2012 01 13 health care amicus

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In the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United States

UNITED STATES DEPARTMENT OF HEALTHAND HUMAN SERVICES, ETAL.,

Petitioners,v.

STATE OF FLORIDA, ETAL.,Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Eleventh Circuit

BRIEF OFAMICUS CURIAE,COMMONWEALTH OF MASSACHUSETTS

(SUPPORTING PETITIONERS AND ADDRESSINGWHETHER ENACTING MINIMUM COVERAGE

PROVISION OF ACA AUTHORIZED BY ARTICLE I)

Becker Gallagher Cincinnati, OH Washington, D.C. 800.890.5001

January 13, 2012

MARTHACOAKLEY

ATTORNEYGENERALOF MASSACHUSETTSCounsel of Record

THOMAS M. OBRIEN

DANIEL J. HAMMOND

EMILIANOMAZLEN

ASSISTANT ATTORNEYS GENERAL

ONE ASHBURTON PLACE

BOSTON, MA 02108

(617) 727-2200

[email protected]

Counsel for Amicus Curiae

NO. 11-398


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i

QUESTION PRESENTED

Beginning in 2014, the minimum coverageprovision of the Patient Protection and Affordable Care

Act, Pub. L. No. 111-148, 124 Stat. 119, amended bythe Health Care and Education Reconciliation Act of2010, Pub. L. No. 111-152, 124 Stat. 1029, will requirenon-exempted individuals to maintain a minimumlevel of health insurance or pay a tax penalty. 26U.S.C.A. 5000A. The question presented is:

Whether Congress had the power under Article I ofthe Constitution to enact the minimum coverageprovision?


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TABLE OF CONTENTS Page

Question Presented. . . . . . . . . . . . . . . . . . . . . . . . . . . i

Table of Authorities.. . . . . . . . . . . . . . . . . . . . . . . . . iv

Interest of the Amicus Curiae.. . . . . . . . . . . . . . . . . 1

Summary of Argument. . . . . . . . . . . . . . . . . . . . . . . 5

Argument.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

I. THE ECONOMIC EFFECTS OF THEMASSACHUSETTS INDIVIDUAL MANDATECONFIRM THAT CONGRESS HAD ARATIONAL BASIS TO DETERMINE THATFREE-RIDING, TAKEN IN AGGREGATE,SUBSTANTIALLY AFFECTS INTERSTATECOMMERCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

II. THE EXPERIENCE IN MASSACHUSETTS

ALSO DEMONSTRATES HOW ELIMINATINGFREE-RIDERS IS RATIONALLY RELATEDTO SUCCESSFUL IMPLEMENTATION OFOTHER COMPONENTS OF FEDERALHEALTHCARE LAW; THUS, CONGRESS

ALSO HAD AUTHORITY UNDER THENECESSARY AND PROPER CLAUSE TOIMPOSE THE MINIMUM COVERAGEREQUIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 12


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III. FEDERAL REFORM IS NECESSARYTO ADDRESS SIGNIFICANTINTERSTATE ASPECTS OF HEALTHCARE WHICH ARE BEYOND THESCOPE OF INDIVIDUAL STATE

AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . 15

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18


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TABLE OF AUTHORITIES Page

CASES

Gonzales v. Raich,545 U.S. 1 (2005). . . . . . . . . . . . . . . . . . . . . 7, 8, 9

McCulloch v. Maryland,4 Wheat 316 (1819). . . . . . . . . . . . . . . . . . . . . . 12

United States v. Comstock,___ U.S. ___, 130 S.Ct. 1949 (2010).. . . . . . . . . 12

United States v. Lopez,514 U.S. 549 (1995). . . . . . . . . . . . . . . . . . . . . . . 8

United States v. Morrison,529 U.S. 598 (2000). . . . . . . . . . . . . . . . . . . . . . . 8

United States v. South-EasternUnderwriters Assn,

322 U.S. 533 (1944). . . . . . . . . . . . . . . . . . . . . . . 8

Wickard v. Filburn,317 U.S. 111 (1942). . . . . . . . . . . . . . . . . . . . . . . 8

