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Historic Health Care Case Leaves Legal Expert Perplexed

Apr 2012

Over three days – March 26, 27 and 28th - , the U.S. Supreme Court heard arguments on the groundbreaking national healthcare reform law signed by President Obama in 2010. Many provisions have already taken effect, including greater coverage for pre-existing conditions, insurance coverage until age 26 under parents’ plans, and free preventive care -- including mammograms and colonoscopies. The most wide-reaching and controversial aspect, requiring most people to buy basic insurance – the Individual Mandate -  is set to become effective January 1, 2014.

The Individual Mandate was initially endorsed by the Heritage Foundation, a conservative think tank in Washington D.C. and became the center-piece of the Massachusetts health care reform in 2003. Backed by health care insurance companies, the pharmaceutical industry, hospitals, doctors, labor unions, health care advocates and many others, the mandate allows health care coverage for people with pre-existing conditions and others who cannot afford insurance by spreading the risk in a larger pool of insureds.

The major sources of contention related to the individual mandate include (1) whether the government can force individuals to participate in a market and whether the mandate involves the insurance market or the health care market, (2) whether there is a limit to Congress’ commerce power, and (3) whether the fee required for violating the mandate is a tax.

Some of the Justices compared the Individual Mandate requirement to paying for funeral services, a cell phone service to assist in an emergency, or insurance for your automobile. The heart of the government’s argument was that those individuals that do not have health care insurance coverage and require emergency services are able to obtain such services from a hospital emergency room, and individuals with insurance coverage subsidize the cost of that emergency treatment through higher premiums.

The other argument supporting the mandate is that it’s the only way to guarantee insurance to individuals with medical conditions. Carriers argue that without the mandate, they would go out of business insuring too many sick people.

“It’s odd how this has played out,” says John Sarno, president of the Employers Association of New Jersey. Sarno, a lawyer, teaches a course at Fairleigh Dickinson University on the health care law, known as the Patient Protection and Affordable Care Act.

“The Individual Mandate was invented by free market economists to preempt a single-payer, government-type approach and it was backed to the hilt by business and industry. It’s strange how the mandate has become a club against what is called ‘Obamacare,’” he says.

The economic aspects of the Individual Mandate were not lost on the Justices. Some seemed to agree that the Individual Mandate supports the other reforms that make health care more accessible.

But according to Sarno, the early indication is that some of the Justices may have been ill prepared for an argument of such historic proportions.

"I thought that Justice Scalia really misunderstood the health care market," says Sarno. "There’s no market for the uninsured — that's the problem.  Because there’s no market, the shifting of the costs of covering the uninsured is making the whole system unsustainable. That’s why, I think, we can’t predict the outcome based on the questions. Some of the questions were just shooting from the hip.”

Justice Scalia also asked if Congress could require people to purchase health care insurance, could it also could require people to purchase broccoli, because it also is good for people.

“I was floored by the question,” says Sarno, a former law clerk. “It’s so ubiquitous that it can be found on bumper stickers. As a matter of style, I’m surprised that a law clerk couldn’t come up with something more original.”

EANJ is a nonprofit trade association dedicated to improving employer-employee relations and facilitating the exchange of information among employers. It does not render legal services, offer legal opinion or engage in the practice of law.