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States damaging their own case with insurance-exchange moves

On Nov. 14, the U.S. Supreme Court granted review of the 26-state lawsuit against the president’s health care law, the Patient Protection and Affordable Care Act. The court granted five and half hours for oral argument, including two hours of argument on the individual mandate and one and a half hours on severability, which addresses whether, in the event the mandate is found unconstitutional, the entire act must be stricken as well.

The severability issue is a critical consideration for states like Arizona, which are suing over the law’s constitutionality while at the same time moving forward with implementing other parts of the law, specifically the law’s health insurance exchanges. This undermines the idea that if the mandate is found unconstitutional the whole law must be thrown out.

The federal district court that first heard the lawsuit brought by the states found the mandate unconstitutional and not severable from the remainder of the statute, thus striking down the entire act as unconstitutional. The judge explained that to sever the mandate from the remainder of the act would require “reconfiguring an exceedingly lengthy and comprehensive legislative scheme,” including “going through a 2,700-page act line-by-line, invalidating dozens (or hundreds) of some sections while retaining dozens (or hundreds) of others.”

The 11th Circuit Court of Appeals affirmed the federal court’s decision on the mandate, but disagreed on severability. That court held that the “stand-alone nature of hundreds of the act’s provisions” and their “lack of connection to the mandate” cut against non-severability. The Supreme Court will now decide the issue.

For its part, the Obama administration has maintained that the mandate is closely linked to the guaranteed issue and community ratings provisions, and that they must also go if the mandate is found unconstitutional. The Goldwater Institute argued in its lawsuit challenging the act that the establishment of health insurance exchanges and increases in Medicaid eligibility are also linked to the act’s overall reform scheme and that the entire act must be stricken.

Now that the Supreme Court has agreed to hear the severability issue, states like Arizona must return federal exchange money they have received and cease from establishing health insurance exchanges. Efforts to stop the federal takeover of health care must not be placed in jeopardy by the states voluntarily complying with a law that they are at the same time challenging as unconstitutional.

— Diane Cohen is a senior attorney for the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

One comment

  1. Why is an individual mandate important for controlling adverse selection?

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