CONSTITUTIONAL PROVISIONS

U.S. Const., art. I 8, cl. 3. . . . . 5, 6, 7, 8, 12, 13, 14

U.S. Const., art. I 8, cl. 18. . . . . . . . . . . . . 6, 12, 13


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STATUTORY PROVISIONS

Patient Protection and Affordable Care Act, Pub. L.No. 111-148, 124 Stat. 119 (2010), as amendedby the Health Care and Education Act of 2010,Pub. L. No. 111-152, 124 Stat. 1029 (2010)(ACA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

29 U.S.C. 1001. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

42 U.S.C. 201. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

42 U.S.C. 1395dd (2006).. . . . . . . . . . . . . . . . . . . . 9

House Bill 4279 .. . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3

Pub. L. No. 93-406.. . . . . . . . . . . . . . . . . . . . . . . 4, 16

OTHER AUTHORITIES

Agency for Healthcare Research and Quality,Center for Financing, Access and Cost Trends,

2010 Medical Expenditure Panel Survey-Insurance Component, available athttp://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/state/series_2/2010/tiid1.pdf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11

Blue Cross Blue Shield Found., Health Reform inMassachusetts: An Update as of Fall 2009 10( J u n e 2 0 1 0 ) , a v a i l a b l e a thttp://bluecrossfoundation.org/~/media/Files/Publications/Policy%20Publications/060810M

HRS2009FINAL.pdf. . . . . . . . . . . . . . . . . . 10, 11


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Division of Health Care Finance and Policy, HealthCare in Massachusetts: Key Indicators, 4, 6( N o v . 2 0 1 0 ) , a v a i l a b l e a thttp://www.mass.gov/Eeohhs2/docs/dhcfp

/r/pubs/10/key_indicators_november_2010.pdf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Mass. Division of Health Care Finance and Policy,Health Insurance Coverage in Massachusetts:Results from the 2008-2010 MassachusettsHealth Insurance Surveys 1 (Dec. 2010),

available at http://www.mass.gov/eohhs/docs/dhcfp/r/pubs/10/mhis-report-12-2010.pdf .. . . 3, 9

Mass. Division of Health Care Finance and Policy,Health Safety Net 2010 Annual Report 4 (Dec.2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 9

Mass. Division of Health Care Finance and Policy,Hospital Discharge Database (HDD) for fiscalyear 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Mass. Division of Health Care Finance and Policy,Uncompensated Care Pool PFY06 AnnualReport 3 (July 2007). . . . . . . . . . . . . . . . . . . . 3, 9

William Pierron & Paul Fronstin, ERISA Pre-emption: Implications for Health Reform andCoverage, 314 EBRI Issue Brief 11 (Feb. 2008),a v a i l a b l e a t h t t p : / / w w w . e b r i . o r g / pdf/briefspdf/EBRI_IB_02a-20082.pdf. . . . . . . 16


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Cathy Schoen, Ashley-Kay Fryer, Sara R. Collins,and David C. Radley, The Commonwealth Fund,State Trends in Premiums and Deductibles,20032010: The Need for Action to AddressRising Costs (Nov. 2011), available athttp://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Nov/State%20Trends/1561_Schoen_state_trends_premiums_deductibles_2003_2010.pdf.. . . . . . . . 10, 11


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INTEREST OF THE AMICUS CURIAE

1

In the spring of 2006, the Commonwealth ofMassachusetts passed and implemented An Act

Providing Access to Affordable, Quality, AccountableHealth Care , Chapter 58 of the Acts of 2006 (Chapter58), thereby becoming the first State in the Nation toenact healthcare reform that requires all non-exemptindividuals to purchase some form of health insurancecoverage. Chapter 58s core features include, amongother things, a state-operated health insurance

exchange, new subsidies for low- and moderate-incomeindividuals, and a mandate that all individuals whocan afford health insurance purchase coverage.Chapter 58 has been widely cited as a model used byCongress in fashioning what became the PatientProtection and Affordable Care Act (the ACA).

With four years of empirical data collected sinceChapter 58 went into effect, Massachusetts is uniquelysituated to speak to the actual economic effects ofcomprehensive reform that includes an individual

coverage requirement.

The experience of Massachusetts under Chapter 58confirms a key Congressional assumption underlyingthe ACA: that by requiring individuals to be insured,and thereby preventing healthy people from foregoing

Pursuant to Rule 37.4 of the Rules of this Court, the1

Commonwealth of Massachusetts, as a sovereign State, does notrequire leave to file this amicus curiae brief submitted by its

Attorney General. This brief was not written in whole or in partby counsel for any party, and no person or entity other than theamicus curiae has made a monetary contribution to thepreparation and submission of this brief.


