Published March 28, 2012
The closing act to the Supreme Court's three-day examination of President Obama's health care law will be a doubleheader covering two distinct issues.
Wednesday's hearing comes after the justices held an intense two-hour session a day earlier on the law's requirement that Americans buy health insurance.
At the final session, the justices will examine whether other parts of the law are invalid if the Court votes to strike down the individual mandate.
The afternoon finale will then look at one specific provision of the 2,700-page law involving the expansion of the Medicaid program that the 26 states challenging the law claim is coercive.
The first half of the day is critical, since the health care law itself covers scores of provisions beyond the well-known ones that expand coverage and address individual costs. The question then arises over what to do with those parts if the individual mandate is ruled unconstitutional.
For example, would the rule barring insurers from imposing lifetime spending caps or the rule allowing some adult children to access their parents' policies survive? The mandate was created, in part, to help insurance companies cover the added costs for those benefits.
Legally, the issue is known as severability, and language calling for this kind of separation is often found in legislation. It serves as an instruction of congressional intent to judges, saying that if one part of a law is invalidated the rest of the law should remain. One of the issues here is that the House version of the health care overhaul had severability language but the Senate bill that eventually became law did not.
"It is clear that Congress intended this unique legislative deal to rise or fall as a whole," lawyer Michael Carvin told the Court on behalf of the National Federation of Independent Businesses and several private individuals. He and the lawyer for the 26 states also challenging the health care law, Paul Clement, agree that if the individual mandate goes, so does the entire Affordable Care Act.
"The ultimate question is whether Congress would have enacted the statute without the invalidated provision," Clement said.
The issue then turns to separation of powers. Can the justices invalidate part of a law while keeping intact the rest of the law that may have never passed Congress without the stricken portion? It's a complex question. Oftentimes laws are passed only because deals are struck to secure passage for certain provisions. So if the Court in an after-the-fact review strikes down one part, how is it to know whether a majority in Congress would have still wanted the other part kept in place?
That is exactly what the states say would happen here. Clement says that once the Court invalidates the core individual mandate from the law, "it ceases to be an act designed to achieve near-universal health insurance coverage, let alone an act designed to achieve it in the manner Congress envisioned."
The government takes a middle ground position on this issue, saying if the individual mandate is struck down -- something it doesn't think should happen -- then the two major parts of the law that are directly tied to the mandate would also have to go down. But it says the rest of the law should remain in force.
Those parts that would fall are the provisions that instruct insurers to extend coverage to all people regardless of medical history and to offer affordable premiums regardless of risk. In the government's scheme, these are expensive benefits that could not exist without the mandate's forced inclusion of additional (mostly healthy) customers who'll collectively cover the added costs.
"But those are the only provisions of the act" that should go down, according to the brief written by Solicitor General Don Verrilli. "Other provisions can operate independently and would still advance Congress's core goals of expanding coverage, improving public health, and controlling costs even if the minimum coverage provision were held unconstitutional."
Verrilli goes on to say that the challengers fail to show how Congress would have wanted the rest of the Affordable Care Act to go down even without the minimum coverage provision.
As much as the government supports the law, it still doesn't back the more extreme position of the 11th Circuit that the entire law is fully severable from the individual mandate. H. Bartow Farr, an experienced lawyer before the Court, was appointed to defend the argument that the justices should avoid "extreme judicial intervention" by keeping the rest of the ACA in effect even if the individual mandate is struck down.
"There is no good justification for striking down any of the numerous provisions of the (ACA) that are totally unaffected by the existence or non-existence of the minimum coverage provision," Farr said.
The final health case before the Court starts after the lunch break and examines whether the effort to expand Medicaid to insure more of the nation's lower-income citizens went too far.
The government's elaborate description of the ACA notes that it's a complex network of different initiatives each designed to make sure all stakeholders are required to give a little so the larger goals of near-universal coverage are accomplished. Accordingly, the part that states play in this design is an increase in their Medicaid role.
Since it was founded as part of the Great Society in the 1960s, the federal-state partnership to give insured health care to poorer Americans has been a voluntary joint effort. States have not been required to take part. Not all of them did at the start, but now all receive federal dollars to help them provide these services for the poor.
The program has been expanded over the years and the federal government says this expansion is no different than in the past. Specifically, the eligibility has been increased to cover all adults with income up to 138 percent of the poverty line. The program had previously excluded single childless adults. And under the ACA's "minimum essential coverage" provision the states are now expected to provide uniform coverage for their Medicaid participants.
The states challenging the law say the changes are tantamount to extortion. They object to the coverage requirement saying it denies them the flexibility to make changes or policy choices appropriate for each state.
While the feds will cover much of the costs associated with the newly eligible enrollees, Washington will not pay additional reimbursements for the 6-7 million people who were previously eligible for Medicaid but for whatever reason chose not to participate. In all, that could be upwards of $43 billion in additional costs to the states.
Finally, the states are steamed that the ACA's provisions give them no ability to beg off this specific requirement without forfeiting all Medicaid money. For most states, that's more than a billion dollars each year.
Their legal argument is that the federal government's spending power cannot allow Congress to coerce the states into taking action that might otherwise be prohibited at the federal level.
Even setting aside the additional costs of the new expansion, the money involved in the current Medicaid program makes it very unlikely that any state would opt out and forfeit billions of federal dollars. Already, 40 percent of all federal funds that go to the states are for Medicaid.
Nonetheless, from the start of the program and with every change since, the decision to participate in those piecemeal expansions has rested with the states. Here, the states argue, Congress provided no alternative plan for making sure the people covered by the expansion would have insurance. They claim Congress knew that the states would be effectively forced to participate and not jeopardize the entirety of their federal Medicaid reimbursements.
"Congress provided no fallback because Congress itself recognized it was making States an offer they could not refuse," Clement wrote with an unmistakable nod to the famous threatening words from The Godfather. He later likened the Medicaid provision to a pickpocket who takes a wallet and then presents it to the owner for return on certain unfavorable conditions -- otherwise it will go to a stranger.
Not surprisingly, the government ascribes no such nefarious intent to the ACA. To the contrary, it contends the Medicaid expansion was done with more financial care for the states than had happened with previous enlargements. Verrilli points out that other states have embraced the changes to the Medicaid roles, and some have even expanded their own eligibility qualifications now to mirror those that will later be in effect with the changes.
With regard to the threat they could lose all Medicaid dollars for failing to participate, Verrilli says the states shouldn't be allowed to complain about the loss of federal dollars when they've voluntarily entered into the program for that money. Further, he says the provision allowing for money to be pulled has always existed.
He also says the state claims of undue financial hardship are overstated, at least in terms of the costs associated with the expanded class of Medicaid participants. And he claims that states will save money with the reduction in uncompensated costs, all adding up to approximately $100 billion in savings by 2019.
Unlike the other three cases heard this week, this is only one in which there has been no split decision in the courts below. So far, no court has sided with the states. The opinion in this case and the other health care challenges are expected by the end of June.