In Chief Justice John Roberts’ decision in National Federation of Independent Business v. Sebelius, he explains that, in arguing that the individual mandate should be “upheld as within Congress’s enumerated power to “lay and collect Taxes[,]” the Government did not claim that the taxing power allows it to mandate that individuals purchase insurance. Rather, the Chief Justice explains, the Government contended that “the mandate is not a legal command to buy insurance.” Under this argument, “going without insurance [is] just another thing the Government taxes, like buying gasoline or earning income.”
As Nathan Cortez highlighted, Chief Justice Roberts’ conclusion that the “shared responsibility payment” that individuals who do not secure health insurance will owe is a tax hinged in part on the fact that “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.” The Chief Justice emphasized that “[i]t may often be a reasonable financial decision to make the payment rather than purchase insurance…” The shared responsibility payment is more tax than penalty because it lacks a scienter requirement and because it “is collected solely by the IRS through the normal means of taxation–except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution.”
That “[t]he individual mandate survives as a tax” is for sure a victory for those who support the Patient Protection and Affordable Care Act. Yet, as Dave Hoffman points out here, victory in a broader sense will hinge on the Act’s success. And the very fact that the individual mandate is weak enough to be characterized, fairly, as not a mandate at all, raises the spectre of, as Professor Hoffman puts it, “disastrously bad adverse selection problems, coupled with a talking point (taxes & costs going up) to hammer liberals with for the next decade.”
The possibility that relatively healthy individuals and small employers with relatively healthy employees will opt out of purchasing health insurance — at all or through the Act’s health insurance exchanges — causing health insurance premiums to rise, the market to contract, and the exchanges to be destabilized is not a new concern. In March of this year, for example, Avik Roy argued at his blog at Forbes that “[b]ecause the mandate is weakly enforced, small in size, and gradually put into place, whereas the pre-existing condition mandate takes effect immediately, Obamacare creates the recipe for an adverse selection death spiral.” Now that the Supreme Court has upheld the Act, these concerns will take on a new urgency for federal and state regulators, insurers, and others.
In fact, just hours after the Court handed down its decision, John Reichard and Rebecca Adams at CQ HealthBeat were reporting that Cigna is planning a lobbying campaign with the goal of convincing lawmakers to strengthen the mandate. Reichard and Adams report that
“Cigna also plans to lobby state governors, state legislatures, the Obama administration and Congress to require waiting periods of up to six months if a health care plan enrollee decides to drop out of a plan and then decides he or she wants to get back in, said Tom Richards, president of Cigna’s individual and family plan division. Efforts in Congress likely won’t occur until next year, he said.
In other words, a person who dropped out of a plan could come back into it during the next open enrollment period but would have to wait for some specified period — perhaps six months — before they would be covered for a pre-existing medical condition. That would keep people from dropping coverage and then re-enrolling quickly if they got sick so they could be covered for that illness.”
Reichard and Adams quote Ron Pollack, the Executive Director of Families USA, who noted that instead of or in addition to pre-existing condition waiting periods, those who wait to purchase health insurance could be charged a higher rate, as is the case with Medicare Part B.
The individual mandate is not the only arrow in the Affordable Care Act’s quiver, however, and it remains to be seen whether these additional measures are necessary. The Act’s premium subsidies, for example, will provide a strong incentive to individuals to participate in the health insurance market. The “3 Rs” — the reinsurance, risk corridor, and risk adjustment programs — are also important, as they are designed to, as Timothy Jost explains here, ease the transition to the exchanges and to a market without medical underwriting and with premium tax credits. The final “R,” risk adjustment, will provide a mechanism to reduce problematic concentration of risk in the exchanges on an ongoing basis.
“The reinsurance program will [ease the transition] by collecting assessments from insured and self-insured group health plans and paying out funds to individual plans that cover high-risk individuals. The risk corridor program will collect funds from issuers of qualified health plans (primarily but not exclusively plans in the exchanges) that have lower-than-expected claims costs and pay out those funds to issuers of qualified health plans with higher-than-expected costs. It will thus stabilize the experience of these plans over the first three years when insurers will have a difficult time predicting exactly how to set their premiums.
Finally, the third ‘R’ program, risk adjustment, will on a permanent basis move funds from issuers in the nongroup and small group market (other than grandfathered plans) with lower-than-average-risk populations to those with higher-risk populations; this will discourage risk selection and compensate insurers that cover sicker enrollees.”
