Deep Background on Court Decision

The Washington Post, By Robert Barnes, N.C. Aizenman and William Branigin –

June 28, 2012: Chief Justice John G. Roberts Jr. on Thursday joined the liberal wing of the Supreme Court to save the heart of President Obama’s landmark health-care law, agreeing that the requirement for nearly all Americans to secure health insurance is permissible under Congress’s taxing authority.

Even as it upheld that central component of the Patient Protection and Affordable Care Act, however, the court modified another key provision of the law, ruling that the federal government cannot withdraw existing Medicaid funding from states that decide not to participate in a broad expansion of Medicaid eligibility.

The court’s historic compromise, which will affect the health-care choices of millions of Americans, amounts to a major victory for the White House less than five months before the November elections, although the Medicaid decision sets new limits on the power of the national government.

President Obama welcomed the ruling, which he called “a victory for people all over this country whose lives will be more secure.” He said the decision would allow the health-care law to offer millions of currently uninsured Americans “an array of quality, affordable health-insurance plans to choose from” starting in 2014.

“Today the Supreme Court also upheld the principle that people who can afford health insurance should take the responsibility to buy health insurance,” Obama said in televised speech at the White House. He said he knew that this individual mandate “wouldn’t be politically popular” and that the debate over the law “has been divisive.” But he said the law was “good for the country” and “good for the American people.”

“The highest court in the land has now spoken,” Obama said. “We will continue to implement this law. And we’ll work together to improve on it where we can.

But what we won’t do, what the country can’t afford to do, is refight the political battles of two years ago or go back to the way things were. With today’s announcement, it’s time for us to move forward.”

Illustrating the divided nature of the ruling, Justice Anthony M. Kennedy, representing the court’s most consistent conservatives, read a scathing dissent, while Justice Ruth Bader Ginsburg, representing the liberals, issued a separate opinion supporting Roberts but differing with him on key aspects of the case.

Still, Ginsburg’s summation seemed to serve as the bottom line: “In the end, the Affordable Health Care Act survives largely unscathed.”

Joined by Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr., Kennedy called the majority’s decision a “vast judicial overreaching” that “creates a debilitated, inoperable version of health care regulation that Congress did not enact and the public does not expect.”

The Medicaid ruling, Kennedy said, leaves state governments in a difficult position: “States must choose between expanding Medicaid or paying huge tax sums . . . for the sole benefit of expanding Medicaid in other states.”

The high court rejected the argument, advanced by the Obama administration, that the individual mandate was constitutional under the commerce clause of the Constitution. But Roberts joined the court’s four liberal justices — Ginsburg, Sonia Sotomayor, Stephen G. Breyer and Elena Kagan — in ruling that a penalty for refusing to buy health insurance amounts to a tax and thus is permitted. Ginsburg favored going further and allowing the mandate under the commerce clause.

Passage of the legislation by the Democratic-controlled Congress in 2010 capped decades of efforts to implement a national program of health care. The act is supposed to eventually extend health-care coverage to more than 30 million Americans who currently lack it.

“No longer will Americans be a heart attack or a car crash away from bankruptcy,” Senate Majority Leader Harry M. Reid (D-Nev.) said in a speech on the Senate floor Thursday after the ruling. “No longer will Americans live in fear of losing their health insurance because they lose their job.”

Republicans in Congress and GOP presidential challenger Mitt Romney have vowed to try to repeal the measure.

“What the court did not do on its last day in session, I will do on my first day as president,” Romney said late Thursday morning. “And that is, I will act to repeal Obamacare.”

The health-care issue thrust the Supreme Court into the public spotlight unlike anything since its role in the 2000 presidential election. The court’s examination of the law received massive media coverage — especially during three days of oral arguments in March — and its outcome remained Washington’s most closely guarded secret.

The court reviewed four questions: whether it was within Congress’s constitutional powers to impose the individual mandate to purchase health insurance; whether all or any additional parts of the law must be struck down if the mandate is rejected; whether an expansion of Medicaid was unduly coercive on the states and whether all of those questions can even be reviewed before the mandate takes effect.

The individual mandate, known technically as the “minimum coverage” provision, was considered a crucial part of the overall health-care legislation because striking it down would have jeopardized the ability of insurers to comply with other, more popular elements of the law without drastically raising premiums.

