All three requests for oral arguments before the Supreme Court are appeals of a 300-page opinion handed down in Atlanta's 11th Circuit Court of Appeals. A three-judge panel of the court ruled Aug. 12 that the law's requirement for nearly all Americans to buy health insurance by 2014 was unconstitutional. But the circuit court also ruled that the rest of the reform law should be allowed to stand without the so-called individual mandate.
The National Federation of Independent Business, along with private citizens Kaj Ahlburg of Washington state and Mary Brown of Florida, want the Supreme Court to overturn the Atlanta judge's holding that mandate can be severed from the wider law. They note that Congress itself said mandate was “essential” to the law, and say government lawyers have admitted as much in oral arguments.
Greg Katsas, a Jones Day attorney representing the federation, said the reform law's requirement that insurance companies issue policies to virtually anyone who applies would become dysfunctional without the corresponding requirement that nearly everyone buy insurance. “The question is, if Congress couldn't have the mandate, would they want that dysfunctional and unsustainable scheme? The answer seems, pretty clearly, no,” Katsas said.
A Justice Department official who spoke on a conference call with reporters on condition of anonymity Wednesday said the insurance mandate is essential to the law's provisions on private insurance because without it, “people could theoretically buy insurance on the way to the hospital.”
“When the Supreme Court rules, what it says about the statute and what remains is what we'll have to work with,” the Justice Department official said. “What we've said before is that we think the minimum-coverage provision serves a very important purpose.”
U.S. District Judge Roger Vinson of Pensacola, Fla., originally struck down the entire reform law after finding the mandate unconstitutional, but the 11th Circuit upheld the law and opted instead to strike down only the insurance mandate.
Meanwhile, the legislatures, governors or attorneys general with 26 states have filed for permission to argue before the Supreme Court that the 11th circuit decision was flawed in upholding Vinson's ruling that it was constitutional for Congress to use the reform law to force states to significantly expand their costly Medicaid programs.
The Congressional Budget Office has estimated the reform law would expand insurance coverage to as many as 32 million more Americans, half of whom would receive it through mandated changes in eligibility criteria for state Medicaid programs. (The other half would be forced to buy it themselves, often with federal subsidies in state insurance exchanges.)
The reform law forces states with Medicaid programs to accept beneficiaries with incomes less than 139% of the federal poverty level by 2014, and to expand the number of offered Medicaid services. States will pay for 5% of the cost of expansion by 2017, and 10% of the costs by 2020, but states that don't comply could lose all federal Medicaid funding—typically more than $1 billion a year each.
The states argue that the Medicaid expansion is unprecedented federal coercion, infringing of states' rights to manage their most costly programs. Although that argument has been rejected by every federal judge that has so far heard it, Florida Attorney General Pam Bondi was confident of a different result from the high court.
“On the Medicaid coercion issue, even the 11th Circuit acknowledged that they denied it only after serious thought,” Bondi said in an interview. “If we don't participate in this, we lose all Medicaid funding. And if that's not coercion, I don't know what is.”
The Justice Department official who spoke with reporters Wednesday said the Medicaid-coercion argument has no merit.
“The states’ argument is that when the Affordable Care Act expanded the coverage for Medicaid, that coerced the states into accepting and implementing the program,” he said. “The problem with that argument is that Medicaid is voluntary and it is a well established legal principle that states cannot accept the money and not abide by the terms by which the money was supplied.”
The Supreme Court's fall term for oral arguments opens next week. Bondi said the states' goal is to have the court grant oral arguments in its spring term next year, which would likely produce a final decision on the reform law by June 2012. The states should know by the end of the year if the court will grant arguments next spring, she said.