Some Justices Question Health Law’s Constitutionality

U.S. Supreme Court justices hinted they might strike down President Barack Obama’s health-care law as the court’s Republican appointees suggested Congress went too far by requiring Americans obtain insurance or pay a penalty.

On the second of three days of arguments in the historic case, justices’ questions indicated they might split 5-to-4, with the court’s five Republican appointees joining together to overturn the law.

Justice Anthony Kennedy said the measure is unlike others the court upheld previously because it tells individuals they “must act.” Kennedy, who most often occupies the court’s ideological middle ground, said, “That changes the relationship of the government to the individual in the very fundamental way.”

The law would extend coverage to 32 million people and revamp an industry that accounts for 18 percent of the U.S. economy. The court hasn’t overturned a measure with such sweeping impact since the 1930s, when it voided parts of Franklin D. Roosevelt’s New Deal, the package of economic programs enacted in the 1930s in response to the Great Depression.

The court probably will rule in late June, months before the November election. A ruling against the measure would give ammunition to Obama’s Republican challengers, who have said the law should be repealed.

Republican Appointees

The Standard & Poor’s Supercomposite Managed Health Care Index of 12 insurance companies rose 0.2 percent when the market closed.

The Obama administration needs the vote of at least one of the five Republican appointees on the nine-member court to uphold the law. Four of them -- Chief Justice John Roberts and Justices Antonin Scalia, Samuel Alito and Kennedy -- challenged U.S. Solicitor General Donald Verrilli, interrupting him repeatedly as he pressed his case for upholding the law.

“I don’t think the challengers could have hoped to have had a better day and I don’t think the government realistically could have had a more distressing day,” said Tom Goldstein, an appellate lawyer whose Scotusblog website tracks the court. Bloomberg Law sponsors the blog.

Roberts directed three-quarters of his approximately 20 questions to Verrilli. Roberts said the health plan would “require people who are never going to need pediatric or maternity services to participate in that market.”

‘Huge Subsidy’

Roberts and Kennedy also questioned the arguments of two lawyers challenging the statute. In one question, Kennedy suggested the health-care market might be one-of-a-kind.

Young people are “uniquely, proximately very close to affecting the rates of insurance and the cost of providing medical care in a way that is not true in other industries,” Kennedy told Michael Carvin, the lawyer for a business trade group. “That’s my concern in the case.”

Alito called the insurance requirement and penalties a “huge subsidy” from young, healthy people who don’t want coverage to those who need a lot of health care. He cited an estimate that people targeted by the mandate consume an average of $854 per year in health-care services, comparing it with the estimated $5,800 annual price for a individual insurance policy in 2016.

Bolstering Government’s Case

On several occasions, the court’s Democratic appointees jumped in to bolster Verrilli’s case. Justice Ruth Bader Ginsburg on multiple occasions said Congress was trying to address the problem of uninsured people shifting their health-care costs onto others.

“The problem is that they are making the rest of us pay for it,” she said.

As the justices heard two hours of arguments, hundreds of opponents of the law gathered near the court at an event sponsored by a Tea Party-affiliated group. They carried signs with slogans such as “One Big Lie” and “Don’t Tread on Me” and chanted, “Hey, hey, ho, ho, Obamacare has got to go!”

The courtroom was packed for a second straight day. Spectators included Attorney General Eric Holder and at least eight U.S. senators, including Republican Leader Mitch McConnell.

Verrilli contended that Congress can require people to buy insurance under its constitutional power to regulate interstate commerce, including the health-care market.

‘Enduring Problem’

People who don’t buy health insurance and can’t afford to pay for their care are guaranteed emergency-room treatment when they need it, Verrilli said. People who have insurance are subsidizing them, he said.

The law “addresses a fundamental and enduring problem in our health care system and our economy,” he said.

Scalia indicated he was skeptical.

“The federal government is not supposed to be a government that has all powers,” Scalia said. “It’s supposed to be a government of limited powers.”

At another point, Scalia said the administration’s argument would let Congress “make people buy broccoli.”

Ilya Shapiro, senior fellow in constitutional studies at the Cato Institute, a Washington group that urges smaller government, attended the arguments and said he watched Scalia’s face.

The justice was “scowling and grimacing in disbelief” at Verrilli’s arguments, he said.

Thomas Silent

The fifth Republican-appointed justice, Clarence Thomas, asked no questions, as is his practice. He has previously voted to put tight limits on Congress’s power under the commerce clause.

Paul Clement, a lawyer for the 26 states challenging the law, called it “an unprecedented effort by Congress to compel individuals to enter commerce in order to better regulate commerce.”

Justice Sonia Sotomayor suggested the federal government can require people to buy insurance ahead of time “because you can’t buy it at the moment you need it.”

The justices questioned Verrilli on whether Congress could force people to buy things such as food or burial insurance.

“Can the government require you to buy a cell phone because that would facilitate responding when you need emergency services?” Roberts asked.

Light Moment

Ginsburg rejected Alito’s concern that healthy people would have to subsidize the sick.

“That’s how insurance works,” she said. Later, she said, “People who don’t participate in this market are making it much more expensive for the people who do.”

The session included one light moment, when Justice Elena Kagan started to ask Carvin a question and then stopped to let him complete a thought. When she again tried to interject, Breyer cut her off and began asking Carvin a minutes-long series of questions.

When he finished, Breyer told Carvin, “Go back to Justice Kagan. Don’t forget her question.”

Kagan, the court’s newest justice, quipped, “I’ve forgotten my question,” causing the courtroom to explode with laughter.

“See what it means to be the junior justice?” she added with a smile.

During yesterday’s opening session, the justices suggested they will reject an argument that they can’t consider the case until the penalty is imposed in 2015.

Republican Challengers

Obama’s Republican challengers all oppose the measure and say they want to undo it. Former Pennsylvania Senator Rick Santorum appeared outside the court yesterday and attacked Mitt Romney, who signed a similar state law when he was governor of Massachusetts. Romney is the “worst person” to debate the health law with Obama, Santorum said.

The six hours of arguments spread over three days are the most the court has heard in a case in 44 years.

Tomorrow, the last day, the justices will consider what should happen to the rest of the law if they invalidate the insurance requirement. The court also will take up whether the law, by expanding the Medicaid program, unconstitutionally coerces states into spending more on health care for the poor.

The fate of the insurance requirement will turn partly on the court’s interpretation of the constitutional provision that lets Congress regulate interstate commerce. The justices’ opinions in previous cases only hint at how they may apply it to the insurance requirement.

Government’s Argument

The government says that every American is already part of the interstate market for health care and that the mandate requires them to get coverage to pay for treatment they will eventually need. The challengers say Americans who fail to buy insurance can’t be regulated because they aren’t engaged in commerce. Congress has never before required people to purchase something, they say.

Upholding the mandate, opponents say, would mean Congress could force consumers to buy any product for the sake of stimulating the economy. Instead of providing cash incentives to buy new cars and boost the auto industry, as the government did in 2009, Congress could have required everyone above a certain income level to buy a new car, they say.

The Obama administration and its allies say the auto and health-care industries aren’t the same. Uninsured people consumed $118 billion in health-care services in 2008 and paid only 37 percent of those costs, the administration says. Those costs are passed from care providers to insurers to policyholders, ultimately increasing the average premium for insured families by $1,000 a year, the government says.

The government also says the individual mandate will keep policy premiums in check by giving insurers millions of new, low-cost customers. Otherwise, prices would soar because the law also requires insurers to accept applicants with pre-existing conditions and charge them the same rates as other policyholders, the government says.

Of the four federal appeals courts to rule on the health-care law, two upheld it, one declared the insurance mandate unconstitutional and the fourth said the Anti-Injunction Act made a judicial review premature.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE