This week the Supreme Court is scheduled to give their verdict on the constitutionality of 1) the individual mandate; 2) whether the Supreme Court can make a ruling at this time (are the penalties a tax or not a tax?); 3) if they rule against the individual mandate, is the mandate “separable” from the health care bill and can the Court let the rest of the bill stand; and 4) are changes to Medicaid eligibility rules an imposition on the states that effectively forces the states to accept the new rules or lose funding for their entire Medicaid program.

Jerry sent me a link to a 2009 set of Republican proposals  for health care reform.  here was my response:

Jer,

This is a Republican position paper from June 2009.  At that time Republicans were chiefly concerned about proposals for a single payer system.  If you read the paper, you will see that many of the Republican reforms were incorporated in the final health care bill.  So why the Republican push back against the health care law?

Dick Armey is a former Texas Congressman who was (and still is?) chairman of Freedom Works, which provided the financial and organizational resources for the formation of the Tea Party.  Armey fought against the individual mandate in 1993 under “Hilarycare” and prodded Tea Party members to protest against the individual mandate in “Obamacare” (why isn’t Medicare called “JohnsonCare”?).  While not a staunch conservative, he felt that the Republican Party had drifted too much to the left.  Armey retired after staunch conservatives continued to challenge him for his seat so he is not one of the wacko conservatives, despite what some Democratic pundits say.

The protest against Obamacare was a wedge issue used by Karl Rove and other Republican strategists as a way to take back the House in 2010 and it worked.

Republican reforms incorporated into the bill may not have been done exactly as Republicans wanted but they were included:

Affordable and accessible health care of all Americans with no refusal for pre-existing conditions.

Enable people to keep the current health care plan they have with their employer.

Give people a choice of health plans and allow small businesses access to affordable health plans (state insurance exchanges)

Prevention, wellness and disease management programs – emphasis on primary care (Bernie Sanders’ amendment that funded Community Health Clinics)

Tax fairness – credits for those buying individual plans so that they have the same tax benefits as people who have employer sponsored plans. (Republican Dan Issa’s committee now finds that this would help too many poor people)

Republican proposals that were not included in the health care bill:

Tort reform that some say causes doctors to order additional tests just to cover their liability.  Estimates of the savings under tort reform run from 1% – 10%.  My own personal experience with my parents’ doctors is that they order additional tests to confirm their diagnosis before starting a definitive treatment program.  The general idea of tort reform is good but the devil is in the details.  If your epileptic child becomes a vegetable after your doctor treats her for the epilepsy, do you want there to be a $100K cap on damages that you can get from the doctor?  Probably not.

Expansion of health savings accounts

I don’t know if these were included:

Additional oversight and authority to Medicare and Medicaid to stop waste and fraud.  One proposal was that Medicare should change its policy of paying bills received within 30 days.  Fraudulent clinics bill Medicare, take the money and have closed up shop by the time Medicare investigators discover the fraud (featured on 60 Minutes program).  The problem with this proposal is that this would also make it difficult for smaller clinics and individual physicians to manage their cash flows.

Financial help for family members who provide in-home care for a relative.

Republicans have successfully used the emotional issue of the individual mandate to decry the entire health care bill.  Should Republicans “repeal and replace”, many of the elements that are in the current health care bill will also be in the Republican bill.  But Republicans will claim that it is theirs and it is substantively different than the current bill.  That is how a party wins elections.  The health care debate is not primarily about health care – it is about elections and power.

This past week the Supreme Court (court) listened to oral arguments on the constitutionality of the individual mandate provision of the Affordable Care Act, the health care law often referred to as ObamaCare.  There were several aspects of the law that were argued in separate sessions. These arguments are available in written form  and oral form in mp3 format.  I have included links to the audio below and a link to one of the written transcripts but you can select the transcripts for any of the arguments using the topic list number for each argument.

The first question the court heard was whether the individual mandate was a tax (11-398 Monday Argument).  If the court rules that it is a tax then the 26 states that brought suit against the federal government, which I’ll refer to as the government, have no standing to sue at this time because no one can bring suit against the government before they pay the tax.  In that case, no one could bring suit until 2015 when someone actually pays the tax.  The court would not rule on the constitutional aspects of the mandate till that time.  Wanting a resolution to the constitutionality of the health care law, neither the government or the states wanted to argue that the individual mandate was a tax.  Since neither party wanted to argue the point, the court invited Michael Carvin as separate counsel to argue the case that the mandate is a tax.  The government argued that the mandate is a penalty under the taxing authority of Congress.  Understanding that the health care law is a contentious issue before a Presidential election, the court will probably side with the case that the mandate is not a tax so that they can take up the constitutional questions that the law raises.

