HOW WILL THE AFFORDABLE CARE ACT AFFECT ANESTHESIOLOGISTS AFTER THE SUPREME COURT RULES?
November 21, 2011
Several readers have asked how to plan for the next few years now that the United States Supreme Court has announced that it will review the constitutionality of the Affordable Care Act (the “ACA”) next year. The answer depends on whether the Supreme Court’s decision, which is expected by early summer, upholds the ACA, invalidates it in part, or decides that the entire statute must fail.
Twenty-six states and the National Federation of Independent Business, the small business lobby, have joined in the challenge to the ACA’s requirement that all persons carry health insurance or pay a penalty starting in 2014. There are four specific questions before the Court:
- Does the United States Constitution allow Congress to require all persons to have health insurance -- to impose the “individual mandate -- by 2014?
- If the individual mandate is unconstitutional, can it be severed from the rest of the ACA, or must the entire statute fail?
- Is the issue “ripe,” or should the decision be delayed until the first taxpayers might pay a penalty for not having health insurance. i.e., in 2015? and
- Can Congress force the states to pay the extra cost of expanding the Medicaid program?
Two of the three federal Courts of Appeal that have addressed the first question have upheld the constitutionality of the individual mandate. On November 8th, the D.C. Circuit Court of Appeals joined the Sixth Circuit in ruling that the mandate is a valid exercise of Congress’ authority to regulate “commerce” or economic activity. Seven-Sky v. Holder, No. 1:10-cv-00950 (D.C. Cir. Nov. 8, 2011); Thomas More Law Ctr. v. Obama, 651 F.3d 529 (6th Cir. 2011).
Previously, the Eleventh Circuit had rejected the argument that the Commerce Power authorizes the individual mandate, taking the position instead that people who do not wish to purchase health insurance are inactive and that Congress cannot regulate inactivity. Florida v. Department of Health and Human Services, 648 F.3d 1235 (11th Cir. 2011). In the view of the Eleventh Circuit and the various lower federal courts that have found the individual mandate to be unconstitutional, Congress cannot require people to purchase health insurance any more than it can require them to purchase some other product or service.
The D.C. Circuit, on the other hand, rejected the economic activity vs. inactivity distinction. As explained in easily understood language by Erwin Chemerinsky, dean of the University of California-Irvine School of Law,
The key flaw in this argument is its failure to recognize that literally everyone at some point will use the healthcare system. Children must be vaccinated to attend school. If a person contracts certain communicable diseases, doctors must report them and the government can require treatment. If a person is in a car accident, the ambulance will take him or her to the nearest emergency room and medical care will be provided.
Therefore, even though it appears that some people are abstaining, in fact everyone is already making an "affirmative" active economic choice to purchase health insurance or to self-insure. The Affordable Care Act regulates this economic activity by imposing a penalty on those who choose to self-insure in order to create a system in which all can have access to the healthcare system
The Eleventh Circuit also held that the individual mandate was a severable provision of the ACA and that striking that provision would not affect the rest of the statute. This set the stage for the second of the questions on which the Supreme Court will hear arguments – five and a half hours have been scheduled, an unprecedented amount – in March.
On the third Supreme Court question, i.e., whether the decision should be delayed until an actual penalty or tax has been paid, the Eleventh Circuit’s position is in conflict with that of the Fourth Circuit Court of Appeal. If the amount to be paid by the individual who fails to carry health insurance is considered a “tax,” there can be no pre-enforcement action enjoining its enforcement under the federal Anti-Injunction Act. The Fourth Circuit held that the penalty was in essence a tax and therefore the action was premature. Liberty Univ. v. Geithner, No. 10-2347 (4th Cir. 2011). The Eleventh Circuit disagreed, maintaining the distinction between a “penalty” and a tax, and rejected the prematurity argument which is now before the Supreme Court. Should the Court side with the Fourth Circuit and find that the Anti-Injunction Act applies, meaning that any decision on the substantive constitutionality of the ACA will be delayed for years until the right case reaches the Court, it would be hard to imagine a greater anticlimax.
The fourth and final question to be addressed by the Supreme Court does not relate to the individual mandate. Rather, some of the states contend that the ACA’s expansion of Medicaid violates their sovereignty by coercing them to spend more on health care for low-income residents. The counter-argument is that the states are free to reject federal Medicaid funds and the conditions on which those funds are given altogether.
Predicting the Supreme Court’s decision is going to become a popular sport at least in and around Washington over the next few months. Although five of the nine justices were appointed by Republican presidents, one or more of them could join the Court’s four liberals in upholding the ACA. The D.C. Circuit and Eleventh Circuit majority opinions finding the health care reform package constitutional were written by conservative judges. Stuart Taylor, Jr., a fellow at the Brookings Institution, wrote in the November 14th edition of Kaiser Health News that “Most but not all Supreme Court experts predict – some very confidently, some cautiously – that the Court will uphold the law.” We shall see.
If the individual mandate is struck down, the ACA may not survive. “The Obama administration insists that if the mandate falls, so does the provision on pre-existing conditions,” according to a news analysis published in the New York Times on November 15th. The health insurance industry supported healthcare reform, including the elimination of exclusions for pre-existing conditions, only because of the individual mandate.
Unraveling some of the changes already made under the ACA would be complex. The White House estimates that one million more young adults under the age of 26 have health insurance because of the law. Would their premiums skyrocket and make continued coverage unaffordable? Other segments of the population have already become accustomed to having certain preventive health services paid for. The American Medical Association endorsed the healthcare reform legislation in part because of the promise of near-universal insurance. Whatever is left of physicians’ support is likely to vanish if the Medicare payment formula, including the Sustainable Growth Rate formula, survives but universal coverage does not.
The Medicare Shared Savings Program could lose its statutory foundation – but Accountable Care Organizations (ACOs) have their origin in private sector initiatives, and the drive toward greater accountability and “value” in health care is by now thoroughly embedded in our health care system. Next summer’s Supreme Court decision may change the course of national politics, but it will not diminish either the challenges or the opportunities for anesthesiologists.
With best wishes,
President and CEO