Today saw the first of three consecutive sittings of the United States Supreme Court dedicated to hearing arguments regarding the constitutionality of the Affordable Healthcare Act of 2010. The legislation has been considered a victory for social justice by its supporters and a stepping-stone toward a socialized healthcare system by its critics. Either way, the plan is undoubtedly expensive - the economic ramifications of which go beyond the scope of this blog.
For those of us who aspire to become future managers and business owners, the Act's "employer coverage requirement" hits close to home. It imposes new obligations on businesses who maintain fifty-or-more individuals on their payrolls (regardless of whether they are full or part time); a requirement which, if unfulfilled, subjects the corporation to a fine of up to $3000 per violation. Under the law, most smaller businesses are likewise compelled to meet certain standards. Such requirements will increase the cost of maintaining a payroll and pose a heavy burden on businesses who are already finding it difficult to stay afloat in a lackluster economy. Furthermore, because the legislation provides no incentive against doing so, the potential exists for business owners to elect to simply pay the fine if health insurance proves to be a costly alternative. However, it is the individual mandate to purchase health insurance that has proven the defining issue behind public support for legal action against the Affordable Healthcare Act. Just as with the employer mandate, the individual mandate imposes what Solicitor General Donald Verrilli referred to as a "penalty tax" on those who fail to purchase health insurance.
In a rare act of accommodation, the court has set aside three days for hearing arguments in regards to two cases addressing the constitutionality of the Healthcare Reform Act. This morning saw the first day of argument in regards to Department of Health and Human Services v. Florida. A link to a transcript and a recording of the day's proceedings is attached. In the interests of expediency, I have created thumbnail summaries of the arguments presented along with brief commentaries reflecting my own understanding.
Prior to hearing the litigants' arguments, amicus curiae ("friend of the court" - a disinterested party to the case who presents expert testimony of sorts to aid the court's decision making) Robert Long presented an argument invoking the Anti-Injunction Act as part of a lengthy chain of reasoning. This act involves a "pay-now, litigate-later" rule that essentially restrains litigants from raising questions in federal court regarding taxes and other tax-penalties prior to their collection. Furthermore, the act allows for a six month period during which an "administrative solution" to the grievance may be sought and requires that the case be initiated not by a taxpayer but rather by the Secretary of the Treasury. Long's ultimate conclusion held that because no "tax-penalties" (as stipulated by Section 5000A of the Affordable Healthcare Act) have yet been collected, the litigants have no standing in arguing this case before the court at the present time. Justices Scalia, Ginsburg, Alito, and Sotomayor appeared ambivalent to the idea that this act applies to the "penalty tax" - citing that the purpose of the penalty is not to raise revenue but to encourage compliance with the Act as evidence against the application of these laws. In my opinion, the amicus curiae's argument was presented to provide the Court with an "out" from deciding this case at the present time. The Supreme Court has a distinctive tendency to avoid passing judgement on controversial issues for as long as possible. As a case in point, in the high-profile 2004 case of Elk Grove Unified School District v. Newdow (where the constitutionality of the phrase "under God" in the Pledge of Allegiance was at issue) the Supreme Court avoided ruling on the issue altogether. Instead, they stated that the respondent did not have standing to sue on behalf of his non-custodial child. Mr. Long's argument presents a similar justification for refusing to rule on the case. However Associate Justice Breyer was the sole justice to express sympathy with this position during today's proceedings.
Solicitor General Donald Verrilli presented his arguments in favor of hearing the case by arguing that the AIA does not apply because, in short, the penalty for non-compliance with the individual mandate does not constitute a tax. Most of the Justices - including polar-opposites Justice Breyer and Justice Alito - had difficulty grasping his reasoning. In a moderately-publicized moment, Alito posed the question of whether the court must hold that "something is a tax for purposes of the taxing power under the Constitution" but "is not a tax under the Anti-Injunction Act." In response, Verrilli replied that they are two separate issues that should not be considered together. Later, Verrilli presented arguments that, in essence, stated that certain passages of the law do not necessarily mean what they say and referred to the fine for noncompliance as a tax in some instances (which he flatly denied it was) and a penalty in others. Indeed, his convoluted reasoning is a perfect illustration of what I consider to be the hair-splitting that the Obama administration seeks to pass off as justification for affirming the Healthcare Reform Act as soon as possible - a victory that, if won, they perceive as a critical lynchpin in securing President Obama's reelection.
Finally, Gregory Katsas, representing 26 states and a large group of private businesses and organizations, presented the respondents' case: "“The purpose of this lawsuit is to challenge a requirement — a federal requirement to buy health insurance. That requirement itself is not a tax. And for that reason alone, we think the Anti-Injunction Act doesn’t apply.” Chief Justice Roberts questioned Katsas' decision to consider the mandate and the penalty as two separate issues. Katsas pointed out that although the mandate applies to everybody, the penalty does not (an income cutoff exists so that a poor person would not be financially penalized for failing to purchase insurance). As evidence for the standing of the 26 states to sue, he argued that the mandate would force millions of uninsured individuals onto State Medicaid roles, resulting in expenses upwards of $600 billion annually - expenses that he argued constitute injury. Unsurprisingly, Justices Kagan and Sotomayor appeared skeptical of accepting the states as injured parties.
In summary, today's arguments centered around the litigants' standing in arguing this case before the Supreme Court. The HHS sought to convince the court that the penalty for noncompliance with the individual mandate does not constitute a tax (though tomorrow they will seek to do the opposite.) The respondents also sought to convince the court that the penalty is not a tax, adding the contention that the states constitute injured parties. Both arguments attempt to disprove the amicus curiae's argument that, under the AIA, this case does not presently belong in court because no tax has been collected and administrative remedies have not been exhausted.
Arguments continue tomorrow, with a final decision being reached this June.
Transcript and Audio
-- M. Brandon
