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PPACA: Can a Nick Pop It?

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One big, open legal question about the Patient Protection and Affordable Care Act (PPACA) is whether any of the act could survive a court case that invalidated part of the act.

Peter Marathas, a partner in the Boston office of Proskauer Rose L.L.P. who handles benefits law, says PPACA is attracting the same kind of flurry of litigation that tends to greet the arrival of any important new federal act.

A recent informal search for federal civil rights suits that name Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services (HHS), as a defendant, turned up about a dozen Justicesuits challenging PPACA.

Some of the suits getting the most attention include a suit filed in Virginia, by Liberty University; a suit filed in Michigan by the Thomas More Law Center, and a suit filed in Florida by a group of state attorneys general and other public officials.

Most of the plaintiffs contend that the PPACA provision that would require many individuals to own health insurance or else pay a penalty is unconstitutional.

PPACA is one of the two bills that make up the Affordable Care Act.

Many components of the Affordable Care Act, such as provisions encouraging standardization of and use of electronic health records, and provisions that would encourage federal health programs such as Medicare to experiment with new strategies for paying for health care, have drawn little negative attention.

Marathas says he gives many groups of employers and insurance brokers Affordable Care Act presentations. At those presentations, “there’s absolutely nobody sitting in the room that believes

American citizens should lose their homes because they have cancer,” Marathas says.

Regulators at the HHS, the Internal Revenue Service and the Labor Department seem to be doing a good job of trying to respond to the concerns of interested parties, including employers, insurers and brokers, about implementation of the Affordable Care Act, Marathas says.

But, when employers look at the Affordable Care Act, they see there is very little in the act that can cut their benefits costs and many provisions that could increase costs, Marathas says.

Employers have grave concerns about provisions that will require many to provide health coverage in 2014 or pay a penalty, and concerns about other provisions that will set minimum standards for health insurance but could also make coverage more expensive. Employers and brokers have been trying to find ways to ease the burden of those provisions.

The PPACA individual health insurance mandate has provoked a more emotional response.

The mandate would require legal residents of the United States who have income over a certain threshold, who can buy coverage that meets federal affordabability criteria, and who have no religious reason not to own coverage to own coverage or else pay a penalty.

America’s Health Insurance Plans (AHIP), Washington, and some health policy experts familiar with health system change efforts in Massachusetts have argued that a tough individual health insurance ownership mandate is critical to efforts to make coverage available on a guaranteed-issue, mostly community-rated basis.

If the government does not impose a mandate, many individuals will avoid buying coverage, and they will count on kind-hearted doctors to take care of them if they suffer from serious, expensive-to-treat health problems, AHIP and others say.

Many civil liberties groups, libertarian groups and conservative groups argue that the U.S. Constitution gives the federal government no authority to make individuals buy a product and rarely gives the federal government direct authority to make individuals do anything else.

The federal government can draft soldiers, and it can make people pay taxes, but that is because the Constitution includes provisions that explicitly give the government to draft soldiers and levy taxes, PPACA opponents say.

The federal government is arguing that it has the right to collect money from individuals who fail to own health insurance because the collection would simply be another tax. Opponents have noted that PPACA supporters originally described the penalty provision as a tax provision, then took out the word “tax” to make the bill more palatable to lawmakers thinking about voting for it. PPACA supporters should not be able to call the penalty a tax today if they intentionally eliminated use of the word from the PPACA bill to get the bill through Congress, provision opponents argue.

At least two judges already have taken active steps to let PPACA constitutionality suits proceed, Marathas says.

Democratic congressional leaders shepherded PPACA through the Senate and then got the bill through the House around the time Sen. Scott Brown, R-Mass., took over the Senate seat of the late Edward Kennedy. To avoid having to get a bill approved by a conference committee through the Senate, Democratic leaders skipped the conference committee stage and sent the bill approved by the Senate directly through the House.

A conference committee typically would go over a bill carefully, correct any obvious problems and take steps such as adding a severability clause stating that the bill as a whole would still be valid even if the courts invalidated parts of the bill, Marathas said.

PPACA never went through a conference committee, and a severability clause was never added, he said.

The courts might invalidate the individual health ownership mandate or other parts but let many other parts stand, Marathas said.

“I don’t buy arguments that this is a slamdunk,” Marathas said.

But Marathas said it is not easy to think of a major court case that deals with the invalidation of a large, multi-part bill that lacks a severability clause.


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