Do States Have Standing to Challenge the Individual Mandate?

Several Supreme Court justices raised the question during Monday's hearing...
by | March 26, 2012 AT 8:00 PM

Toward the end of Monday’s opening oral arguments on the Affordable Care Act (ACA), Justice Elena Kagan asked a crucial question ahead of tomorrow’s hearings on the constitutionality of the law’s individual mandate: how can states have standing for the lawsuit if they won’t be directly affected by the insurance requirement?

After all, it is individuals who are charged with purchasing health insurance under the law, facing a fiscal penalty if they do not. And much of the debate about the mandate has focused on personal liberty.

In his merit brief filed to the court, Paul Clement, one of the attorneys for the 26 states opposing the law, argues that the states will be injured because people who were previously eligible for Medicaid but had not enrolled will now do so to comply with the mandate. That boon in enrollment could be difficult for states that are already struggling with the finances of their Medicaid programs after the Great Recession, Clement says.

But when the issue was raised during Monday’s hearing on the applicability of the Anti-Injunction Act to the mandate’s penalty, which could lead to the dismissal of the legal challenge until 2015 at the earliest, several justices sounded skeptical.

Kagen initially questioned the issue after attorney Gregory Katsas argued that, even if the mandate penalty were a tax under the Anti-Injunction Act, the states would still have standing for the lawsuit because they are challenging the insurance requirement itself, not the financial penalty. He pointed to the financial burden that states would bear for the new Medicaid enrollees.

“That does seem odd to suggest that the state is being injured because people who could show up today or tomorrow with or without this law will show up in greater numbers,” Kagen said. “Presumably, the state wants to cover people for whom it has declared eligible for this benefit.”

Katsas acknowledged that he didn’t know why some people who are eligible for Medicaid haven’t enrolled, but said that Florida, for example, expects up to $600 million in additional costs if those currently eligible enroll in 2014 to comply with the mandate. He added that the states wants to make Medicaid available to “all who are eligible and choose to obtain it” before being interrupted by Justice Ruth Ginsburg.

“Why would somebody not choose to obtain it?” she asked. “That’s one puzzle to me.”

“I don’t know,” Katsas said.

“It may be just that they haven’t been given sufficient information to understand that this is a benefit for them,” Ginsburg said.

Katsas asserted that, regardless of why some who were eligible for Medicaid hadn’t enrolled, that didn’t change the states’ standing for the case. Justice Sonia Sotomayor then brought the debate full circle, again inquiring how the 26 states had standing “to challenge an obligation that is not imposed on the states in any way.”

“The principle theory for the states’ standing is the states are challenging the mandate because it injures them when people are forced to enroll in Medicaid,” Katsas said.

“I’m confused by it,” Sotomayor replied.

Katsas then pointed to South Carolina v. Regan (1984), in which the state filed a lawsuit to stop a federal tax on government bonds. South Carolina was granted standing in the case, not because the state would pay the tax directly, but because the state held the affected bonds, he said.

Chief Justice John Roberts then ended Katsas’s argument, which had exceeded its allotted 20 minutes, before the issue could be explored any further.

It should be noted that the states’ case has been consolidated with those of several individuals who would fall directly under the mandate’s authority.

The question of standing seems likely to be addressed again on Tuesday, when the court will hear arguments on the mandate’s constitutionality.