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High Court Wraps Up Hearings on Federal Health Reform Law Case

On Wednesday, the Supreme Court concluded up three days of oral arguments in the lawsuit challenging the federal health reform law, the Washington Post reports.

Wednesday's hearings consisted of a morning session on the severability of the law's individual mandate and an afternoon session on the overhaul's Medicaid expansion (Barnes/Aizenman, Washington Post, 3/28).

Audio and written transcripts of the morning session and the afternoon session are available from the Supreme Court's website.

Severability of Individual Mandate

In the morning session of Wednesday's arguments, some of the justices "seemed open" to allowing the remainder of the overhaul to stand even if the individual mandate is deemed unconstitutional, the Associated Press reports (Sherman/Yost, Associated Press, 3/28). Some observers noted that the justices' openness to allowing other provisions to stand could indicate that they have accepted that the individual mandate will be struck down (Stohr/Asseo, Bloomberg, 3/28).

According to AP, three liberal justices -- Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor -- asked questions that intimated they believe the law can stand without the minimum coverage requirement (Associated Press, 3/28). Sotomayor said, "The bottom line is, why don't we let Congress fix it" instead of eliminating the overhaul in its entirety (Bloomberg, 3/28).

Meanwhile, Chief Justice John Roberts and Justice Antonin Scalia -- both conservatives -- also asked questions that suggest they were leaning the same way (Associated Press, 3/28). Roberts noted that the law includes measures -- such as a provision related to Native American health care -- that are unrelated to the individual mandate (Bloomberg, 3/28).

Paul Clement -- the lead attorney for the plaintiffs -- argued that keeping portions of the health reform law without the individual mandate would leave a "hollow shell." He added, "Whatever you do, Congress is going to have options." Scalia questioned Clement's argument, saying, "You're telling us that the whole statute would fall" if the court struck down even one provision. Scalia added, "That can't be right" (Bloomberg, 3/28).

Clement continually tried to convince the justices that insurance regulations tied to the individual mandate in the law are key to how other provisions, including the health insurance exchanges, function. Kagan challenged that notion, noting that exchanges "function perfectly well in Utah without a mandate."

Clement countered that it would be better to strike down the whole health reform law than to allow it to "limp along" in a manner different than Congress intended. However, Ginsburg said, "There are so many things in this act that are unquestionably okay. Why make Congress redo these?" (Washington Post, 3/28).

Uncertainty Among Justices

According to Politico, while most of the justices seemed opposed to eliminating the entire law, they also "were clearly worried about the consequences if they pull out pieces of the law and that throws the rest of the health care system into chaos" (Gerstein/Budoff Brown, Politico, 3/28).

Ginsburg said that if portions of the overhaul needed to be changed as a result of the high court's decision, "Congress can take care of it" rather than the courts. Kagan noted that it would represent a "revolution" for the court to guess which provisions Congress would have approved without the individual mandate (Kendall et al., Wall Street Journal, 3/28).

Scalia said it is "totally unrealistic" for the court to comb through the 2,700 pages in the health reform law (Gerstein/Budoff Brown, Politico, 3/28). "My approach would be to say that if you take the heart of the statute" -- referring to the individual mandate -- "the statute's gone" (Liptak, New York Times, 3/28).

Justice Anthony Kennedy, a likely swing vote, said it would be "more extreme" for the court to attempt to piece together the remaining parts of the overhaul. If they were to do that, "we would have a new regime that Congress did not order" (Gerstein/Budoff Brown, Politico, 3/28).

Justices Question States' Arguments Against Medicaid Expansion

In the afternoon session of Wednesday's arguments, the high court's liberal justices "hammered" states' arguments against the Medicaid expansion, Politico reports. Chief Justice John Roberts also seemed skeptical of the states' position (Haberkorn, Politico, 3/28).

States involved in the case have argued that the Medicaid expansion -- including the mandated coverage levels and the amount of money involved -- is unnecessarily coercive. The high court has noted previously that there are limits to what the federal government can require states to do to receive funds -- a condition cannot be "so coercive as to pass the point at which pressure turns into compulsion." However, it has yet to rule that the federal government has overstepped its bounds (Washington Post, 3/28).

Liberal Justices Assail Clement

Almost immediately after Clement began laying out the reasons the states believe the expansion is unlawfully coercive, Justice Elena Kagan interrupted him.  She asked, "Why is a big gift from the federal government a matter of coercion?" She added, "It's just a boatload of federal money. It doesn't sound coercive to me."

Fellow liberal Justice Stephen Breyer aggressively questioned Clement on his claim that the federal government would force states to leave Medicaid entirely if they do not comply with the rules of the Medicaid expansion in the overhaul, Wall Street Journal's "Washington Wire" reports.  Breyer noted that it is up to the HHS secretary to determine whether a state will be forced out of Medicaid and that administrative law requires the secretary to act reasonably.

Clement countered that the health reform law seems to suggest that the HHS secretary could have the power to force states to leave Medicaid, and that HHS officials previously have indicated that they might have to force states out if they refuse to comply with provisions in the Medicaid expansion (Kendall et al., "Washington Wire," Wall Street Journal, 3/28).

Conservative Justices Seek Reassurance

According to Politico, Roberts sounded unconvinced by the states' argument that the expansion amounts to an unreasonable demand. He noted that states have been receiving Medicaid money with federal requirements attached for years, so "they shouldn't be surprised that the federal government has decided to pull them" (Haberkorn, Politico, 3/28).

Although most of the conservative justices remained silent for a good part of Clement's arguments, they put Solicitor General Donald Verrilli through "a barrage of tough questions" ("Washington Wire," Wall Street Journal, 3/28).

Justice Samuel Alito noted that it would nearly impossible for states to turn down the influx of funding through the Medicaid expansion. He asked, "How could that not be coercion?"

Verrilli countered that the federal government's share of funding for the Medicaid expansion represents a generous offer. However, Roberts asked why -- if it is so generous -- the federal government feels it necessary to compel the states to participate ("Washington Wire," Wall Street Journal, 3/28)

According to "Washington Wire," the justices seemed to want Verrilli to offer some assurance that the federal government would not end a state's federal Medicaid funding, even if it refuses to comply entirely with the Medicaid expansion. Verrilli did not go that far, but he noted that the federal government and states typically are able to work out their differences on Medicaid ("Washington Wire," Wall Street Journal, 3/28).

Implications for California

The Kaiser Family Foundation has estimated that California could receive an additional $45 billion to $55 billion in federal funds between 2014 and 2019 if the reform law is upheld.

A friend of the court brief filed by California Attorney General Kamala Harris and attorneys general in 11 other states estimates that the law's Medicaid expansion could extend health care to 11.2 million U.S. residents, including 1.9 million Californians.

Marian Mulkey -- director of the Health Reform and Public Programs Initiative of the California HealthCare Foundation, which publishes California Healthline -- said, "A lot of investment and energy is going into trying to improve Medi-Cal, enroll people in managed care, be transparent and accountable." She added, "Those are durable regardless of what happens with the Affordable Care Act ... Those investments will bear fruit down the road" (Jewett, California Watch, 3/28).

Daniel Zingale, senior vice president of The California Endowment, in a statement said, "Congress’s ability to regulate and correct the problems with the current health care market should be upheld. The Endowment remains confident the historic Affordable Care Act will lead to improved public health not just in California but across the country" (California Endowment release, 3/28).

For additional coverage on how the case will affect California, see today's California Healthline feature.

What's Next

Wednesday's afternoon session ended more than six hours of oral arguments over three days. The high court is expected to release its decision in late June (Bloomberg, 3/28).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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