Supreme Court Upholds Entire Affordable Care Act

| June 28, 2012

June 28, 2012 — The Supreme Court today declared that the Affordable Care Act (ACA) — the most significant healthcare legislation since the creation of Medicare — is also a constitutional act.

The ruling comes as a shock to many observers, who predicted the court would strike down the individual mandate to obtain insurance coverage, if not the entire law, after its 5-member conservative wing voiced misgivings about the controversial provision during oral arguments in March. The court decision also represents an early Christmas present for President Barack Obama, who seeks reelection this fall against a Republican opponent committed to rolling back "Obamacare."

The individual mandate was at the core of a lawsuit filed against the ACA by officials from 26 states, all but 1 of whom were Republican, as well as a business association. Similar to their Republican allies in Congress, the plaintiffs claimed that the mandate violated the Constitution's Commerce clause, which empowers Congress to regulate interstate commerce. They argued that although healthcare is a form of interstate commerce, Congress cannot compel "inactive" individuals to engage in commerce; that is, to buy or sell something. To allow the mandate to stand, they said, would open the door to further encroachments on personal liberty.

federal district court in Florida and a federal appeals court in Georgia sided with the plaintiffs and invalidated the individual mandate. However, the Supreme Court had other precedents to follow.

The majority of lower federal courts that ruled on similar challenges to the ACA gave the mandate a clean bill of health, agreeing with the Obama administration's argument that contrary to the law's critics, individuals foregoing insurance coverage actively participate in the healthcare marketplace because they will eventually require medical attention. Their decision not to get coverage is bad for everyone else because the cost of their free or subsidized care is passed on to others in the form of higher provider costs and higher premiums, according to the administration. In addition, the decision by healthy Americans to go uninsured leaves the existing risk pool of insured Americans smaller and sicker, driving up premiums even more.

The mandate helps cure all these problems, the administration contended, by forcing "free riders" to finance their healthcare now as opposed to later, if at all.

During the oral arguments in March, several conservative Supreme Court justices did not appear to buy into the administration's point of view.

"Here the government is saying that the federal government has a duty to tell the individual citizen that it must act," said Justice Anthony Kennedy, "and that is different from what we have in previous cases, and that changes the relationship of the federal government to the individual in a very fundamental way."

By finally affirming the individual mandate in its written opinion, the Supreme Court today held to a broad interpretation of the Constitution's Commerce clause that has held sway during the last 70 years. That position is remarkable because, in a number of rulings since 1995, the court has narrowed its interpretation of what Congress can and cannot do in the name of regulating interstate commerce. In the ACA decision, the court is honoring past precedents, as opposed to further rocking the boat.

The court's ruling on the ACA addressed more than the mandate. The justices also upheld the constitutionality of the law's dramatic expansion of the Medicaid program, which the plaintiffs had portrayed as a usurpation of states' rights. The court also declared that a penalty levied on individuals who fail to obtain health insurance coverage beginning in 2014 does not bar consideration of the case beforehand. At issue was a law called the Anti-Injunction Act (AIA), which prohibits anyone from challenging a tax in court until it has been paid. A federal district judge in Richmond, Virginia, last year ruled that the ACA penalty amounted to a tax, and thus triggered the AIA.

 


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