“Obama-care”: an overview of US health care reform litigation

Recent PILA intern Kelli Gano has written an informative essay on the Affordable Care Act Cases in the United States. The essay gives an overview of the changes in the Act and the subsequent widely publicised litigation regarding the Act’s constitutionality.  Kelli was a William Sampson Fellow from the University of Washington who undertook an externship with PILA in summer 2012.

When the United States Congress passed the Patient Protection and Affordable Care Act (“the Act”) in March 2010, it did so among a maelstrom of contention and controversy. The significant changes proposed by the legislation were heralded by some individuals as a revolutionary step forward in the health care system and by others as a grievous error. The Act, known colloquially in the U.S. as “Obama-care”, was designed to encourage patients to purchase health insurance and made three significant changes to the existing system. First, the Act created an individual mandate which required that all non-exempt individuals purchase and maintain a minimum level of health insurance or face a monetary penalty. Second, the Medicaid system was expanded and the States were obliged to accept the changes or lose all federal funding for the program. Finally, the Act compelled employers to provide health coverage for their employees.

These provisions created considerable commotion in the political arena—while supporters of the Act were thrilled with the changes, its detractors thought that elements like the individual mandate were an unlawful use of government power.  In light of its misgivings the State of Florida, in conjunction with 24 other States, filed suit against the Department of Health and Human Services in United States District Court claiming that the Act was unconstitutional. Florida based this assertion on three grounds: (1) the individual mandate did not fall under Congress’ powers as enumerated under the Commerce Clause; (2) the requirement that States accept the new Medicaid system or lose federal funding was unconstitutionally coercive; and (3) the employer mandate interfered with state sovereignty.

The District Court ruled that the individual mandate was unconstitutional and that as a result the entire Act was invalid because the mandate was not severable. A provision is severable if it can be removed without automatically invalidating the entire statute. The District Court dismissed the challenge to the employer mandate. With regards to Medicaid, the Court found that there was not enough evidence to support the conclusion that the expansions were unconstitutionally coercive. On review, this decision was largely upheld in the U.S. Court of Appeals of the Eleventh Circuit. However, the Eleventh Circuit found that the individual mandate was severable and could be removed but if also reversed the District court holding that the individual mandate could be severed without invalidating the rest of the Act.

In November 2011 the U.S. Supreme Court accepted a petition to hear the Affordable Care Act Cases, a consolidation of several cases challenging the constitutionality of the Act. In a 5-4 decision, the Supreme Court determined that Congress did not have the power to enact the individual mandate under the Commerce Clause but that it did fall within Congress’ enumerated powers under the Taxing and Spending Clause. The Taxing and Spending Clause of the U.S. Constitution provides the legislature with the ability to institute taxes in order to provide for the ‘common Defence and general Welfare of the United States’. The majority opined that the individual mandate was a tax and that it fulfilled a necessary function. The dissent focused on the language of the statute; the Act referred to the payment as a ‘penalty’ rather than a ‘tax’ and the dissent felt that to call it a tax effectively re-wrote the provision.  Because the Supreme Court found that the individual mandate was constitutional there was no need to determine its severability. The final aspect of the decision dealt with the Medicaid expansions. Chief justice John Roberts, writing for the majority, ruled that it was unconstitutionally coercive for the federal government to completely withdraw Medicaid funds from a state that refused to implement the changes to the program. The other modifications to Medicaid were deemed constitutional. 

Although the Supreme Court has made a decision regarding the Affordable Care Acts the debate in the United States is far from over. The Department of Health and Human Services has emerged victorious but it is likely that litigation will persist into the foreseeable future.  The majority of the “Obama-care” provisions will continue to be in effect and this fact will cause considerable turmoil within political and social spheres. With the November 2011 election looming the U.S. can look forward to a pronounced ideological schism and impassioned debate between the two candidates regarding the Act. The election will not bring an end to the discussion but it will help set the tone for the future of health care in the U.S.

Here are some useful links if you’d like to learn more:

The Affordable Care Act Cases Slip Opinions

Supreme Court of the United States - Patient Protection and Affordable Care Act Cases

Oyez Today - The Court and Health Care Reform


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