February 7th, 2012
Briefs continue to be filed at a furious pace in the Affordable Care Act Supreme Court litigation. On January 6, the federal government led off with its brief challenging the decision of the Eleventh Circuit federal court of appeals that the ACA’s minimum coverage requirement (individual mandate) is unconstitutional. The states and the National Federation of Independent Businesses also filed briefs on January 6 arguing that if the Court finds the minimum coverage requirement unconstitutional, it must strike down the entire Affordable Care Act. A brief was also filed by a Court-appointed amicus curiae contending that the Anti-Injunction Act deprives the Court of jurisdiction to hear a challenge to the minimum coverage requirement because the requirement is enforced through an exaction imposed through the Internal Revenue Code and thus cannot be reviewed by a court until actually assessed. I discussed these briefs in an earlier blog post.
Since January 6, a number of additional briefs have been filed. On January 10, the states filed their brief challenging the Eleventh Circuit’s decision that the Medicaid expansions included in the Affordable Care Act are constitutional, and they filed their brief arguing that the minimum coverage requirement is unconstitutional on February 6. These briefs are discussed further below. On January 27, the federal government filed its brief on the severability issue, contending that if the minimum coverage requirement is stricken, the guaranteed issue and community rating requirements should also be stricken, but the ACA should otherwise be left in place. The brief of another Court-appointed amicus arguing that in the event the minimum coverage requirement is stricken, the entire remainder of the ACA can remain—the position adopted by the court of appeals below—is due February 17.
Amicus briefs supporting a party on each particular issue are due seven days after the party’s brief on that issue is due. To date, amicus briefs have been filed as follows:
- thirty-one briefs supporting the United States on the minimum coverage requirement issue,
- two briefs supporting the Court-appointed amicus on the Anti-Injunction Act issue,
- eleven briefs supporting the states and NFIB on the severability issue,
- seven briefs supporting the federal government on the severability issue,
- one brief supporting neither party on the severability issue, and
- seven briefs supporting the states on the Medicaid issue.
The federal government’s reply brief on the Medicaid issue is due February 10. Then each of the parties and court-appointed amici gets a final chance to respond to the issues on which they filed an initial brief, with the final briefs due March 12. A continued cavalcade of amicus briefs will follow in tow. The Court will hear arguments from the parties at the end of March. The briefs can be accessed through the ACA Litigation Blog. As mentioned, this post will discuss the states’ Medicaid brief filed on January 10 and the states’ brief on the minimum coverage requirement filed on February 6.
The States’ Medicaid Brief
The states’ Medicaid brief is a remarkable document. The basic argument of the states is that the ACA unconstitutionally “coerces” them into expanding their Medicaid programs to cover all individuals under age 65 with incomes up to 133 percent of the federal poverty level. (Actually, the ACA expands eligibility up to 138 percent of poverty because it disregards an extra five percentage points of household income above the 133 percent level.)
The states recognize the power of Congress to spend for the general welfare and to make grants to the states conditional upon the states acceding to certain conditions. They could hardly argue otherwise because the power of Congress to make conditional grants to the states has been recognized in Supreme Court precedent since the 1930s. Federal government conditional grant programs are in fact pervasive, including not just health and welfare programs, but also programs providing federal assistance for education, transportation, infrastructure, and indeed homeland security.
But, the states argue, conditional grants are only acceptable if a state can in fact turn down a grant if it does not want to accept the conditions attached to it. It is clear that the federal government cannot constitutionally force states to undertake programs against their will. But, according to the states, this is what the ACA Medicaid expansions effectively do. A state that refuses to expand its Medicaid program will under the ACA lose all Medicaid funding. Medicaid is the single largest source of federal funding to the states, accounting for 40 percent of all federal money dispersed to the states. States do not really have a choice to walk away from federal Medicaid funding, they argue. The states do not, therefore, really have a choice to refuse to participate in the Medicaid expansions. This coercion, the states contend, is unconstitutional.
The states argument is based on a number of premises. The first is that the ACA’s minimum coverage requirement “requires Medicaid-eligible individuals to obtain and maintain insurance.” This is simply not true in any meaningful sense for many, perhaps most, Medicaid-eligible persons. Although the minimum coverage requirement technically requires most uninsured individuals to purchase insurance, individuals and families with incomes below the tax filing limit (currently $8500 for an individual and $19,000 for a family) or who will not be able to obtain a basic insurance policy for eight percent or less of their income face no consequences if they remain uninsured. This effectively excludes most persons with incomes below 133 percent of poverty, although some Medicaid recipients offered health insurance through their jobs will be subject to the penalty if the employee’s share of the premium amounts to less than eight percent of their income and they fail to enroll, as will households that are eligible for premium tax credits that would reduce the cost of insurance below eight percent of household income.
The second premise is that the ACA makes no provision for funding health care for Americans with incomes below 100 percent of poverty other than Medicaid. This is basically true. It makes little sense to pay for private insurance with tax credits for people who do not pay taxes. The ACA instead offers much higher levels of federal funding for the Medicaid expansion group than it has historically offered the states for other categories of Medicaid funding—100 percent for the first three years phasing down to 90 percent, as compared to 50 percent to about 80 percent federal funding for traditional Medicaid. But the states must decide whether or not to accept this money and to continue to participate in Medicaid. The fact that the federal government will fund most of the cost of the expansion does not make participation in the expansion under threat of losing all other Medicaid funding less coerced, the states argue.
Third, the brief asserts that states would be limited in their ability to fund a separate program to replace Medicaid because the federal government would still collect from their citizens money to fund the federal Medicaid program in other states, limiting their ability to fund a separate program. This view is based on a particular, and rather radical, view of the nature of federalism: when the federal government collects taxes it is essentially taking money that belongs to the states and their citizens, not taxing its own citizens. It also ignores the fact that distribution of the burden and benefits of federal funding are already distributed quite unevenly among the states (with most of the 26 plaintiff states being net beneficiaries).
Finally, the brief argues that if the Court adopts the states’ coercion claim, this will not take down all other federal programs as well. It is hard to see what the inherent limits are to the theory the states argue. Whenever funding under any federal program is made to turn on compliance with any particular condition, it could be argued that the condition is coercive, effectively making participation with any particular requirement of any particular program optional with the states. The states argue, however, that the coercion doctrine only applies to the unique circumstances of the Medicaid program—the Court needn’t concern itself with the floodgates problem. The states’ argument, however, sounds suspiciously like the federal government’s “unique circumstances” argument, which the states discount when made in support of the minimum coverage requirement. It seems that everything about the ACA case is unique.
The states’ Medicaid brief is oddly devoid of legal authority. One of the cases cited most often in the brief is a 1936 case striking down a New Deal program that antedates the “switch in time,” after which the constitutional law of modern federalism was created. On the other hand, the brief ignores a host of lower court cases questioning or refusing to apply the coercion theory. The states fail to cite a single case applying the theory they argue to strike down a federal law. The Supreme Court, however, agreed to hear the states’ claim, even though the claim was rejected by both the district court and the court of appeals below, so it is a claim that has to be taken seriously, if only because the Court is Supreme, and can make new law when it chooses to do so.
The States’ Minimum Coverage Brief
The states’ minimum coverage requirement brief begins with the assertion that:
The individual mandate rests on a claim that is both unprecedented and unbounded: The power to compel individuals to engage in commerce in order more effectively to regulate commerce. . . . If Congress really had this remarkable authority, it would not have waited 220 years to exercise it. . . We would not have a federal government with limited and enumerated powers, or states that continue to enjoy dignity and residual sovereignty.
These themes—the unbounded nature of Congress’ claim that “economic” decisions are subject to federal government control, the unprecedented nature of the minimum coverage requirement, the threat the requirement poses to individual liberty, and the violence the requirement causes to the relationship between the state and federal governments—are repeated over and over again throughout the brief. The assertion that Congress has not claimed this authority for 220 years is repeated five times in the brief. Congress has gone too far, the states assert, and the Court must stand firm or the Republic is at risk.
The outline of the brief is familiar to anyone who has followed this litigation. The states argue first that the constitutional power to regulate commerce does not include the authority to require individuals to enter commerce. Further, the minimum coverage requirement is neither necessary to regulate commerce nor a proper means of doing so. Finally, the requirement is not a valid exercise of the power of Congress to tax.
The brief does present some new variations, however, on familiar themes. First, the states go to some pains to ground their position that the power to regulate commerce does not include the power to compel individuals to engage in commerce in the text of the Constitution, responding to, albeit without acknowledging, D.C. Circuit Judge Silberman’s observation that there was no textual basis in the Constitution for this argument. Thus, the states argue, with respect to other powers, such as the power to coin money, the Constitution grants Congress the authority both to create and to regulate, but this is not true with respect to the commerce power. They also argue that the Ninth and Tenth Amendments, and indeed the structure of the Constitution and the Bill of Rights, are based on an understanding of the limited reach of the power of Congress that the minimum coverage requirement exceeds.
The states’ brief also attempts to decouple regulation the market for health care services and the market for health insurance, which the federal government’s brief seeks to combine. The federal government argues that the minimum coverage requirement is necessary to ensure that insurance is available to purchase services in the health care market, and thus to avoid cost shifting. The states seem to think that it is important that the mandate only requires individuals to have insurance—not to use it to pay for services—and thus the requirement is in fact unrelated to the market for health care.
The states also contend that the requirement is neither necessary to effectuate any legitimate exercise of the commerce power nor constitutionally proper. Here they press the “absence of a limiting principle” argument that they have raised so often before. If Congress can require Americans to purchase health insurance, can it not require other forms of insurance, or food, or shelter? Just because Congress requires hospitals to provide uncompensated care in emergencies does not mean that it can then force individuals to pay for insurance to provide compensation. And if Congress has “a plenary power to compel individuals to live their day-to-day lives according to Congress’ dictates,” what residual authority remains to the states, the constitutional repository of the police powers? The states cite several times a Supreme Court decision from last term written by Justice Kennedy, noting the importance of the “diffusion of sovereign power” between the federal and state governments to protect individual liberty.
The states argue that Congress sought to use the commerce power to accomplish goals that it was unable to accomplish politically using its power to tax and spend—to finance health care for the uninsured and to compensate insurers for taking on high risk enrollees. The states argue emphatically, moreover, that Congress in fact did not use its taxation power in adopting the minimum coverage requirement. The states spend a surprising share of their brief arguing the tax issue, given how little traction the argument has so far gotten in the courts. First, they argue that the requirement is completely independent of the penalty that enforces it, so even if the penalty were a tax, it would not justify the mandate. Second, they argue that the penalty is not a tax. And, thirdly, they argue that if it is a tax, it is a direct tax unconstitutionally applied, raising an arcane constitutional issue that has heretofore been noticed only by tax law scholars.
Nowhere does the states’ brief acknowledge that their arguments have been rejected in by two out of the three appellate courts that have considered the issue in opinions written by distinguished conservative judges. The states press vigorously, indignantly, on. They are likely to find a sympathetic audience in at least some Supreme Court justices when oral arguments are heard in late March.
Editor’s note: Timothy Jost signed as an amicus on a brief by Health Policy Historians supporting the constitutionality of the minimum coverage requirement and is assisting with the preparation of an amicus brief supporting the constitutionality of the Medicaid expansions.