Will healthcare reform survive the Supreme Court?

by Joyce Frieden

Partisan wrangling aside, the Supreme Court will have to address serious constitutional questions about the healthcare reform law, and it’s far from clear how the justices will decide the issues, legal scholars say.

So far, 21 state attorneys general are suing to overturn the law on constitutional grounds. One of their arguments is that by forcing individuals to either buy health insurance or pay a fine, the law violates the commerce clause of the Constitution, which regulates commerce among the states.

Eric Segall, JD, professor of law at the Georgia State University School of Law, in Atlanta, said in an interview that such a mandate is legitimate under the commerce clause.

“Congress has the power . . . to regulate those things that substantially effect commerce,” he said. “All of this substantially affects commerce.”

Theodore Ruger, JD, professor of law at the University of Pennsylvania in Philadelphia, agreed that the commerce clause argument doesn’t really work.

“Clearly, the new healthcare statute imposes a new requirement on individuals,” he said. “However, despite all the rhetoric about an individual mandate, it’s essentially a tax incentive regime, so people who don’t have insurance pay a little more in taxes.”

Viewed that way, Ruger said, “it’s a form of incentive that has been used extensively through the decades.” For example, choosing not to purchase a house that qualifies for certain tax breaks might increase an individual’s taxes.

“No one will be put in jail for this; it’s clearly a monetary incentive,” he said.

But Randy Barnett, JD, professor of constitutional law at the Georgetown Law Center in Washington, said the commerce clause argument was a reasonable one.

“Requiring individuals to enter into an economic relationship with a private company has never been done before under the commerce clause,” he said. “It’s never before been used to make individuals engage in a private activity.”

The only things the government mandates that American citizens do “are pay taxes, register for the Selective Service, and serve on a jury,” Barnett continued. “So given that, there can’t be any precedent that says directly they can do this, and any challenge to that is therefore viable.”

He said the argument that the individual mandate is simply a monetary incentive by which people buy their own health insurance to avoid a tax doesn’t wash because “they [Congress] don’t claim they’re doing it under the tax power” of the federal government.

“They didn’t even include the revenue from the penalty in the list [of revenues generated under the bill] because they didn’t think it was a tax,” he added.

The suits also argue that the law unjustly coerces states into vast expansions of their Medicaid programs.

“I suspect the court would uphold this part of the statute . . . under the spending clause, which allows the federal government, when it spends money, to condition the receipt of that money on states adopting certain terms,” Ruger said. “Medicaid is a federally funded program that comes with strings attached.”

He noted that participation in Medicaid is voluntary on the state’s part: “As a formal legal matter, states could turn down Medicaid altogether.”

But Barnett said the new law is indeed coercive, citing an earlier case in which the court permitted the federal government to withhold some federal highway funds from any state that did not raise its drinking age to 21.

“One reason the court said they were upholding that is that [the government] only conditioned 5% of federal funds on states raising the drinking age, so it wasn’t coercive,” he said.

“Under this bill, states have to forgo 100% of federal funding, and I think it’s viable to ask whether that’s coercive and if it is, then it’s unconstitutional commandeering of the state.”

If a state does opt out of Medicaid, its citizens will continue paying federal taxes, some of which will go to the Medicaid program, “but they don’t get the Medicaid funding back, so that’s not exactly an opt-out,” said Barnett.

One thing experts agree on: no one knows how the justices will rule if the lawsuits, as expected, reach the the Supreme Court.

“You never know what four conservative justices plus [Associate Justice Anthony] Kennedy will do in cases involving relationships between states and the federal government,” said Segall.

Barnett agreed on the uncertainty but argued that challenging the law was a good idea.

“Is it viable?” he said of the suit. “I think so. Will it win? Who knows?”

One issue they all agreed on: if Solicitor General Elena Kagan is confirmed as the replacement for retiring justice John Paul Stevens, it will not drastically change how the court decides these issues.

“She’s as likely to vote to uphold the law as Stevens would have been,” said Barnett.

Segall agreed. “President Obama would never put anybody on the court who he didn’t have full confidence in to uphold the healthcare law,” he said. “I’d be shocked if she didn’t uphold it.”

Ruger also said he would be very surprised “if [Kagan] voted to overturn President Obama’s primary domestic policy initiative.”

But he noted that these are just speculations and will be for some time.

“It will probably be a few years before even lower courts address these issues, so we’re probably thinking about the Supreme Court five to seven years from now, and who knows what the [court’s] composition will be then?” he added.

Joyce Frieden is a MedPage Today News Editor.

Originally published in MedPage Today. Visit MedPageToday.com for more health policy news.