Marty J.

Jackley

South Dakota Attorney General

Charles McGuigan
Chief Deputy Attorney General

FOR IMMEDIATE RELEASE : Thursday, June 28, 2012 CONTACT: Sara Rabern, (605) 773-3215 Attorney General Jackley Announces United States Supreme Court Upholds Federal Health-Care Act’s Individual Mandate as Imposing a Tax, and Declares Medicaid Expansion Violates the Constitution by Threatening States PIERRE, S.D. – Attorney General Marty Jackley announces that the United States Supreme Court has overturned the U.S. District Court and 11th Circuit Court of Appeals decisions, holding that the Federal Health-Care Act’s  individual  mandate is a constitutional tax,  and  the  Court  declares  the  Act’s  Medicaid   Expansion does violate the Constitution by threatening the States. “I  feel  strongly  that  the  federal  takeover  of  healthcare  goes  too  far  in  violation  of  fundamental  individual   and  state’s  rights  guaranteed by our Constitution. I am disappointed that despite lawmakers representation this does not impose a tax, a divided Supreme Court declares the Act as creating a constitutional tax. I am relieved that the Act’s  Medicaid expansion has been declared unconstitutional and has been significantly limited by the Court,” stated Attorney General Jackley. “Today’s  decision  now  places  this  monumental   issue back into the political arena for the voters to determine the future of their healthcare, and the importance  of  their  individual  and  state’s  rights.” CASE HISTORY On March 23, 2010, South Dakota and 12 other states joined in the litigation challenging the Federal Health-Care Act. The multi-state litigation ultimately expanded to 26 states plus the assistance of Virginia and Missouri. In October 2011, the U.S. Federal Court denied the federal government’s  motion  to  dismiss   the multi-state healthcare suit. In January 2011, the U.S Federal District Court ruled that the Health-Care Reform Act was unconstitutional. The Federal Court ruled that the provisions requiring Americans over 18 to obtain qualifying  insurance  coverage  or  face  a  penalty  exceeded  Congress’  powers  under  the   Commerce Clause of the U.S. Constitution. In August 2011, the 11th Circuit Court of Appeals affirmed the District Court ruling that the Federal Health-Care Individual Mandate is unconstitutional. The case was then argued before the U.S. Supreme Court in March of 2012. THE ACT’S FINANCIAL BURDEN The  Federal  Healthcare  Act’s  expansion  of  coverage  was  estimated to increase federal spending in the amount of $3.3 trillion over 10 years as set forth in the U.S. Supreme Court oral arguments. In the case filings, the South Dakota Department of Social Services further estimated that  South  Dakota’s   Medicaid costs would increase $100 million initially with the Federal Acts implementation, and $36

1302 E. Hwy 14, Suite 1  Pierre, SD 57501  605-773-3215 http://atg.sd.gov/

million annually thereafter. Because South Dakota responsibly maintains a balanced budget, these significant cost increases are a significant concern for the financial well-being of the State. The total cost for the State to join the challenge is approximately $8,252.

SUPREME COURT DECISION The Supreme Court held that the Anti-Injunction Act does not bar the challenge because Congress did not intend  the  payment  to  be  treated  as  a  “tax” for purposes of said Act. The Court further opined that the individual  mandate  is  not  a  valid  exercise  of  Congress’  power  under  the  Commerce  Clause. The Court went on to state nor can the individual mandate be sustained under the Necessary and Proper Clause as an integral  part  of  the  Affordable  Care  Act’s  other reforms. However, the Court has held that despite law makers  representations,  the  individual  mandate  may  be  upheld  as  within  Congress’  power  under  the   Taxing Clause of the Constitution. Significantly, relying on the case South Dakota v. Dole, the Court  held  that  the  Healthcare  Act’s  Medicaid   expansion violated the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply. The  Court  described  Congress’  inappropriate  financial  inducement  as  follows:   “It  is  a  gun  to  the  head.”    The  Court  held  “It  is  enough  for  today  that  whenever  that  line  may  be,  this   statute  is  surely  beyond  it.”  The  Court  went  on  to  state  that  Congress  is  not  free  to  penalize  States  that   choose not to participate in the new program by taking away their existing funding.

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1302 E. Hwy 14, Suite 1  Pierre, SD 57501  605-773-3215 http://atg.sd.gov/