Over three days, the Supreme Court of the United States heard oral arguments in a challenge to the constitutionality of the Affordable Care Act. On March 28, the final day, the hearings were split into two sessions. In the morning they listened to both sides present their case on whether the Affordable Care Act must be overturned if a key component—the individual mandate—is thrown out.
Miller Johnson's Health Care Reform Team, formed in 2010, has kept you informed of all the key changes—discussions and deadlines—regarding the Act (see our Health Care Reform newsletters). Once the Supreme Court releases its opinion, which is expected in late June, we will provide additional information regarding its impact on employers, health plans, and individuals.
Here is the summary on the arguments from the final day's morning session. The summary of the March 28 afternoon session on the Medicaid expansion is posted separately.
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Today was the final part of the three-day marathon of Supreme Court arguments over the Affordable Care Act.
This morning, the Court looked at the first of two issues: assuming that the individual mandate is unconstitutional, can the rest of the Affordable Care Act remain in effect, or must it fall as well? Put differently, is the individual mandate severable from the rest of the Act?
The Challengers' Position
Paul Clement, the attorney for the challengers argued that, "If the individual mandate is unconstitutional, then the rest of the Act cannot stand," because the mandate is the heart of the Act, without which the remaining provisions fall like dominos. He quickly pointed out that even the government concedes that at least two other provisions fall with the individual mandate: the guaranteed issue provision and the community rating provision.
He then explained the domino effect. The individual mandate, the guaranteed issue provision, and community rating provision "are the heart of the Act.' "They are what make the exchanges work." "The exchanges," he continued, "are critical to the tax credits . . . to the employer mandate . . . and the Medicare provision."
He pointedly asked the Court: "Do you want to give Congress the task of fixing the statute after something has been taken out, especially a provision at the heart, or do you want to give Congress the task of fixing health care?"
Several of the justices expressed concern that Mr. Clement's position went too far. Justice Sotomayor asked, "[W]hy don’t we let Congress fix it?" Justice Kagan echoed that sentiment saying, "And on something like the exchanges it seems to me to a perfect example where half a loaf is better than no loaf." Justice Ginsburg pointed out that "there are so many things in this Act that are unquestionably okay." She then asked Mr. Clement why the Court should accept his "wrecking operation" over "a salvage job." Even Chief Justice Roberts asked, "[W]hy should we strike the whole Act, when Congress has other tools available?"
But Mr. Clement's position was not without support. Justice Scalia, later in the argument, bluntly stated his position, "My approach would say if you take the heart out of the statute, the statute is gone."
The Government's Position
Edwin Kneedler, the Deputy Solicitor General representing the United States, argued that, assuming the individual mandate is unconstitutional, only the community rating and guaranteed issue provisions fall with it; the rest of the Act stays in place.
In support of that argument, he made two main points. First, he argued that the challengers lack standing—the legal capacity to bring a lawsuit—to challenge many parts of the Act, because those parts do not impact them. Second, and more importantly, he argued that the text of the Act "creates a sharp dividing line" between the individual mandate, the guaranteed issue provisions, and the community rating provisions on the one hand, and the rest of the Act on the other. He also pointed out that Congress did not intend for the whole Act to fall with the individual mandate, because there are "many provisions that are operating now" without the mandate being in effect.
The justices seemed critical of Mr. Kneedler's argument on standing. Justice Scalia pointed out that there are some provisions in the law that no one would have standing to challenge. "Can that possibly be the law?" he asked. And Justice Sotomayor asked him three times to move on from that argument.
His second argument was met with a mixed response. Justice Ginsburg commented that only one branch of government "clearly" has the authority "to take out what isn't infected by the Court's holding . . . and that's Congress." Justice Kennedy contended that by removing the individual mandate together with the community rating and guaranteed coverage provisions would result in "a new regime that Congress did not provide for, did not consider." And Justice Scalia balked at the idea that the Court should go section by section through the Act to determine what stood or fell with the individual mandate. "What happened to the Eighth Amendment [prohibiting cruel and unusual punishment]? You really want us to go through these 2,700 pages?" Justice Breyer also expressed some frustration, at one point asking Mr. Kneedler whether he and Mr. Clement would be willing to go through the Act themselves to determine which provisions they could agree on before returning to the Court to argue the remainder.
The Court-Appointed Amicus Curiae's Position
H. Bartow Farr, an attorney appointed by the Court to argue that no other part of the Act should fall with the individual mandate spoke last. He made two arguments.
First, although the individual mandate was a tool to help reduce health care costs in light of the guaranteed issue and community rating provisions, other provisions effectuate that goal as well. For example, he cited provisions dealing with enrollment periods and subsidies.
Second, he argued that, although Congress has stated that the individual mandate is "essential" to other parts of the Act, the text of the Act did not eliminate the possibility that the individual mandate is severable from the other sections. According to Farr, this is because Congress used the term "essential" to mean useful, not absolutely necessary.
Mr. Farr met near universal criticism. Justice Ginsburg commented that, if the community rating and guaranteed issue provisions remained and the individual mandate fell, the former would do little good, because people "won’t be able to afford the premiums." Justice Kagan suggested that such a system "crashes and burns" without the individual mandate. Justice Sotomayor bluntly stated that the community rating and guaranteed issue provisions "would be a death spiral" without the individual mandate. Scalia contended that Mr. Farr's suggestion would bankrupt the insurance companies by requiring them to provide coverage to everyone without any way to pay for it.
At the end of the morning's argument, the Court did not seem to favor any of the three mutually exclusive options offered by the parties. But one common theme did emerge: the Court resisted taking on the onerous task of going provision-by-provision through the Act to determine which parts stand or fall with the individual mandate. Instead, the Court seemed to prefer to leave that task to Congress.
That sentiment may ultimately prove to be a boon to the Act's viability. There are many provisions in the Act that are popular (i.e. the provision preventing insurers from excluding people for pre-existing conditions) and constitutional. If the Court does rule the individual mandate unconstitutional, it may decide not to throw the baby out with the bathwater and only strike that one provision—leaving Congress to sort out the remainder.
This summary was provided by CJ Schneider. If you have any questions, you may contact him at
or 616-831-1738 or any other member of our Health Care Reform Team. The transcript from the Supreme Court of the United States hearing can be found at http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-393.pdf