Does the Affordable Care Act matter?

US Supreme Court takes on taxes, timeliness in day 1 of health reform challenge

By Sean P. Carr and Adam Cancryn

In a multiparty litigation raising questions over the reach of the U.S. Constitution’s Commerce Clause, individual rights and responsibilities, and federalism, the U.S. Supreme Court first addressed the matter of whether any of the substantive issues surrounding the Affordable Care Act matter, at least for now.

Both the Obama administration and those challenging the law agree on one thing: The court has the authority to take on the constitutionality of the 2010 health reform law. Federal appellate courts were split on the constitutionality of the individual mandate to carry health insurance and what the implications were for the act as a whole.

But the justices first heard from Robert Long, a partner with Covington & Burling LLP, who presented arguments that the 1867 Anti-Injunction Act makes court action premature, since the mandate does not take effect until 2014 and the penalties would not be assessed until 2015. The law blocks a challenge to the individual mandate because it forbids pre-emptive legal action against federal tax laws before they go into effect, Long argued.

The court took the unusual, but not unprecedented, step of retaining Long to present the Anti-Injunction Act argument. While defenders and foes of the ACA want the court to rule, some appellate court justices have questioned whether it applies.

The high court’s decision to take on the special counsel “is a real tribute to the court,” said Mary Massaron Ross, an appellate court attorney and president-elect of DRI, an international organization of defense attorneys. “It’s a fascinating depiction of the appellate process at the Supreme Court at its best,” she told SNL.

The government’s presentation, made by Solicitor General Donald Verrilli Jr., is a smartly nuanced one, Ross said. Verrilli argued that the Anti-Injunction Act does apply on jurisdictional grounds, but not in the specific case of the health reform law. Long argued that the penalty, which is to be administered by the Internal Revenue Service, is effectively a tax, even though it is never referred to as one in the legislation. But Verrilli said the distinction is key and that the penalty was never meant to be considered a tax for purposes of the 1867 law — even as several justices pointed to his use of the term “tax penalty.”


“Here, while penalties do provide for some revenue to the government, the purpose of the penalty here is not to raise revenue, as the purpose of a tax is. The purpose of the penalty is to encourage people to take another action in an economic health insurance market,” Ross said.

Representing ACA opponents, Gregory Katsas of the firm Jones Day argued that the ACA was not the kind of law for which the Anti-Injunction Act was meant to apply. He framed the challenge to the health law as against the mandate itself, not the penalty.

The details can be “arcane,” but the conclusion is clear, Elizabeth Milito, senior executive counsel of the National Federation of Independent Business Small Business Legal Center, told SNL. The justices showed a welcome healthy skepticism of Long’s argument, said Milito.

The NFIB is suing to overturn the individual mandate, which will be in focus when the court reconvenes March 27. “It was a good prelude for what we’re going to see tomorrow,” she said.

The justices could conceivably find the AIA does apply to the ACA and wash their hands of the rest of the arguments. That course of action is unlikely, but it could be tempting if the justices want to avoid being seen as political players in highly controversial drama, Ross said.

“If the court wants to stay out, this is the way it could do that,” she said.

However, few observers and attorneys on the various sides expect the court to opt out of making a decision on the substance of the Affordable Care Act. “They’re going to reach the merits. They’re not going to throw it out on jurisdictional grounds,” Timothy Jost, a professor at the Washington and Lee University School of Law who supports the law, told SNL.

“There wasn’t a whole lot of enthusiasm for the notion that the Anti-Injunction Act bars jurisdiction in this case,” Bradley Joondeph, a professor at the Santa Clara University law school, told SNL. “The only way that they wouldn’t would be is if there seemed to be some coalition forming among those who have kind of a narrower vision of the court’s jurisdiction, which would tend to include one or two conservatives, and then some of the Democratic appointees who are fearful of the potential result might be interested in making this case go away on jurisdictional grounds.”

from SNL Financial