One Small Judicial Step, One Giant Leap for Mandate?

The legal drama over the 10-month-old federal health law soon moves to a new stage — but the all-important finale may still be a year-and-a-half away.

Legislators continue to wrestle with a key question: Is the law’s individual mandate constitutional? The issue has fueled debates on the Capitol floor and fights in district courts across the nation, with Democratic lawmakers and judges largely favoring the mandate against Republican opposition. However, dueling events last week — a Florida judge’s decision in a multistate lawsuit to void the law followed by the Senate’s vote to uphold it — essentially end this phase of legal and legislative wrangling.

Republicans now will pitch a war of attrition to defund the law, Democrats must decide whether to rework the controversial mandate, and lawyers on both sides ready their appellate cases for later this spring.

Legal Debate Over Constitutionality Rages On

The law’s critics have consistently argued that the Constitution’s Commerce Clause — which allows Congress the ability to regulate economic activity — has been inappropriately invoked to justify the individual mandate. While defenders of the law quickly dismissed the charge, early forecasts that the repeal effort would sputter are looking increasingly rash.

One ex-Supreme Court clerk and current law professor predicted that the courts had a “less than 1% chance” of overturning the mandate; President Reagan’s former solicitor general promised to eat his hat if the law was revoked. Four federal judges have since split on partisan grounds over the mandate’s constitutionality.

Some observers speculate that an eventual Supreme Court decision will fall out along party lines, too. But before the high court likely reviews the case next term — barring an effort by Virginia’s attorney general to rush a hearing — appellate judges will take a crack at the mandate’s constitutionality.

The Florida case is on track to move to the 11th U.S. Circuit Court of Appeals. Meanwhile, two cases out of Virginia federal district courts — one upholding the law, the other striking down the individual mandate — are being appealed to the 4th Circuit Court, with expedited hearings slated for May. The 6th Circuit Court this week agreed to expedite a case backing the mandate, with oral arguments also expected for May or June.

The Supreme Court could opt to pass on the case should the circuit courts all agree, Seth Stern writes in CQ Weekly. However, the law’s weighty and time-sensitive provisions could spur the Supreme Court to take up the first circuit court decision this fall, rather than wait for multiple rulings.

Why Words Matter

Debate over the mandate has focused in part on semantics. Is Congress able to regulate inactivity in addition to activity? Do non-compliers face a tax or a penalty?

According to Laurence Tribe, a professor at Harvard Law School, distinguishing between activity and inactivity is “illusory” with respect to obtaining health insurance. Tribe notes that the “conscious choice” to be a “free ride[r] on the health care system … carries serious economic consequences for the national health care market,” thus warranting regulation and supporting the law’s constitutionality.

In contrast, the American Spectator‘s Philip Klein notes that Congress does not have the ability to “regulate anything … by simply slapping the word ‘tax’ on it and collecting a small amount of revenue.” Forbes’ Avik Roy argues that “if the individual mandate is constitutional, there simply isn’t anything that Congress doesn’t have the power to force you to buy.”

Political Battleground May Force Alternate Approaches

Even if the courts uphold the law, the controversy is prompting some centrist Democrats — like Sens. John Tester (Mont.), Claire McCaskill (Mo.) and Ben Nelson (Neb.) — to explore potential replacements for the mandate ahead of difficult 2012 re-election campaigns. For example, Nelson has requested that the Government Accountability Office and Congressional Budget Office review options like using open and closed enrollment periods to boost coverage.

Other alternatives to the mandate could include:

  • Auto-enrollment: Adding U.S. residents to public insurance programs by default and forcing them to specifically withdraw or choose a different insurance plan.
  • Incentives: Offering bonuses to residents who purchase health insurance during open-enrollment periods. Nelson reportedly favors this model over mandating insurance.
  • Opt-out: Allowing individuals to opt-out of purchasing health coverage. According to a model put forward by Princeton University professor Paul Starr, residents who opt out cannot purchase health insurance via new exchanges, receive subsidies from the government or take advantage of other benefits under the overhaul. Rep. Peter DeFazio (D-Ore.) is among several lawmakers to attach to this idea.

There’s no guarantee that any Democrat-backed alternative to the mandate will clear Congress, however. Republicans may not back efforts to reform the reform law, while the White House is expected to resist changes in the absence of bipartisan compromise.

Meanwhile, the current law retains considerable support. “The mandate will be upheld and it’s still the best option,” according to Neera Tanden, a former health adviser to the Obama administration and now at the Center for American Progress.

According to Jonathan Oberlander, a professor at the University of North Carolina-Chapel Hill, “I’m not sure that any of the alternatives have been discussed so far are very compelling and so if you don’t have very compelling alternatives, then you’re stuck with the policy that you brought to the dance — and that’s the individual mandate.”

California Healthline will monitor the next steps in the legal battle over health reform and potential changes to the individual mandate. Meanwhile, here’s a look at what’s making news around the nation.

