Obamacare Heads to the Supreme Court: Here's What You Need to Know

Editor’s Note: This article is the first in a two part series analyzing the Supreme Court’s upcoming hearing on the Patient Protection and Affordable Care Act, and all the relevant issues surrounding the case. Part 2 will be published on Friday.

Next week, the Supreme Court is scheduled to take up the most controversial legal question in a generation as it examines whether the Patient Protection and Affordable Care Act (ACA), also known as “Obamacare,” survives a myriad of constitutional challenges.

This series will serve as a primer, giving background information and pertinent analysis to spin up individuals interested in learning the ins and outs of the legal question without getting lost in legalese and jargon. There is obviously far more to this issue than I can possibly cover here (the Court has allotted six hours of argument as opposed to the usual hour). The goal of this primer is to give a quick briefing, not a thorough exploration of the relevant law. If you want to dive deeper on the legal history or political implications of the case, find me in the comments.

There are a number of auxiliary and tangential issues mixed in with the two big questions – I will pick out the important ones and cover them below.

With that said, let’s dive right in.

The case comes to the Court as an amalgamation of several distinct legal challenges from multiple circuit courts of appeals. The primary challenge, HHS v. Florida, comes to the bench courtesy of 26 state attorney generals who have filed suit asking the Supreme Court to declare the law unconstitutional on the grounds that the “individual mandate” violates the Commerce Clause. A secondary case, National Federation of Independent Business v. Sebelius, challenges the constitutionality of conditions placed on state receipt of future Medicaid funds by the ACA. Both cases will be held concurrently next week.

The Tax Anti-Injunction Act (Arguments March 26, 10-11:30 a.m. EST)

One of the big lessons young lawyers learn early is that when the Supreme Court has an opportunity to duck an issue on procedural grounds, it is apt to do just that. Potentially faced with the opportunity to do so here, the big question is whether the Supreme Court will elect to punt on this issue.

The procedural question the Justices must decide is whether the Tax Anti-Injunction Act bars the Court from reaching the constitutional merits of the underlying challenges.

The Tax Anti-Injunction Act is an 1867 law that prohibits courts from hearing cases that challenge tax laws that have not yet been levied. In other words, the law states that you must pay the tax (or fail to pay the tax) in order to challenge its legality – you don’t get to claim it’s illegal until after it comes into effect.

The question then returns to one that has hounded the discussion since the law was passed; namely, is the fine levied against those who fail to secure insurance a tax or a penalty? If it is a tax, then the Court is technically barred from hearing any challenges to the law until after its 2014 implementation (meaning it wouldn’t hit SCOTUS until 2015). This was the conclusion of the 4th Circuit.  If it is a penalty, then there is no procedural bar and the Court will turn to the constitutional questions themselves.

Interestingly enough, because both sides want to reach the merits of the issue, neither side wishes to argue that the Court dodge this question on procedural grounds. The Court has actually solicited an outside attorney to brief and argue the issue for them, a fairly rare occurrence.

The answer to the Tax Anti-Injunction Act question can come out either way. If the Court concludes that the penalty is a tax, it is going to take a fair amount of legal sleight-of-hand to reach the merits. With that said, the political baggage riding on this case is obviously massive and a ruling punting this case to 2015 will only serve to cause greater uncertainty and instability since the Court will have to reach the merits eventually. The Court may be tempted to punt this back down to let the lower courts have another go at it when it comes back up in 2014, but I think it is likely that the Court will simply call it a penalty and move to the merits, addressing the substantive questions sooner rather than later.

Medicaid and State Sovereignty (Arguments March 28, 1-2 p.m. EST)

The far less sexy, but equally important, element of the health care litigation focuses on conditions placed on the disbursement of Medicaid funds by the health care law.

The question presented to the Court is whether Congress has the power to condition states’ receipt of Medicaid funds upon the states’ acceptance of certain conditions that the health care law imposes.

The ACA expands Medicaid to adults earning 133% of the federal poverty level (currently $23,050 for a family of four). The overwhelming majority of the expansion will be funded by federal dollars. However, in order for states to continue receiving any Medicaid dollars, the ACA requires that states comply with this expansion in its entirety.

Aggrieved states have asserted that hinging all Medicaid dollars on mandatory compliance with the new requirement is a violation of state sovereignty. They contend that the ACA effectively forces states to make a choice: comply with the ACA’s Medicaid expansion or lose federal funding for Medicaid.

The governing law in this area arises from a prior controversial use of federal dollars as a cudgel to force state action: Ronald Reagan’s effort to raise the minimum drinking age in the 1980’s. In South Dakota v. Dole, the state of South Dakota challenged the federal government’s withholding of highway funds until the state raised the minimum drinking the age to match the federal age of 21, alleging a violation of the Tenth Amendment. The Supreme Court dismissed the challenge, holding that the federal government can pressure states to act by using financial incentives so long as the conditions for access to funds are reasonable and “promote the general welfare.”

The ACA’s challengers argue that the conditions placed on Medicaid funds amount to unconstitutional coercion. They argue that by making the states’ choose between their own sovereignty and what amounts to being able to maintain the health of their citizens, the federal government has forced an impossible choice which it is constitutionally prohibited from creating.

The government argues that this situation is the same as it was in South Dakota v. Dole, in that they are putting a reasonable condition on receiving federal funds – namely, complying with federal rules. They will argue that states can’t force the government to hand out federal dollars while refusing to follow the rules on how those dollars can be used. Moreover, the government will argue that the Supreme Court upheld a restriction linking drinking ages with highway dollars so surely the Court must uphold conditions linking Medicaid rules with Medicaid dollars. They will likely conclude by pointing out that Medicaid has been expanded numerous times in the past and no court has ever upheld a challenge to hinging continued funding on recognizing the expansion.

In my view, the Supreme Court will likely uphold the 11th Circuit’s opinion ruling in favor of the government and call it a day. Ever since Dole, the Supreme Court has only ever struck down two laws on Tenth Amendment grounds and neither of those concerned federal funding powers. In order to come down in favor of the ACA’s challengers, the Supreme Court would have to either re-work the test it set forth in Dole (effectively overruling it and superseding it) or do some extreme judicial gymnastic to distinguish the two cases. Moreover, the language of the Medicaid program makes clear that the funds are predicated on compliance with federal rules and that the federal government retains the right to change those rules just as states retain the right to leave the program at will. 

Photo Credit: Morning Calm News