Supreme Court Kicks Off Health Care Arguments

Posted March 26, 2012 at 1:06pm

At the start of historic arguments on attempts to overturn President Barack Obama’s signature health care law, both sides at least agreed on one thing: They want the case tried now. And the justices seemed inclined to agree.

Justices on both the liberal and conservative wings of the court pressed attorneys for ways around an 1867 law that prohibits people from filing a lawsuit against tax provisions until after they have already paid the tax in question.

Both sides of the lawsuit agree that an exemption should be granted, but for different reasons, although the court appointed an attorney to defend the notion — held by a lower court — that the case won’t be ripe until 2015.

The sharpest exchange hinting at the core of the case came between Justice Samuel Alito and Solicitor General Donald Verrilli.

“Today you are arguing that the penalty is not a tax. Tomorrow you are going to be back, and you will be arguing that the penalty is a tax,” Alito said.

The argument amounts to allowing the case to go forward on a technicality. Otherwise, the health care law could potentially go unchallenged until 2015, when individuals would start incurring penalties if they don’t buy insurance.

Verrilli contended that because Congress did not call the penalty a “tax” in the health care law, it falls outside the 1867 law, the Anti-Injunction Act, which is aimed at preventing a flood of lawsuits against federal revenue measures important to keeping the government running. But he argued that the law is a “tax penalty” otherwise permissible under the Constitution.

At one point, Verrilli kept calling the penalty a “tax” — correcting himself to “tax penalty” after a justice caught him on it — to laughter from the court.

Verrilli essentially said that the court doesn’t need to reinterpret the 1867 law, just ignore it.

At one point, Justice Anthony Kennedy — potentially the swing vote in the whole case — punctured the tension in the room.

“Don’t you want to know the answer?” he asked of how the court would rule on the question of the 1867 law.

“Justice Kennedy, I think we all want to know the answer to a lot of things in this case,” Verrilli replied.

Robert Long, the attorney hired by the court, warned that opening up an exemption could invite a flood of lawsuits whenever a tax provision is in question.

But several of the justices questioned that idea, positing that a narrow exemption could be granted in this case — as the court did in several other cases from the New Deal era.

And Justice Stephen Breyer pressed repeatedly on whether the penalty should be considered a tax, even though it is administered through the tax code.

Just because the penalty is “collected in the same manner as a tax doesn’t automatically make it a tax,” he said.

“What is the parade of horribles that you see occurring” if the court rules it isn’t a tax, Justice Sonia Sotomayor asked.

To which Justice Antonin Scalia joked, “There will be no parade of horribles because all federal courts are intelligent.”

Alito also noted concerns that forcing people to wait until after they’ve paid a penalty on the individual mandate puts people in a position of having to disobey the law to make a claim.

Long, when pressed whether Congress meant the penalty to be a tax or not, said the best interpretation is that it is a tax and subject to the 1867 law.

But he allowed, “I would not argue that this statute is a perfect model of clarity” to chuckles.

Attorney Gregory Katsas also argued that the states should have standing in the case regardless because the requirement that people buy insurance would prompt people now eligible for Medicaid but who have not yet signed up to do so, even though they would not be subject to the tax penalty. That will cost states hundreds of millions of dollars a year, he said.

Several justices seemed skeptical of that line of argument, however.

The first 90 minutes of arguments opened up a rare three days of argument on the sweeping law, with the debate over the constitutionality of the individual mandate itself planned for Tuesday.

It attracted a high-profile audience in the packed courtroom, including Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius, and a number of Members of Congress, including Reps. John Larson (D-Conn.), Diana DeGette (D-Colo.) and Tom Price (R-Ga.) and Sen. Jeff Sessions (R-Ala.). Hundreds of people protested for and against the law outside the building.

DeGette, a lawyer herself and a prominent backer of the law, called the 1867 concerns a “sleeper issue” but said she expects the court to rule on the broader case and find a way around it.

Otherwise, she said, she doesn’t think the court would have taken up the case in the first place.