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Supreme Court Oral Arguments on Health Reform, Day 3: Analysis

We posted earlier this week with detailed coverage of the oral arguments over the Anti-Injunction Act (AIA) and the constitutionality of the individual mandate. On the last of three days of oral arguments on Wednesday, the U.S. Supreme Court considered two separate issues:

  1. whether the mandate is severable from the rest of the Patient Protection and Affordable Care Act (PPACA), and
  2. the parameters of congressional authority to expand the eligibility requirements under the Medicaid Program.

A decision from the Court is expected in three months, most likely in late June 2012.

Day 3 Oral Argument Snapshot: Severability – 90 minutes of argument in the morning on the severability of the individual mandate from the rest of PPACA – Quick background on severability:

  • If the mandate is ruled unconstitutional, the Court must then decide whether the mandate can be severed from the rest of the law.
  • Without a mandate to require the purchase of insurance, the other insurance reform provisions in PPACA may be unsustainable.
  • Some lower courts ruled that the mandate was unconstitutional, and struck down PPACA in its entirety. Other lower courts struck only the mandate.
  • Plaintiffs argued that if the mandate falls, the rest of the law must follow. The federal government argued that only (1) guaranteed issue (which includes prohibition on denying coverage because of pre-existing conditions) and (2) community rating (allowing insurers to charge higher premiums because of medical history) should be invalidated if the mandate is struck down.

– Edwin Kneedler, Deputy Solicitor General, argued on behalf of the federal government. He argued that the guaranteed-issue and community-rating provisions should likewise fall if the individual mandate is struck.

  • Congress tried to develop a “market-based solution to control rates,” he explained, to make community-rating and guaranteed-issue possible.
  • Without a minimum coverage provision, the concept would fail – which is why these three provisions “rise or fall in a package.”
  • Kneedler explained that the legislative history of the minimum coverage provision indicates that Congress did not mean for the whole Act to fall in the absence of a minimum coverage provision “since we have many provisions that are operating now without that.” In fact, he continues, “all the other provisions of the Act would continue to advance Congress’s goal.”
  • But Justice Scalia was wary – “My approach would say if you take the heart out of the statute, the statute’s gone.”

– Former Solicitor General Paul Clement argued on behalf of NFIB, private plaintiffs and the states. He argued that the entire Act should fall if

  • the mandate is found unconstitutional.
  • Clement argued that the provisions in question are “at the very heart of this Act” and are “textually interconnected” to the entirety of the ACA. “When everything else from the center of the Act is interconnected and has to go,” he asked, “would you keep this hollowed-out shell?”
  • Justice Ginsburg asked: “there are so many things in this Act that are unquestionably okay . . . so why should we say it’s a choice between a wrecking operation . . . or a salvage job.”

– H. Bartow Farr was appointed by the Court to argue in favor of the severability of the individual mandate, allowing the rest of the Act to remain intact.

  • He argued that if the minimum coverage provision falls, the “system is not going to work precisely as Congress wanted” but it “would certainly serve central goals that Congress had of expanding coverage for people who were unable to get coverage or unable to get it at affordable prices.”

Day 3 Oral Argument Snapshot: Medicaid Expansion – One hour of oral argument was allotted for argument on whether the Congress has the authority under its spending power to expand the Medicaid program. – The arguments ran from 1:00pm to 2:24pm, in part because the U.S. Solicitor General Don Verrilli ran out of time and Chief Justice Roberts granted him an additional 15 minutes. – Quick background on the Medicaid expansion:

  • Starting in 2014, PPACA expands Medicaid eligibility to all individuals up to 133% of the federal poverty level.
  • The federal government will finance 95% of the Medicaid expansion between 2014 and 2019.

– Clement argued against the Medicaid expansion, representing the position of 26 states. Opponents of the expansion say it is coercive because states need federal Medicaid funds and, yet, are required to implement the coverage expansion mandated by PPACA or risk losing all of their federal Medicaid funding. – U.S. Solicitor General Don Verrilli argued that the Medicaid expansion was well within the Spending Clause power of Congress.

  • Justice Ginsberg pointed out that “we have never had, in the history of this country or the Court, any Federal program struck down because it was so good that it becomes coercive to be in it.”

– Clement stated that the expansion of Medicaid under PPACA was different from previous expansions in 3 key ways:

  • The size of the expansion (billions more than in previous years).
  • The connection between this expansion and the individual mandate, which is “nonvoluntary.”
  • The fact that the federal government is leveraging “previous participation in the program” to coerce states. He argues that the expansion would be more voluntary if they could get the money for a coverage expansion without risking “any of their existing participation programs.”

– The key question here is about federalism and the limits of federal power.

  • Chief Justice Roberts stated that the federal government attached strings to the money, and that states “shouldn’t be surprised if the Federal Government …start[s] pulling them.”
  • Justice Breyer questioned whether – simply because she had the power to –the Health and Human Services Secretary would actually remove a state entirely from the Medicaid program.

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