Supreme Court Takes on Pivotal Piece of Health-Reform Law

'Individual mandate' requires most adults to have health insurance or pay a penalty

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By Lisa Esposito
HealthDay Reporter

TUESDAY, March 27 (HealthDay News) -- The U.S. Supreme Court will hear arguments Tuesday morning that cut to the heart of the constitutional debate over the massive health-reform initiative known as the Affordable Care Act: Can the federal government require people to buy health insurance or pay a penalty?

Opponents of the controversial 2010 law contend that Congress exceeded its authority with the so-called "individual mandate," which requires almost all adult Americans to maintain health insurance or risk a fine.

The law's supporters argue that without the requirement that people have insurance coverage while they're healthy, there won't be enough money in the risk pool to pay to take care of them when the need for health care eventually -- and inevitably -- arises.

The individual mandate -- scheduled to take effect in January 2014 -- is the pivotal piece of the law.

The Affordable Care Act -- the most ambitious government health-care initiative since the Medicare and Medicaid programs of the 1960s, and the legislative landmark of President Barack Obama's presidency -- is the first federal effort to rein in health-care costs. It aims to extend insurance coverage to more than 30 million Americans through an expansion of Medicaid and the provision that people buy health insurance starting in 2014 or face a penalty.

"The requirement that people purchase insurance is the key to having health insurance be there for everyone when they need it," said John Rother, president of the National Coalition on Health Care, which works to achieve reform of the U.S. health-care system.

Opponents call the mandate a stunning government intrusion into the private lives of Americans and argue that Congress has no right to tell an individual to buy a certain product.

Grace-Marie Turner, president of the Galen Institute, a conservative public policy group, and a critic of the new law, was heartened that the High Court agreed to hear challenges to the legislation.

"This case is before the Supreme Court in record time. Two years from the law being enacted to the case being heard is really remarkable," Turner said. "And you have 26 states -- the majority of states -- challenging the law."

The Supreme Court will also hear arguments this week on whether the law is unconstitutional for requiring states to either comply with an expansion of Medicaid to cover more lower-income people without health insurance, or lose federal matching funding. At issue is the concept of "federalism," the division of powers between the federal and state governments.

Finally, the court will address "severability" -- that is, whether the individual mandate can be struck down while leaving the rest of the law intact.

"There are 50 million people in this country who don't have health insurance. The Affordable Care Act will probably extend coverage to an estimated 30 to 32 million of those people," said Renee Landers, a professor at Suffolk University Law School in Boston.

In a recent New England Journal of Medicine commentary, Landers described arguments for and against severability.

Opponents have said that provisions of the legislation are too intertwined for the law to stand without the individual mandate. The Obama administration has said the law can still work without the mandate, but provisions such as prohibiting insurance companies from denying coverage to people with preexisting conditions would be greatly compromised without the mandate.

On Monday, the Supreme Court's nine justices began an unprecedented three days of legal arguments with a 90-minute discussion of whether the high court has the right to hear the case at this time. At issue: whether the court can consider tax challenges before they take effect. Some, including a federal appeals court in Richmond, Va., have contended that the provision in the health-reform law that people pay a penalty if they don't have insurance is, in reality, a tax.

But the justices' questions Monday morning suggested that they did not think the insurance penalty was tantamount to a tax. An obscure 1867 law prohibits legal challenges to a tax until it has been collected. The penalty for not having health insurance wouldn't take effect until 2014, with payment due in 2015, the Washington Post reported.

Although the insurance penalty is "being collected in the same manner of a tax doesn't automatically mean it's a tax," said Justice Stephen Breyer, the Post reported.