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Five Key Lines in the Circuit Court Rulings on Reform

Is the Affordable Care Act constitutional or not?

It seems like every week brings a different wrinkle, if not a new answer.

The Supreme Court will convene on Thursday to decide whether to take up the case against reform. The universal expectation is that the high court will elect to grant certiorari, rather than avoid the lawsuits altogether.

But which legal thinking will guide the justices’ conclusion?

Four appeals courts have now rendered decisions — or dismissals — on five separate challenges to the ACA. Collectively, the circuit courts’ opinions represent more than 630 pages of legal argument; those briefs follow hundreds of additional pages of lower-court rulings.

Among the millions of words spent on arguing the ACA’s legality, here are five key lines that address what will shape the Supreme Court’s own decision — and help you make sense of the issues in play.

11th Circuit

: Congress exceeded its commerce power in enacting its individual mandate … and Congress’s tax power does not provide an alternative constitutional basis for upholding this unprecedented individual mandate.”

Opponents of the ACA had reason to cheer in August, when 11th Circuit Chief Judge Joel Dubina and Judge Frank Hull found that the ACA’s mandate was unconstitutional on these grounds.

Their decision takes on outsized importance, given that SCOTUS is most likely to take the lawsuit brought by 26 states and the National Federation of Independent Business and heard by the 11th Circuit.

11th Circuit: “Because of the Supreme Court’s strong presumption of severability and as a matter of judicial restraint, we conclude that the individual mandate is severable from the remainder of the Act.”

Another issue facing the high court is whether the law is severable — specifically, can one part of the ACA be struck down without jeopardizing the entire reform package?

The 11th Circuit concluded that the mandate could be abolished without striking down other aspects, like new requirements that health insurance plans provide coverage for individuals for pre-existing conditions.

However, the Obama administration maintains that the law is not severable; the Department of Justice has argued that striking down the individual mandate would invalidate the law’s other provisions, such as efforts to prevent health plans from charging sicker individuals higher premiums.

6th Circuit

“The activity of forgoing health insurance and attempting to cover the cost of health care needs by self-insuring is no less economic than the activity of purchasing an insurance plan.”

Unlike their colleagues on the 11th Circuit, 6th Circuit Judges Boyce Martin and Jeffrey Sutton found that Congress has legitimate argument to impose a minimum coverage provision.

Their majority opinion cited two factors:

  • The provision regulates economic activity — health care utilization — which Congress “had a rational basis to believe has substantial effects on interstate commerce”; and
  • Congress also had valid reason to conclude that the mandate “was essential to its larger economic scheme reforming the interstate markets in health care and health insurance.”

Sutton’s participation in the majority opinion was seen as a boon for swaying several Supreme Court justices, as he was appointed by President George W. Bush and is seen as a staunch conservative.

4th Circuit
: “If we were to adopt Virginia’s standing theory, each state could become a roving constitutional watchdog of sorts; no issue, no matter how generalized or quintessentially political, would fall beyond a state’s power to litigate in federal court.”

This case isn’t actually on the Supreme Court’s conference docket for Thursday. However, the ruling gets to an issue still facing the nation’s jurists: Can states rebuke federal law simply by creating statutes that declare the law to be invalid?

In Judge Diana Gribbon Motz’s opinion — rendered unanimously — state lawmakers lack that power, but it hasn’t stopped more states from trying. On Tuesday, Ohio voters approved a ballot measure designed to prevent state residents from participating in any health care mandate.

D.C. Circuit Court: “Since so much has already been written by our sister circuits about the issues presented by this case — which will almost surely be decided by the Supreme Court — we shall be sparing in adding to the production of paper.”

Tuesday’s ruling to uphold ACA’s constitutionality was a symbolic victory for the law’s backers — “this is the best day that the [ACA] has had in court so far,” the Center for American Progress’ Neera Tanden told reporters — but its legal impact may be muted.  Like the 4th Circuit’s ruling, the D.C. Circuit’s decision won’t be considered on Thursday.

However, Judge Laurence Silberman’s opinion also recognizes that there’s a plethora of commentary about the ACA; in that spirit, we’ll move on to a roundup of what else is happening around the nation.

Benefits to Consumers

  • More than 2.2 million Medicare beneficiaries have received discounts on prescription drugs totaling $1.2 billion under a provision in the federal health reform law seeking to close a gap in prescription drug coverage, according to CMS. A state-by-state agency analysis also found that beneficiaries in New Jersey received the largest discounts, averaging $686 per beneficiary, while the smallest discounts, averaging $274, were in Hawaii. The average discount was $550 (Bristol, CQ HealthBeat, 11/4).
  • Children of low-income state employees in at least five states — Alabama, Kentucky, Montana, Pennsylvania and Texas — can enroll in the Children’s Health Insurance Program under a policy change in the federal health reform law. The federal government previously blocked the option because of concerns that it would spur some states to shift their employees’ health benefits to the government. Under the policy change, states seeking federal approval to open CHIP enrollment to their employees must prove that they have not reduced their share of employees’ health insurance costs and that the cost of private insurance poses financial difficulties for the families (Barr, Kaiser Health News/Washington Post, 11/6).

