Obamacare’s Legal Hurdles Seen Leading to New High Court Review

President Barack Obama’s health-care law, which survived a test before the U.S. Supreme Court in 2012, is facing new legal challenges that make another high court showdown all but inevitable.

More than 65 lawsuits around the country are targeting key provisions of the Affordable Care Act, from its contraceptive mandate to the Medicare spending-cut mechanism, raising the prospect that the law could be partially dismantled.

“This law is going to be litigated up and down for years,” says Jonathan Adler, who directs the Center for Business Law & Regulation at Case Western Reserve University School of Law in Cleveland. “And the litigation is not going to come exclusively, or necessarily even primarily, from those we might characterize as the law’s opponents.”

The lawsuits are part of the resistance the health-care law continues to face three years after its passage. Republicans in the House today will hold their 40th vote to defund or repeal at least part of the law, and state Republican officials last year came within one Supreme Court vote of overturning the measure. The court upheld the law’s centerpiece, the requirement that people get insurance or pay a penalty, with Chief Justice John Roberts joining the four Democratic appointees in the majority.

The next Supreme Court clash may be over the federal government’s requirement that employer-provided insurance plans include contraceptive coverage. A case involving that issue could reach the high court within a year.

Hobby Lobby

Hobby Lobby Stores Inc., a family-run craft store chain, and at least 34 other companies have sued for an exemption. They say the birth-control mandate would violate their religious freedom, forcing them to offer a benefit they consider immoral.

“The government has plenty of other ways to deliver these drugs,” says Mark Rienzi, a lawyer for the Becket Fund for Religious Liberty. The group represents Hobby Lobby, whose owners say they run the company “consistent with biblical principles.”

The core legal question is whether companies can assert the same rights as people, an issue that drove an ideological wedge through the court in the 2010 Citizens United case, which cleared the way for corporations to spend unlimited sums on political campaigns.

The Obama administration says for-profit corporations aren’t covered by the Religious Freedom Restoration Act, a 1993 law that says the U.S. government may “substantially burden a person’s exercise of religion” only in rare cases. The law was a response to a 1990 Supreme Court decision that cut back on the constitutional protections for religious practices.

Triggering Review

One federal appeals court backed Hobby Lobby in June. In late July, a different appeals court rejected a similar claim by a Mennonite-owned cabinet-maker in Pennsylvania, Conestoga Wood Specialties. The at-odds rulings created the type of lower court division that often triggers a Supreme Court review.

Two other suits would undercut a crucial aspect of the law: the subsidies being offered to help lower-income people buy insurance through the online marketplaces known as exchanges.

One case is being pressed by Scott Pruitt, the Republican attorney general of Oklahoma, the other by Michael Carvin, a lawyer who helped argue the case against the health-care law at the Supreme Court last year.

The legal challenges stem from what Case Western’s Adler says is the law’s slipshod wording. In maneuvering to ensure passage in 2010, congressional Democrats took a procedural shortcut by skipping the typical House-Senate conference that would have provided an opportunity to clarify the language.

No Flyspecking

The bill didn’t get to go through the normal flyspecking that a large regulatory statute usually goes through,” Adler says. “You have all these provisions that aren’t written the way people had hoped.”

Pruitt and Carvin are making an argument that, if successful, would free some people from the penalties that the Affordable Care Act imposes for not carrying coverage.

They say the law makes subsidies available only to people who buy insurance through state-run exchanges, and not to those who use the federal exchange that will operate in more than half the states. A ruling in their favor would abolish the subsidies in much of the country and by extension let more people claim that insurance is unaffordable. Under an exemption in the law, people who can’t afford insurance don’t have to pay the penalty.

Defenders of the law say Congress’s aim was clear -- to make subsidies broadly available -- even if its wording wasn’t.

Opponents “have yet to come up with a figment of any kind of indication that Congress intended federal exchanges to do anything other than issue premium tax credits,” says Tim Jost, a health-law professor at Washington and Lee University School of Law.

Medicare Cuts

Two other challenges filed by conservative groups are now on appeal.

The Goldwater Institute, on behalf of an Arizona doctor, is trying to block the Independent Payment Advisory Board, which is supposed to impose cuts in Medicare, the federal insurance program for the elderly, if spending exceeds inflationary targets.

The institute contends that the agency would exercise vast authority with little oversight, in violation of separation-of-powers principles.

The Pacific Legal Foundation is pressing the second suit, for a small-business owner in Iowa who wants to invalidate the entire law for violating the constitutional requirement that revenue-raising bills originate in the House.

The Senate passed the health-care law first, though it did so by amending a House-passed bill on an unrelated subject. A trial judge found that procedure to be adequate and said the origination clause didn’t apply anyway because revenue-raising wasn’t the main purpose behind the law.

“It’s just like trench warfare in World War I,” says Jost. “It’s going to be, ‘Fight every hedge row, fight every ditch.’ ”

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net.

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