Health Care Reform: What Will the Court Do?

After three days of often contentious debate, the Supreme Court is expected to decide by midsummer if health care reform in whole or in part will remain the law of the land.

The hearings focused on four key questions: Should Americans be required to purchase health insurance? Should the court's review be delayed until 2014, when health insurance becomes mandatory? Is the expansion of Medicaid under the law unconstitutional? And can the Affordable Care Act stand if parts of it are "severed," or ruled unconstitutional?

Individual Mandate's Fate is Key Question

As expected, the issue of mandatory health insurance commanded center stage.

The Affordable Care Act requires uninsured Americans to purchase health insurance beginning in 2014 or face a penalty, likely on their federal income tax. Opponents claim that the so-called "individual mandate" is unconstitutional. The Obama administration says the mandate falls well within the scope of congressional power to regulate interstate commerce and impose taxes.

"There were many justices who were expressing great skepticism about the mandate's constitutionality, and given precedent and prior case law, the degree of their skepticism was perhaps somewhat surprising but not shocking," says Wendy Parmet, professor of law at Northeastern University.

Chief Justice John Roberts and Justice Antonin Scalia, two of the court's conservatives, hammered Solicitor General Donald Verrilli on whether the individual mandate sets a dangerous precedent.

"It's good for you in this case to say, 'Oh, it's just insurance,'" said Roberts. "But once we say that there is a market and Congress can require people to participate in it ... it seems to me that we can't say there are limitations on what Congress can do under its commerce power."

Verrilli maintained that health care, by virtue of "the unique nature of this market," is not working like other free markets. Instead, he said the system is transferring "many billions of dollars of uncompensated costs" to other market participants, resulting in higher premiums for the insured and making health coverage too expensive for more than 30 million uninsured Americans.

With the court seemingly split along ideological lines, attention was focused on swing-vote Justice Anthony Kennedy. True to his traditional tiebreaker role, Kennedy seemed to side with conservatives early on but ended the session by noting that the uninsured, by their nonparticipation, have a significant impact on the health care market.

Legal Observers See Close Ruling

Will mandatory health insurance survive the crucible?

"I wish it had gone better ... but I don't think it's hopeless," says Tim Jost, health law scholar and professor of law at Washington and Lee University. "I think the press probably read a bit too much into the extent to which Justice Kennedy was pressing the solicitor general and the plaintiffs. I still think it's likely that the statute will be upheld, but it was a lot closer than I expected it to be."

Parmet agrees: "I think it's too close to call. I would not be surprised with a 5-4 or 6-3 decision going either way."

It took two years for the constitutional challenge by 26 states, the National Federation of Independent Business and several individuals to work its way through the appeals process to reach the nation's highest court. Once it did, the Supreme Court allotted an extraordinary six hours over three days for arguments for and against President Barack Obama's landmark 2010 overhaul of America's health care system.

On Day One of the hearings, the court seemed inclined to rule this summer on challenges to the Affordable Care Act, despite an arcane 1867 law. It holds that judges cannot rule on challenges to federal taxes until the taxes have actually been levied.

Given the combative hearing on mandatory insurance during Day Two, the issue of "severability" took on new meaning on Day Three as observers tried to imagine what health care reform might look like with its centerpiece individual mandate removed. Unlike many laws, the Affordable Care Act does not include a severability clause.

"If the individual mandate doesn't stand, then the whole issue of pre-existing condition exemption has to go away and that kind of pulls the pillars out of the (state health) exchange programs as well, so it may be that basically what survives are the Medicaid expansions," says Michael Morrisey, professor of health economics and health insurance at the University of Alabama at Birmingham.

Medicaid Expansion Ruling Could be Major

In Wednesday's final session of the hearings, the court heard the states' objections to the expansion of Medicaid, the joint federal-state program for low-income people.

Under the law, states that had previously been required to offer Medicaid to certain groups of low-income people, such as families with dependent children, pregnant women, the elderly and the blind, would have to extend coverage to all individuals under age 65 with qualifying incomes. The states claim that health care reform coerces them into going along with the expansion.

Parmet says that while the Medicaid expansion has not garnered much media attention, if the court strikes it down the potential ramifications could extend far beyond that of the individual mandate.

"That would be the true constitutional revolution," Parmet says. "It would put into jeopardy and raise constitutional challenges to almost every federal-state program: unemployment compensation, all of Medicaid, support for children with disabilities in school, federal funding for prisons, you name it. If all of those suddenly face constitutional challenges, we really would start to go back to (the) early 20th century -- where there would be no federal support for pretty much any local problem."

Still, with the court seemingly focused on preventing the Affordable Care Act from setting dangerous precedents rather than letting it cause one, Parmet says she's optimistic.

"I don't think they're going to strike the Medicaid expansion. I think that would be going too far. But I don't think you can take that for granted," she says.

The court is expected to deliver its ruling on the Affordable Care Act by late June.