What Happens Now?

Edition: June 2012 - Vol 20 Number 06
Article#: 3993
Author: Mark Seitz

Editor’s Note: After the U.S. Supreme Court heard arguments about the healthcare reform law in March, Repertoire asked Mark Seitz, president and CEO of National Distribution & Contracting, to give his assessment of those arguments and his predictions of what the Court will decide. Why? Because Seitz not only knows healthcare distribution, he knows law, too.

Seitz practiced law for almost 21 years, much of it with a large regional law firm. He is admitted to practice in both Tennessee and Delaware. Prior to private practice, he clerked for the Superior Court in Delaware and has served as an Assistant Attorney General for the State of Tennessee. He is the son of a federal judge, and his sister, Virginia Seitz-McLeese, clerked for Justice William Brennan on the United States Supreme Court.


In the first few days of the last week of March, most of the country was captivated by the public drama playing out both inside and outside of the building in our nation’s capital that is home to the United States Supreme Court. Inside the building, the highest court in the land heard highly contentious oral arguments on four distinct legal challenges that have been made contesting the validity of the federal law known as The Patient Protection and Affordable Care Act, but just as often referred to as “Obamacare.” As the lawyers and judges inside the court room debated the legal challenges to the legislation, proponents and opponents of the legislation, divided mostly along political lines, delivered their own passionate arguments in favor or against the legislation on the steps outside of the Supreme Court building.

Now it is June, and the dust stirred during the last few days in March has settled and the protestors have long since retreated. It is now, in the quiet chambers of some of the most powerful people on earth, that the fate of the healthcare reform law will be determined.

There is no doubt that the Supreme Court recognized that this case represents a pivotal moment in United States history. The Court heard six hours of oral argument over three days, the longest allotment of time for oral argument in the modern history of the U.S. Supreme Court. The oral argument delivered to the Court detailed both legal challenges to the constitutionality of the law as well as a procedural matter. The Act is, as a matter of law, capable of being challenged prior to the actual implementation of many of its provisions.

The Anti-Injunction Act

In their decision, and in the first instance, the justices will be forced to decide whether The Anti-Injunction Act prohibits the states and other parties from challenging the individual mandate prior to its implementation. The Anti-Injunction Act was enacted to prevent legal challenges to tax laws until the tax under attack had actually been paid. If the Court were to decide that the individual mandate is tantamount to a tax and thus the Anti-Injunction Act applies, the Court would be precluded from considering the constitutionality of the individual mandate as well as the question of severability. Most legal scholars believe that the Court will decide the Anti-Injunction Act does not apply, and the Court will then proceed to rule on the constitutional challenges to the law.

The expansion of Medicaid coverage

Another of the constitutional challenges before the Court is brought by 26 states through their attorneys general. A provision of the Affordable Care Act mandates that states expand Medicaid to cover any of their residents with incomes of less than 133 percent of the poverty level. Much of the increased expense of this expanded coverage would be borne by the states. Although state participation in Medicaid is “voluntary,” as a practical matter, no state is in a position to decline the federal funding it receives as a result of its participation in the program. Consequently, the states have argued that the federal government’s threat to withhold funding unless the states expand eligibility for Medicaid coverage is coercive and violates the principles of federalization. What sounds like a straightforward challenge to a specific federal/state program is actually a fundamental constitutional law issue. In a system of government where all powers not given to the federal government are expressly reserved to the states, the question is, has the federal government violated principles of federalism by dictating to the states the details of a state program designed to provide healthcare benefits to state citizens?

The minimum coverage mandate

The provision that has so far garnered the most publicity is the “individual mandate.” This provision of healthcare reform imposes the requirement that most individuals purchase health insurance or pay a fine. The constitutional challenge to the individual mandate is grounded in the commerce clause of the United States Constitution. In layman’s terms, the challenge asks, in essence, the following: Can our federal government compel every individual to purchase health insurance from government-approved private insurance companies? If the answer to this question is “yes it can,” the question that necessarily follows is this: Are there any limits to the products or services the federal government can compel us to purchase?

If the mandate fails, then what?

The last of the arguments before the Court is perhaps the easiest to understand. If the individual mandate is found unconstitutional, does the entire Act fail, or can the individual mandate be stricken from the law and the rest of the Act be allowed to stand? The legal test on this issue, if it is reached, will require the Court to try to discern if Congress would have passed the legislation without the individual mandate; and whether the law can operate as Congress intended without the individual mandate. If the Supreme Court determines that the requirement that most individuals be forced to purchase insurance was viewed by Congress as essential to successfully raising the money necessary to fund the expanded coverage mandated by the Act, then the court would be compelled to strike down all of the legislation if it finds that the individual mandate is unconstitutional.

What’s next?

On March 30, the Friday following the three days of oral argument, both the court room and the outside steps of the Supreme Court building were quiet. Inside the building, however, the path toward a decision that will be a watershed event for the country had likely been chosen. If their behavior was true to form, on the Friday following oral arguments, the justices of the Supreme Court met alone in a conference room and voted their decision in the case. They cast their votes in order of seniority. After the votes are cast in writing, assignments were given to the specific justices that would author the majority and dissenting opinions. Votes can change as draft opinions are circulated, but only infrequently. A public decision and opinion of the Court is expected by June 30.

Predictions

I am by no means a constitutional scholar, and my predictions as to how the Court will vote are little better than pure speculation. Nonetheless, here they are:

• The Court will rule that the Anti-Injunction Act does not apply and that the constitutional challenges to the Act are ripe for decision.

• The Court will rule (6-3) that the individual mandate is unconstitutional, but that the rest of the Act can survive despite the ruling on the individual mandate.

• The Court will rule that because of the voluntary nature of the states’ participation in the Medicaid program, the federal government can choose to mandate expanded coverage as a condition to participation in the program.

As noted, I have little confidence in the predictive value of my opinions, but I am confident that if the Court elects to take any action other than uphold the Act in its entirety, the cascade of confusion that will follow will last for months, if not years.

After the Court’s decision is announced, the private deliberations of the U.S. Supreme Court will once again yield to the very public and extremely political process of drafting legislative changes to the Act. In this the year of a presidential election, it is unlikely that any disturbance to the Act caused by the Supreme Court’s decision will be successfully addressed until the middle of next year. I hope we are comfortable operating in the current environment of uncertainty, because it is likely to continue.