Health Care Reform is still Appealing

One of the cornerstones of the fledgling Affordable Care Act is the “minimum coverage requirement,” where American individuals must demonstrate that they have current health coverage or pay a financial penalty for such irresponsible behavior.  The backlash for this impending arrangement has been considerable and illuminates the boundaries designed to establish and preserve government power as set forth in the Constitution.  For example, the reaction has led to:

• considerable lobbying in pursuit of exemptions for select groups (e.g., unions) and individuals
• lawsuits filed against:

-                      the anti-constitutionality of the idea based on Congress overstepping its bounds in terms of Interstate Commerce Law, that is, whether the minimum coverage requirement is a constitutional exercise of Congress’ commerce power and

-                      courts' ability to enjoin in the collection of tax under the Anti-Injunction Act (i.e., enjoining the imposition of the ACA penalty for failing to purchase health insurance), and

• a groundswell of Republican, Conservative, and Libertarian resistance and propaganda designed to delegitimize the entire ACA on the basis of the minimum requirement provision (e.g., shape media content by focusing so much on this one provision of a huge Act that by default the minimum requirement provision and the ACA die as one [instead of the minimum coverage requirement being considered only one part of a substantial, overhauling Act]).

On the constitutionality lawsuit front, after three wins and two defeats at the District Court level, the 6th Circuit Federal Court of Appeals held that Congress has the power under the Constitution to adopt the minimum coverage requirement of the Affordable Care Act.  This decision, the first by an Appellate level court, was handed down on June 29, 2011.

But forget about the power.  The question is, will Congress have the stomach for it at this point (see bullet #3 above)?  Since the 11th and 4th Circuit Courts will hand down decisions of their own later this summer, Congress has the luxury of a little time to get its stomach in order.  In addition, we should expect to hear from the final digester, the Supreme Court, sometime in 2012.  As far as how the Supreme Court will ultimately rule on this, it is difficult to predict.  Since the ‘40s, the Supreme Court has interpreted the Commerce Clause very broadly to permit the regulation of economic activity that affects interstate commerce.  In two cases in 1995 and 2000, however, the Court held that Congress exceeded its authority by regulating non-economic activity insufficiently related to interstate commerce.  On the other hand, in 2005, the Court returned to a broad/permissible interpretation of the Commerce Clause.  So purely from the perspective of case law, the legal question is, ‘where does this regulated conduct (i.e., minimum coverage requirement) sit on the spectrum?’  Or more importantly, what kind of impact will bullet #3 have on the impending Supreme Court ruling?

The June 29, 2011 6th Circuit Court decision was based on three opinions -- two upholds and one strike-down.  One of the uphold opinions (Sutton) was issued by a Republican (appointed by George W. Bush), which is a first, since prior judicial decisions on this matter have toed party lines.  Since Judge Sutton wrote a brief challenging Congressional authority in one of the two cases in recent memory in which the Supreme Court has held that Congress had exceeded its authority under the Commerce Clause, his support for the constitutionality of the law stands out.

The upholders claim that the minimum coverage requirement is regulation of “the activity of participating in the national market for health care delivery, and specifically the activity of self-insurance.”  Heretofore, minimum coverage opponents have argued that the provision regulates inactivity -- nonparticipation in the market for insurance.  But Judge Martin, one of the two judges that upheld the provision (Judge Sutton the other) concluded that what is involved is not inactivity, but instead a particular kind of activity -- self-insurance.  Judge Martin contends that the minimum coverage requirement is constitutional because Congress rationally concluded that self-insurance has substantial effects on interstate commerce, and that the provision was essential to Congress’ “larger economic scheme of reforming the interstate market in health care and health insurance.” In 2008, $43 billion dollars worth of care was passed on by those who chose to self-insure to others.  Thus self-insuring has a substantial impact on interstate commerce.

Unfortunately, these arguments are painfully thin, particularly when thick ones are needed for such unprecedented territory.  For example, the self-insured monetary cost ($43 billion) is not merely a function of self-insured vs. 3^rd party-insured.  It is also about millions of illegal immigrants using US medical care, plus a lot of bonafide Americans who have suffered through a horrible economy and are having trouble paying all their bills, not just medical.  Further, many self-insured individuals pay their medical bills in full, using the money they saved in ridiculous monthly premiums.

But enough of this, the real question is what the Supreme Court will end up doing because it appears it will come down to their decision.  Should they uphold the minimum coverage requirement, it is rather troubling to think about how much the self-insurance penalties will be, and how much they’ll continue to go up as politically-connected patrons continue to buy their way out through exemptions.  The less penalty payers, the higher the penalties, one would assume.

As this debate heats up, there is no telling what kind of thin and thick arguments will be presented on both sides, and how financial information will be interpreted in the most creative ways imaginable.  This should get very interesting -- stay tuned as tPF continues to monitor and report on this epic power struggle.