Day 3: The Affordable Care Act Hangs in the Balance
Oral arguments before the United States Supreme Court concluded today regarding the constitutionality of certain provisions of the Patient Protection and Affordable Care Act ("ACA"). Today's oral arguments were divided into two sessions: first, whether, if the Court ruled the minimum coverage "mandate" unconstitutional, the remainder of the ACA should stand (i.e., whether the mandate is "severable" from the remainder of the ACA); and second, whether the ACA's expansion of Medicaid to cover a greater share of the poor is constitutional.
If the Mandate is Ruled Unconstitutional, Should the Remainder of the ACA Stand?
This issue of what parts of the ACA, if any, should remain if the mandate is deemed unconstitutional, is largely at issue because Congress failed to include a "severability" clause in the ACA that would provide guidance as to which sections of the law should remain even if a part of the ACA is deemed invalid or unconstitutional.
The challengers of the ACA take the position that if the mandate is struck down as unconstitutional, the rest of the ACA must fall with it. A number of the Justices expressed a reluctance to take the challengers approach because so much of the ACA consists of uncontroversial laws that are not connected to the mandate, or, as Justice Ginsburg put it, "there are so many things in this Act that are unquestionably okay." The challengers position is that because the mandate is at the heart of the ACA and connected, directly or tangentially, to many other parts of the Act, that it should be struck down in its entirety. Aside from the health care reform measures that Justice Ginsburg described as "unquestionably okay", there are many laws included in the ACA that are not tied to health care reform and were included in the Act because Congress often ends up combining many unrelated laws in a single bill. As Chief Justice Roberts put it, "a lot of this is reauthorization of appropriations that have been reauthorized for the previous 5 or 10 years and it was just more convenient for Congress to throw it in the middle of the 2700 pages than to do it separately." Such unrelated items include reauthorization of the Indian Health Services Act, the Black Lung Disease Act and certain wellness provisions of Medicare. A key issue in the Court's exchanges with the challengers revolved around the idea that certain provisions of the ACA that the challengers want to strike down still help achieve the purpose of the Act, which includes "affordable care". Justice Sotomayor asked "[w]hy should we be striking down a cost saver... when Congress was concerned about costs rising?" Regarding State insurance exchanges, Justice Kagan noted "The exchanges will do something. They won't do everything Congress envisioned." The challengers seemed to concede that every provision of the ACA need not be struck down by the court when they stated, towards the end of their initial argument, "if you want to keep the periphery, that's fine." Determining what is and what is not on the "periphery" of the ACA is a task that the Court did not appear eager to tackle, as was evident when the Government argued its position.
The government's position is that two provisions of the ACA are directly tied to the mandate and should be struck down along with the mandate, if the mandate is deemed unconstitutional. Those provisions-- guaranteed issue and community rating-- involve limitations on insurers regarding limiting coverage for individuals with pre-existing condition and the setting of rates. The government's position is that without a mandate requiring all people to obtain health insurance immediately, the uninsured will feel comfortable waiting until they are in immediate need of care before obtaining coverage. This would in turn cause skyrocketing costs to insurers, causing them to either pull out of markets or severely drive up rates. The government's contention is that "the Act itself creates a sharp dividing line between the minimum coverage provision... along with the guaranteed issue and community rating" and the rest of the ACA. Several justices took issue with this argument, however. Chief Justice Roberts, in particular, did not seem to think that a "sharp line" existed.
Because the challengers agree with the government's position that the guaranteed issue and community rating provisions should be struck down alongside the mandate, if it is deemed unconstitutional, the Court appointed an attorney to make the argument that, absent the mandate, the rest of the ACA should remain in its entirety. The Court's main issue with the argument is that, as Justice Sotomayor stated to the court-appointed attorney, "you are ignoring the congressional findings and all of the evidence Congress had before it that community ratings and guaranteed-issuance would be a death spiral... without [the mandate]." The idea being that guaranteed issue and community rating, absent the mandate, could severely harm insurers and would be contrary to congressional intent. The counterargument is that it is not in the Court's purview to be deciding what provisions are directly connected to the mandate: "[S]everability is by necessity a blunt tool. The Court doesn't have, even if it had the inclination... the authority to retool the statute." Justice Scalia, in an exchange with the court-appointed attorney, seemed to indicate that his preference is to strike down the ACA in its entirety: "My approach would say if you take the heart out of the statute, the statute's gone." This was a central topic of discussion throughout the morning's arguments-- what, exactly, is the "heart" of the ACA, and if that "heart" is removed, should the remainder of the Act survive? As Justice Ginsburg put it: should this be a "wrecking operation" or a "salvage job"? The Court made hard arguments against each of the positions taken and it is not clear which direction they are leaning.
Is the ACA's Expansion of Medicaid to Cover a Greater Share of the Poor Constitutional?
Among the provisions of the ACA is an expansion of Medicaid, the Federal and state funded program which covers the very poor. The challengers to the ACA argue that it is an unconstitutional leverage of Federal power over States rights because it is "coercive" of Congress to use Federal money in order to force the States to do something that Congress does not have the legal authority to command them to do.
The challengers contend that the Medicaid expansion is unduly coercive because: (i) of "the sheer size of the program", (ii) the statute is tied to the minimum coverage mandate, and (iii) prior participation in the Medicaid program is being "leveraged". Justice Kagan noted that the Federal government would be covering 90% of the Medicaid expansion and wanted to know why a big gift from the Federal government [is] a matter of coercion?" The challengers argued that "the sheer amount of money here makes it very, very difficult to refuse."
The argument that was discussed at greatest length was the leverage argument. The challengers cited a letter that the Secretary of Health and Human Services (the "Secretary") sent to the State of Arizona, when the State "floated the idea that it would like to withdraw from the [Children's Health Insurance Program], which is a relatively small part of the whole program." The letter informed the State that withdrawal from the program would risk Arizona losing the entirety of its Medicaid participation (almost $8 billion). Justice Breyer seemed skeptical that the Secretary could revoke all Medicaid funds at her total discretion, because the Secretary is "limited to what is not arbitrary, capricious, and abuse of discretion in interpreting statutes." Justice Breyer also pointed out that there were several prior extensions of Medicaid eligibility, all of which were governed by the same statute at issue that allows the Secretary to revoke certain funds, and all of which added similarly large numbers of people to the Medicaid enrollment.
The challengers made a final argument regarding coercion when they noted that there is no Federal substitute if a State does not accept the Medicaid expansion funds: "if you don't take this offer we are giving you, your tax dollars will fund the other 49 states and you will get nothing."
The government argued that the Secretary is operating within her authority when she threatens to revoke Medicaid funds for nonparticipation, but the Court appeared concerned with her broad authority. Chief Justice Roberts asked "why shouldn't we be concerned about the extent of authority that the government is exercising, simply because they could do something less?" The government's back and forth with the Court mainly revolved around the idea of the Federal government "coercing" the States to act in a certain way because of the lure of the sizable funds at issue. Justice Scalia noted that it was inconceivable to Congress that any State would turn down the Medicaid funds because some of the other provisions of the ACA are based on the assumption that every single state would participate in the program. Justice Scalia described it is "an offer you can't refuse."
The Court has previously stated that there is a limit on Congressional coercion towards the states but it has yet to find an instance where it has ruled that the government has crossed that line.
Prior to this week's oral arguments, a majority of scholars seemed to believe that the Court would uphold the mandate as a constitutional use of Congress' powers. After these oral arguments, however, opinion has shifted and the prospects of the mandate's survival appear to be very much up in the air. As the threshold issue argued on Monday of whether the case is "ripe" is not expected to stop the Court from deciding on these issues now, the entire case should turn on the issue of the constitutionality of the minimum coverage mandate.
Many commentators believe that the government has done a poor job of defending the mandate's constitutionality; specifically, that it has done a poor job of articulating a "limiting principle" with regard to the Constitution's commerce clause as a basis for the mandate's constitutionality. The concern seems to be that without such a limiting principle, finding the mandate to be constitutional would set a precedent that greatly expands Congressional powers going forward. If the Court crafts a limiting principle on its own, the mandate should survive. If not, several of the key provisions of the ACA are also expected to fall, and possibly, though seemingly unlikely, the entirety of the ACA.
A decision is expected from the Court before its current session ends in late June.
More on Health Care Reform Before the Supreme Court
To read a summary of oral arguments from Day Two read SNR Denton's previous client alert.