Supreme Court Justices Zero In on Key Provision of Health-Care Law

'Individual mandate' requires most adults to have health insurance or pay a penalty

The individual mandate -- the portion of the Affordable Care Act that requires Americans to purchase health insurance or pay a penalty -- appeared threatened during U.S. Supreme Court arguments made on Tuesday.

Four conservative justices appeared opposed to the provision, with several questioning whether the individual mandate falls under the federal government's constitutional powers. Four liberal justices seemed to come out in its favor.

Justice Anthony M. Kennedy, considered a swing vote, also seemed critical of the mandate. He suggested that the health-care law assigns the federal government regulatory powers over interstate commerce that exceed those previously supported by the court, the Washington Post reported.

"Can you create commerce in order to regulate it?" he asked.

Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito, both considered conservatives, compared forcing Americans to buy health insurance to compelling them to purchase commodities such as cellphones or burial services, respectively.

And conservative Justice Antonin Scalia, who had previously supported broad federal regulatory power, appeared more skeptical in Tuesday's arguments.

Representing the Obama administration as it defends the health-care law, Solicitor General Donald Verrilli Jr. argued that the health-care market is unique in that people who don't save or pay for their care still receive it and that uninsured people account for billions of dollars in health-care costs passed on to insured families each year.

But Scalia worried that the "unique" market notion is too fluid, and the federal government could come up with reasons why any number of industries might fall into that category.

Justice Ruth Bader Ginsburg, considered more liberal, said that "the people who don't participate in this [health insurance] market are making it much more expensive for those that do," according to the Post.

On Wednesday, the court will consider whether the Affordable Care Act as a whole can stand without the individual mandate, should that part of the law be ruled unconstitutional.

Opponents of the controversial 2010 law contend that Congress exceeded its authority with the individual mandate.

The law's supporters argue that without the requirement that people have insurance coverage while they're healthy, there won't be enough money in the risk pool to pay to take care of them when the need for health care eventually -- and inevitably -- arises.

The individual mandate -- scheduled to take effect in January 2014 -- is the pivotal piece of the law.

The Affordable Care Act -- the most ambitious government health-care initiative since the Medicare and Medicaid programs of the 1960s, and the legislative landmark of President Barack Obama's presidency -- is the first federal effort to rein in health-care costs. It aims to extend insurance coverage to more than 30 million Americans through an expansion of Medicaid and the provision that people buy health insurance starting in 2014 or face a penalty.

"The requirement that people purchase insurance is the key to having health insurance be there for everyone when they need it," said John Rother, president of the National Coalition on Health Care, which works to achieve reform of the U.S. health-care system.

Opponents call the mandate a stunning government intrusion into the private lives of Americans and argue that Congress has no right to tell an individual to buy a certain product.

The Supreme Court will also hear arguments this week on whether the law is unconstitutional for requiring states to either comply with an expansion of Medicaid to cover more lower-income people without health insurance, or lose federal matching funding. At issue is the concept of "federalism," the division of powers between the federal and state governments.

Finally, the court will address "severability" -- that is, whether the individual mandate can be struck down while leaving the rest of the law intact.

"There are 50 million people in this country who don't have health insurance. The Affordable Care Act will probably extend coverage to an estimated 30 to 32 million of those people," said Renee Landers, a professor at Suffolk University Law School in Boston.

In a recent New England Journal of Medicine commentary, Landers described arguments for and against severability.

Opponents have said that provisions of the legislation are too intertwined for the law to stand without the individual mandate. The Obama administration has said the law can still work without the mandate, but provisions such as prohibiting insurance companies from denying coverage to people with preexisting conditions would be greatly compromised without the mandate.

On Monday, the Supreme Court's nine justices began an unprecedented three days of legal arguments with a 90-minute discussion of whether the high court has the right to hear the case at this time. At issue: whether the court can consider tax challenges before they take effect. Some, including a federal appeals court in Richmond, Va., have contended that the provision in the health-reform law that people pay a penalty if they don't have insurance is, in reality, a tax.

But the justices' questions Monday morning suggested that they did not think the insurance penalty was tantamount to a tax. An obscure 1867 law prohibits legal challenges to a tax until it has been collected. The penalty for not having health insurance wouldn't take effect until 2014, the Post reported.

