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Supreme Court to Hear Challenge on Healthcare Law in 2012

Source: WSJ - Brent Kendall

Posted on 14 Nov 2011

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The long-awaited Supreme Court showdown over the Obama administration's health-care overhaul formally began Monday as the justices agreed to consider a high-profile challenge to the law.

The court, in a short written order, agreed to hear a challenge brought by a group of Republican governors and attorneys general from 26 states, the National Federation of Independent Business and two individual plaintiffs.

The case raises several issues, but chief among them is this: Did Congress exceed its constitutional powers when it required most individuals to carry health insurance or pay a penalty?

The court is expected to hear oral arguments in March, with a decision expected by the end of June. That timeline means the court will rule on President Barack Obama's signature legislative achievement during the thick of the 2012 presidential campaign.

Lower courts have issued conflicting rulings on whether the law's individual insurance mandate is constitutional. The Justice Department, which is defending the law, and several challengers all filed petitions asking the Supreme Court to resolve the disagreement.

The challengers, who view the insurance requirement as an unprecedented intrusion on individual liberty, argue that Congress can't use its interstate commerce powers to regulate citizens who choose not to participate in the health-insurance market.

The Obama administration argues the insurance mandate is a valid way to address a national crisis in which the uninsured impose huge costs on the U.S. health-care system. It also says the provision is an essential part of the law's insurance reforms, which require insurers to accept all prospective customers, even if they have pre-existing medical conditions.

In the event the justices strike down the individual mandate, the court also agreed to rule on whether the rest of the health-care overhaul can remain intact. The law's challengers are seeking to void the entire law, while the Obama administration argues that most of the law's provisions aren't connected to the mandate and should remain in place even if the insurance requirement is invalidated.

Many of the law's provisions, including state-based exchanges where consumers could comparison-shop for coverage, are scheduled to take effect in 2014.

The Supreme Court also agreed to consider a procedural question that could preclude it from issuing a major constitutional ruling: Do the insurance-mandate penalties amount to a type of tax that can only be challenged after it is collected, rather than before? If the answer is yes, then courts wouldn't have legal jurisdiction to consider such challenges until individuals start paying penalties after the mandate goes into effect in 2014.

Nearly all courts that considered the matter have decided that the challenges can proceed now. But a federal appeals court in Richmond, Va., reached a contrary conclusion in September.

In addition to insurance-mandate issues, the Supreme Court said it would consider the state challengers' legal attack against the health-care law's expansion of Medicaid, a federal-state partnership that provides health care to low-income Americans. Lower courts ruled for the Obama administration on this issue.

Only the 11th U.S. Circuit Court of Appeals in Atlanta has struck down the insurance mandate as unconstitutional, ruling that Congress couldn't command that individuals purchase insurance products.

Three other appeals courts have ruled for the Obama administration, which scored a notable victory just last week when a leading conservative judge, Laurence Silberman of the District of Columbia Circuit, wrote that court's opinion upholding the law. The ruling served as a reminder that the outcome of the case may not fall strictly along ideological lines.

Conservative justices hold a narrow majority on the Supreme Court, and their views will be crucial.

The Constitution gives Congress the power to regulate interstate commerce, and courts have interpreted that power broadly. A key question in the health-care cases has been whether the insurance mandate exceeds the outer reaches of that power.

Chief Justice John Roberts and Justice Samuel Alito, both appointees of President George W. Bush, haven't had an opportunity to express their views on the commerce power since they joined the high court.

Justice Antonin Scalia also is likely to be a key focus of attention. The conservative justice joined two rulings in 1995 and 2000 that placed limits Congress' commerce power. But Justice Scalia also embraced a broader view of that power in 2005, saying Congress had the authority to prohibit seriously ill Californians from growing marijuana for their personal medical use, even though a state law allowed it.