If the 3 Rs, and, in particular, the risk adjustment program, work as intended, a weak individual mandate may be strong enough.
In addressing the constitutionality of statutes, courts create and develop constitutional doctrine. Sometimes that doctrine works in a way that tests the constitutionality of a statutory provision in all of its applications, deciding either that it is unconstitutional “on its face,” so that it cannot be applied in any circumstances, or that it is constitutional in all of its applications. But frequently that doctrine instead tests the constitutionality of a statutory provision “as applied,” sorting between constitutional and unconstitutional applications of the statute, thereby allowing the statute to be applied to the extent it is constitutional, but only to that extent. The first approach calls for an all-or-nothing up-or-down decision; the second allows a statutory provision to be used in some, but not all, situations. The first approach raises the stakes; the second approach lowers them. The second approach also takes advantage of what courts are especially well-designed to do (and that legislatures are especially ill-equipped to do): focus on the particular – the particular applications of particular statutory provision in particular cases.
One of the issues lurking in the health care cases to be decided next week that has not received much press attention is which of these two ways the Court will address the constitutionality of the individual mandate. Everyone — including the parties — seems to seek and expect an up-or-down determination regarding the constitutional validity of the individual mandate. There are many reasons to think that the Supreme Court will oblige. Existing Commerce Clause doctrine dating back to at least Wickard (the wheat case) is shaped in a way that discourages as-applied challenges; prior successful challenges under the Commerce Clause such (Lopez, the Gun-Free School Zones case, and Morrison, the Violence Against Women case) have been facial challenges; and the as-applied challenge in Raich (the medical marijuana case) was soundly rejected.
In light of all this, odds are that the Supreme Court will either find the individual mandate constitutional on its face, following cases like Wickard and Raich, and foreclosing the possibility of as-applied challenges, or unconstitutional on its face, following cases like Lopez and Morrison, and foreclosing the possibility that it could be constitutionally applied in some instances.
But not necessarily. Judge Sutton, a Circuit Judge who was appointed by President Bush and had clerked for Justice Scalia, concluded that the right approach was to sort between the constitutional and unconstitutional applications of the individual mandate, not to declare that it is unconstitutional on its face and cannot be applied in any circumstance, and not to declare that it could be constitutionally applied in all circumstances. Because the Court is being asked to articulate a principle for the first time, it is freer to capitalize on its comparative competence, follow the path illuminated by Judge Sutton, and render a decision that lowers the stakes rather than raises them.
[Ed. Note: Professor Hartnett's paper on the subject, Facial and As-Applied Challenges to the Individual Mandate of the Patient Protection and the Affordable Care Act, originally published in the University of Richmond Law Review, can be found here, the abstract can be found here.]
Starting in 2010, states began addressing illegal immigration by rewriting their laws on the books. Over the past two years, two states – Alabama and Arizona – have passed strict anti-immigration laws, and both states have had their laws challenged in court with split results. Just last week, the Kansas legislature’s committee on House Federal and State Affairs reviewed new bills which would require police officers to verify citizenship and would criminalize the harboring of illegal immigrants. Mississippi, which estimates it has 90,000 illegal immigrants living within its borders, has also discussed passing an anti-immigration bill which would force police officers to detain those who fail to produce identification.
With more illegal immigrants becoming ensnared in the growing detainment and deportation framework nationwide, the question of how they should be treated, once detained, is unavoidable. How their mental health conditions affect their due process rights is one of the issues near the top of this list.
Four decades ago, the United States Supreme Court held that an incompetent criminal defendant could not be held by the state indefinitely while the state waited for him to become competent to stand trial. Instead, the court held, the detention must only be held for a “reasonable period of time necessary to determine whether there is a substantial probability that he will attain that capacity in the foreseeable future.” Jackson v. Indiana, 406 U.S. 715, 738 (1972). The court added that if the individual’s competence is unlikely to be restored, then the state must civilly commit the individual or release the defendant. Id.
However, today, contrary to the spirit of Jackson, those subject to removal proceedings who are declared incompetent to proceed are left in a lurch. Many represent themselves during the proceedings – according to the Department of Justice, about 60 percent. Further, the hearings are often complicated by language barriers. Without counsel and unable to understand the proceedings, the result: indefinite detention, or (arguably) worse, immediate deportation.
The lack of guidance – and dearth of procedural protections in this area – has even left judges seemingly frustrated. Immigration judge Renee L. Renner, in dismissing a removal proceeding against Ever Martinez Rivas, wrote that “[t]he Attorney General has provided little guidance regarding steps to take to protect the rights and privileges of the alien.” Likewise, in her decision, U.S. District Court Judge Dolly Gee noted “the absence of any systemic guidelines setting forth what is a ‘reasonable accommodation’ for unrepresented mentally incompetent aliens.” See Franco-Gonzales v. Holder, — F.Supp.2d —-, 2011 WL 5966667, at *12 (C.D. Cal. May 4, 2011).
But help could be on the way. Recently, purported class action lawsuits were filed by the ACLU, Public Counsel Law Center, and others, seeking representation for severely mentally disordered detainees. Although many of the court documents remain sealed, in a May decision, Judge Gee went on to order that mentally incompetent detainees must receive a custody hearing – in which the court would review the appropriateness of the detainee’s current custody – and must be given the services of a qualified representative (an attorney, law student or law graduate, or “accredited representative”). Id. at *11. Subsequently, in late November 2011, Judge Gee granted class certification to the detainees in the lawsuit (individuals with severe mental disorders currently detained in California, Washington, and Arizona). Franco-Gonzales v. Holder, No. CV 10-02211 (Order Re: Plaintiffs’ Motion for Class Certification) (Dkt. 348) (Nov. 21, 2011). Last week, the proceedings were stayed so that the parties could pursue a potential settlement. Id. (Order Staying Proceedings) (Dkt. 372) (Feb. 13, 2012).
The lawsuit seems to be a vital first step in building a more equitable system for incompetent detainees. And while litigation continues, the cases serve as a reminder to Americans to seek not only clear, enforceable guidelines governing removal and/or paths to citizenship, but also fair and clear procedures that govern deportation hearings themselves – especially for those who often are faced not only with language and cultural differences, but also the formidable challenge of severe mental disorder.
I have had a great deal of off-line correspondence with several readers about the applicability of the Anti Injunction Act to all of the lawsuits challenging the minimum essential coverage provision. Thanks to everyone who has written; it has been extremely helpful.
I remain convinced, at least at this point, that the AIA poses a very serious threat to the Supreme Court’s hearing of any challenge to the individual mandate. That said, I think I have a clearer idea of the issues that will determine the resolution of that issue.
* First, and perhaps most important, there is a very real dispute as to whether one should see the mandate (codified at 26 USC 5000A(a)) as a stand-alone legal obligation, or instead merely as part of a provision that, taken as a whole, gives those persons covered by the provision a choice between acquiring health coverage and paying a penalty.
* Second, this matters greatly, for if 5000A(a) is truly a stand-alone legal obligation, it obviously is not a “tax” within the meaning of the Anti-Injunction Act (or the General Welfare Clause). It is simply a command, an “economic mandate” in the words of Randy Barnett.
* Conversely, if the best way to see 5000A is in its entirety, giving “applicable individual[s]” a choice between either (a) buying insurance, or (b) remitting the applicable exaction on their tax return, then the provision might well be a “tax” within the meaning of the AIA, consistent with the reasoning of Judge Motz’s opinion in Liberty University.
There is much more to this issue. I think this question functions as a basic threshold, over which all other analysis of the AIA question must cross.
[Ed. Note: This post originally appeared on the aca litigation blog, an invaluable resource in following the various lawsuits pending against the Patient Protection and Affordable Care Act (PPACA or ACA). Bradley W. Joondeph, Professor of Law at Santa Clara Law School, publishes the aca litigation blog.]
[Ed. Note: We are pleased to welcome the work of Bradley W. Joondeph to HRW. He is a Professor of Law at Santa Clara Law School who publishes the aca litigation blog, an invaluable resource in following the various lawsuits pending against the Patient Protection and Affordable Care Act (PPACA or ACA). He specializes in Tax and Constitutional Law and is a well regarded author on the topics of federalism, judicial behavior, and American constitutional development. He has had extensive experience with the Supreme Court, having served as judicial clerk to the Honorable Sandra Day O’Connor. He also served as clerk for the Honorable Deanell Reece Tacha of the United States Court of Appeals for the Tenth Circuit.]
