It is no surprise that the passage of the Patient Protection and Affordable Care Act has sparked several legal challenges. States already have insurance laws and regulations. But what happens to these now?
States already have insurance laws and regulations. The question is, what happens to those now that PPACA is law? The state of Virginia contends that the Act conflicts with state law regulating the insurance industry. Further, several other state legislatures have introduced bills in an attempt to prevent implementation in their respective states.
The most prominent lawsuit at this time, however, is one filed in the United States District Court in Pensacola, Fla. The suit was filed by several states, with Florida taking the lead, and directly challenges the constitutionality of PPACA. Specifically, the Constitution's Commerce Clause allows Congress to regulate interstate commerce, which would include health insurance, but what are the limitations on such power?
While the legal bases for the challenge are complex, the fundamental question is whether the federal government can regulate a failure to act-in this case the failure to purchase health insurance.
Some argue that allowing the government to compel the purchase of insurance policies would similarly allow the government, for example, to impose taxes upon those who fail to lose weight or fail to vote. The controversy has sparked sharp disagreement among legal scholars.
Previous cases have tested this issue, particularly lawsuits grappling with New Deal reforms during the Franklin D. Roosevelt administration. One case from that era stands for the proposition that Congress cannot impose fines through the Commerce Clause to indirectly regulate activities and that an essential purpose of any tax must be to raise revenue. That case and others likely will be used to argue that PPACA is not intended to raise revenue, but rather to compel the "activity" of purchasing insurance.
Recent case law, however, has taken a more expansive view of the Commerce Clause. Members of the current Supreme Court issued a decision in 2005 that interpreted the Constitution as giving Congress extremely broad authority over interstate commerce. Since that decision, the composition of the Court has changed, which raises more uncertainty about the ultimate decision regarding the constitutionality of PPACA.
The side that does not prevail in any of the pending lawsuits is likely to appeal, and any given case might reach the Supreme Court, guaranteeing a legal battle that could take years to resolve.
Further, a court might declare certain provisions of the Act unconstitutional, while allowing other sections to withstand challenge-a result that will render the implementation process even more difficult than it already is.
The controversy surrounding the Act has been deeply divisive, leaving the courts to wrestle with difficult issues for years to come. Unfortunately, because of this, managed care executives face the difficult task of strategic planning for an unknown future in respect to costs, operations and the fate of patient care as lawsuits slowly drag through the court system.
Michael J. Jordan, a partner at Walter & Haverfield in Cleveland, is head of the firm's Healthcare and Bioscience Litigation practice group.