tax," the government contended its practical operation is as a tax law. The government said it is integrated into the tax system, will raise substantial revenue and trigger only tax consequences for non-compliance.
The challengers are 26 states, the National Federation of Independent Business and two individuals. They argued that while Congress can largely regulate interstate commerce, it cannot force someone into a marketplace and require him or her to buy a product. They said the individual mandate rests on an "unbounded assertion of power."
Clement rejected the government's argument that the law falls under Congress' taxing power. He said that Congress knew that the public would not support a general tax increase, so it came up with the mandate instead. He said the penalty provision associated with the mandate is neither labeled nor structured as a tax.
What Happens to the Rest of the Law if the Mandate Is Struck Down?
The actual law is 975 pages long. It includes provisions that have little to nothing to do with the individual mandate, such as a section regarding black-lung disease and another pertaining to the promotion of nurses and doctors to serve in underserved areas.
Government arguments: The government conceded that if the mandate is struck down, two popular provisions that are linked to the mandate must also fall. One is called the "guaranteed issue" that requires health insurance companies to offer and renew coverage even if an individual has a pre-existing condition. The other is the "community rating" provision that is meant to set premiums at the same price for everyone based on average costs of providing health care.
Challengers: They argued that the mandate is the central provision of the law and, if it is struck down, the entire law should fall.
The court will also consider the lower court decision that struck down the mandate but allowed the rest of the law to remain standing.
Covering the Uninsured With Medicaid Expansion
Beginning in 2014, under the Affordable Care Act, states will be asked to cover all individuals younger than 65 with incomes up to 133 percent of the poverty level. Although the federal government will initially fund 100 percent of the expansion, states will be responsible for 5 percent of those costs by 2017, with that number increasing to 10 percent by the end of the decade.
Government arguments: Congress' spending power includes the power to fix the terms in which it will disburse funds to the states. Under the Affordable Care Act, the government said, initially, it will bear nearly the entire cost of medical assistance for individuals made newly eligible and that the states' spending will be offset by other savings the states will achieve as a result of the ACA changes. If a state is unhappy with the conditions placed on the funds, it is free to opt out of receiving them.
Challengers: Paul Clement said that, unlike past expansions of Medicaid, the law's provision creates a "dramatic transformation" of the federal-state partnership. He said the law "coerces" states into participation. His central argument is that because Congress made the new terms a condition of continued participation in Medicaid, no state could reasonably expect to withdraw. He said the sheer size of the expansion -- which he estimates will cost states about $20 billion by 2019 -- and the link to the individual mandate means the states have no practical ability to turn down the money.
While no lower court has struck down the law's Medicaid expansion, if the Supreme Court were to do so, the ruling could potentially affect other state-federal programs dealing with issues from highway funding to education.
Unlike the other branches of government, the Supreme Court deliberates behind closed doors and leaks are almost unprecedented. The court is expected to release its decision on the case during the last week of the term, which begins June 25, a date that falls less than five months before the next presidential election.