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.


Backup plans if mandate struck down

By: Brett Norman
March 11, 2012 10:07 PM EDT

If the U.S. Supreme Court strikes down health reform’s individual mandate and leaves the rest of the law in place — what happens next?

The backup plan could be automatic enrollment in your employer’s health insurance, a lot like the way you get signed up for the 401(k) plan.

If Congress decides to act to repair that hole in the Affordable Care Act — and that’s a big if — an auto-enrollment requirement is the option that’s getting the most attention from health policy experts. It’s a more low-key way to reach at least some of the uninsured people who would be covered by the individual mandate.

It’s an idea that could even appeal to Rep. Paul Ryan (R-Wis.) — because it’s straight out of the health reform alternative he sponsored in 2009.

“Compared to the relatively weak tax penalties with the mandate, aggressive auto-enrollment like what was talked about in 2009 could work pretty well,” said Don Taylor, a health policy professor at Duke University who has written extensively about Ryan’s 2009 bill, the Patients’ Choice Act, at The Incidental Economist blog. “In policy terms, there are things that can be done. Of course, politically, it’s a very different story.”

The Patients’ Choice Act proposed setting up auto-enrollment procedures at emergency rooms and state departments of motor vehicles and through state tax returns and workplaces. People would have been enrolled in private plans being sold on state exchanges.

Although the bill allowed individuals to opt out, research has shown that auto-enrollment, particularly in the case of individual retirement accounts, has successfully boosted participation from people who wouldn’t take the initiative on their own. And Congress will need high participation from healthy people if they want to keep one of the most popular parts of the health reform law: the guaranteed coverage for people with pre-existing conditions.

The individual mandate would require nearly all Americans to purchase health insurance or pay a tax penalty, starting in 2014. It’s one way to get more healthy young people and others on insurance rolls to help pay for expanded coverage of the sicker population.

It’s also the most politically unpopular element of the law.

A Supreme Court decision to strike the mandate could bring back other ideas like auto-enrollment, which enjoyed some conservative support — as did the individual mandate — before the Affordable Care Act passed, some health policy experts say. And Congress would come under considerable pressure to act.

Health care economists disagree on how effective the mandate would be, but they are united on at least one point: If the mandate goes and insurance companies still have to cover everyone with pre-existing conditions, a tidal wave of uncertainty — that great fear of actuaries — will crash down on the insurance industry and people’s premiums could shoot up to frightening levels.

That’s only a hypothetical, since the court could rule that the pre-existing condition coverage — along with a provision that bans insurers from basing premiums on people’s health status — has to go away if the mandate is unconstitutional. But if it gets rid of only the mandate, calls for action will echo through the halls of Congress.

“If it’s as bad as I think it’s going to be — and I think the uncertainty it adds would be very, very bad — then we’ll need to try something else,” said Jon Gruber, an architect of the Massachusetts health reform law that is a model for the Affordable Care Act. “It would become a self-fulfilling prophecy. The actuaries would imagine the worst case and start projecting high premiums across the board.”

Gruber believes the individual mandate is the tried-and-true way to move people onto insurance rolls, but he would choose auto-enrollment as the second best option. He warns, however, that a loss of the mandate would be a major shock to a load-bearing piece of the health reform law.

Gail Wilensky, who ran Medicare and Medicaid under President George H.W. Bush, said she thinks a combination of carrot-and-stick policies could do a better job of moving free riders into the insurance market than the mandate — “a terrible piece of policy,” she said.

Auto-enrollment could do a better job, Wilensky said, as could another option: strict late-enrollment penalties, in which people pay higher premiums if they don’t enroll in coverage as soon as they’re eligible. That’s an approach similar to those that have shown results in Medicare Part B and Part D.

Another alternative comes from Princeton sociologist Paul Starr, who was a senior health care adviser to President Bill Clinton. Under his proposal, people would have three options, not including the poor, who would be covered under health reform’s Medicaid expansion.

They could buy insurance, with subsidies if they qualify. They could pay an annual tax penalty for going uninsured. Or they could opt out with no penalty — but they couldn’t opt back in for five years. And those who opt out wouldn’t have the protections under the health reform law, meaning any insurance — if they could get it at all — could be prohibitively expensive.


Why Medicaid Is No Longer a Voluntary Program

Why Medicaid Is No Longer a Voluntary Program

BY Jeffrey A. Singer

It is widely believed that Medicaid is a voluntary program. While this may have once been true, it is no longer the case. Today, states confront the dilemma of having to choose between joining Medicaid or being forced to sacrifice any health care “safety net” for their indigent populations. This is all because of a law enacted by Congress in 1986 called the Emergency Treatment and Labor Act (EMTALA).

