Report Discusses the Legal Challenges to Health Care Reform

May 19, 2010 (PLANSPONSOR.com) – A new Congressional Research Service report discusses the arguments courts will face in hearing the challenges to the new health care law.

In the report, Legislative Attorney Kathleen S. Swendiman notes that while the Constitution and Supreme Court interpretations do not identify a constitutional right to health care at the government’s expense, Congress has enacted numerous statutes which establish and define specific statutory rights of individuals to receive medical services from the government. To date, most health care entitlement statutes have been enacted pursuant to Congress’s authority to “make all Laws which shall be necessary and proper” to carry out its mandate “to … provide for … the general Welfare,” Swendiman says.  

In enacting the Patient Protection and Affordable Care Act, Congress used its power to regulate interstate commerce, as well as its power to tax and spend for the general welfare.  

According to the report, the most frequently utilized grant of power in the Constitution for health care spending is that found in Article I, § 8, cl.1, which states in part that “[t]he Congress shall have Power to lay and collect Taxes, … to … provide for the … general Welfare of the United States.” The last paragraph of this section provides that Congress shall have the authority “to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” Other powers in § 8 for which Congress has the authority to enact “necessary and proper” laws include Congress’s power to regulate interstate commerce (cl. 3).  

Swendiman points out that the scope of the national spending power was brought before the United States Supreme Court in a landmark case in 1937 dealing with the newly enacted Social Security Act. In Steward Machine Co. v. Davis, the Court sustained a tax imposed on employers to provide unemployment benefits to individual workers.   

Much like the arguments against the new health care reform law, it was argued that the tax and a state credit that went with the state’s tax were “weapons of coercion, destroying or impairing the autonomy of the States.” However, the Supreme Court held that relief of unemployment was a legitimate object of federal spending under the “general welfare” clause, and that the Social Security Act, which also included old age benefits for individuals so they might not be destitute in their old age, as well as provisions for child welfare and maternal child health projects, was a legitimate attempt to solve these problems in cooperation with the states.  

Subsequent Supreme Court decisions have not questioned Congress’s policy decisions as to what kinds of spending programs are in pursuit of the “general welfare.” Swendiman notes that the Supreme Court accords great deference to a legislative decision by Congress that a particular spending program provides for the general welfare. In fact, the High Court has suggested that the question whether a spending program provides for the general welfare is one that is entirely within the discretion of the legislative branch.  

With this in mind, Swendiman contends that issues courts will face in assessing the constitutionality of the individual health insurance mandate, which is being challenged in several lawsuits (see Business Group Joins HCR Challenge), include procedural issues such as standing, because states, which are not directly subject to the mandate, would be enforcing arguments about the rights of individuals, and ripeness, since the mandate does not go into effect until 2014. In addition, the courts may address substantive issues such as Congress’s power to enact an individual mandate under the Commerce Clause, or Congress’s power to impose a tax upon failure to comply with the mandate pursuant to its power to tax and spend to “provide for the common Defense and general Welfare of the United States.”  

These are some of the arguments the Obama administration put up in its first response to a lawsuit over the new health care reform law (see Government Responds to Health Care Reform Lawsuit).

State Efforts to Opt out of Health Care Mandate  

In the Congressional Research Report, Legislative Attorney Kathleen S. Swendiman addressed states’ attempts to opt out of the mandate for individual health care coverage. In March, Virginia became the first state in the nation to enact a statute which states that, as a matter of law in Virginia, no individual (with certain exceptions) shall be required to obtain or maintain a policy of individual insurance coverage (see VA Lawmakers Approve Ban on Mandatory Health Coverage).   

In the following weeks Idaho enacted a similar law, and a Utah bill was enacted that not only prohibits an individual health insurance mandate, but also prohibits any state agency from implementing federal health reform measures without the Utah legislature “specifically authorizing the state’s compliance or participation in, federal health care reform.”  

Swendiman says a direct conflict between federal and state laws would raise constitutional issues which are likely to be resolved in favor of the federal law under the Supremacy Clause of the Constitution, which states: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; ... shall be the supreme Law of the Land; ... any Thing in the constitution or Laws of any State to the Contrary notwithstanding.”   

When Congress legislates pursuant to its delegated powers, state laws, and even state constitutional provisions, must yield, according to the report. As an example, Swendiman points out that in Cooper v.Aaron, the U.S. Supreme Court upheld the federal law mandating desegregation of public schools in the face of Arkansas’s constitutional amendment which prohibited integration.

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