Fate of PPACA’s Individual Mandate Unclear After Day 2 of SCOTUS Arguments

After the second day of oral argument before the U.S. Supreme Court regarding HHS v. Florida, one thing is clear: with regard to the individual mandate, it could go either way.  The case concerns the constitutionality of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).  Yesterday, the Court heard arguments as to whether the Court had the ability to hear the case before the effective dates of PPACA had passed.  Today the Court turned to the constitutionality of the provision requiring all individuals to obtain health insurance coverage or face a penalty. 

The government, through Solicitor General Donald Verrilli, stated that health insurance is the predominant method of payment in the health care industry, yet effective access does not exist for 40 million Americans.  Those not covered under employer-sponsored health insurance, and not qualifying for Medicare or Medicaid, are left to purchase coverage from the individual market at the going-rate, rather than at a heavily subsidized rate that employers pay. 

The respondents, represented by Paul Clement, argued that individuals are being forced to participate in commerce and there is no limiting principle in place.

Some of the major sources of contention seem to be whether you can force individuals to participate in a market and whether the individual mandate involves the insurance market or the health care market; whether there is a limit to Congress’ commerce power the government advocates; and whether the fee required for violating the mandate is a tax.

What is the market?  Verrilli argued that this does not involve the insurance market, but rather, the insurance market is merely the method through which health care is financed.  The Court was skeptical about this argument and questioned whether it wasn’t, in fact, the insurance market being regulated.

Unwilling participants.  The government’s argument was that all individuals participate in the health care market whether or not they use health care services because arguably, everyone will use it at some point.  Justices argued on both sides of this argument, responding affirmatively, that we, as humans, are at a risk for needing health care and are not able to predict when that will be (Breyer) and negatively, that you shouldn’t be able to regulate those individuals that have chosen not to participate in the market.  The Justices compared the individual mandate requirement to paying for funeral services after your death, a cell phone service to assist in an emergency, or insurance for your automobile.  The heart of the government’s argument is that those individuals that do not have insurance coverage, and require emergency services, are able to obtain such services from an emergency department, and all of those with insurance coverage subsidize the cost of that emergency treatment through higher premiums. 

What comes next?  One of the issues that Chief Justice Roberts has with the individual mandate is that there is no limit on Congress’ commerce power.  Is there a limit on the power the government calls for?  To what other areas could this power be extended, if any?  This is a question that will be addressed tomorrow.

Is it a tax?  The Court was concerned about the term used to describe the the fee that individuals violating the individual mandate will have to pay.  When asked why the government chose to call the fee a “penalty” rather than a “tax,” Verrilli responded that it believed it would be more effective in accomplishing its objective by calling it a penalty.  The government further argued that, since the penalty is paid on an IRS form (1040), on April 15th each year, it is a tax. 

The third and final day of oral arguments before the Court will be tomorrow.  Stay tuned for continued coverage in the coming days…