The second session (oral or written ) consisted of oral arguments for and against the constitutionality of the individual mandate (11-398 Tuesday Argument).  The third session argued whether the court can strike down the individual mandate and let the rest of the law stand, referred to as the “severability” of the individual mandate, i.e. can the mandate be severed from the rest of the law (11-393 Argument).  The fourth session took up the question: can the federal government withdraw existing Medicaid funds it provides to the states if the states do not want to follow the new additional Medicaid guidelines that ObamaCare imposes (11-400 Argument)

Justice Scalia summarized the concerns of the court’s conservative justices: “An equally evident constitutional principle is the principle that the Federal Government is a government of enumerated powers and that the vast majority of powers remain in the States and do not belong to the Federal Government.”

Is the individual mandate within the scope of Congress’ power?  In Article 1, Section 8 of the Constitution, the Federal government is given a list of enumerated powers.  The Tenth Amendment asserts that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”  Amendments to the Constitution are the  definitive way to give the federal government an additional enumerated power; the Sixteenth Amendment to collect taxes on income is an example.  Since the federal government’s power is limited to what is allowed under the Constitution, it must argue for an expanded interpretation of the authority given to it by the Constitution.   It does this under the “Basket Clause” power enumerated in Article 1 which gives Congress the power “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.”

One of those “foregoing powers” is the Commerce clause in Article 1: “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

The intent of the Constitution regarding the federal government is to put limits on the power of that government.  In any case involving the authority of the federal government, the court often wants to hear a limiting provision so that their judicial decision does not open the floodgates for unlimited government authority.  The subject of limits was raised frequently by the conservative justices on the court.  Congress has enumerated powers; the states have plenary powers.  The states can force an individual to buy car insurance; the federal government does not have that authority.  In many areas, the states have coercive powers over the individual that the federal government does not have.

In this case the government argued that the individual mandate is within its power to regulate interstate commerce.  The individual mandate to buy insurance is needed in order to require insurance companies to write policies with community rating, i.e. risk is spread throughout a large community, and guaranteed issue, i.e. no denial because of medical history or condition.  The states argued that the law’s individual mandate to buy insurance is unconstitutionally forcing people to buy a product, thus creating an insurance market.

Justice Breyer cited a lower court opinion (Sutton) that an earlier precedent setting case, Wickard v. Filburn, effectively allowed the government to force a farmer to buy wheat. Other justices disagreed with this interpretation of the Wickard case. 

The government advocate, Donald Verrilli, made what is its primary point:  health care insurance is simply a financing mechanism for health care services which all but a few will consume at some point in their lives. Since all people are or will be in the market for health care services, the government has the authority to regulate the payment for those services.

Justice Alito asked Verrilli, the government advocate, whether the government could require people to buy burial insurance since everyone will need to be buried or cremated.  Verrilli made the argument that burial expenses do not involve cost shifting the way that paying for health care insurance does.  Justice Alito countered that the government does pick up the expense of burying or cremating someone who cannot pay but Verrilli argued that this comes out of general tax revenues and these costs are miniscule when compared to the unreimbursed costs of health care.  Justice Scalia asked the rhetorical question: why couldn’t Congress just pass a tax to cover the costs of unreimbursed care?  There would be no question of constitutional authority since Congress has the express power to levy such a tax.  Although many liberals disagree with much of Justice Scalia’s opinions, they have asked this same question.

Justice Kennedy noted that the court has an implied presumption that a law is constitutional but that the government has a burden to prove its case when enacting a law that requires an individual to buy something, a requirement that fundamentally changes the relationship between the government and the individual. Kennedy noted that the health care act requires an affirmative action from an individual, i.e. buy insurance.  Under existing tort law, the government can not require an individual to take an action to prevent a blind man from stepping in front of oncoming traffic, despite the grave moral concerns this raises.  The laws of this country delineate a clear boundary around the individual that the government can not cross.  Kennedy is concerned that the court may set a precedent in this case that erodes that boundary.  Often regarded as the swing vote on the court, Kennedy’s remarks show his concerns about the constitutional questions and limits on Congressional power that the law raises.

