Supreme Court rules on health care law

June 28, 2012

The Supreme Court decision in National Federation of Independent Business v. Sebelius is available on Westlaw and WestlawNext at 2012 WL 2427810.  From the Court’s synopsis:

In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage. For individuals who are not exempt, and who do not receive health insurance through an employer or government program, the means of satisfying the requirement is to purchase insurance from a private company. Beginning in 2014, those who do not comply with the mandate must make a “[s]hared responsibility payment” to the Federal Government. The Act provides that this “penalty” will be paid to the Internal Revenue Service with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties.

 Another key provision of the Act is the Medicaid expansion. The current Medicaid program offers federal funding to States to assist pregnant women, children, needy families, the blind, the elderly, and the disabled in obtaining medical care. The Affordable Care Act expands the scope of the Medicaid program and increases the number of individuals the States must cover. For example, the Act requires state programs to provide Medicaid coverage by 2014 to adults with incomes up to 133 percent of the federal poverty level, whereas many States now cover adults with children only if their income is considerably lower, and do not cover childless adults at all. The Act increases federal funding to cover the States’ costs in expanding Medicaid coverage. But if a State does not comply with the Act’s new coverage requirements, it may lose not only the federal funding for those requirements, but all of its federal Medicaid funds.

 Twenty-six States, several individuals, and the National Federation of Independent Business brought suit in Federal District Court, challenging the constitutionality of the individual mandate and the Medicaid expansion. The Court of Appeals for the Eleventh Circuit upheld the Medicaid expansion as a valid exercise of Congress’s spending power, but concluded that Congress lacked authority to enact the individual mandate. Finding the mandate severable from the Act’s other provisions, the Eleventh Circuit left the rest of the Act intact.

The Supreme Court affirmed in part and reversed in part. The Court announced the following holdings:

  1. Justice Roberts, in Part II, concluded that the Anti-Injunction Act did not bar the suit.
  2. Justice Roberts, in Part III-A, concluded that the individual mandate is not a valid exercise of Congress’s power under the Commerce Clause and the Necessary and Proper Clause.
  3. Justice Roberts, in Part III-B, concluded that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable.
  4. Justice Roberts, in Part III-C, concluded that the individual mandate may be upheld as within Congress’s power under the Taxing Clause.
  5. Justice Roberts, joined by Justices Breyer and Kagan, in Part IV, concluded that the Medicaid expansion violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.
  6. Justice Ginsburg, joined by Justice Sotomayor, is of the view that the Spending Clause does not preclude the Secretary from withholding Medicaid funds based on a State’s refusal to comply with the expanded Medicaid program. But given the majority view, she agrees with Justice Roberts’ conclusion in Part IV–B that the Medicaid Act’s severability clause determines the appropriate remedy. Because Justice Roberts finds the withholding—not the granting—of federal funds incompatible with the Spending Clause, Congress’ extension of Medicaid remains available to any State that affirms its willingness to participate. Even absent the Act’s command, the Court would have no warrant to invalidate the funding offered by the Medicaid expansion, and surely no basis to tear down the Act in its entirety. When a court confronts an unconstitutional statute, its endeavor must be to conserve, not destroy, the legislation.

 Justice Roberts (joined by Justices Ginsburg, Breyer, Sotomayor and Kagan) wrote the opinion of the Court with respects to Parts I, II and III-C. Justice Roberts (joined by Justices Breyer and Kagan) wrote the opinion with respect to Part IV. He wrote for himself in Parts III-A, III-B and III-D. Justice Ginsburg (joined by Justice Sotomayor in full and by Justices Breyer and Kagan as to Parts I, II, III and IV) concurred in the judgment in part and dissented in part. Justices Scalia, Kennedy, Thomas and Alito filed a dissenting opinion. Justice Thomas filed a dissenting opinion.