The Health Law And The Supreme Court: A Primer For The Upcoming Oral Arguments

Later this month, the high court will consider the fate of the health law. Here are key points to keep in mind while watching the action.

Topics: Supreme Court, Politics, Health Reform

By Stuart Taylor, Jr.

Mar 15, 2012

How big is the constitutional challenge to the Obama health care law, which the Supreme Court will hear on March 26-28?

For starters, it’s big enough for the justices to schedule six hours of arguments — more time than given to any case since 1966. After all, the Affordable Care Act is arguably the most consequential domestic legislation since the creation of Medicare in 1965.

It’s also big enough to attract more briefs than any other case in history. At least 170, including more than 120 “friend-of-the-court” or amicus briefs, have been filed, many of which are joined by 10, 20 or more groups of every imaginable description.

And, finally, it’s big enough to cause the justices to postpone until October half of the 12 cases that they would ordinarily hear in April in order to clear time to get started on the health care opinions that they are expected to issue by the late June, or possibly, early July.


What’s it all about?
The immediate issues, in the order the court will hear them, begin with the question of whether the so-called “individual mandate” — which requires that almost all Americans without coverage buy individual health insurance policies or pay fines — is ripe for adjudication now. Or must the case be deferred until 2015 because of the 1867 Anti-Injunction Act, which bars federal courts from ruling on the constitutionality of tax laws before payments are due?

After that come the arguments about what many consider the central issue: whether the mandate, which is unprecedented, should be voided because it represents an unconstitutional exercise of Congress’ powers to regulate commerce and to levy taxes.

Next is what becomes of the law’s hundreds of other provisions, covering 2,700 pages, if the mandate is unconstitutional? Are some or all of them “severable,” meaning that Congress would have wanted them to stand even if the mandate falls? For example, what about the provisions establishing tax credits to help small businesses and individuals buy health insurance and taxing large employers that do not provide full-time employees government-approved coverage?

Apart from those issues, does the law’s expansion of Medicaid violate the sovereignty of the states by effectively requiring them to spend more of their own money or forfeit all of the federal Medicaid money they now receive?

What’s the likely outcome?
Nobody knows. It’s clear that the court’s four more liberal members, like almost all other liberal legal experts, will find the law constitutional in all respects. It’s also clear that conservative Justice Clarence Thomas will vote to strike down much or all of the law. It’s less clear what swing-voting Justice Anthony Kennedy and conservative Chief Justice John Roberts as well as Justices Antonin Scalia and Samuel Alito will do.

Kennedy, Roberts, Alito, and (especially) Scalia — whom the government’s brief quotes five times — have all joined past decisions construing federal regulatory power very broadly. Two respected conservative federal appeals court judges, Laurence Silberman and Geoffrey Sutton, who is one of Scalia’s favorite law clerks, have upheld the law.

What are the major arguments for and against the individual mandate?
Defenders say that the broad constitutional power of Congress to regulate interstate commerce, and the even broader power to “lay and collect taxes,” both provide ample authority for requiring that people buy insurance as part of a comprehensive scheme to end “discriminatory insurance practices that have excluded millions of people from coverage based on medical history,” in the words of a brief by Solicitor General Donald Verrilli.

The same brief also asserts that uninsured people consume $43 billion a year worth of emergency-room and other health care for which they do not pay, costs that are shifted to insurers and that raise insured families’ average premiums by more than $1,000 a year. Critics of the law dispute these numbers.

The 26 states challenging the law (along with a business group and four individuals) say, in the words of a brief by Paul Clement, who was solicitor general under President George W. Bush: “The individual mandate rests on a claim of federal power that is both unprecedented and unbounded: the power to compel individuals to engage in commerce in order more effectively to regulate commerce. This asserted power does not exist. … It is a revolution in the relationship between the central government and the governed.”

Clement also stresses that President Barack Obama and his allies in Congress insisted during the debate before the measure became law that the financial penalty for failing to comply with the individual mandate is not a tax. They should not be allowed, he argues, to “enact legislation that would not have passed had it been labeled a tax and then turn around and defend it as a valid exercise of the tax power.”

The Anti-Injunction Act?
This reconstruction-era statute bars courts from considering the constitutionality of tax laws until payments are due. It will apply here if the court deems the individual mandate’s penalty provision a “tax.”