Mr. Verrilli argued that both sides agree that the government can regulate transactions affecting interstate commerce at the point of sale.  Paul Clement, the states’ advocate, later confirmed his agreement when questioned by Justice Sotomayor:  Yes, the government can regulate commerce at the point of sale.  Verrilli argued that insurance is the way that health care services are paid for at the time of delivery or point of sale; however, no one can buy insurance at the time of delivery since no insurance company will sell someone a policy at that time.  Given this rather unique feature of health care transactions, the government has the authority to ensure that people have insurance in advance of the point of sale.  Further on, I’ll cover Clement’s argument against this contention.

Given the government’s argument, Chief Justice Roberts asked if the government could require people to buy a cell phone so that they could call for emergency services, i.e. police, fire, ambulance and roadside service, which most people will need in their lifetime.  Verrilli argued that, unlike health care, there is no market for emergency services. Justice Breyer argued that the goverment could require someone to buy a cell phone or burial insurance.  As an example, Breyer challenged Paul Clement, the states’ advocate, couldn’t the government require people to get vaccinated to prevent the spread of a disease that would kill 60% or more of the population.  Clement answered that the government could not do so.  This argument between Breyer and Clement reflects the sharply differing interpretations of the General Welfare clause of Article 1.

Justice Kennedy questioned the government’s case that the health insurance market and the health services market are the same market.  The health care act requires people to buy insurance for services that they will never need; i.e. maternity care or pediatric care.  The government advocate, Donald Verrilli, argued that the government has a right to impose minimum coverage provisions as a regulatory detail.

Justice Ginsburg noted that the government’s brief makes the case that the health care market is one where there is direct cost shifting from one market participant to another, thereby constituting an existing market.  Insurance companies and hospitals charge additional to people with insurance to pay for those who have no health insurance.  Verrilli concurred, noting that this direct cost shifting distinguishes the health care market and justifies the government’s regulation of this cost shifting.  Justice Scalia argued that there is an implied cost shifting when someone decides not to buy a car.  To make a profit, car companies have to charge more to compensate for selling fewer cars.  Verrilli argued that, unlike cars, health care will be provided regardless of one’s ability to pay.  Although Scalia failed to make his point directly, he showed a skeptical wariness of  allowing the government to control and expand the definition of what is a market.  If given a wide latitude to define a market, the government could define almost any activity as a market in the future and its authority to regulate that newly defined market.

Justice Sotomayor asked the states’ advocate, Paul Clement, whether the government could enact a “health care responsibility payment” that would be waived on proof of insurance.  Mr. Clement answered that there might be some question whether Congress could do so under its taxing authority.  Such a payment could be construed as a direct tax that would presumably not be a uniform tax and unconstitutional under Article 1.

Justice Breyer argued that Congress has historically created commerce out of nothing, noting the creation of a national bank as a regulation of commerce which did not previously exist.  Breyer cited various court decisions that ruled the growing of wheat or marijuana as activities engaging in commerce and affirming Congress’ authority to regulate such activities under the Commerce clause.  Clement countered that the creation of a national bank was not done so under the Commerce clause, nor did the government require an affirmative action from individuals – that they deposit their money only in the national bank.  Clement returned again to this question of coercion, adding that the government does not require people to buy cars to support the car industry; rather, the government offered incentives such as the Cash for Clunkers program.  The government does not support wheat farmers by requiring everyone to buy so many loaves of wheat.  In short, the government has no authority or precedence for forcing individuals into a market.

In response to challenges by Justice Roberts and Kagan, Clement argued that everyone is not in the health care market; that through this insurance mandate, the government is trying to force everyone into the market. Justice Kagan responded that insurance is a way of funding a market that everyone will participate in during their lifetime. Clement countered that not everyone will use the health care services during the year that they have bought the policy for.  Clement consistently draws the distinction between the health care services market and the health care insurance market, an appeal to the conservative justices who are wary of Congress’ future desires to make connections between markets in order to extend the reach of Congressional authority under the Commerce clause.

Justice Kagan summed up what will lie at the heart of arguments both for and against the constitutionality of this law:  “who’s in commerce and when are they in commerce?”