The first day of arguments before the Supreme Court in the case of HHS v. Florida challenging the constitutionality of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) centered around whether or not it is appropriate for the Court to hear the case before the effective date of the provisions that are in dispute. The individual mandate provision does not become effective until 2014.
Hearing this case could be prohibited if the penalty for not purchasing insurance is considered a tax. The Anti-Injunction Act (AIA) provides that “no suit for the purpose of restraining the assessment of collection of any tax maybe maintained in any court by any person.” If the penalty is a tax, a person would have to pay the tax first and then litigate the matter, including using all administrative hearings before going to the courts. In this case, no tax would be or could be paid until after 2014, and as such, because nothing to date has been paid, the AIA would prohibit this case from being heard.
Both Parties Argue the AIA Does not Apply
The government maintains that the AIA does not apply because PPACA does not impose a tax and, so the AIA is not relevant. Solicitor General Verrilli, the attorney for the U.S. Government, in response to a line of questioning from Justice Alito, argued that Congress has the authority to use its taxing power to enact a measure not labeled a tax, and that the court has ruled, in licensing cases for example, there can be an exercise of taxing power although there is no tax. The government argues that there are no jurisdictional issues in this case for the Court to decide. Even if the penalty is an exercise of taxing power, it is not a tax and, as such, the AIA prohibition against maintaining a case is not relevant.
Those who argue that that individual mandate is unconstitutional agree that this case should be heard. Their argument is that the “purpose of this lawsuit is to challenge a requirement — a Federal requirement to buy health insurance. That requirement itself is not a tax.” For that reason alone, they argue that the Anti-Injunction Act does not apply.
Chief Justice Roberts questioned how a mandate can be a mandate if there is no enforcement mechanism such as a tax or penalty. If you violate the law, but there is no penalty, how is that a mandate?
The attorney for those who would like the mandate struck down demonstrated that a mandate without a penalty still has an injury. He argued that “because Congress reasonably could think that at least some people will follow the law precisely because it is the law,” that those people will begin preparations to be compliant with the law. In response to line of questioning from Justice Kagan, who asked how those individuals would have standing to bring a suit, the attorney arguing for a repeal of the mandate said that the mandate is the forced acquisition of an unwanted good, and that the injury is an economic one–one to the pocketbook–and that it starts with the preparations to be compliant.
He then pointed out how the law exempts some people from the penalty but not the mandate: the very poor. They will not have pay the penalty, but they are still required to purchase insurance, which he argues is the problem–the requirement to purchase whether or not there is a penalty. The injury in this case is to the states that would have to plan and prepare to add these individuals to their Medicaid programs.
Arguments on Behalf of the AIA
The court asked a third attorney to argue that the AIA requires this case to be dismissed because no tax has been collected and the process to argue the legality of that tax has not been followed. That attorney argued that the penalty is a tax because (1) the statute claims that the penalty be collected as a tax, (2) the amount of the penalty is dependent upon one’s income and (3) because the penalty is being collected via the use of the income tax form. In addition, this attorney pointed out that this penalty was designed to raise revenues, an estimated $4 billion, according to the Congressional Budget Office, and it is thus more than just a penalty designed to induce compliance.
The Court was concerned about granting equitable exceptions to the AIA’s prohibition against courts hearing cases about taxes before they were collected. The Court was worried that giving the government the discretion to waive the AIA prohibition was a bit arbitrary. Justice Sotomayor, however, identified four cases where the AIA was waived by the government and a tax case was allowed to be heard before the collection of a tax, making it seem like granting an exception could be a possibility in this case.
The court will turn to hearing arguments on other issues on the second and third days of the hearings.