In 1986, Congress passed EMTALA, making it a federal crime to transfer a patient from one hospital/emergency room to another for financial reasons. It compels hospitals to render care, even without any compensation.

EMTALA led to an explosion in uncompensated care. It became common knowledge that, if a person presents to a hospital emergency department, the hospital must provide care and may not transfer the patient elsewhere without the patient’s permission. This became a major cause of “cost-shifting,” as hospitals and doctors tried to recoup their losses from uncompensated care by raising their fees on insured patients.

Many doctors resigned from emergency room coverage, tired of rendering uncompensated care to people who might turn around and sue them for malpractice. EMTALA forced many hospitals to close their emergency rooms.

But EMTALA did more. It killed the voluntary nature of the Medicaid system.

Four years before the passage of EMTALA, Arizona still had its own state-run indigent care program.

Arizona law required each county to establish a comprehensive indigent care system. Maricopa County, home to metropolitan Phoenix, maintained a system of health clinics staffed with full-time physicians. At its heart was the Maricopa County Medical Center, a full-service teaching medical center, including a trauma center and the largest burn unit in the southwest. Patients who were seen in private hospitals and needed hospitalization were transferred over to “County.”

The system provided preventative care, prenatal care, mental health, and long-term care. Eligibility was tied to income and assets. Patients presenting for the first time as an emergency would be treated and retroactively enrolled in the system.

I was a surgical resident at “County” (1976-81). It was commonplace for a doctor at some other hospital to phone me and say, “I have an indigent patient in my emergency room who has an ‘acute gallbladder’ and who doesn’t have insurance. Can I send her over to you?” Like all of my fellow residents, I would enthusiastically accept the patient (we were a teaching hospital and wanted the experience). They would get prompt treatment, supervised by full-time faculty, cared for in a ward setting.

This system worked well and was popular. But in 1982, after pressure from various factions, Arizona became the last state to join Medicaid.

Today, if Arizona decided to leave Medicaid and resume its pre-Medicaid system, it couldn’t do so. EMTALA would prevent it from functioning. EMTALA specifically bans any hospital from transferring patients for financial reasons. Arizona’s pre-Medicaid system depended upon the transfer of indigent patients from private centers into its indigent health system, thus relieving private hospitals and providers from the burden of constantly providing uncompensated care.

Last year, when 26 states and the National Federation of Independent Business challenged, in federal court, the Patient Protection and Affordable Care Act (“Obamacare”), they argued there was no constitutional authority for the so-called “individual mandate.” But they also challenged the authority of the PPACA to require states to expand their Medicaid rolls, and thus their Medicaid budgets.

The plaintiffs claimed that compelling the states to increase the amount they spend on Medicaid was a federal “commandeering” of the states’ treasuries.

Medicaid is a voluntary program, said the Feds. If the states opt in they receive matching funds of 50% or more from the federal government to fuel the system. But nothing prevents the states from opting out of Medicaid, so state sovereignty is not being usurped.

The states responded that the loss of federal matching funds resulting from an opt-out would be so severe as to amount to coercing the states to stay in the program.

The District Court, and later the Appeals Court, didn’t buy this part of the states’ case. While they agreed that the “individual mandate” is unconstitutional, they didn’t see the state Medicaid mandates as usurping state sovereignty.

The U.S. Supreme Court recently agreed to hear the case in the spring of 2012. And it will revisit the Medicaid issue. Hopefully, at that time, the EMTALA factor will finally get the attention it deserves.

If a state opts out of Medicaid, it forfeits federal matching funds amounting to anywhere from 40% to 60% of the state’s Medicaid budget. It is fiscally impossible for the state to create anything remotely resembling Medicaid using solely state funds without imposing massive tax increases on its residents, as well as draconian cuts in other services.

But if a state chose to leave Medicaid and adopt a less extravagant, more cost-effective, county-based indigent care system, like Arizona enjoyed until 1982, it couldn’t do that either. How, for instance, can an indigent patient be transferred to the County Medical Center or any of the satellite County treatment centers for financial reasons? It would be a violation of EMTALA.

By banning the transfer of indigent patients to indigent care facilities, this 1986 federal law unintentionally denies states the freedom to exercise their traditional sovereign powers to design their own cost-effective forms of indigent care.

EMTALA leaves states no real choice. Any choice to opt out of Medicaid effectively forces them to abandon indigent health care delivery.

EMTALA is the heretofore-unnoticed 800-pound gorilla in the room that just might secure the argument that “Obamacare” violates state sovereignty.

Jeffrey A. Singer, MD practices general surgery in metropolitan Phoenix, writes and lectures on regional and national public policy, and writes for Arizona Medicine (the journal of the Arizona Medical Association).

To view this article by Jeffrey A. Singer for The Hawaii Reporter in its original context, please visit

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: