Hot Topic: Supreme Court Takes Up the Health Care Law and the Individual Mandate

Hot Topic: Supreme Court Takes Up the Health Care Law and the Individual Mandate

The Supreme Court will begin hearing arguments this
week in a challenge to the most significant overhaul of the nation’s health
care system in nearly 50 years. The suit brought by 26 states, several
individuals, and a national business group challenges the
Affordable Health Care Act, which President Obama signed into law two years ago. The law requires nearly all Americans to obtain insurance
or pay a penalty by 2015. The court will dedicate six hours to hear arguments
over three days, the most time given to any case since 1966. Joel C. Cantor,
director of Rutgers’ Center for State Health Policy and a professor of public
policy, explains the issues the court will consider, components of the law, and
what’s at stake if it’s struck down. 

Rutgers Today: What
issues will the Supreme Court consider this week?

Joel Cantor

Joel C. Cantor

Cantor: First, the
court will address whether it has the jurisdiction to hear the constitutional
case against the individual mandate, the most controversial provision of the health care law requiring virtually all Americans to buy health insurance. The provision takes effect January 2014. There is a very old federal law, the
Anti-Injunction Act, which says you can’t challenge a federal tax until it’s
imposed – you actually have to pay the tax to oppose it. If the court decides the
act applies, it could be the end of the story on this part of the case for a
few years. No one has to pay the penalty until they pay their taxes on April
15, 2015. 

Rutgers Today:
What other issues will the court consider?

Cantor: The court will
review whether the individual mandate, to take effect in 2014, is constitutional and that is a very big
issue. Most health insurance analysts believe that without the
mandate the law would be ineffective: it would not cover nearly as many people
and it would cause harm to the stability of the health insurance market.

The Commerce clause of the Constitution gives the U.S.
Congress the power to regulate commerce among the states. But is this interstate
commerce? The plaintiffs are arguing this mandate regulates inactivity, not
activity, and therefore is not interstate commerce. But there is a body of law
that suggests it is interstate commerce, and there are previous cases. For
example, the court has decided that a wheat farmer growing wheat for his own
use affects interstate commerce. He is not selling it, but it affects the
market and the market is interstate. 

Rutgers Today:
What happens if court strikes down the individual mandate?

Cantor: If the
justices were to strike down the mandate as unconstitutional, the question becomes: Do they have to strike down the whole law or would they strike down only pieces
of the law, and if so which pieces? Opponents of the law say the court should
strike down the whole thing, but proponents say if they strike down the mandate, there are a few pieces that have to
go but the bulk of it can stand. The administration argues that the regulations
requiring insurance companies  to take
everybody regardless of their health, and some of the rules for setting
premiums that say insurers can’t charge sick people more would have to go but
the rest can stand. Legal scholars suggest that it’s the tendency of the court
to make its decision as narrow as possible, so the likelihood that the whole
thing will be struck down is small.

Rutgers Today:
Why is the individual mandate an important part of the law?

Cantor:  Fewer people would end up enrolling in
coverage when the main parts of the law go into effect in 2014, even with
subsidies available. The other implication is the price of health insurance is
driven by who buys it. The people who are least likely to buy coverage are
people who are comparatively young and healthy and don’t believe they will have
health care costs. The people remaining in the risk pool will require more
services and, therefore, premiums will go up. Right now there is a large number
of people without health insurance coverage, and many will get sick or injured
and incur catastrophic costs that they can’t pay. Some estimates say that for
the average family health insurance plan, about $1,000 a year goes to subsidize
the uninsured, so that drives up premiums.

Opinion polls show the individual mandate is by far the most
unpopular part of the act. But the new rules that require insurance companies to
cover everybody regardless of their health are enormously popular. I think in
the mind of the public, they haven’t made the connection between the two, but
you can’t have one without the other. Imagine a world where you can get health
insurance no matter how sick you are. You would be irrational to buy health
insurance until you are sick and the insurance industry simply can’t exist with
that model.

Rutgers Today: What
about the expansion of Medicaid? Why is that being challenged as part of this

Cantor: The law
will reduce the number of uninsured people in the United States by 32 million
and about half of that is through the expansion of the Medicaid program. Right
now Medicaid covers low-income adults who have children, are elderly, or who have
certain disabilities. The act does away with eligibility categories and creates
a single income threshold, making able-bodied low-income single adults are the
biggest part of the expansion.

For this group, the federal government will pay 100 percent
and eventually phases it down to 90 percent. 
The last issue the court will consider is whether the Medicaid expansion
part of the law is an unconstitutionally coercive imposition of federal power
over the states. The 26 states argue they don’t have a choice but to implement
a big Medicaid expansion that will cost them money.  States have the option of dropping their
Medicaid programs altogether, but if they keep their program they have to
expand them.  There is a long history of
federal expansions of Medicaid, and the court will have to decide whether this
one is different and unconstitutional.

Rutgers Today:
Are there other parts of the law that are not part of this challenge?

Cantor: One of
the early pieces of the law to be implemented requires employers and health
insurers to allow young adults to stay on their parents plans until their 26th
birthday. It’s widely popular and as of June 2011, 2.5 million young adults
have gained coverage. If the whole law gets struck down, and as I said that’s unlikely,
this could go away. The other thing the law slowly does is close the “doughnut hole”
Medicare prescription gap. There is an estimate that in 2011, New Jersey
Seniors saved $95 million. Health insurance also now has to cover preventative
services with no deductibles or cost sharing. If the whole law gets struck down, and as I said that’s unlikely, all this could go away.

Media Contact: Andrea Alexander
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