As has been widely reported, a sea of skepticism from all points on the Supreme Court’s ideological spectrum greeted arguments by Robert Long, who had been designated as the Court-appointed defender of the position that the Anti-Injunction Act (AIA), 26 U.S.C. § 7421(a), bars a pre-penalty challenge to the Affordable Care Act’s minimum essential coverage requirement. (§ 5000A of the Internal Revenue Code) (See, for example, Health Affairs Blog posts by Tim Jost and Wendy Mariner, although Bill Sage counsels against counting the Anti-Injunction Act out completely in his Health Affairs Blog post.)
The first objection from the Justices to Long’s argument was the not-surprising argument (not surprising from the Court, which naturally zealously guards the power of the federal courts to intervene in disputes) that the AIA is designed to stop individuals from bringing facial tax challenges, rather than the courts hearing them. For Justice Alito, who termed the law a “mandatory claims processing rule” (Tr., p. 10), the proper way to understand the AIA is as a law that prevents preemptive taxpayer judicial strikes against laws they don’t like, thereby circumventing the Treasury Department’s power to impose a tax and then sort matters out through a subsequent administrative proceeding. Viewed this way, the AIA becomes not a complete bar to the power of the courts to hear a challenge to a law such as the minimum coverage requirement, but instead simply a procedural requirement that the courts can waive as a matter of equity.
The second objection was best illustrated by Justice Breyer, who pointed out that the penalty “is not attached to a tax. It is attached to a health care requirement.” (Tr., March 26, 2012, p. 17). Viewed in this manner, the question of whether the AIA is a true jurisdictional barrier or merely an administrative procedure rule becomes irrelevant, since it simply does not apply to cases like this one, because no tax within the meaning of the AIA is involved. In contrast to the Fourth Circuit’s ruling in Liberty University v Geithner, 2011 WL 3963915, which dismissed the challenge to the ACA on AIA grounds, the Justices piled on, expressing their view that no tax of the sort that would trigger the AIA at all was involved.
Solicitor General Donald Verrilli, who advanced this position for the United States, concurred that this was the proper reading of the tax penalty provisions Affordable Care Act in an AIA context. (In one of the day’s lighter moments, Justice Kennedy asked Solicitor General Verrilli, “Don’t you want to know the answer?” (Tr. p, 36) when the Solicitor General took the position that whether the AIA was a true jurisdiction-stripping law need not be resolved because the Affordable Care Act’s tax penalty fell outside the provisions of the AIA).
A third objection voiced by the Justices – and the one that eventually got the Court into Medicaid territory, at least tangentially – was the one also advanced by National Federation of Independent Businesses (NFIB) in its briefs. This argument is that the case really is a challenge to the minimum essential coverage requirement itself, not to the tax penalty that might attaches to people who fail to comply with the requirement. Under this argument, the NFIB case could continue to go forward even were the AIA to close the door on a challenge to the tax penalty, since the minimum coverage requirement ostensibly rests on how Congress’s Commerce Clause powers are construed and does not involve a tax at all.
The Medicaid Discussion
This is where Medicaid entered the picture. In attempting to refute the NFIB’s argument that their challenge could survive as an attack on the minimum coverage requirement itself even were the AIA to be understood as barring a challenge to the tax penalty, General Verrilli appeared to take the position that the poor are not subject to the minimum coverage requirement, when in fact they are. In reality, the Solicitor General was attempting to pick his way through this preliminary minefield. But the discussion became highly confusing at this point.
JUSTICE ALITO: Suppose a person who has been receiving medical care in an emergency room — has no health insurance but, over the years, goes to the emergency room when the person wants medical care -goes to the emergency room, and the hospital says, well, fine, you are eligible for Medicaid, enroll in Medicaid. And the person says, no, I don’t want that. I want to continue to get — just get care here from the emergency room. Will the hospital be able to point to the mandate and say, well, you’re obligated to enroll?
GENERAL VERRILLI: No I don’t think so, Justice Alito, for the same reason I just gave. I think that the – that the answer in that situation is that that person, assuming that person – well, if that person is eligible for Medicaid, they may well not be in a situation where they are going to face any tax penalty.
(Tr. pp. 50- 51) In trying to make the point that for AIA purposes the penalty cannot be separated from the mandate, General Verrilli seemed to be trying to avoid the obvious, namely, that the poor are indeed subject to what was termed the “must-buy” requirement, that is, the minimum essential coverage requirement under § 5000a(a), regardless of whether they ever would be subject to a penalty. At this point, Justices Sotomayor and Kagan both sought further clarification, and it was clear that the AIA-related point that General Verrilli was trying to make was getting lost in the miasma of the Affordable Care Act’s two-step provisions – the minimum coverage requirement of § 5000a(a), and the penalty provision, § 5000a(b).
Because this point – namely that the must buy provision can be separated from the penalty provision — is so crucial to the NFIB’s argument regarding the right to proceed even if the AIA knocks out its challenge to the tax penalty, Gregory Katsas, arguing for the respondents, returned to the Medicaid example. Precisely because they are subject to the minimum essential coverage requirement but not to the penalty, he argued, the poorest Americans illustrate the very point that the Affordable Care Act challengers make, namely, that even if the penalty is inapplicable or waived, all people obligated under the minimum coverage requirement are subject to the command of the law and therefore have the right – that is, the standing — to challenge it.
MR. KATSAS: The very poor are the people Congress would be most concerned about with respect to the mandate, to the extent one of the justifications for the mandate is to prevent emergency room cost shifting when people receive uncompensated care. So they would have had very good reason to make the very poor subject to the mandate, and then they didn’t do it in a draconian way; they gave the very poor a means of complying with the insurance mandate, and that is through the Medicaid system.
The Court will, of course, on Wednesday turn to the question of whether Congress even has the power to deal with the poor in this non-draconian way. But in the meantime, the relationship between the minimum essential coverage requirement and Medicaid turns out to be key to the question of whether — in the unlikely event that the Court rules that the AIA prevents a challenge to the tax penalty — the Court nonetheless can hear a challenge to the minimum coverage requirement.
Editor’ note: Sara Rosenbaum signed two amicus briefs in support of the constitutionality of the ACA’s minimum essential coverage requirement, and was a joint author of a third brief in support of the constitutionality of the statute’s Medicaid expansion.