The new health reform law, the Patient Protection and Affordable Care Act, is under attack from many fronts. A number of states filed suit almost immediately, challenging several aspects of the new Act. The most recent legal challenge has come from four individuals and the Thomas More Law Center (a nonprofit Christian legal organization). In April, they filed a motion in a federal district court in Michigan to preliminarily enjoin the part of Act that would require individuals to purchase health care coverage or be assessed a tax penalty. Their main claim is that the individual mandate is unconstitutional because the federal government does not have the authority to create such a mandate. While these suits raise a novel and interesting legal question about the ability of the federal government to require citizens to purchase goods or services from a private entity, this latest challenge will probably be rejected for other reasons.
Last week, the government filed a response defending against the plaintiffs' motion on jurisdictional and substantive grounds, but the government's strongest arguments were jurisdictional: it claimed that the suit was premature, and that these plaintiffs do not currently have legal standing to challenge the law.
First, the government argued that the plaintiffs lack standing to sue because they have not suffered any injury under the law, and they cannot even show that they will be "injured" (required to purchase insurance or be penalized) once the law does take effect in 2014. In fact, not everyone will be subject to the mandate. For example, people who qualify for Medicaid or Medicare do not have to purchase insurance. The law also creates exemptions from the mandate for those who cannot afford acceptable coverage, would suffer financial hardship if forced to buy insurance, have incomes below the tax filing threshhold, and have religious objections.
Second, the government raised a defense based on the Anti-Injunction Act. This defense has gotten almost no attention by commentators, but my tax friends say this should give the government a slam-dunk win, for now at least. Essentially, the injury alleged by plaintiffs is an unconstitutional tax that will be assessed on those who are legally required to purchase insurance, but do not. The Anti-Injunction Act (AIA) is a federal law that prohibits law suits that seek to prevent the assesment and collection of taxes in advance. Basically, the AIA requires individuals to pay their taxes first and then file a law suit for a refund. This means that the earliest that an individual would be able to file suit would be in 2015, assuming that the person did not qualify for one of the exemptions provided in the law and then chose to pay the tax penalty instead of purchasing insurance.
The government will likely be successful at fending off this preliminary legal challenge based on standing and the AIA, but this only delays the more interesting question about whether the individual mandate will be found constitutional.