The big news from [last Friday's] two decisions was not that Virginia lacks standing; that was a problem lurking in that case from the beginning, a nettlesome issue going all the way back to Judge Hudson’s first opinion (in August 2010) rejecting the United States’s motion to dismiss on 12(b)(1) grounds. Virginia would have stood on much stronger ground had it also alleged an injury in fact from the effect of the minimum essential coverage provision’s necessarily pushing more Virginia residents onto the state’s Medicaid rolls, and thus imposing a significant financial cost on the state. But the Commonwealth failed to do this, instead resting on the claim that it had standing based on the alleged “conflict” between its Virginia Health Care Freedom Act and the individual mandate. This was a weak argument from the beginning, and the Fourth Circuit’s holding was entirely unsurprising.
What is surprising–perhaps not on the merits, but in relation to the attention the issue has received to date, from the courts and the parties–is the court’s holding in Liberty University v. Geithner that federal courts lack any subject matter jurisdiction over a suit seeking to enjoin enforcement of the individual mandate because such jurisdiction is precluded by the Anti-Injunction Act. In this respect, there are some important points worth noting:
* This is a potential problem in every lawsuit currently challenging the individual mandate. That is, if the Fourth Circuit’s analysis is correct, then the Supreme Court would lack jurisdiction to hear any private plaintiff’s claim that the minimum coverage provision exceeds Congress’s enumerated powers until after a taxpayer was assessed a penalty under ACA 1501, paid the penalty, and sued the federal government for a refund. The case thus would not reach the Supreme Court until somewhere in the neighborhood of 2015 or 2016.
* It is conceivable, though, that the AIA does bar suits brought by state governments. Of course, state governments have problems establishing standing under Article III, as discussed above. But if the states could overcome the Article III hurdle, it might be that they (unlike private plaintiffs) could avoid the AIA bar. (I remember Judge Hudson analyzing this issue in his August 2010 ruling denying the United States’s motion to dismiss. Obviously, I need to look at it more carefully now.)
* One solution is that which Kevin Walsh has just proposed, which you can read here. In essence, Congress could pass a law repealing the AIA (since it is a statutory bar to jurisdiction) as applied to the ACA lawsuits. As Kevin documents, such a “retroactive” restoration of jurisdiction appears to be viable, even if there actually was not jurisdiction when the case was initially filed in the district court. (I agree with Kevin that Democrats and the President likely have an incentive to appear publicly to support this. But I am not sure there is quite the bipartisan consensus in fact to which Kevin refers. I can think of several reasons that most Democrats would much rather this case be decided by the Supreme Court in 2013 rather than June 2012.)
* What does the Justice Department do now? It has already essentially flip-flopped on this question–initially arguing that the AIA precluded subject matter jurisdiction, but then changing its tune, most notably in the letter brief it filed with the Fourth Circuit after oral argument. Does it now wish to flip back, given that the argument now seems to have gained greater credibility? Or is there too high a political cost for the administration in appearing to run from a fight on the merits? Or is there just too much to gain politically from delaying Supreme Court review (something the Court might well welcome) and pushing the decision past the 2012 election, such that it is worth taking whatever the hit will be from appearing so irresolute? I’m sure the DOJ lawyers working on this case were happy to have prevailed yesterday. But they simultaneously had a new strategic headache thrown into their laps.
There is much more to say, but I need to look into the various legal questions with more care. For now, it suffices to say that the Fourth Circuit’s decision may well have complicated matters considerably, at least if Judge Motz’s analysis proves difficult for the Supreme Court to refute.
UPDATE: One other point worth emphasizing: Probably the most important analytic move in Judge Motz’s opinion was to hold that the meaning of “tax” for purposes of the Anti-Injunction Act and the meaning of “tax” for purposes of the General Welfare Clause (relevant to whether the individual mandate is a valid exercise of Congress’s taxing power) are distinct. More specifically, the category of “taxes” (or exactions) to which the AIA applies is potentially much broader than that under the General Welfare Clause. Most (and perhaps all–I would need to go back and check carefully) of the other judges to have analyzed the AIA issue thus far have treated the issues as one and the same. (Recall Judge Vinson’s opinion in October 2010, where he held that the individual mandate imposed a “penalty” rather than a “tax,” and thus concluded from this both that the AIA was inapplicable and that the individual mandate could not be justified by the taxing power.) My suspicion is that Judge Motz’s analysis on this point will be much harder to refute than the government’s claim that the mandate is a valid exercise of the taxing power.
This post first appeared on the aca litigation blog.