PPACA Amicus Brief Rundown: Severability

On Monday, March 26, oral arguments begin in the U.S. Supreme Court in Florida v. HHS.  This historic case will decide the constitutionality of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).  In addition to the briefs filed by the parties, numerous amicus curiae or “friend of the court” briefs have been filed by other interested parties.

These amicus curiae briefs center on two major issues: (1) whether, if the Court concludes that the provision of PPACA requiring virtually all Americans to obtain health insurance or pay a penalty (the individual mandate) is unconstitutional, the rest of PPACA can remain in effect (severed) or must also be invalidated; and (2) whether Congress can compel a state to chose between PPACA implementation and the loss of federal Medicaid funding. This article will examine the severability issue only.

On August 12, 2011, the 11th Circuit Court of Appeals concluded that PPACA’s individual mandate exceeds Congress’ enumerated commerce power and is unconstitutional, but also concluded that the individual mandate can be severed from the remainder of PPACA, leaving the remaining provisions standing.

Briefs Favoring Reversal on the Severability Issue

U.S. Chamber of Commerce. One brief favoring reversal of the 11th Circuit decision regarding severability was filed by the U.S. Chamber of Commerce. The Chamber is the world’s largest business federation, representing 300,000 direct members and indirectly representing 3 million business and professional organizations. Prompt resolution of the fate of PPACA is of critical importance to Chamber members as many provide health insurance to their employees.

The Chamber’s brief states that PPACA’s comprehensive reforms place a myriad of obligations on individuals, employers, and the states. Some of these changes include: (1) health insurance industry reforms, such as guaranteed-issue and community rating; (2) health-insurance exchanges and federal subsidies (tax credits) to purchase insurance; and (3) the individual mandate.

According to the Chamber, the government has already conceded that the guaranteed-issue and community rating provisions are non-severable from the individual mandate. In addition, the Chamber claims that all of the other health insurance reforms, such as the risk-adjustment provision, the bar on annual benefit limits, and the medical loss ratio depend, either directly or indirectly, on the individual mandate.  As a result, if the individual mandate falls, many of PPACA’s insurance reforms will function in a manner different than Congress intended.  If the Court finds the individual mandate unconstitutional, the Chamber concludes that the best approach would be to invalidate PPACA in its entirety, and to allow Congress to address the nation’s health care problems within constitutional boundaries.

AHIP and BC/BS Association. Another amicus brief in support of non-severability was filed jointly by America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BC/BS).  AHIP is a national trade association that represents companies providing health insurance coverage to over 200 million Americans.  BC/BS is a non-profit association of 38 independent, community-based, and locally operated health insurance companies providing health care coverage to 99 million people – one out of three Americans.

According to their brief, the central flaw of the 11th Circuit’s severability holding is that the court largely confined its analysis to the narrow question of whether PPACA could structurally be operative or enacted as a law without the minimum individual coverage provision.  According to AHIP and BC/BS, the Supreme Court has previously held that severability must turn on whether the remaining portions of a law “will function in a manner consistent with the intent of Congress” (Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987)).  AHIP and BC/BS believe that the Supreme Court need only look as far as the plain text of PPACA to find that the minimum individual coverage provision is “essential” to and thus non-severable from provisions such as the guaranteed issue, preexisting conditions, health-status discrimination, and adjusted community rating reforms.

The American Center for Law & Justice.  The American Center for Law & Justice (ACLJ) is an organization dedicated to defending constitutional liberties. The ACLJ has an interest in this case as it represents the plaintiffs in a challenge to PPACA’s individual mandate in Seven-Sky v. Holder, No. 11-679 (U.S. Nov. 30, 2011).  The ACLJ has filed its brief on behalf of 117 members of the U.S. House of Representatives in the 112th Congress and 103,000 ACLJ supporters who specifically requested that they be included.

In addition to the above arguments that Congress would not intend for a provision to be severable if severing would allow an inoperable or counterproductive regulatory scheme to stand, the ACLJ offers one additional factor to demonstrate that Congress did not intend the individual mandate to be severable. The Affordable Health Care for America Act (H.R. 3962), which the House approved on November 7, 2009, contained the individual mandate and a severability provision.  Since H.R. 3962’s severability provision was not included in the final version of PPACA, this conscious rejection of a severability clause is strong evidence that Congress did not intend for PPACA’s individual provisions to be severable.

Briefs Supporting Severability

AARP.  A brief supporting severability was filed by AARP on behalf of itself and five other organizations. AARP is a nonprofit organization dedicated to the needs of people aged 50 and older. Since it founding in 1958, AARP has advocated for affordable and accessible health care, improved quality of care and controlled health care costs.

In its brief, AARP contends that nothing in the text of PPACA suggests that Congress wanted the significant changes provided by PPACA to be contingent on the constitutionality of the minimum coverage provision. The brief highlights parts of PPACA that greatly benefit people 65 and older and are unrelated to the minimum coverage provision.

For example, PPACA reduces cost-sharing for Medicare beneficiaries by substantially reducing the coverage gap for prescription medications (commonly known as the “donut hole”), eliminating cost-sharing for preventive services such as an annual wellness visit and numerous screening services, and prohibiting Medicare Advantage (MA) plans from charging higher cost-sharing for chemotherapy and dialysis than permitted under traditional Medicare. These cost-sharing reductions improve access to specific services under Medicare, of tremendous value to beneficiaries, but have no impact on expanding insurance coverage for uninsured individuals.

In addition, PPACA further improves the quality of care for Medicare beneficiaries by providing higher bonus payments for MA plans that achieve high ratings for quality, requiring Special Needs Plans to meet quality standards, and limiting MA plan spending on administrative expenses.

AARP believes that these PPACA provisions show a clear Congressional intent to pursue numerous objectives independent of the minimum coverage provision.

Missouri Attorney General. After PPACA was signed into law, the state of Missouri overwhelmingly passed a referendum (Proposition C) that prohibits compelling “any person, employer, or health care provider to participate in any health care system.” Because PPACA and Proposition C are in conflict, the state of Missouri has an interest in the Supreme Court’s decision.

Missouri begins its brief by making the interesting observation that even if the Court finds the individual mandate unconstitutional, from providing coverage for well child visits and preventive services to establishing reasonable break times for nursing mothers, PPACA today is already providing benefits to Americans that are not dependent on an individual mandate that is two years away.

To Missouri, the question is whether “the balance of the legislation is incapable of functioning independently” or whether the remaining “statute will function in a manner consistent with the intent of Congress.” Missouri contends that both questions are satisfied in this case.

Missouri freely admits that the individual mandate is important to Congress and that certain parts of PPACA will not operate without it, particularly the insurance industry reforms. But, Missouri believes that only those provisions that do not operate properly without the individual mandate should be struck down. Missouri reminds us that PPACA contains over 450 provisions, some of which are already effective and operating independently of the individual mandate.

Missouri also readily admits that PPACA is silent on the issue of severability, but stresses that this does not raise a presumption against severability.  Instead, the most compelling evidence of Congressional intent, according to Missouri, may be the very structure of PPACA, and the manner in which the provisions become effective.  To Missouri, had Congress intended that the entire law would fall if the individual mandate was held unconstitutional, then it is unlikely that so many provisions would have become effective years before its central provision – the individual mandate — became effective.

Missouri, therefore, encourages the Court to restrict its ruling to the individual mandate and any dependent provisions.