WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on March 27 heard oral arguments on whether the individual mandate in the Patient Protection and Affordable Care Act (PPACA) that requires most Americans to purchase health care insurance is constitutional (Department of Health and Human Services, et al. v. State of Florida, et al., No. 11-398, U.S. Sup.).
The Supreme Court is considering whether Congress had the power under Article I of the U.S. Constitution to enact the individual mandate, which requires most Americans to purchase health care insurance or face a penalty starting in 2014. In States of Florida, et al. v. Department of Health and Human Services, the U.S. District Court for the Northern District of Florida held that the individual mandate is an unconstitutional regulation of commerce. A split 11th Circuit U.S. Court of Appeals panel affirmed that the individual mandate is unconstitutional.
Solicitor General Donald Verrilli argued for the government, saying Congress had the power under the commerce clause of the Constitution to enact the individual mandate.
Justice Anthony Kennedy asked whether Congress could create commerce to regulate it.
Congress is not seeking to create commerce, and what is being regulated is the method of financing health care, which is an economic activity with substantial effects in the interstate market, Verrilli said. Later he added that Congress is regulating existing commerce - economic activity that already is going on.
Chief Justice John G. Roberts Jr. asked whether the market for emergency services should be considered the same as for health care services because an individual never knows if or when he will need the services. He asked whether the government could require individuals to buy cell phones because it would facilitate responding when in need of emergency services.
The fundamental difference between the two is that emergency services are not an issue of market regulation, whereas health care insurance is an issue of market regulation, Verrilli said. Another difference is that with other markets - such as for emergency services or burial services - there is no cost shifting to other market participants, Verrilli said.
Even opponents to the law acknowledge that it is within Congress' authority under the commerce clause to impose guaranteed-issue and community rating forms - to impose a minimum coverage provision - but they argue that the authority occurs at the point of sale, Verrilli said.
Justice Kennedy said the court must presume that laws are constitutional but asked whether the government, when changing the relation of the individual to the government in such a unique way, would have a heavy burden of justification to show authorization under the Constitution.
The law regulates people's participation in the health care market, and all the minimum coverage provision does is say that instead of requiring insurance at the point of sale, Congress has the authority under the commerce and necessary and proper clauses to ensure that people have insurance in advance of the point of sale because people have to pay for the health care they get, and the predominant way to do that is through insurance, Verrilli said.
Attorney Paul Clement argued for the states, saying the individual mandate exceeds Congress' power under any reading of the Constitution's enumeration of limited powers.
Justice Sonia Sotomayor asked Clement whether he accepted Verrilli's position that Congress could say that if people are going to consume health care services, they have to pay by way of insurance.
Clement said he agreed that Congress could require consumers to pay for health care services via insurance but said Congress could simply mandate that insurance companies provide insurance to people who come in for services at the point of use. The problem, however, is not one of timing alone because if Congress tried to regulate at the point of sale, it still would not capture all of the people who do not want to purchase health insurance and have no plans of using health care services, which is a group Congress very much wanted to capture because those people are "the golden geese that pay for the entire lowering of the premium," he added.
Justice Ruth Bader Ginsburg noted that that was how Social Security worked and asked whether Congress could use Social Security as a model.
Clement responded that he thought other options are available, such as figuring out what amount of subsidy to the insurance industry would be necessary to pay for guaranteed issue and community rating. Once that amount is calculated, there could be a tax that is spread generally through everybody to raise the revenue to pay for the subsidy, which is the way most subsidies are paid for, Clement said.
Attorney Michael Carvin argued for the National Federation of Independent Business and two of its members, saying that if the court accepts Verrilli's premise that the government can compel the purchase of health insurance to promote commerce in the health market because it will reduce uncompensated care, the text of the Constitution would have to be fundamentally altered to give Congress plenary power.
Justice Roberts asked whether regulation includes the power to promote. Carvin agreed that when Congress is acting within its enumerated power, it can promote commerce. However, the government is trying to say it has the power to regulate anything to promote commerce, he added.
The question, however, is not whether activity can be regulated because it has a statistical connection to an activity that harms Congress; the Constitution only gives Congress the power to regulate things that negatively affect commerce or commerce regulation, Carvin said.
Verrilli, Assistant Attorney General Tony West, Deputy Solicitor General Edwin S. Kneedler, Deputy Assistant Attorney General Beth S. Brinkmann, Assistant to the Solicitor General Joseph R. Palmore and attorneys Mark B. Stern, Alisa B. Klein, Samantha L. Chaifetz and Dana Kaersvang, all of the U.S. Department of Justice; George W. Madison of the Department of Treasury; M. Patricia Smith of the Department of Labor; William B. Schultz, acting general counsel, and Kenneth Y. Choe, of the Department of Health and Human Services, all in Washington, represent the government.
Karen R. Harned of the National Federation of Independent Business Legal Center; Randy E. Barnett, professor at Georgetown University Law Center, and Michael A. Carvin, Gregory G. Katsas, C. Kevin Marshall, Hashim M. Mooppan and Yaakov M. Roth of Jones Day, all in Washington, represent the private petitioners.
Clement and Erin E. Murphy of Bancroft in Washington; Florida Attorney General Pamela Jo Bondi, Florida Solicitor General Scott D. Makar and Louis F. Hubener, Timothy D. Osterhaus and Blaine H. Winshop of the Florida Attorney General's Office, all in Tallahassee, Fla.; Texas Attorney General Greg Abbott and Texas Deputy Attorney General Bill Cobb, both in Austin, Texas; South Carolina Attorney General Alan Wilson in Columbia, S.C.; Alabama Attorney General Luther Strange in Montgomery, Ala.; Michigan Attorney General Bill Schuette in Lansing, Mich.; Nebraska Attorney General Jon Bruning and Katherine J. Spohn of the Nebraska's Attorney General's Office, both in Lincoln, Neb.; Utah Attorney General Mark L. Shurtleff in Salt Lake City; Louisiana Attorney General James D. "Buddy" Caldwell in Baton Rouge, La.; Colorado Attorney General John W. Suthers in Denver; Washington Attorney General Robert M. McKenna in Olympia, Wash.; Pennsylvania Gov. Thomas W. Corbett Jr. and Pennsylvania Attorney General Linda L. Kelly, both in Harrisburg, Pa.; South Dakota Attorney General Marty J. Jackley in Pierre, S.D.; Indiana Attorney General Gregory F. Zoeller in Indianapolis; Georgia Attorney General Samuel S. Olens in Atlanta; Idaho Attorney General Lawrence G. Wasden in Boise, Idaho; Arizona Attorney General Tom Horne and Joseph Sciarrotta Jr. and Janice K. Brewer of the Arizona Attorney General's Office, all in Phoenix; Nevada Gov. Brian Sandoval in Carson City, Nev.; Alaska Attorney General Michael C. Geraghty in Juneau, Ala.; Ohio Attorney General Michael DeWine and David B. Rivkin and Lee A. Casey of Baker & Hostetler, all in Columbus, Ohio; Wyoming Gov. Matthew Mead in Cheyenne, Wyo.; Maine Attorney General William J. Schneider in Augusta, Maine; Iowa Gov. Terry Brandstad in Des Moines; Michael B. Wallace of the Mississippi governor's office and Phil Bryant of Wise Carter Child & Caraway, both in Jackson, Miss.; Kansas Attorney General Derek Schmidt in Topeka, Kan.; and Wisconsin Attorney General J.B. Van Hollen in Madison, Wis.; represent the states.
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