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health insurance until they are sick or injured (apractice often described as free-riding), acomprehensive reform program can spread risk,control costs, and reduce the financial burdensotherwise borne by health plans and free-care pools.Massachusetts submits this amicus brief in support ofthe ACA because its experience demonstrates thatCongress had a rational basis for concluding that free-riding by individuals, taken in aggregate, has asubstantial effect upon interstate commerce, and thatreducing or eliminating free-riding has a salutary

impact on the health insurance market as a whole.

In July of 2005, then Governor Mitt Romney filedHouse Bill 4279, and in his filing letter to theMassachusetts Legislature he stated:

Today, we spend approximately $1 billion on themedical cost for the uninsured. Safety Net Careredirects this spending to achieve better healthoutcomes in a more cost-effective manner. WithSafety Net Care in place, it is fair to ask all

residents to purchase health insurance or havethe means to pay for their own care. Thispersonal responsibility principle means thatindividuals should not expect society to pay fortheir medical costs if they forego affordablehealth insurance options.2

Letter from Governor Mitt Romney to the Massachusetts2

Legislature dated July 20, 2005, filing An Act to Increase the Availability and Affordability of Private Health Insurance To

Residents of the Commonwealth . H.B. 4279, 184th Gen. Ct. (Mass.2005).


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Governor Romneys proposed legislation to enactSafety Net Care was the precursor to Chapter 58,which he signed on April 12, 2006.3

The Massachusetts healthcare reform law hasyielded positive economic consequences. Since itsenactment, Massachusetts has reduced the number ofuninsured residents to less than two percent of theStates population, giving Massachusetts the lowestpercentage of uninsured residents in the Nation. The4

significant gains in the number of Massachusetts

residents with health insurance helped spur acorresponding sharp decline in spending by the states"free care" pool for the uninsured and under-insured.The dollar value of free care provided dropped from$709.5 million in fiscal year 2006 to $475 million infiscal year 2010.5

Despite these successes under Chapter 58,Massachusetts, like any individual State, is unable to

Under Governor Romneys proposed legislation, Safety Net3

Care was the term used for a proposed government- subsidizedpremium assistance offered to low-income individuals who werenot eligible for Medicaid. H.B. 4279, 184th Gen. Ct. (Mass. 2005).

See Mass. Division of Health Care Finance and Policy, Health4

Insurance Coverage in Massachusetts: Results from the 2008-2010 Massachusetts Health Insurance Surveys 1 (Dec. 2010),available at http://www.mass.gov/eohhs/docs/dhcfp/r/pubs/10/mhis-report-12-2010.pdf [hereinafter Mass. Health Insurance SurveyResults].


Safety Net 2010 Annual Report 4 (Dec. 2010); Mass. Division ofHealth Care Finance and Policy, Uncompensated Care PoolPFY06 Annual Report 3 (July 2007).


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grapple effectively with the interstate (andinternational) economic implications of currenthealthcare trends. While Massachusetts plays theprimary role in protecting the health and welfare ofMassachusetts residents, the State sharesresponsibility for regulating healthcare and healthinsurance with the federal government. ThroughMedicare, Medicaid, and a variety of federal statutes,notably the Employee Retirement Income Security Actof 1974 (ERISA), the federal government plays a6

substantial (and, in some areas, exclusive) role in

shaping the nationwide healthcare marketplace.Given this overlay, some aspects of healthcare reformare beyond individual states regulatory reach. Forexample, Massachusettss ability to regulate theprivate group health plan market in Massachusetts isconstrained by ERISA, which preempts stategovernments from enacting laws that regulate self-insured employer health benefit plans, the mostcommon source of health coverage for Americanworkers.

Accordingly, Massachusetts supports the ACA asan appropriate federal response to the urgent need forcomprehensive, national healthcare reform. The ACAcarefully balances federal economic interests with theStates interests in developing new ways to controlcosts while improving access to quality healthcare.

Pub. L. No. 93-406, 2.6


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SUMMARY OF ARGUMENT

Having enacted six years ago a prototype of thecomprehensive healthcare reform package thatCongress would later adopt in 2010, Massachusetts isin a unique position to assess the rationality of theassumptions that underlay both enactments.

Specifically, the Court has held that the CommerceClause empowers Congress to regulate activities thatsubstantially affect interstate commerce. Congress

properly exercised that power in adopting a provisionin the ACA that requires all non-exempt persons topurchase at least a minimum level of health insurancecoverage. Through its legislative findings, Congressrationally concluded that those who fail to purchasehealth insurance despite their ability to pay for it(free riders) not only drain finite State and federalfree-care resources, but also negatively impact theavailability of privately-issued health insurancepolicies and the prices at which such policies are sold.Congress further concluded that curtailing the practice

of free riding would make private health insurancecoverage easier for individuals both to procure and toafford.

Having examined data for four years following theadoption of its own individual mandate, Massachusettscan attest to the rationality of Congresss conclusions.Massachusetts now finds that its efforts to stophealthy people from opting out of purchasing healthinsurance have increased health-plan enrollment andhelped decrease the rate of premium growth. These

developments, in turn, prompted a significantreduction in governmental and private free-careexpenditures. Because Massachusettss empirical


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experience demonstrates a strong link betweeneliminating free riders and improving access (andreducing costs), Congress acted rationally in drawingthe same link as one basis for its regulation of activityaffecting interstate commerce. (Pages 7 to 11.)

The Massachusetts experience furtherdemonstrates that Congress was also empowered toenact an individual mandate under the Necessary andProper Clause. That clause authorizes Congress totake the steps necessary to implement legislation that

falls within a specifically enumerated power. Thus,even if an individual mandate did not fall within theambit of the Commerce Clause, the broader machineryof the ACA -- provisions broadening access, controllingcosts, and eliminating denials based on pre-existingconditions -- was constructed precisely to regulate theinterstate features of the health insurancemarketplace. That attacking the free rider problemis rationally related to achieving the ACAs interstate-commerce objectives likewise finds strong support inthe Massachusetts data. (Pages 12 to 14.)

Finally, while Massachusetts has reaped manybenefits as a pioneer in healthcare reform, itsexperience also demonstrates the limitations on asingle State, acting alone. Many aspects of healthinsurance are the exclusive domain of federalregulators, while innovations by individual Stateshave consequences beyond that States borders. Thisdemonstrates both the interstate character of thehealth insurance market and the need for a coherentfederal approach to its regulation. (Pages 15 to 17.)


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ARGUMENT

I. THE ECONOMIC EFFECTS OF THEMASSACHUSETTS INDIVIDUAL MANDATECONFIRM THAT CONGRESS HAD ARATIONAL BASIS TO DETERMINE THATFREE-RIDING, TAKEN IN AGGREGATE,SUBSTANTIALLY AFFECTS INTERSTATECOMMERCE

The Commerce Clause provided Congress with

authority to enact the ACA, including the minimumcoverage requirement. The Constitution givesCongress the power to regulate Commerce . . . amongthe several States. U.S. Const., art. I, 8, cl. 3.Under this authority, Congress can regulate activitiesthat substantially affect interstate commerce.Gonzales v. Raich, 545 U.S. 1, 17 (2005).7

As stressed by this Court, [i]n assessing the

scope of Congress authority under the CommerceClause . . . the task before [the Court] is a modest one.

Id. at 22. The Court need not determine itselfwhether the regulated activities, taken in theaggregate, substantially affect interstate commerce infact, but only whether a rational basis exists for soconcluding. Id.

There is a rational basis for concluding that, takenin the aggregate, individuals refusal to obtain health

Congress also has the authority to regulate the channels of7

interstate commerce and to regulate and protect theinstrumentalities of interstate commerce and persons or things ininterstate commerce. Gonzales, 545 U.S. at 16-17.


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insurance substantially affects interstate commerce.[T]he business of insurance is within the regulatorypower of Congress under the Commerce Clause.United States v. South-Eastern Underwriters Assn,322 U.S. 533, 553 (1944). In the ACA, Congress foundthat:

The cost of providing uncompensated care to theuninsured was $43,000,000,000 in 2008. To payfor this cost, health care providers pass on thecost to private insurers, which pass on the cost

to families. This cost-shifting increases familypremiums by on average over $1,000 a year. Bysignificantly reducing the number of theuninsured, the requirement, together with theother provisions of this Act, will lower healthinsurance premiums.

