Patient Protection and Affordable Care Act: What’s at Stake?

On Monday, the U.S. Supreme Court opened the first of three days of arguments regarding President Obama’s signature health care legislation: The Patient Protection and Affordable Care Act—frequently shortened to the Affordable Care Act—or to those who disdain it, “Obamacare.”

The justices heard opinions concerning a single issue; namely, does the ACA’s individual health care mandate constitute a penalty or a tax? If Americans choose not to purchase health insurance by January 1, 2014, they will be assessed an income tax penalty. The question of whether this is a tax or a penalty. The Obama administration argues that the penalty is not a tax.

However, Justice Samuel Alito pointed out to Solicitor General Donald B.Verrilli, “Today you are arguing that the penalty is not a tax,” Alito said. “Tomorrow you are going to be back and you will be arguing that the penalty is a tax.”

Justice Alito was referring to the U.S. Justice Department’s contention that the penalty is a tax, even though when Congress passed the ACA with the clear understanding that the penalty was a penalty.

It appears that the Court will not wait until 2015, when the first legal challenges to the ACA’s federal mandate could be heard, to rule on this facet of the legislation. Chief Justice John Roberts indicated that the Anti-Injunction Act, an 1867 injunction that forbids lawsuits against federal tax policies until after the person filing the claim has actually paid the tax, was not likely to stand in this court’s way.

“Why would you have a requirement that is completely toothless?” Roberts asked. “You buy insurance or else. Or else what? Or else nothing.”

Monday’s arguments set the stage for Tuesday’s showdown over the ACA’s individual mandate. Decried and loathed by Republicans, praised by Democrats, the individual mandate is at the heart of what the justices will be deciding in their judgments. If the individual mandate is allowed to stand, then the President’s most important piece of legislation will remain intact—and health insurance companies can expect a flood of approximately 32 million new customers before January 2014. If the Court rejects the individual mandate, the justices effectively eviscerate that ACA, which in turn opens the question of whether the bill can survive without the mandate (severability).

Since the 1930’s, Congress has generally had wide-ranging powers of to regulate the economy and federal commerce. A federal mandate that requires all citizens to purchase a particular product, health insurance in this case, would set a prescient, which many Americans fear could be expanded to include everything from washing machines or firearms. A recent ABC News/Washington Post poll found that 67 percent of those surveyed wanted the Supreme Court of reject the individual mandate.

Without a mandate, however, healthy people have no incentive to purchase health insurance unless they get sick or injured, and the health insurance business would not have enough money in their coffers to pay out all the claims made by sick people (especially with millions of new customers in the system) unless they could balance those claims with premiums from healthy individuals.

An often-used analogy when discussing the individual mandate is auto insurance. You must have auto insurance to drive legally in all 50 states. States’ rights supporters add that states can do things that the federal government cannot; however, no state requires its citizens to own a car.

This analogy only goes so far because millions of Americans get by just fine without a car, but everyone will need health care sometime in their lifetime. Without a mandate, the cost of health care for those who cannot afford it or refuse to buy it is passed on to citizens, health care providers, and insurance companies—someone other than the individuals who choose to opt out of health insurance.

Expect Tuesday’s hearing to be as hot as a Fourth of July finale. Audio recordings and transcripts of Tuesday’s hearings will be available after 2 p.m. EST on the Supreme Court’s Web site at

The issue of “severability” (Can the ACA stand without the individual mandate?) is reserved for Wednesday morning’s arguments. Wednesday afternoon will be taken with the constitutionality of the ACA’s requirement that states accept the expansion of Medicaid. As the law is written, the federal government will cover 100 percent of the Medicaid expansion until 2016. After that time, the federal government will still pick up 90 percent of states’ Medicaid tab.

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