Supreme Court Watch: PPACA Day 3
Today is the third and final day of oral arguments in the epic Supreme Court lawsuits covering the Patient Protection and Affordable Care Act (PPACA, ACA or “Obamacare”).
There are two issues before the Court today, the last day of oral arguments in the case. The issue called “severability” will be discussed for 90 minutes in National Federation of Independent Business v. Sebelius and Florida v. Department of Health and Human Services. After a lunch recess, the Court will hear one hour of argument on the Medicaid expansion issue in Florida v. Department of Health and Human Services.
Most Court observers find the severability issue the more interesting one, and so I’m going to basically ignore the Medicaid expansion issue and talk about severability in this blog post. If you’re interested in Medicaid expansion, feel free to read up on this excellent analysis and then come back here to discuss it.
What is severability? Simply put, it’s the idea that Congress can pass a law that has an unconstitutional provision inside of it, but that does not necessarily invalidate the remainder of the law. With a law that weighs in at 2,700 pages, determining the severability of the PPACA will be a monumental task.
Severability is essentially an argument for judicial restraint and separation of powers: the Supreme Court should respect Congress’s lawmaking authority and not do unnecessary violence to Congress’s creations, even ugly ones like the PPACA. Remove the cancer, the argument goes, but don’t kill the patient.
One surreal aspect of this whole enterprise is that the Court is asking a question that is a hypothetical on top of a hypothetical. The first hypothetical has been discussed in our two previous articles on Monday and Tuesday. The Supreme Court is being asked to strike down provisions of a law that have yet to be imposed on any citizen. That’s the point of arguing about the Anti-Injunction Act, because if the individual mandate is a tax, then the Court cannot issue an injunction against it before it is implemented in 2014. Now a further hypothetical is stacked on top of this: “Let’s assume we find the individual mandate unconstitutional. Does that invalidate the entire law?”
Befitting the unusual nature of this case, the Court has taken an unusual step. Along with accepting arguments and amicus briefs from those challenging the law (the 26 states’ Attorneys General) and from the U.S. Government’s Solicitor General Donald B. Verelli defending the law, they have opened up a third front in this legal war.
The states’ Attorneys General argue against severability (kill the law! stab it with knives!). They want the law thrown out in its entirety.
Solicitor General Verelli, like Robbie Robertson, will argue that you should take what you need and leave the rest, but you should never have taken the very best. Verelli argued in his brief that if the mandate goes, then the preëxisting condition and the premium increase limit clauses must also go. This position supports the rumors of a Faustian bargain made by the Obama Administration: according to this theory, Obama and a Democratic Congress sold the American people out in the ACA in order to get insurance companies and Big Pharma on board and keep them from running “Harry & Louise”-type ads.
The economic argument goes like this. The individual mandate is needed to maintain a steady flow of capital to the insurance companies, in the form of healthy young people who will pay premiums to support the health care of the chronically ill and the elderly. Recall that about one-quarter of medical expenses are incurred during the last year of life. Similarly, ten percent of Medicare beneficiaries consume two thirds of the Medicare dollars. Absent this guaranteed cash pipeline, the argument goes, a “death spiral” will result that will kill the insurance industry. This is the essence of Verelli’s argument.
The Court has engaged H. Bartow Farr, III of Farr & Taranto, a prestigious Washington law firm, to argue a third position, one held by neither the law’s opponents nor its supporters. The third position is this: not only is the law severable, but the Court could kill the mandate by ruling it unconstitutional and let the rest of the law stand. That is, the dire predictions of a death spiral if the mandate were removed are overblown.
As veteran Court watcher Lyle Dennison said at SCOTUSblog,
As a final departure from the positions of the combatants, Farr disagreed that, if the mandate is nullified, a “death spiral” would set in that would bring down the entire new health care law because it would deprive the insurance companies of the guaranteed pool of premium-payers and yet they would still have to cover the medical services that the uninsured would need in the future. Congress, Farr said, has put into the ACA mechanisms to head off that prospect. There are incentives for the uninsured to buy insurance before they are sick, he said, and there are generous subsidies to entice low-income people to go into the market for insurance even while they are in good health. There would be no “death spiral,” he argued.
Farr’s bottom line: if the Court strikes down the mandate, that and its attached penalty for not obtaining insurance, “and nothing more,” should be cast aside. “The Court should seldom invalidate statutory provisions that are not themselves unconstitutional,” he summed up.
Denniston believes that by calling in Farr, the Court has tipped its hand and is giving a clue as to one possible outcome: ruling the mandate unconstitutional, while keeping the remainder of the law.
The Court, of course, has the complete option to accept, reject or ignore the arguments made by Farr, even though it invited him to make them. But the reality is that the Court is very careful in selecting lawyers to perform that unusual role, and it has a good deal of respect for what it hears from them.
The teenaged boy in me, who likes to see a punishment meted out to big companies who have caused so much suffering, wants very much for this outcome to take place. The insurance industry has said all along that absent a mandate, they can’t survive if they aren’t allowed to do business as before, dropping people like a bad habit if they get sick, or denying people coverage for having preëxisting conditions like being female. This is the “death spiral” argument. Farr argues in his brief — and I agree — that Congress built protections against such a “death spiral” into the Act, and that if the Court finds the mandate unconstitutional, the proper course is to leave the remainder of ACA intact.
We’ll find out what happens in June. Until then, let’s gather here to read the tea leaves from the oral arguments.
- Infographic: The Arguments About The Medicaid Expansion In The PPACA (theinsurancebarn.wordpress.com)
- Court to address 4 big issues (cnn.com)
- What About the Employer Mandate? Companies Watching Supreme Court Case (thehealthcareblog.com)
- Supreme Court Watch: Salinas v. Texas
- Supreme Court Watch: United States v. Windsor
- Supreme Court Watch: Hollingsworth v. Perry
- Supreme Court Watch: Shelby County v. Holder
- Supreme Court Watch: Millbrook v. United States
- Supreme Court Watch: Levin v. United States
- Supreme Court Watch: Maracich v. Spears
- Supreme Court Watch: Missouri v. McNeely
- The Fourth Branch
- Supreme Court to Rule on PPACA Today