ACA 1501(a)(2)(F), as amended by 10106. It is8

well established by decisions of the Court that thepower to regulate commerce includes the power toregulate the practices affecting the prices at which

commodities in that commerce are dealt in. . . .Wickard v. Filburn, 317 U.S. 111, 128 (1942). Becauseit directly impacts the prices at which healthinsurance policies will be sold, individuals refusal toobtain health insurance is a practice properly subjectto regulation by Congress under the CommerceClause.9

Such Congressional findings are to be considered in the analysis8

when available, although they are not necessary to sustain theexercise of Commerce Clause authority. Gonzales, 545 U.S. at 21.

United States v. Lopez, 514 U.S. 549 (1995), and United States9

v. Morrison, 529 U.S. 598 (2000), have no application here as they


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The experience in Massachusetts elevates theconnection between eliminating free-riders andcontrolling costs from a rational belief to ademonstrable correlation. Governor Romney and theMassachusetts Legislature, like Congress, determinedthat an individual health insurance mandate, as partof a comprehensive reform package, would serve toincrease access to healthcare while greatly decreasingthe detrimental cost-shifting caused by people whochose to forego insurance and shift the cost of theircurrent and future healthcare to others. As10

discussed above, in the four years after Chapter 58senactment, there was, indeed, a significant increase inthe percentage of insured Massachusetts residents.11

The significant gains in the number of Massachusettsresidents with health insurance helped spur acorresponding sharp decline in the amount of spendingon "free care" for the uninsured and under-insured:The amount of free care dropped 33 percent --hundreds of millions of dollars -- from fiscal year 2006to fiscal year 2010.12

relate to Congressional attempts to regulate non-economicbehavior. See Gonzales, 545 U.S. at 25-26.

Federal law, in fact, requires Medicare-participating hospitals10

with an emergency department to provide emergency services tostabilize patients with emergency medical conditions regardlessof whether they are insured. See 42 U.S.C. 1395dd (2006).

See Mass. Health Insurance Survey Results, supra note 4.11


Safety Net 2010 Annual Report 4 (Dec. 2010); Mass. Division ofHealth Care Finance and Policy, Uncompensated Care PoolPFY06 Annual Report 3 (July 2007).


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The Massachusetts reform program also hasimproved healthcare use. From the fall of 2006 to thefall of 2009, more adults (including lower-incomeadults, adults with chronic health conditions andminority adults) reported visits to doctors and feweradults reported unmet need for care.13

Massachusetts achieved these gains in access tocare while making gains in the affordability of care forits residents. In the fall of 2009, as compared with thefall of 2006, and notwithstanding the impacts of the

economic recession, there were reductions in both theshare of adults reporting high out-of-pocket healthcarespending relative to family income and the share ofadults reporting unmet needs for care due to cost.14

Moreover, according to the most recent informationavailable from the Agency for Healthcare Researchand Quality, Massachusetts has slowed the growthtrend in health insurance premiums since enactmentof healthcare reform in 2006. The rate of premium15

See Blue Cross Blue Shield Found., Health Reform in13

Massachusetts: An Update as of Fall 2009 10 (June 2010),available at http://bluecrossfoundation.org/~/media/Files/Publications/Policy%20Publications/060810MHRS2009FINAL.pdf[hereinafter BCBS Found. Fall 2009 Update].

Id.14

See Agency for Healthcare Research and Quality, Center for15

Financing, Access and Cost Trends, 2010 Medical ExpenditurePanel Survey-Insurance Component, available athttp://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/state/series_2/2010/tiid1.pdf [hereinafter AHRQ MEPS 2010Data]; see also Cathy Schoen, Ashley-Kay Fryer, Sara R. Collins,and David C. Radley, The Commonwealth Fund, State Trends inPremiums and Deductibles, 20032010: The Need for Action to


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growth in Massachusetts since the State enactedhealth care reform compares favorably to that in manyother States, and to the national average. The averagecost of employer-sponsored family coverage inMassachusetts as of 2010 was less expensive than inFlorida, Illinois, Connecticut, New Hampshire, New

York, Rhode Island and Delaware, and within $100 ofthe annual premium rates in Texas, Wisconsin andMaine.16

As the experience with healthcare reform in

Massachusetts shows, prohibiting people from optingout of the insurance market when they can affordcoverage, and creating incentives for these free-riders to join their employer-sponsored health plan orto enroll in a publicly supported healthcare plan, hashelped generate increases in both public and privateinsurance coverage, and this increase in coverage hastranslated into increases in the access, use,affordability, and quality of care in the state.17

Congress could rationally have determined that asimilar requirement on the federal level would have

the same impact on the interstate market for healthinsurance.

