By Dave Lenckus of Business Insurance, www.businessinsurance.com

Some critics of the landmark Patient Protection and Affordable Care Act doubt that opponents of the health care reform law will prevail in court.

Pointing to legal precedents on congressional powers, several legal experts critical of the law expect it to go into full effect in 2014, unless Republicans regain control of Congress and repeal the law.

Legal experts predict the law will survive even if opponents win some lower court battles, as Virginia’s attorney general did in August, when a federal judge refused to dismiss Virginia’s lawsuit challenging the federal law as infringing on states’ sovereign rights.

Many observers expect the issue to end up before the U.S. Supreme Court.

If it survives, the law would reduce the number of uninsured individuals by two-thirds, or 32.5 million, the Congressional Budget Office has estimated. The law would accomplish that by requiring most individuals to purchase health insurance and most businesses to offer health care plans to workers. PPACA also broadens coverage eligibility by barring exclusions of pre-existing conditions and lifetime coverage caps.

Various states, individuals and organizations have challenged the law in federal court.

But observers are most closely watching the lawsuits filed in federal district courts in Richmond, Va., and Pensacola, Fla. Virginia filed suit the day that President Barack Obama signed the law in March. Florida’s lawsuit has expanded to include the attorneys general of 16 additional states, governors of four more states, the National Federation of Independent Business and two individuals. Judges in both cases have scheduled additional hearings this year, when the Florida judge could rule on the government’s motion to dismiss that case, legal experts said.

State officials are “all sincerely committed to these lawsuits,” said Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, a Washington-based libertarian think tank. “They’re happy to make political hay out of it, but it’s not a political stand,” he said.

The suits challenge the constitutionality of several PPACA provisions. The most controversial is the individual coverage mandate. The law also imposes monetary penalties on individuals and businesses that don’t comply with the law. It also requires states to beef up Medicaid benefits and broaden eligibility.

The plaintiffs argue that Congress has exceeded its authority to regulate commerce and levy taxes and that the law violates individual and state rights.

Mr. Shapiro agreed with those criticisms, but he also noted that courts traditionally have relied on the U.S. Constitution’s “necessary and proper” clause to extend broad powers to Congress to regulate commerce.

The odds of striking down the law by focusing on the commerce clause is “a long shot,” agreed Neil Trautwein, a vp and the employee benefits counsel at the National Retail Federation in Washington.

Grace-Marie Turner, president of the Alexandria, Va.-based Galen Institute, a conservative health care consumer advocacy group, predicted only that the Supreme Court will decide the law’s fate. She did, however, say that the commerce clause has been “stretched beyond recognition” and “there’s a real risk” courts could “stretch it further to say the government can regulate health activities.”

Even so, requiring individuals to participate in economic activity pushes the commerce clause to its “extreme borderline,” Mr. Trautwein said.

The nonpartisan Congressional Research Service and the judge hearing Virginia’s challenge also noted they are unsure whether the clause permits the mandate.

If it survives, “there’s really nothing the government couldn’t require people to do,” which could trouble courts, Mr. Shapiro said.

But Ernest A. Young, a law professor at Duke University in Durham, N.C., disputed that assessment. “It is clear Congress is trying to make a market work,” not impose extreme controls on individuals, he said.

Ron Pollack, vp and executive director of consumer health care advocacy group Families USA and a former dean of the Antioch School of Law, both in Washington, said full participation in the health insurance market is necessary to keep coverage affordable. Therefore, it is “a valid area for Congress to legislate,” he said.

Some opponents of the law also argue that that while the commerce clause allows Congress to tax what it cannot regulate, Congress cannot regulate through taxation.

But a group of constitutional law professors from Yale Law School and Columbia Law School, who filed an amicus brief in the Virginia case, argue the law is within Congress’ taxing authority. Because the individual penalty does not tax property and is escapable by purchasing insurance, the law is not a direct tax, the brief argues. Under the Constitution, a direct tax would necessitate apportionment among the states by population.

Instead, the law would impose an indirect tax, which is allowable because it meets various constitutional tests, including serving the general welfare, the brief contends.

In addition, the Supreme Court ruled in 1937 and 1950 that a tax is valid even if it regulates or deters activity that Congress is not authorized to regulate, the government noted in its Virginia and Florida court briefs.

Plaintiffs also contend the mandate violates the Constitution’s Ninth Amendment, which protects individual rights not enumerated elsewhere in the document.

But the Supreme Court “never has relied on the Ninth Amendment solely to strike anything down,” Duke’s Mr. Young said. “And it won’t do it here.”

Opponents and supporters also clash over whether the law violates states’ rights.

By expanding Medicaid benefits and broadening program eligibility, the government is changing Medicaid from a voluntary program to “something more coercive” in violation of the 10th Amendment, the Cato Institute’s Mr. Shapiro said. That amendment protects states’ rights by limiting federal powers to those the Constitution enumerates.

Mr. Pollack described the coercion argument as “nonsense.” States’ current share of Medicaid costs averages 44% of total program costs, he said. After 2016, states would cover a “miniscule” 5% of the additional Medicaid costs that the new law adds, he said.

Critics and supporters agree, however, that political realities influence courts, so predicting rulings is difficult.

Aon Consulting anticipates that the dispute will be resolved politically rather than judicially, said Crystal Hover, a Los Angeles-based vp and senior manager in the health and benefits practice at the Aon Corp. unit. After seeing how lower courts rule, Congress may modify the law, perhaps even dramatically, to improve its chances of survival, she said.

But, “we don’t believe this is going away,” Ms. Hover said.

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This entry was posted by Adam V. Russo on Tuesday, September 21st, 2010 at 3:19 pm and is filed under Medicaid, PPACA, Virginia. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.