View from Washington: A Potential Judicial Wreck over the Health Reform Act

Leroy has a self-authorized land grant at the George Washington University, where I teach. The area between the law school and the fountain at the side of the library is evidently the perfect range for his philosophical pursuits. As best I can tell, Leroy hangs out, talks to students, and does a little light panhandling. Seemingly his main objective is to engage with others who have a predisposition to talk politics and current events. Leroy is somewhat of a modern-day urban-sage.

As I walked through his territory after class the other day, Leroy yelled out to me “Doc … got a second? Students tell me you know stuff about health care.” I started to repeat my worn-out and somewhat automatic response to those who confuse my Ph.D. with an M.D. degree when Leroy interrupted me. “You know, I think these state lawsuits against Obama’s health reform bill are gonna be a game changer.” I was shocked. Evidently Leroy had given thought to an important issue that most, including many of my own students, are overlooking.

‘Just the beginning’
Today there are 33 states that are actively working to block key provisions of the Patient Protection and Affordable Care Act, Public Law 111-148 (H.R. 3590 as amended by H.R. 4872) (PPACA). Most of the legal and legislative challenges to PPACA revolve around the law’s requirement that virtually every American buy health insurance or pay a tax to the government as a penalty. They call this the “individual mandate.”

Seven states have recently joined a lawsuit originally filed by the State of Florida and 12 other states in late March. Filed in U.S. District Court of Florida, the suit contends that Congress lacks the constitutional authority to mandate that individuals participate in an insurance plan and that PPACA infringes on states rights by requiring them to extend Medicaid coverage to additional low-income people without providing funding to cover the associated costs. As Leroy observed “Doc, that just ain’t right.”

Many constitutional scholars have stated that the Florida suit has little chance of success. Leroy is probably not a constitutional scholar, despite his resident proximity to a law school and a university library. However, Leroy makes the point that Florida is “… just the beginning.” The resident sage of George Washington University concurs with many activists who say there will be numerous lawsuits and challenges from state governments, legislatures, and individuals seeking to narrow the scope of PPACA and just possibly, to bring down key structural components of the law.

PPACA got passed and is now the law of the land. However, what about all the voluminous regulations that will be published to implement the law? Some in the policy community believe this is where serious lawsuits will arise as the Centers of Medicare and Medicaid Services (CMS) and other federal agencies try to make sense of what Congress actually meant as they roll out implementing rules and regulations.
The White House and its supporters forcefully argue that if insurance was not mandated, healthcare costs would be uncontrollable in the future. As PPACA bars insurers from excluding people with pre-existing conditions, without relatively healthy people in the insurance pool, the sick and elderly would predominate. Insurance costs would escalate. Furthermore, the White House argues the Supreme Court has a long record of upholding Congressional action to regulate the economy (Commerce Clause of the U.S. Constitution) by imposing taxes. Additionally, they point out that the Court has let stand Congressional authority to impinge on personal freedoms if a national interest is to be served. They ask – what greater national interest is there than near universal health care? Finally, the Obama Administration and their supporters have made the argument that the Supreme Court has a long history of allowing federal legislation designed to supersede laws which are in conflict between the states.

After my impromptu conversation with Leroy, I did a little checking around. Some of my friends in health law believe the judicial schedule for the Florida case is quite aggressive. A few speculated the case could be before a judge as early as mid-September this year.

Showdown in the courts
And then there is Virginia. This state has filed a separate lawsuit which may be before a federal judge by late summer. Virginia and Idaho are the only two states to pass a law prohibiting the “individual mandate” for the purchase of insurance coverage – before PPACA became law. Virginia is arguing that the federal law infringes on its pre-existing state statue. In mid-May, a U.S. District Court Judge told the Justice Department to, in essence, hurry up on their response to the Virginia lawsuit. Meanwhile, Arizona, Oklahoma and Florida are also trying to establish a state constitutional prohibition for an “individual mandate” by putting the matter on the upcoming November ballot. Several other states – Arizona, Georgia, and Oklahoma – are considering a multi-state strategy to follow Virginia’s approach by enacting restrictive legislation and state constitutional prohibitions. However, proposals to enact restrictive legislation and state constitutional prohibitions have already failed in 15 other states.

In mid-May, the Justice Department released a statement defending PPACA. They said that a courts’ overturning the law “would amount to unwarranted interference with the policymaking authority of Congress.” The Administration defended the mandated purchase of health insurance as well within the bounds of both the Commerce Clause and Congress’s power to raise revenue/taxes. The Administration has also put forth the argument that consumer decisions to forgo health insurance do “substantially affect interstate commerce by shifting costs to healthcare providers and the public, thus giving the government power to regulate via the Commerce Clause.” The Justice Department statement also defends “Congress’s power to levy taxes.”

Some state officials have argued that PPACA represents the most massive transfer of power to the Executive Branch of government that has ever occurred. On this alone they raise constitutional objections (10th Amendment) – objections they fully intend to pursue. All this judicial jockeying is setting up a first, big, crash-up this fall between the states and the feds. All this potentially right before the November mid-term elections – no less. This courtroom drama will be the beginning of the beginning – several years of court machinations as lawyers for the states seek to identify judicial vulnerabilities in PPACA.
Don’t worry! I’ll get the word out to Leroy in advance. He may never have ever seen a really awful wreck before – train, automotive, legislative, or in this case, judicial.

Robert Betz Ph.D. About Robert Betz Ph.D.

Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit www.robertbetz.com.

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