Under those other provisions, for example, insurers can no longer limit or deny benefits to children because of a preexisting condition, and young adults to up age 26 are eligible for insurance coverage under their parents’ plans.

During oral arguments in March, conservative justices indicated they were skeptical about the individual mandate, the provision in the 2,700-page health-care law that requires nearly all Americans to obtain health insurance by 2014 or pay a financial penalty.

Arguing the case for the Obama administration, Solicitor General Donald B. Verrilli Jr. defended the law as a constitutional exercise of congressional power under the charter’s commerce clause to regulate interstate commerce. He said lawmakers were regulating health insurance to deal with the problem of millions of people who lack coverage and therefore shift costs to the insured when they cannot pay for their medical care.

Paul D. Clement, representing Florida and 25 other states objecting to the health-care law, argued that Congress exceeded its power in passing the law, which he said compels people to buy a product.

In a 59-page opinion, Roberts wrote: “The Affordable Care Act is constitutional in part and unconstitutional in part.” He said the individual mandate “cannot be upheld as an exercise of Congress’s power under the commerce clause,” which allows Congress to regulate interstate commerce but “not to order individuals to engage in it.”

Roberts added: “In this case, however, it is reasonable to con¬strue what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Con¬gress’s power to tax.”

Neither the plaintiffs in the case nor the Obama administration had argued before the court that the individual mandate was a tax. Instead, the court asked a Washington lawyer to present the argument that lawsuits against the health-care law were premature under an obscure 19th-century law, the Anti-Injunction Act, which bars suits against a tax until the tax is actually paid.

Under the health-care law, penalties for refusing to buy health insurance do not kick in until people pay their 2015 income tax returns.

In its ruling, the court did not accept that the Anti-Injunction Act precludes a decision on the health-care law, but it embraced the argument that the penalty amounts to a tax.

Ginsburg, in a separate, 61-page opinion joined by Sotomayor and in which Breyer and Kagan concurred in part, said she agreed with Roberts that the individual mandate provision “is a proper exercise” of Congress’s taxing authority. But she said she “would hold, alternatively, that the Commerce Clause authorizes Congress to enact” the provision. Ginsburg also wrote in her opinion that the Constitution’s spending clause “permits the Medicaid expansion exactly as Congress enacted it.”

The court majority, however, ruled that the law’s expansion of Medicaid can move forward, but not its provision that threatens states with the loss of their existing Medicaid funding if the states declined to comply with the expansion.

Roberts wrote that the portion of the health-care law that expands Medicaid “violates the Constitution by threatening existing Medicaid funding.”

Congress can offer the states grants and impose accompanying conditions, “but the States must have a genuine choice whether to accept the offer,” Roberts said. “The states are given no such choice in this case: They must either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding.”

However, the remedy for that violation is to preclude such a sanction, not to strike down other parts of the health-care law or scuttle the legislation as a whole, he said.

The finding was unexpected — every lower court that has ruled on the issue has upheld the constitutionality of the Medicaid expansion. And it raises immediate questions as to how effectively the federal government will be able to implement a provision that is central to the law’s goal of substantially reducing the share of uninsured Americans.

Medicaid provides health insurance to the poor and disabled with a combination of federal and state dollars. Beginning in 2014, the health-care law significantly broadens the program’s minimum eligibility requirements. About half of the tens of millions of Americans who will be newly covered through the law will gain coverage this way.

Initially, the federal government will foot the entire bill for covering the newly eligible. But its share will gradually drop to 90 percent by 2020 and beyond, with states required to pick up the rest. The 26 states challenging the expansion argued in court that this requirement would impose a crushing burden on their budgets.

In their searing dissent, Kennedy, Scalia, Thomas and Alito said the entire health-care law should have been thrown out because its “complex structures and provisions” exceed the authority of Congress.

“The Court regards its strained statutory interpretation as judicial modesty. It is not,” the dissenting justices wrote. “It makes enactment of sensible health-care regulation more difficult, since Congress cannot start afresh but must take as its point of departure a jumble of now senseless provisions.”

