Entries in Anti-Injunction Act (2)


Day One--Obamacare in SCOTUS

Seems the consensus from the experts who attended the Supreme Court's hearings today on the Anti-Injunction Act issue are that the Justices pretty unanimously expressed skepticism that the penalty was actually a tax. If true, it means the substantive issues can be decided. Neither side argued in favor of it being a "tax", so the Court retained its own counsel to ensure it had all the issues before it. Clearly, the Court is very conscious of its role in history on this case. 


You can review a full transcript of the day's hearing's here...DAY ONE TRANSCRIPT, 3-26-12


Obamacare and the Supreme Court--An Overview

Next week, we’re going to be sideline observers to a monumental event, oral arguments in the U.S. Supreme Court on major provisions of the Affordable Care Act (“Obamacare”). It is, of course, sending a shiver down the spine of lawyers and pundits. But the issues are fairly complex for the average layman, all intertwined constitutional and jurisdictional issues with one issue leaning upon another in a crazy Rube Goldberg concoction. When the decision is issued in June its ramifications will be felt for decades, perhaps generations, and will define the relationship between the federal and State governments like never before. This is important. This is historic. We wanted to piece together a simple overview of the case and a snapshot of the process.


Basically, oral arguments happen. In brief, on one side is the federal government. On the other side are 26 States and private litigants. Arguments will run 1-1/2 hours on Monday, 2 hours Tuesday and 2-1/2 hours Wednesday. Different issues are argued at each session. That is an extraordinary amount of time, and indicates the Supreme Court’s recognition of both the complexity and the importance of this case. The hearings will not be broadcast live but can be heard afterward (most likely 2PM on Monday and Tuesday, 4PM Wednesday) on the Supreme Court’s website, or on C-SPAN or NPR.


Topic: the Anti-Injunction Act (“AIA”)

Background: This is the threshold issue. Before deciding the substantive matters the Court needs to decide whether it actually has jurisdiction to hear the cases at this time.

AIA is a piece of the internal Revenue Code that won’t allow a lawsuit on a tax matter until the tax has actually been paid. Since no taxes can happen until 2015 (the tax year after Obamacare’s effective in 2014), the Court could decide it can’t hear the cases until then. But first the Court needs to decide if the penalties for not having insurance coverage is really a tax or not. If it is, then the Court will likely hold it can’t decide the case now. If it is a penalty, however, the case would proceed to the constitutional matters.

The interesting thing is that none of the parties have argued that AIA applies. Consequently, the Court appointed outside counsel to argue that position.


Topic: The Mandate

Background: Now we move into the heart of the issue, whether the requirement that all individuals must have health insurance is constitutional. Beginning in 2014 Obamacare requires that virtually all persons (a few exceptions, like prisoners) have a minimum level of health insurance coverage, That can come through Medicaid, Medicare, an employer plan or other approved sources. If you don’t have coverage through one of those you will pay a penalty based on a percentage of income. The argument is that the mandate exceeds Congress’ authority under 3 constitutional provisions: its power to tax, the Commerce Clause and the Necessary and Proper Clause.

Taxing power: The federal government argues the penalty is really a tax which falls within its authority to impose. The other side contends it’s a civil, regulatory penalty and not within Congress’ power. 

Commerce Clause: This is a critical issue with major implications. An excellent 2009 piece by The Heritage Foundation offers a crisp description of the potential problem with the mandate:

because (the individual mandate) commands all individuals to enter into a contractual relationship with a private insurance company, (it) takes congressional power and control to a striking new level. Its defenders have struggled to justify the mandate by analogizing it to existing federal laws and court decisions, but their efforts do not withstand serious scrutiny. An individual mandate to enter into a contract with or buy a particular product from a private party, with tax penalties to enforce it, is unprecedented-- not just in scope but in kind--and unconstitutional as a matter of first principles and under any reasonable reading of judicial precedents. 

Section 8, Article I of our constitution gives congress the right to regulate commerce among the states. The plaintiffs argue that this is an effort to force individuals into commerce so their activity can be regulated; it will essentially give Congress unfettered power under the Commerce Clause. The federal government counters that voters control Congress’ use of that power not the courts. The federal government also contends that Congress has a right to regulate otherwise unregulated costs (i.e., those from uninsured persons) which impact all insured individuals, insurers and others and substantially burden interstate commerce.

Necessary and Proper Clause: Article I provides that Congress can enact any laws which are “necessary and proper” to its use of the federal government’s constitutionally granted enumerated powers. The federal government argues that the mandate is such a necessary and proper use of its powers under the Commerce Clause. The States say that since the government’s use of the Commerce Clause is invalid so is its reliance upon the Necessary and Proper Clause. 


Topic: Severability

Background: Let us assume the Court finds that the mandate violates the constitution and can not, therefore, be implemented; this would the impact other aspects of Obamacare. (Most commentators would say that without the mandate the entire effort fails.) But the question for the Court is whether the rest of the law can be separated from the mandate and proceed; this is the severability issue.

This generally depends upon Congress’ intent, whether it intended each portion of the bill to stand or fall on its own so that even if one aspect were invalidated by judicial or other action the balance of the law would remain intact. Frequently, laws will have a specific “severability clause” to ensure each section stands on its own. Obamacare does NOT have such a clause so the Court will look to intent. (An earlier version did, in fact, have a severability clause and it was removed; the Court may see that as evidence of Congress’ intent to not encompass severability.)

Topic: Medicaid Expansion

This is the issue the States have sued on. Article I of our constitution states that Congress has authority to "…provide for the…general welfare”. The States are arguing that the massive expansion of Medicaid—the cost of which is borne by both the federal and State governments—is outside the acceptable spending powers of Congress under this “Spending Clause”. They argue that Congress could not compel the States to participate in Medicaid (although all voluntarily do now) under its general, enumerated constitutional powers so that use of its spending powers is too broad.

In fact, the States contend that Medicaid is so critically important that the mandatory expansion of that coverage (from a limited group to ALL persons under age 65 and with income under $14,856 for an individual) would be coercive. That is, they argue that the federal government is stepping outside its enumerated authority to force the States to comply through its use of the purse.

The federal government counters that it can put conditions on the receipt of federal money. It also notes that the Court has never restricted its use of the spending clause as coercive. However, there has never been an effort of this magnitude and the Court may look to challenge this as to scope.

Watch for the analysis offered by some of the good Court watchers out there. Frequently the questions, tone and even body language of the judges can give experienced observers clues as to the Justice’s leanings. We won’t know, for certain, until sometime in June.

However, this is an historic case, a landmark decision in the making. The opportunity to watch it play it should be pretty interesting.