Budget office sees savings; opponents skeptical

Here's how the health-reform law is designed to provide health insurance to uninsured Americans:

·         Individual mandate. It requires most adults to purchase health insurance or pay a penalty. By 2016, the phased-in penalty will reach either $695 or 2.5 percent of yearly taxable income, whichever is greater. People with incomes below tax-filing thresholds will be exempt from the provision. Up to 16 million people are projected to join the rolls of the insured under the mandate.

·         Medicaid expansion. This would increase eligibility to all people under age 65 with annual incomes up to 133 percent of the federal poverty level -- about $14,850 for a single adult and $30,650 for a family of four in 2012. Non-disabled adults under 65 without dependent children were previously ineligible. Another 16 million people are estimated to gain insurance under the expansion.

·         State-run insurance exchanges. They will be created to help small businesses and individuals purchase insurance through a more organized and competitive market.

In February 2011, the Congressional Budget Office estimated that savings from the Affordable Care Act would cut the federal deficit by $210 billion during the next decade.

But opponents say that the cost-cutting provisions probably won't work.

Devon Herrick, a health economist at the free-market National Center for Policy Analysis, said the law sets up a "slippery slope" that will increase costs, not lower them.

"If Congress and company have the legal authority to decide the minimum coverage you must have, all manner of lobbyists and special interests and providers for specific diseases will descend on Washington and state capitals, as they always have, to make sure that their respective services are covered by that mandate," Herrick said.

The law's supporters argue that without the requirement that people have insurance coverage while they're healthy, there won't be enough money to pay for the nation's health insurance needs.

"If people don't feel like paying, then get sick and go to the emergency room or the hospital, those people's costs will be added on to our insurance bills as they are today, which makes it much more expensive," Rother said.

Lower courts, different interpretations

The trail of legal challenges leading up to the Supreme Court has involved more than two dozen lawsuits and appeals.

Last June, the Cincinnati-based 6th Circuit Court of Appeals ruled that the individual mandate was valid because of the Constitution's Commerce Clause, which allows Congress to regulate commerce that takes place among states.

In August, a district judge in Florida ruled that the individual mandate was unconstitutional. However, the 11th Circuit Court of Appeals, which reviewed his decision, rejected that argument and found that the Affordable Care Act could stand even if the individual mandate provision were removed, Landers said.

Then in November, the U.S. Court of Appeals for the District of Columbia also upheld the individual mandate based on the Commerce Clause.

The U.S. Supreme Court chose to review the Florida case, which now includes 25 other states as plaintiffs, along with the National Federation of Independent Business.

The law has been controversial since it was passed by Congress and signed by Obama in March 2010. Poll after poll has found that Americans don't like the individual mandate. But a recent Harris Interactive/HealthDay poll revealed that people are starting to warm up to certain key provisions of the law -- such as the ban on insurance companies turning away applicants with preexisting health problems.

Some popular provisions -- including allowing children to stay on their parents' health plans until age 26 -- are already in place.

Other provisions meant to help older Americans began in 2011, with changes to continue through 2020.

Medicaid expansion a vital component of the law

States must comply with the Medicaid expansion no later than 2014. But some worry that a big influx of new enrollees could strain medical specialties such as obstetrics/gynecology, pediatrics and family practice.

Dr. Peter Carmel, president of the American Medical Association, called the expansion "an important step in the right direction," even though many "physicians are currently unable to accept Medicaid patients due to low reimbursement rates."

Added Dr. Glen Stream, president of the American Academy of Family Physicians: "For the time being, [the new law] seems like the best option to get everyone covered with health insurance. Otherwise, people are carved out from good primary-care services, good preventive care and wellness services, and care of their chronic illnesses until sometimes it's too late."

The Supreme Court ruling is expected in June. The court could go one of several ways:

·         It could rule the individual mandate is unconstitutional and the entire law invalid.

·         It could rule the mandate is constitutional and the entire law can stand.

·         It could reach a middle ground: that the individual mandate is unconstitutional but the rest of the law can stand.

·         It could decline to rule on the case and the health reforms would proceed.

Whatever the court decides, it will provide plenty of fodder for the 2012 elections. And even if the Affordable Care Act survives the legal challenge, Landers said, "with upcoming elections -- a new Congress -- it doesn't mean that everything is set for all time."