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Obamacare and the Supreme Court


By Gary MacLaren, Representative HD 89

This last week The US Supreme Court heard arguments on four different lawsuits regarding the Patient Protection and Affordable Care Act, or ACA.  Probably no case has attracted as much attention and interest since the Gore v Bush decision in 2000.

The first case has to do with whether or not the Individual Mandate assesses a tax or a penalty for failure to comply. The Anti-Injunction Act of 1857 is a federal law that precludes, with certain exceptions, an individual from suing the federal government to prevent a tax from being assessed or collected. The issue here is whether the suit can go forward since the tax is not yet in effect.  The court must determine whether the penalty an individual is assessed for failing to obtain health insurance as required by the “individual mandate” is a tax penalty.  If it is found to be a tax, the court would be precluded from hearing the case until the penalty is assessed and paid.  The Individual Mandate does not become effective until 2014, therefore no penalty could be assessed until 2015 when the 2014 taxes are paid, therefore the Court could not rule on the constitutionality until 2015, at the earliest.

The second suit brought by 26 states and the National Federation of Independent Businesses challenges the constitutionality of the individual mandate which requires everyone to buy health insurance, or pay a penalty. The question here is if the individual mandate is upheld, does it extend the commerce clause too far.  Supporters of ACA argue that if the individual mandate is found unconstitutional then the requirement for insurance companies to insure people with pre-existing conditions (called guarantee issue) and charge them the same premium as healthy people in the same community (called community rating) will break insurance companies.

The third suit, and probably the most interesting, is the question of severability. Most bills when they go through the legislature, or Congress, contain a “Severability Clause” which basically says: “if any part of this law is found unconstitutional, the rest still stands”. The ACA was actually passed as two separate bills, one from the House and one from the Senate.  The Senate version never had a severability clause.  The House version had a severability clause in a couple of early versions, but the final version did not. The two bills were eventually forged into one by a “reconciliation act”, and the final bill had no severability clause.

Usually, this means that if any part, such as the individual mandate, was found unconstitutional then the whole thing goes. The court, on occasion, may find that the unconstitutional part is not essential to the rest of the law, and so let the rest stand.

The government’s attorney argued that the individual mandate was so important to guaranteed issue and community rating that if the individual mandate is unconstitutional, then the other two must be also, but the rest of the law could stand. The plaintiffs’ attorney argued that the individual mandate was so crucial to the whole bill that if the mandate is unconstitutional, then the whole law must be.

The fourth suit questions whether or not the Medicaid expansion is constitutional.

The arguments centered on whether or not the extent of the expansion constituted coercion of the states by the federal government. This is of huge importance to Montana. In 2009, before ACA was passed, Montana had 81,600 enrollees on Medicaid. Due to the economic downturn, in May 2011 we had 104,600 enrollees. Current estimated state costs of Medicaid in Montana for the biennium ending June 30, 2013 are $642M.

Current estimates are that ACA will add about 80,000 new enrollees. ACA will pay 100% of the cost of these people until 2017 when the amount will step down year by year to 90% in 2020. After that Montana will have to pay the 10% indefinitely. Of course, there will be a huge financial impact to administer the nearly double enrollment.

We won’t know what the court decides until June, but the Children, Families, Health and Human Services Committee is planning for this huge impact for the next legislature.

Stay tuned til June.

Activities and documents of the interim committees can be found at

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