Employee benefit brokers and advisers are paying close attention to the proceedings as the Supreme Court takes up an historic test of whether health reform is valid under the country's Constitution.

Tom Schuetz, co-president of Group Services Inc., in Bettendorf, Iowa, doesn’t remember an issue that has drawn as much interest into the affairs of the Supreme Court as this one. Two years after President Barack Obama signed into law the Patient Protection and Affordable Care Act, Schuetz is particularly concerned about what potentially upholding the individual mandate may imply about the level of government control on our lives.

“We simply cannot continue to operate profitably under this growing burden,” says Schuetz. “Finding the mandate unconstitutional might be a first step to reversing this trend.”

At the law's core is the requirement that most people buy health insurance by 2014 or pay a tax penalty. Challengers, including 26 of the 50 states, say Congress exceeded its constitutional power to regulate commerce with the individual mandate.

They argue that government should not meddle so deeply in people's lives and force them to pay for a product they have opted against. The Obama administration counters that virtually every person will need medical care and that those who shun insurance put a disproportionate burden on the system.

The arguments will be held over three days. Four distinct legal issues are before the nine justices, and the first question they will address is about the timing of any lawsuit against the individual insurance mandate as well as the Anti-Injunction Act prevents people from challenging the individual mandate until after they have paid the tax and sought a refund, which would be in 2015.

Of the four U.S. appeals courts that have heard the health care dispute, only one has ruled the challenge to the individual mandate could not go forward because of the tax law.

The first day's arguments did not reach the more anticipated issue of Congress' power to dictate that individuals obtain insurance; a step that critics warn could lead to a wide range of other requirements such as eating broccoli, joining gyms, or buying American-made cars. That test of congressional power will be aired on Tuesday.

On Wednesday, two questions will be heard. One is whether, if the individual mandate is declared unconstitutional, it can be severed from the rest of the law or all of it must be struck down. The other is whether Congress improperly put new burdens on states when it expanded eligibility under Medicaid, the joint state-federal program offering medical care for poor people.

On Monday, court-appointed attorney Robert Long argued that no lawsuit against the individual mandate can go forward until after someone who refuses to buy insurance has paid the penalty and sought a refund.

The federal Anti-Injunction Act, dating to 1867, generally bars anyone from challenging a tax law until it has taken effect because such lawsuits would hinder the government's ability to collect revenues needed for the federal budget.

When Obama and Democratic sponsors of the health care law in Congress were urging approval of the individual mandate they insisted the penalty for failing to obtain insurance was not a "tax." The legislation more often used the word "penalty."

The Obama administration, which had briefly argued in lower courts that the lawsuits could not go forward until after 2014 because of the Anti-Injunction Act, will argue that the justices should not regard the sanction for no insurance as a "tax."

“Our national health care is continuing to deteriorate on many levels and the sooner the Supreme Court rules definitively the sooner we can begin to repair the damage,” believes Dave Lapka, president of D360 Consulting. “So it is extremely important that the Court make a definitive ruling in short order.”

Follow EBA’s live coverage of the action outside the Supreme Court this week in inBrief, as well as on Twitter @EBAmagazine and on Facebook at facebook.com/EBAmagazine as we post photos, videos, podcasts and more.

For even more EBA coverage on the Supreme Court’s decision and its impact on brokers:

  • NAIFA’s Diane Boyle discusses what the state exchanges final rule means for brokers in a recent podcast
  • Learn how each potential ruling concerning the constitutionality of the individual mandate could affect plan sponsors and advisers alike.
  • A recent survey shows 4 in 10 employer-sponsored insurance plans would shop for coverage through a private health insurance exchange if their employer provided vouchers for purchasing insurance independently.

(Additional reporting by: Joan Biskupic and James Vicini. Editing by Howard Goller and Doina Chiacu)

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