Because the mandate is not scheduled to take effect until 2014 and the first penalties would not be due until 2015, the federal courts would not yet have jurisdiction to consider the constitutionality of the penalties or the mandate. In other words, consideration of the case would be postponed until 2015, and, therefore, such a decision would convert the biggest case in decades into the biggest anticlimax in Supreme Court history.

Both sides say that the Anti-Injunction Act does not apply. But the court appointed a lawyer as “friend of the court” to argue that it does, as one federal appeals court held. This appointment signaled the court’s care to observe arguable limits on its jurisdiction even when the parties agree that it has jurisdiction.

What are the major arguments on severability?
The government says that if the court strikes down the mandate, it should defer until future cases any ruling on the severability of most other provisions. But, if it does rule on severability, the government maintains that only two other provisions should go down with the mandate. Those are the “guaranteed-issue” and “community-rating” provisions, which bar insurers from denying coverage or charging higher premiums because of medical history. Without the individual mandate, the government says, those provisions would send premiums soaring by creating incentives for healthy people to defer buying insurance until they need health care.

The 26 states argue that the mandate was deemed by Congress to be “necessary to make the other provisions work as intended,” and that the court should strike down the whole law.

The court appointed another friend-of-the-court lawyer to write a brief arguing that a decision striking down the mandate should leave the rest of the law — including guaranteed issue and community rating — intact.

What are the major arguments on Medicaid?
The government asserts that “it is well settled that Congress’s spending power includes the power to fix the terms on which it will disburse funds to the states,” that Congress has repeatedly expanded the state-federal Medicaid program, and that this new expansion will not “impose significantly onerous burdens on the states.”

The 26 states counter that the Medicaid expansion unconstitutionally coerces them because it “threatens States with the loss of every penny of federal funding under the single largest grant-in-aid program in existence — literally billions of dollars each year — if they do not capitulate to Congress’ steep new demands.”

Stuart Taylor, Jr. is an author and contributor to the National Journal and other publications.


Rules For New Insurance Marketplaces Give Insurers Clout

By Julie Appleby

KHN Staff Writer

Mar 12, 2012

Insurers and other industry representatives will get to fill as many as half the seats on the governing boards for state health insurance exchanges, under final rules for the marketplaces issued today by the Department of Health and Human Services.  At least one seat must be reserved for a consumer representative.

The long-awaited rules are likely to disappoint consumer advocates who would have preferred the governing boards “be dominated by consumers,” said Timothy Jost, who speaks as a consumer advocate before the National Association of Insurance Commissioners and is a professor at the Washington and Lee University School of Law.  But Jost said he is pleased the final rules require at least one consumer representative. “It at least gives a toe-hold,” he said.

But they may also frustrate insurers who had sought to prevent the governing boards from imposing requirements on plans beyond what is included in the 2010 health care law. HHS left that possibility in place, however, writing, “We continue to believe that states are best equipped to adapt the minimum exchange functions to their local markets and the unique needs of their residents.”

The exchanges are seen as a key element in the health law, offering one-stop shops for individuals and small businesses looking to purchase health insurance. They will also help determine applicants’ eligibility for programs such as Medicaid, and for federal subsidies to help them purchase insurance. An expected 21 million people will purchase coverage through the exchanges by 2017, according to Congressional Budget Office projections.

The Obama administration touted the 644-page rules as granting states great flexibility in how they design their exchanges, the types of organizations – nonprofit or public agency – that will oversee them and whether to partner with the federal government to operate parts of it. The rules were published as some states are working to set up exchanges and their governing boards – while others have balked at moving forward until after the Supreme Court rules on the constitutionality of the federal health law, which is expected in June.

Additionally, Monday’s announcement included some “interim” rules, meaning they could be tweaked following a 45-day public-comment period. Those interim rules cover issues such as how quickly states must determine if an applicant is eligible for Medicaid or the Children’s Health Insurance Program, and the role insurance brokers will play in helping low- and middle-income people apply for federal subsidies to buy coverage.

Administration officials said the new rules differ from preliminary regulations in several ways. Earlier guidance had proposed that each exchange be responsible for determining which applicants are eligible for insurance subsidies.  The final rule gives states the option to allow HHS to conduct eligibility review. To determine who is eligible for Medicaid or the Children’s Health Insurance Plan, states can choose their own Medicaid agencies.  It also says states cannot allow insurance agents to determine an applicant’s eligibility for subsidies or Medicaid, which remain government functions. But agents, including those who work for web-based private exchanges, can assist those applicants in sorting through their health plan options.