Address Rising Costs (Nov. 2011), available athttp://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Nov/State%20Trends/1561_Schoen_state_trends_premiums_deductibles_2003_2010.pdf [hereinafterCommonwealth Fund Report].

See AHRQ MEPS 2010 Data, supra note 15; see also16

Commonwealth Fund Report, supra note 15.

BCBS Found. Fall 2009 Update, supra note 13, at 50.17


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II. THE EXPERIENCE IN MASSACHUSETTSALSO DEMONSTRATES HOW ELIMINATINGFREE-RIDERS IS RATIONALLY RELATEDTO SUCCESSFUL IMPLEMENTATION OFOTHER COMPONENTS OF FEDERALHEALTHCARE LAW; THUS, CONGRESS

ALSO HAD AUTHORITY UNDER THENECESSARY AND PROPER CLAUSE TOIMPOSE THE MINIMUM COVERAGEREQUIREMENT

The Necessary and Proper Clause providedCongress with additional authority to set theminimum coverage requirement as a means toeffectuate the broader ends of the ACA. TheConstitution gives Congress the power to make allLaws which shall be necessary and proper in carryinginto Execution its powers, including those under theCommerce Clause. U.S. Const., art. I, 8, cl. 18.

As with the analysis under the Commerce Clause,the standard for determining whether legislation is

authorized under the Necessary and Proper Clause isa relaxed one. Enactment of a particular federal lawis authorized by the Necessary and Proper Clausewhen the statute constitutes a means that isrationally related to the implementation of aconstitutionally enumerated power. United States v.Comstock, ___ U.S. ___, 130 S.Ct. 1949, 1956 (2010).In Comstock, the Court reiterated its nearly 200-year-old formulation of this authority, that the Necessaryand Proper Clause is a broad power to enact laws thatare convenient, or useful or conducive to the . . .

beneficial exercise of specifically granted powers.130 S.Ct. at 1956 (quoting McCulloch v. Maryland, 4Wheat 316, 413, 418 (1819)).


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Thus, even if Congress lacked authority under theCommerce Clause to impose the minimum coveragerequirement - which it did not; see Argument I, supra- it was authorized by the Necessary and ProperClause to impose the requirement as a rationalrequisite of implementing other components of federallaw that were unequivocally permitted by theCommerce Clause. Congress made particular findingsthat make clear the rational relationship between theminimum coverage requirement and Congresssexercise of its Commerce Clause powers in other

related legislation. First, Congress found that:

Under the Employee Retirement IncomeSecurity Act of 1974 (29 U.S.C. 1001 et seq.),the Public Health Service Act (42 U.S.C. 201 etseq.), and [the ACA], the Federal Governmenthas a significant role in regulating healthinsurance. The [minimum purchase]requirement is an essential part of this largerregulation of economic activity, and the absenceof the requirement would undercut Federal

regulation of the health insurance market.

ACA 1501(a)(2)(H), as amended by 10106.

Second, Congress, in 1201 of the ACA, makeschanges to the Public Health Service Act that ban pre-existing condition exclusions and discrimination inhealth insurance based on health status. Congressfound that:

Under sections 2704 and 2705 of the Public

Health Service Act (as added by section 1201 ofthis Act), if there were no requirement, manyindividuals would wait to purchase health


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insurance until they needed care. Bysignificantly increasing health insurancecoverage, the [minimum coverage] requirement,together with the other provisions of this Act,will minimize this adverse selection andbroaden the health insurance risk pool toinclude healthy individuals, which will lowerhealth insurance premiums. The requirementis essential to creating effective healthinsurance markets in which improved healthinsurance products that are guaranteed issue

and do not exclude coverage of preexistingconditions can be sold.

ACA 1501(a)(2)(I), as amended by 10106.

Massachusettss experience gives additionalsupport to the conclusion that the minimum coveragerequirement was, at a minimum, rationally related tothe implementation of Congresss unquestionedauthority under the Commerce Clause to alter otheraspects of the federal healthcare regulatory landscape.

Specifically, as discussed above, Massachusettsutilized just such a provision as a linchpin of itscomprehensive reform and has reaped intrastatebenefits through sharp reductions in spending on freecare for uninsured residents and improved access tohealthcare.


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III. FEDERAL REFORM IS NECESSARY TO ADDRESS SIGNIFICANT INTERSTATEASPECTS OF HEALTH CARE WHICH AREBEYOND THE SCOPE OF INDIVIDUALSTATE AUTHORITY

There remains a limit to the structural changesMassachusetts -- or any other State attempting to goit alone -- can effect in the healthcare marketplace. Asingle States freedom of action is necessarilyconstrained by jurisdictional limits and the pre-

emptive overlay of federal law. Even successfulhealthcare innovations on the State level have impactsbeyond State borders. During fiscal year 2009 alone,for example, Massachusetts hospitals providedinpatient care to more than 43,000 patients who werenot residents of Massachusetts, at an estimated cost of$910,000,000. Of these non-Massachusetts residents,18

approximately 1,200 did not have any healthinsurance. The number of out-of-state patients19

without insurance coverage was even greater atMassachusetts emergency departments where more

than 12,900 uninsured individuals received careduring fiscal year 2009. Massachusetts cannot20

regulate insurance coverage for non-Massachusettsresidents, nor can it (or should it) restrict access tonecessary and emergent care. This interstate flow ofpatients (including uninsured patients) is but one

Mass. Division of Health Care Finance and Policy, Hospital18

Discharge Database (HDD) for fiscal year 2009 (October 1, 2008through September 30, 2009).

Id.19

Id.20


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illustration that individual states cannot effectivelyaccount for, let alone mitigate, the impact ofhealthcare trends felt on the national and interstatelevels.

Congress has long recognized that employer healthplans had operational scope and economic impactthat was increasingly interstate. The federal21

government already exercises significant control overa large section of the private group health planmarket. In Massachusetts, more than half of this

market is made up of self-insured plans that, becauseof ERISAs preemptive effect, are beyond the directreach of state regulators.22

Nationwide, the number of people enrolled in theseself-insured employer plans has increased markedlysince 1999. In 2007, 55 percent of the 132.8 millionpeople in plans governed by ERISA were in self-insured plans, up from 44 percent in 1999. The23

federal government has long exercised exclusiveregulatory authority over these self-insured employer

benefit plans. The continued growth of self-insuredplans, coupled with the interstate nature of the

ERISA, Pub. L. No. 93-406, 2.21

The private group market includes large group, small group,22

and self-insured members. See Division of Health Care Financeand Policy, Health Care in Massachusetts: Key Indicators, 4, 6(Nov. 2010), available at http://www.mass.gov/Eeohhs2/docs/dhcfp

/r/pubs/10/key_indicators_november_2010.pdf.

See William Pierron & Paul Fronstin, ERISA Pre-emption:23

Implications for Health Reform and Coverage, 314 EBRI IssueBrief 11 (Feb. 2008), available at http://www.ebri.org/pdf/briefspdf/EBRI_IB_02a-20082.pdf.


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healthcare marketplace, demonstrates the need for thefederal reforms contained in the ACA to establishminimum national standards for health coverage.Nothing in the ACA constrains individual States fromfurther regulating intrastate aspects of the healthinsurance market as Massachusetts has done inChapter 58 -- if they so choose.

Massachusetts has already experienced theeconomic benefits of tackling the free-rider problemhead-on, by enacting comprehensive reforms that

include a requirement that individuals who can affordhealth insurance must purchase it. Massachusetts hassubstantially increased the numbers of insured andsubstantially decreased free care costs. Theexperience in Massachusetts shows that, whenCongress included a similar minimum coveragerequirement in the ACA, it acted pursuant to itsenumerated powers under Article I to promote forthe Nation more affordable and accessiblehealthcare.


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CONCLUSION

For these reasons, Massachusetts urges the Courtto hold that Article I conferred upon Congress therequisite authority to enact the Patient Protection and

Affordable Care Act.

Respectfully Submitted,

MARTHA COAKLEYAttorney General of Massachusetts

Counsel of RecordThomas M. OBrienDaniel J. HammondEmiliano Mazlen

Assistant Attorneys GeneralOne Ashburton PlaceBoston, MA 02108617.727.2200

Counsel for the Amicus Curiae,Commonwealth of Massachusetts

January 13, 2012

2012 01 13 health care amicus

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