On the Hill

  • On Wednesday, the House Small Business Committee is scheduled to hold a hearing on a bill (HR 4) to repeal the 1099 tax-reporting requirement in the federal health reform law. Unlike a similar Senate-approved measure, the House bill lacks an offset for the estimated $19.2 billion in revenue that would be lost if the provision were repealed. An aide to Rep. Dan Lungren (R-Calif.), who sponsored the House bill, said the offset was excluded in an attempt to secure support for the measure. House GOP members have said they would like more evidence that the 1099 provision would generate $19.2 billion in tax revenue (Ethridge, CQ Today, 2/7).
  • Last week, Sen. Bill Nelson (D-Fla.) introduced a measure asking the U.S. Supreme Court for an accelerated ruling on the constitutionality of the federal health reform law. Nelson said, “We ought to do the right thing and ask the High Court to rule quickly so we don’t keep arguing over this for the next several years” (Yadron, “Washington Wire,” Wall Street Journal, 2/2).  The Senate cannot force the Supreme Court to take up a case. Unless the lawsuits are fast-tracked, the court likely would not be able to decide on the reform law’s constitutionality until 2012 or later (Millman, “Healthwatch,” The Hill, 2/2).
  • Meanwhile, there is a partisan divide over whether the Supreme Court should hasten its review of the case. Senate Health, Education, Labor and Pensions Committee Chair Tom Harkin (D-Iowa) said Democrats should wait out the challenges before the case reaches the U.S. Supreme Court. He said, “[Q]uite frankly, the longer the health care bill is in existence and the more people find out the benefits they have,” the more popular the law will become. He added, “The court may want to take a look at that and think about the public reaction will be” (Bolton, The Hill, 2/2).
  • In related news, law experts at a Senate Judiciary Committee hearing last week presented varied opinions on the overhaul’s constitutionality. Charles Fried — a Harvard Law School professor and former solicitor general — said that “health insurance is undoubtedly commerce” and thus subject to regulation by Congress under the Commerce Clause of the Constitution. Randy Barnett, a professor at Georgetown University Law Center, said the law imposes an unprecedented requirement on every American to enter into a contractual relationship with a private company (Norman, CQ Today, 2/2).

In the States

  • Five Republican state lawmakers in South Dakota have proposed a bill (HB 1237) that would require state residents to purchase a firearm, which they say is akin to the individual mandate in the federal health reform law. State Rep. Hal Wick (R), the bill’s chief sponsor, said, “We’ve put this bill in to make a point and to help people understand why what the federal government is doing is unconstitutional.” The bill, which will have a hearing on Feb. 16, is not expected to pass. However, Wick said he hopes the legislation will shape the debate on the individual mandate and other controversial elements of the health reform law (Richardson, Washington Times, 2/7).
  • Last week, Florida Insurance Commissioner Kevin McCarty notified HHS that the state wanted to return a $1 million grant that was meant to help the state implement the federal health reform law, which was struck down recently by U.S. District Court Judge Roger Vinson. The grant would have gone toward the development of a program to enforce Florida’s requirement that insurers receive prior approval for premium increases in the large group market. Gov. Rick Scott (R) said Florida no longer will implement any part of the reform law (Kliff/Haberkorn, Politico, 2/2).
  • Florida also is returning a separate $1 million federal grant that was meant to help the state plan a system to allow consumers to compare health care prices. So far, Florida is the only state to return federal money for the health reform law, although other states appear torn about whether they must return federal grants to implement the reform law before the case goes to the U.S. Supreme Court (Millman, “Healthwatch,” The Hill, 2/4).
  • Last week, U.S. Federal District Court Judge Keith Starrett dismissed a lawsuit by Mississippi Lt. Gov. Phil Bryant (R) challenging the constitutionality of the federal health reform law. Starrett dismissed the suit on procedural grounds because he said the plaintiffs — Bryant and 10 state residents — lacked evidence in their claim that the law’s individual mandate would cause them injury. In his decision, Starrett said the plaintiffs would have to state that they face imminent injury for their lawsuit to stand (Haberkorn, Politico, 2/4).

Eye on the Industry

  • Health care providers and organizations have made more than $42.7 million in contributions to lawmakers following the enactment of the federal health reform law, according to research conducted by the Center for Responsive Politics. Although lawmakers received significant donations from health companies while the reform law was being drafted, most of that funding went to Democrats. Since the law was adopted, 60% of donations — a total of $25.7 million — have gone to Republicans, while Democrats received $17 million (Smith, Washington Post, 2/6).
  • Meanwhile, health care organizations and other companies are continuing to implement the federal health reform law, despite a recent district court decision declaring the individual mandate unconstitutional. Officials at America’s Health Insurance Plans said that member companies will continue to implement the law. In addition, many large employers plan to continue reform implementation, according to Helen Darling, CEO and president of the National Business Group on Health. Darling said, “It’s the law of the land, so employers are still going to have to move ahead with what they’re doing now” (Johnson/Hobson, Wall Street Journal, 2/1).

Promoting the Overhaul

  • Organizations that favor the federal health reform law have developed a new initiative to defend it against Republican attacks and have hired Democratic strategist Paul Tewes to oversee the campaign. Tewes, who directed field operations in key states for President Obama‘s campaign, will be joined by Tanya Bjork and David Di Martino, who are both Democratic campaign veterans. Ron Pollack, executive director of Families USA, helped organize the new campaign. The group is expected to open an office in Washington, D.C., within a few weeks (Aizenman, Washington Post, 2/8).
  • Meanwhile, Democratic lawmakers are developing a similar messaging strategy that also will focus on promoting the law’s benefits to consumers and the potential problems that repealing the law would cause. The lawmakers plan to defend the overhaul by framing Republican repeal attempts as an effort to rescind health protections for U.S. residents. In addition, Democrats plan to coordinate with the White House to release tangible statistical data that highlight how many people and businesses are benefiting from the law (Dennis, Roll Call, 2/7).

Related Topics

Road to Reform The Health Law