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AAOS Now

Published 5/1/2010
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Kevin Jones

States poised to challenge healthcare reform

Battle shifts from Congress to the courts

Mandating health insurance coverage for all, penalizing individuals without coverage, and expanding the Medicaid program are just some of the provisions in the federal healthcare overhaul legislation recently signed by President Obama that faced stiff opposition in Congress and among many segments of the American public. Now that these provisions are law, however, the battlefield has shifted to the courts, as states attempt to repeal, revise, or work around various aspects of the bill.

Getting the most attention is a joint lawsuit by the Attorneys General of 18 states (Fig. 1). The suit, initially filed by Florida Attorney General Bill McCollum, charges that the new law violates the U.S. Constitution by requiring every American to carry health insurance as well as placing additional budget requirements on state governments.

Thus far, Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington have joined the lawsuit. Virginia has filed an independent lawsuit because the new federal law directly conflicts with its Virginia Healthcare Freedom Act (VHFA), which states that residents cannot be compelled to carry health insurance or forced to pay a fine or penalty for refusing such coverage.

The constitutional challenge
The crux of the constitutional challenge revolves around the individual mandate that requires everyone to purchase health insurance. In a March 21, 2010, Washington Post open editorial prior to the passage of healthcare reform, Georgetown Law School professor Randy E. Barnett wrote that while the commerce clause of the Constitution empowers Congress to regulate interstate commerce, “the individual mandate extends the commerce clause’s power beyond economic activity, to economic inactivity.”

Professor Barnett acknowledged that it is challenging to predict the outcome of constitutional challenges “Ultimately, there are three ways to think about whether a law is constitutional: Does it conflict with what the Constitution says? Does it conflict with what the Supreme Court has said? Will five justices accept a particular argument?”

Many constitutional scholars around the country, however, have taken the opposite view. University of Washington Law School Professor Stewart Jay cites the structure of individual mandate as proof to its constitutionality.

“Unless the U.S. Supreme Court is willing to fundamentally change the way constitutional law has been interpreted for the last seven decades, the lawsuit has no merit,” writes Professor Jay. “By that I mean that this kind of program—which is essentially a taxing and spending program—has been consistently upheld since 1937.”

This view is based on the mandate’s structural form as a tax penalty for individuals who choose not to purchase health insurance. Some have compared this to the tax deduction enjoyed by home-owners who have a mortgage, which is, in effect, a tax penalty for those who rent and cannot claim a mortgage deduction.

The second aspect of the lawsuit filed by the states centers on state officials’ assertion that the new law will require a vast expansion of state spending on Medicaid programs. This has been referred to as “unconstitutional commandeering of the states.”

Those who disagree with this assessment, however, point out that states are free to withdraw from participation in the Medicaid program. Both sides acknowledge that these lawsuits will require that the courts venture into relatively unexplored areas of jurisprudence.

State legislative actions
In addition to the lawsuits, 39 states have filed legislation to limit, alter, or oppose selected state or federal actions in the new healthcare overhaul. The previously mentioned VHFA is one such successful effort. It explicitly prohibits its citizens from being required to purchase health insurance, in direct defiance of the new federal reform law. Utah and Idaho have recently passed similar legislation.

Several states have also proposed state constitutional amendments to prohibit insurance mandates. Arizona, for example, will feature the amendment on its November 2010 ballot. The National Conference of State Legislatures has compiled an extensive list of the specific actions taken by state lawmakers in response to the new healthcare law.

Additionally, the state legislative process remains a good opportunity for orthopaedists to make their concerns known. For more information on the actions your state legislature may be taking in response to the federal healthcare reform, contact your state orthopaedic society.

Kevin Jones is the AAOS state legislative affairs manager. He can be reached at jonesk@aaos.org