The rules appear to strike a balance between responding to thousands of comments about earlier proposals and providing more details “so states can move forward,” says Patti Boozang, managing director at Manatt Health Solutions, a law and consulting firm based in New York.

The rules do not explain how the federal government would set up exchanges in states that are unable or unwilling to develop their own marketplaces, with those details promised in future rules. In January, the Obama administration released a report saying about 28 states are “on their way” toward establishing exchanges.  “There’s no new information on how that would work, what the partnership model would look like or what states would have to pay – and that’s all information many states have anxiously awaited,” says Boozang.

Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP), a trade group, said her organization would be reviewing the rule and offering feedback.

“Exchanges will work best if they are true marketplaces that maximize choice and competition so that individuals, families, and small businesses can purchase plans that are right for them,” she said in a prepared statement. “Consumers will be best served if a state exchange adopts an efficient, cost-effective approach that leverages existing health plan resources, utilizes federal resources or guidance where sensible, and relies on the exchange itself to administer key functions.”

The law says the exchanges will start taking applications in Oct. 1,  2013 – and policies purchased through them would take effect Jan. 1, 2014.  States that are allowed to operate their own exchanges must have approval or conditional approval from HHS by Jan 1, 2013, according to the rules.

In a nod to the fact that some states won’t be able to meet that deadline, the final rules say HHS can grant conditional approval to states that show they are likely to be fully operational by October 2013. Details on what it will take to prove that are expected in future rules.


CLASS Act tackles problems of aging

By: Rep. Ted Deutch
November 2, 2011 09:11 AM EDT

The Obama administration’s decision to stop our first real attempt to solve America’s long-term care crisis, by suspending the Community Living Assistance Services and Supports Act, was met with predictable jubilation by opponents of health care reform.

Yet even as my Republican colleagues hail this as proof that the Affordable Care Act will not work, what they don’t realize is that it shows that the opposite is true. CLASS was included in the Affordable Care Act as long as it could be financially self-sustaining. The administration’s difficulty achieving that goal is proof that individual insurance mandates, first championed by Republicans, all work.

Critics of CLASS cannot have it both ways. You cannot fault it for lacking the means to ensure a diverse, financially-stable, healthy risk pool while you challenge the Affordable Care Act for doing just that. CLASS provided Americans with an affordable but voluntary long-term insurance option.

Preventing adverse selection — the challenge arising when only those already needing long-term care seek to buy insurance — would have to be addressed during implementation.

While the administration has yet to endorse any measures encouraging the widespread adoption of long-term care insurance, I join the CLASS actuary and advocates in believing they have not only a statuary authority but a statuary obligation to pass measures thwarting adverse selection and to move forward implementing this important law.

The sad truth is that those now young and able won’t always be. Everyone needs long-term care insurance, because no one is immune from disabling injuries or incapacitating disorders. If that is not compelling enough — the inevitability of aging should be.

Just 5 percent of Americans carry long-term care insurance, despite the fact that 70 percent will someday need long-term care. The reality that everyone else relies on Medicaid is why a third of this federal- and state-funded entitlement program is spent on long-term care.

Relying on Medicaid is unsustainable and costly. It essentially encourages seniors to spend themselves into poverty to qualify for Medicaid. Save nothing, pass what you have to your children before you fall ill, own little property — and you will be eligible for the most expensive long-term care around, paid for by Medicaid.

We can cut entitlement spending by steering long-term care away from the expensive, institutionalized nursing home care paid for by Medicaid and instead into a premium-financed social insurance program that encourages cost-effective, and far more popular, community and home-based care.

Having heard from seniors facing foreclosure due to their spouses’ nursing home expenses, and families desperate for a way to provide care to their ailing parents, I cannot accept just abandoning the CLASS Act. By improving this promising idea, we can reduce entitlement spending through Medicaid — and provide American families with greater financial security.

Rep. Ted Deutch (D-Fla.) serves on the House Judiciary Committee and on the House Democratic Caucus Task Force on Seniors.


Follow the Money: How Industry Is Lobbying To Preserve Reform Law

November 02, 2011 – Road to Reform

by Dan Diamond, California Healthline Contributing Editor

Two years ago this week, then-House Speaker Nancy Pelosi (D-Calif.) unveiled the bill that would become the backbone of the Patient Protection and Affordable Care Act.