Eye on the Courts

  • During a Heritage Foundation event last week, attorneys representing some of the plaintiffs in the lawsuits challenging the federal health reform law said they expect the U.S. Supreme Court to rule in their favor (Baker, “Healthwatch,” The Hill, 11/3). On Nov. 10, the Supreme Court justices are scheduled to convene a private meeting to discuss whether they will review any of the lawsuits against the overhaul. David Rivkin and Michael Carwin, two lawyers in the case filed by 26 states and the National Federation of Independent Business, said the overhaul is an example of significant overreach on the part of the federal government, which would lead the high court to vote unanimously for the plaintiffs (Sanger-Katz, National Journal, 11/3).

In the States

  • In a report released last week, Vermont Gov. Peter Shumlin’s (D) administration and legislative researchers said that Vermont’s single-payer health system will cost between $8.2 billion and $9.5 billion annually by 2020. However, the report found that a system with private insurers would cost more than $10 billion annually by 2020. In May, Shumlin signed a bill (H 202) to create a state health insurance exchange as required under the federal health reform law, establish a publicly financed single-payer system and allow enrollees to purchase supplemental private insurance policies (Gram, AP/San Diego Union-Tribune, 11/1).

On the Campaign Trail

  • During a speech before the Congressional Health Care Caucus last week, Republican presidential candidate Herman Cain said the federal health reform law is “fundamentally flawed” and promised to repeal it on March 23, 2013, the third anniversary of its signing, if he is elected (Sonmez, “2chambers,” Washington Post, 11/2). Cain added that he would replace the law with some standard conservative proposals and he would attempt to end employer-based health insurance (Baker, “Healthwatch,” The Hill, 11/2).

On the Hill

  • Last week, Sen. John Thune (R-S.D.) introduced a bill (S 720) to repeal the Community Living Assistance Services and Supports Act created by the federal health reform law. Thune said the long-term health care program is “destined to fail” and Congress “ought to repeal it.” In a letter sent to Thune earlier in the week, the Congressional Budget Office stated that repealing the CLASS Act would have no effect on the federal deficit (Baker, “Healthwatch,” The Hill, 11/2). Meanwhile, AARP and more than 50 disability rights groups, unions and other advocacy organizations sent a letter to lawmakers urging them not to repeal the CLASS Act, reiterating the need for a long-term health care program (Pecquet, “Healthwatch,” The Hill, 11/2).
  • During a House subcommittee hearing last week, lawmakers and advocacy groups argued over an HHS rule that requires health plans to cover contraceptive services without cost-sharing by policyholders and an exemption for certain religious organizations. The rule is part of a provision in the federal health reform law that will require health plans to cover certain preventive services — including contraceptive services — without copayments, coinsurance or deductibles (Pecquet, “Healthwatch,” The Hill, 11/2).

Rolling Out Reform

  • In an audit issued this week, the U.S. Treasury Department‘s office of the inspector general for tax administration reported that fewer than expected small businesses have take advantage of a tax credit under the federal health reform law to help provide health coverage for employees. By May 2011, only about 228,000 small-business owners had claimed the tax credit, which totaled more than $278 million, the audit found. IRS anticipated that 4.4 million business owners would be eligible for the subsidies (Becker [1], “Healthwatch,” The Hill, 11/7). However, the Treasury Department and the Internal Revenue Service downplayed the new report, saying that its figures are outdated because more recent data showed that $435 million in tax credits have been claimed (Becker [2], “Healthwatch,” The Hill, 11/7).
  • In recent comments on proposed regulations for the health insurance exchanges created by the federal health reform law, stakeholders urged CMS to be prepared for delays in implementing certain provisions. Commenting on proposed rules for determining Medicaid eligibility, officials from the National Association of Medicaid Directors suggested that CMS work with states “to develop transitional, phase-in, and contingency plans.” Meanwhile, America’s Health Insurance Plans officials said that current deadlines for building exchanges are “quite challenging” so “the implementation time frame should be re-evaluated in consultation with the states and the health plan community” (Reichard, CQ HealthBeat, 11/1).

Studying Its Effects

  • In a new analysis issued last week, the youth advocacy groups Demos and Young Invincibles reported that rising health care costs and declining opportunities for jobs that offer employer-sponsored health insurance have left millions of young adults uninsured. However, provisions under the federal health reform law will expand coverage for them, they added. One provision — which requires health insurers to cover dependents up to age 26 on family coverage — helped 500,000 adults between ages 18 and 24 obtain coverage in 2010, the report noted. In addition, eight million uninsured young adults will become eligible for insurance when Medicaid expands in 2014, and more than nine million will become eligible for subsidies to buy private insurance (Pecquet, “Healthwatch,” The Hill, 11/2).

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