Instead of avoiding constitutional difficulties, the decision “creates them,” they wrote. The judgment on Medicaid expansion “ushers in new federalism concerns and places an unaccustomed strain upon the Union.”

The dissenters said the ruling “undermines … at every turn” the values of caution, minimalism and limited federal powers.

Supporters of the law offered mixed opinions on the potential impact of the court’s ruling on the Medicaid issue.

The expansion is central to the law’s goal of reducing the number of uninsured Americans and is projected to help 16 million people gain insurance, nearly half of the estimated 34 million who will be newly covered as a result of the law.

Ronald Pollack, head of the advocacy group Families USA, was unconcerned. He noted that while the justices have removed the stick that the federal government could have used to ensure compliance, federal authorities will still be able to offer states a large carrot: For the first three years of the expansion, federal funds will pay for 100 percent of the newly eligible, then 90 percent in the years following.

“The incentive is so strong,” he said. “This is an incredible bargain that states are not going to want to refuse.”

However, Joan Alker, co-executive director of the Center for Children and Families at Georgetown University, was less optimistic.

“We remain concerned … that the court’s decision on Medicaid means that the lowest-income parents and other adults could be the only Americans left behind, depending on where they live,” she said.

Alker said her reading of the law is that if a state declines to participate in Medicaid’s expansion, the options for people who might otherwise have been covered by the program will depend on their income.

Those with incomes between 100 percent and 133 percent of the federal poverty line will be eligible for federal assistance to buy private plans on state-based marketplaces, or “exchanges,” set up by the law. However, in a paradoxical twist, said Alker, federal subsidies will not be available for people with incomes below poverty, because the law was written on the assumption that all of them would be covered by Medicaid.

No initiative has exemplified Obama’s progressive domestic agenda or inflamed his conservative opponents like the health-care law. The court’s decision will resonate throughout the election season, not only in the presidential campaign but in House and Senate races across the country.

The law provoked an unlikely debate about the Constitution. Opponents saw it as a trespass on individual and state’s rights by an omnipotent federal government, and supporters viewed it as a long-sought guarantee of health care to Americans regardless of where they live or work.

Although the most controversial provisions of the law are not scheduled to take effect until 2014, a complex web of new rules has already extended coverage and expanded benefits across the country.

As a mark of the case’s importance, the justices spent more than six hours over three days hearing oral arguments on the constitutional questions and related issues. It was the most time than the court has spent on any issue in nearly half a century.

As soon as Obama signed the health-care bill in March 2010, opponents raced to challenge it. Early court decisions followed a predictable pattern, with district judges appointed by Democratic presidents upholding the law and Republican appointees striking it down.

But at the appeals court level, that changed. In a decision by the U.S. Court of Appeals for the 11th Circuit in Atlanta, Judge Frank Hull, an appointee of President Bill Clinton, joined with a Republican colleague in saying that the individual insurance mandate in the “unprecedented” legislation exceeded congressional authority. The judges said that if the law were constitutional, it would be impossible to say what action on the part of the government would go too far.

At the U.S. Court of Appeals for the 6th Circuit in Cincinnati and the U.S. Court of Appeals for the D.C. Circuit, two prominent Republican-appointed judges agreed that the law is intrusive but said it is within Congress’s powers.

In Cincinnati, Judge Jeffrey Sutton, a George W. Bush appointee, was the deciding vote to uphold the act. In Washington, Senior Judge Laurence Silberman, named to the bench by President Ronald Reagan, wrote an opinion saying that the question was political, not constitutional.

“It certainly is an encroachment on individual liberty,” Silberman wrote. But then — alluding to other cases in which the Supreme Court has ruled that the commerce clause gives Congress power — he added that “it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race, that gravely ill individuals cannot use a substance their doctors described as the only effective palliative for excruciating pain, or that a farmer cannot grow enough wheat to support his own family.”

Even as the legal wrangling grew to a crescendo, some aspects of the law were already being enforced. Those include requirements that many insurance plans allow young adults to stay on their parents’ policies until age 26; cover a range of preventive services, including birth control, without imposing co-payments or other out-of-pocket costs; eliminate lifetime dollar limits on coverage; and begin phasing out annual caps.

Source: John & Rusty Report via Word & Brown