It only seems like efforts to repeal PPACA began that day, too.

A series of Republican presidential debates this year have kept criticism of the law <>  in the news, and conservative-leaning trade groups, activists and politicians continue their calls for striking down PPACA. While some anti-PPACA fervor has ebbed, criticism of the law may surge again as the Supreme Court next week will consider taking up the case <>  against reform.

One group continues to remain quiet on repeal: the health industry.

If anything, health insurance companies, device manufacturers, and many provider associations have strong financial motives to keep PPACA in place — and the sector continues to put its lobbying dollars where its pocketbook is.

Health Donations Remain Strong

The Center for Responsive Politics on Monday reported that the health industry remains atop its lobbying charts <;year=2011> . The sector collectively has spent more than $373 million toward lobbying efforts in 2011, led by the pharmaceutical industry’s $181.5 million.

But while the industry in 2010 shifted toward <>  favoring the GOP in some of its donations, ahead of midterm elections that juggled congressional majorities, it remains a staunch supporter of the White House’s current occupant.

Additional Center analysis found that <>  President Obama’s re-election campaign has raised $1.6 million from the health care sector, significantly more than his top Republican challengers. (Mitt Romney has collected $920,000 and Rick Perry has brought in $494,000.)

Backing Architect of Current Law

There’s wide perception that the health law imposes new restrictions on businesses, including those in the health sector; as Kaiser Family Foundation’s Drew Altman observed, critics of PPACA often framed it as “a government takeover of the health care system.”

So why the continued industry support for the current government?

Chris Frates at National Journal notes that <> the health industry “is hedging its bets. The Obama administration still has a mountain of regulations to implement and trade associations and companies don’t want to alienate an administration that holds huge sway over their bottom lines. “ 

But there’s an even more pressing reason for health companies to keep Obama in seat.

There’s limited evidence that the industry would benefit from repealing reform — and a lot of data suggesting that PPACA will be a boon to the sector’s bottom line <> .

Hospitals are expected to benefit <>  from the law’s expansion of health insurance coverage. Insurers are seizing on new opportunities <>  in the individual market.

Even some of the law’s more fearsome provisions aren’t turning out as the health sector feared. CMS’ proposal to create accountable care organizations — which providers originally viewed as draconian, given restrictions on payment and potential risk — was toned down and made significantly more industry-friendly <>  when the agency finalized the program last month.

Lobbying Focus Shifting To Preserving Programs, Provisions

Meanwhile, it’s hard to foresee what a repeal would actually look like.

As Drew Armstrong and Kristen Jensen write for Bloomberg Businessweek <> , calling to repeal PPACA may be “a killer applause line” at Republican presidential debates, but actually striking down the law would require a somewhat byzantine series of White House-directed efforts and acts of Congress.

In many ways, fighting over PPACA is last year’s battle. Instead, the industry is concerned with what’s coming this month: the so-called Super Committee and its Nov. 23 deadline for recommendations.

Lobbying efforts are focused on Congress’ deficit reduction panel, which is charged with coming up with $1.2 trillion in cuts over a decade, and federal health spending is squarely in its crosshairs; many expect <>  the committee to call for hundreds of billions of dollars in cuts to Medicare and Medicaid.

The pharmaceutical sector also is focused on preserving Medicare Part D’s current structure, pushing back on potential changes to the drug benefit program <>  that would give CMS more negotiating power.

We’ll be watching for the Super Committee’s recommendations, as well as how the health care sector is lobbying to shape them. Meanwhile, here’s what else is making news around the nation.

On the Hill

Challenges to Reform

Rolling Out Reform

In the States

  • Massachusetts officials recently unveiled a proposal to create a managed care program for residents eligible for both Medicaid and Medicare as part of a broader effort to cut spending on dual eligibles. The plan would reduce the $4 billion the state spends on dual eligibles by about 2%. The plan calls for the state to employ “integrated care” organizations that could include private or other third-party insurers and hospital networks, as well as “care teams” that would provide and coordinate acute, behavioral and long-term care services. Massachusetts and 14 other states received grants of up to $1 million from the federal health reform law to overhaul their programs for dual eligibles (Levitz, Wall Street Journal <> , 10/27).

Public Opinion

Administration Actions

Effects on the Elderly

Read more: