The 11th Circuit’s Affordable Care Act Decision Cannot Be Squared With The Constitution
The key passage in today’s opinion striking down part of the Affordable Care Act appears on page 113, where the two judge majority explains how they will determine whether this law is constitutional:
In answering whether the federal government may exercise this asserted power to issue a mandate for Americans to purchase health insurance from private companies, we next examine a number of issues: (1) the unprecedented nature of the individual mandate; (2) whether Congress’s exercise of its commerce authority affords sufficient and meaningful limiting principles; and (3) the far-reaching implications for our federalist structure.
This is one way to evaluate whether a law is constitutional, but a better way is to ask whether the law can be squared with text of the Constitution. The Constitution provides that Congress may “regulate Commerce…among the several states,” and the very first Supreme Court decision interpreting this language made clear that this power is “plenary,” meaning that Congress may choose whatever means it wishes to regulate interstate marketplaces such as the national health care market, so long as it does not violate another textual provision of the Constitution.
A law requiring most Americans to either carry insurance or pay slightly more taxes clearly regulates the national market for health care. It determines how people will finance health care purchases. It lowers the cost of health insurance. And it protects that market from something known as an “adverse selection death spiral.” So that should have been the end of the case. The Court cites no provision of the Constitution limiting Congress’ authority to pass this law because no such provision exists.
Instead, it imposes two extra-textual limits on national leaders’ ability to solve national problems. If the law is somehow “unprecedented,” and if a decision upholding the law lacks vague and undetermined “meaningful limit[s]” on Congress’ authority that somehow upset the balance between federal and state power, then the law must be struck down even if the Constitution’s text says otherwise.
Yet even if these two novel limits are taken seriously, the court’s analysis still makes no sense. For one thing, the law is only “unprecedented” in the sense that it preferred a market-driven solution to the problem of widespread uninsurance over more government driven solutions such as Medicare. The truth is that Congress already requires nearly all Americans to purchase health insurance — and they have done so for many years. Every year the federal government collects taxes which are in no way optional. A portion of these taxes are then spent to buy health insurance for the elderly (Medicare) for the poor (Medicaid) and for children (SCHIP).
So the only real question in this case is whether the government is required to first take your money and then buy health coverage for you, or whether the Constitution allows Congress to cut out the middle man.
The Court is also simply wrong to claim that a decision upholding the ACA would necessarily mean that there are no limits on federal power. The Constitution does not simply allow Congress to regulate commercial markets. It establishes that, in Justice Scalia’s words, “where Congress has the authority to enact a regulation of interstate commerce, it possesses every power needed to make that regulation effective.”
Scalia’s rule is important because the ACA doesn’t just require people to carry insurance, it also eliminates one of the insurance industry’s most abusive practices — denying coverage to patients with pre-existing conditions. This ban cannot function if patients are free to enter and exit the insurance market at will. If patients can wait until they get sick to buy insurance, they will drain all the money out of an insurance plan that they have not previously paid into, leaving nothing left for the rest of the plan’s consumers.
Because the ACA’s regulation of the national insurance market cannot function without a requirement that nearly every American carry insurance. this requirement is clearly constitutional under Justice Scalia’s statement that Congress possess “every power needed” to make it’s economic regulations effective. Moreover, upholding the Affordable Care Act under Justice Scalia’s rule would require a court to do nothing more than hold that the Affordable Care Act is constitutional. There is no federal law which depends upon mandatory broccoli purchases, for example, in order to function properly in the same way that the ACA’s preexisting conditions provision can only function properly in the presence of an insurance coverage requirement. Accordingly, the court’s concern that upholding the law would destroy any limits on federal power is unwarranted.
As a final note, it is likely that conservatives will tout the fact that Judge Hull was appointed by President Clinton in the same way that progressives touted Bush-appointed Judge Sutton’s decision rejecting an ACA challenge. The two judges are not comparable, however. Judge Sutton is a former Scalia clerk who stood on the vanguard of the conservative legal movement for many years. Judge Hull, by contrast, is a compromise nominee Clinton selected in order to overcome obstruction from the Republican-controlled Senate.
Hull has a long record of conservative criminal and individual rights decisions. We now know that she is also very far to the right questions of federal power. That is unfortunate, but it also places her well to the right of some of the Supreme Court’s most conservative members.
By: Ian Millhiser, U. S. News and World Report, August 12, 2011
How The Budget Deal Affects The Affordable Care Act
So how does this mammoth budget-cutting deal, with its congressional “supercommittee” affect health reform?
Good question, because lots of people in Washington are asking it too.
More specific answers will become clearer in the next few weeks, but here’s a first version of the road map to both the policy and the politics.
First, understand there are two different processes – and each, separately, aims at cutting more than $1 trillion over the next decade.
The one that you’ve probably heard most about is the “supercommittee” of 12 members of Congress. They are supposed to identify savings by Thanksgiving. Entitlements – Medicare, Medicaid, Social Security and aspects of the Affordable Care Act – are part of their turf. So are taxes and revenue – at least in theory. It’s not so clear that the Republicans see it that way given the public statements of Congressional leaders.
If they agree on some kind of grand deal by Thanksgiving, Congress has to take it or leave it by the end of December, eliminating the usual congressional dilly-dallying. (It looks like dilly-dallying to the casual observer or much of the public, but remember that all that arcane, tedious process IS policy in Congress. If you slow something down, make it go through hoops, amend it, hold it up, etc., it doesn’t become law. That may be good or, depending on your point of view, bad politics.)
If Congress takes any recommendations that the supercommittee agrees on, that’s the law. If the committee fails, or Congress rejects it, then the “trigger” gets pulled. The official name is “sequestration.” That’s a fancy name for automatic cuts – 2 percent across-the-board cuts in Medicare, for instance, affecting all health care providers, doctors, hospitals, etc. It won’t affect beneficiaries – at least not directly.
Medicaid is not subject to the trigger. Neither, according to the preliminary interpretations I’ve received from analysts and congressional staff, are the big, key subsidies in the health care reform law – the Medicaid expansion and the subsidies that will help low-income and middle-income people afford health care in the new state exchanges.
Other parts of the health reform law are, however, subject to automatic cuts. Among them: Cost-sharing subsidies for low-income people. This isn’t the help paying the premium; this is the help with the co-pays when people do get care. But the payments are made to health plans, not directly to beneficiaries so it won’t have the direct impact of discouraging care. It may affect how health plans make decisions about what markets to participate in. Gary Claxton and Larry Levitt at Kaiser Family Foundation explain here.
Also, the supercommittee could have a partial deal – meaning there’s still a trigger, but a smaller one. Maybe they won’t reach agreement on $1.2 trillion to $1.5 trillion in savings, which would avoid the trigger. But maybe they could agree on, say, $500 billion. That means a trigger wouldn’t have to go as deep because some of the savings would already be identified.
To recap – before we go on to the second stage of this process: The “super-committee” can do whatever it wants to health care, Medicare, Medicaid, Social Security, etc. – if it can agree, if it can get the rest of Congress to agree and if the president doesn’t veto it.
Will the Democratic Senate and the Obama White House agree to cuts that eviscerate health reform? Not likely. In fact, the Democrats “won” on very few aspects of the budget/debt deal. Walling off Medicaid and key parts of the health coverage expansion were two of the “wins.” That’s a bright line worth paying attention to as this moves forward.
Does that mean other health-reform related spending will be untouched? Given how many moving parts there are to any spending deal, and the fact that defense and tax policy are also part of the mix, chances are it will be affected. But expect to see that bright line remain visible – maybe not quite as bright, but visible. (The CLASS Act, the voluntary long-term care program created under health reform, is a different story; it’s quite vulnerable.)
The second part is the annual appropriations process. The budget deal provides for cuts – real cuts in spending, not just slowing the rate of growth. Health programs (aspects of the health reform legislation touching on exchange creation, prevention, community clinics, etc., and just about everything else at the Department of Health and Human Services – the FDA, NIH, CDC, etc. – will be subject to these cuts. But this isn’t an across the board process, it’s a line-by-line, or at least category/agency-by-category/agency, process. And there is some horse trading.
It’s safe to say that the Republicans will try to cut discretionary portions of the new health law. That’s not a new political dynamic, it doesn’t arise out of the debt ceiling or the Wall Street woes. It’s what we’ve seen since last fall’s elections and the repeal/defund fights of the past few months. And House Budget Chairman Paul Ryan has publicly tried to insert health care into any potential deal. So expect to see more Republican push to cut, and continued Democratic push back. Will health spending emerge unscathed? It’s too soon to know but, given the amount of savings Congress needs to find –both in this budget deal and in the perennial quest to fund the “doc fix” payments – some cuts are clearly possible. Some of it may affect aspects of exchange establishment, regulation, prevention, public health, etc. But it’s hard to see the Democrats allowing cuts so deep that they basically constitute a side door to repeal.
One further twist – some Republicans are calling for a delay in health reform implementation to save money.”Delay” may sound better to an ambivalent public worried about spending than “repeal.” What’s delayed (if anything), how it’s delayed, how long it’s delayed, and what stopgaps are created in the meantime could have an impact on how many people get covered in 2014.
Assorted committees and government agencies are still examining the new budget law and how it will affect … everything. So the perspective I’ve outlined here – and I’m writing amid all the market turbulence – may change as the economic and political climates change. But the lines in the sand around the trigger – health reform, Medicaid and Social Security – tell us something about where the White House will come down.
By: Joanne Kenen, Association of Health Care Journalists, August 10, 2011
Stunt Of The Week: Heritage Foundation Plays A Foolish Game
I’ve grown increasingly concerned about the poor quality of the Heritage Foundation’s scholarship, but this week’s stunt is awful, even by Heritage standards.
The conservative think tank published an item yesterday purporting to show that passage of the Affordable Care Act immediately stalled private-sector job growth. Conditions were quickly improving, Heritage argues, right up until those rascally Democrats felt the need to overhaul the health care system.
This is deeply foolish, both as an exercise and as an attempt to manipulate data. Here, for example, is a chart showing private-sector job growth in the 12 months after implementation of the ACA began.
Note, three of those months reflect the strongest private-sector monthly totals in the last five years. One might also mention that private-sector employment bottomed out shortly before the Affordable Care Act passed, and has been on an upwards trajectory ever since.
To clarify, I’m not saying the successful passage of health care reform necessarily caused private-sector job growth to improve. There are all kinds of other facts that gave the economy a boost, most notably the Recovery Act (which, incidentally, the Heritage Foundation also dislikes).
But to argue that the ACA was somehow responsible for undermining the economy is unbecoming an institution that claims to be a “think” tank. I know the right hates the reform law — despite the fact that it includes several provisions, including the individual mandate, which had been endorsed by the Heritage Foundation — but this just reeks of desperation.
As Matt Yglesias explained, referring to the Heritage piece, “Clearly … no fair-minded person actually interested in the subject is going to be persuaded by this kind of nonsense. I think it’s really too bad that conservative institutions spend a fair amount of time and energy on projects whose only possible effect can be to mislead their own constituency.”
By: Steve Benen, Contributing Writer, Political Animal-Washington Monthly, July 21, 2011
Eric Cantor Loves Government Spending…On The Drug Industry
Republicans would like you to believe that our deficit problem is primarily a spending problem and that responsibility for that problematic spending is primarily a Democratic responsibility. But the second claim is as misleading as the first. Republicans have also been known to promote wasteful government spending, particularly when it goes towards an industry with which they happen to be cozy. For a vivid illustration of this, look no further than a new Politico article about House Majority Leader Eric Cantor and his position on a key deficit reduction proposal.
The proposal in question would lower the cost of what the federal government currently pays to provide low-income seniors with prescription drugs. For years, the government purchased drugs for these seniors directly through Medicaid, taking advantage of the low prices drug companies must, by law, provide when selling drugs for the people in that program. But that changed in 2006, with the creation of Medicare drug benefit. At that point, the government delegated the purchasing of drugs for low-income seniors to private firms. And the firms haven’t been able to negotiate equally deep discounts, partly because of restrictions on their ability to limit drug availability.
According to the Congressional Budget Office, restoring the “Medicaid discount” for low-income seniors could save more than $100 billion over the course of a decade, depending on the structure of the proposal. And, at one point, many health care reformers had hoped to include that proposal as part of what became the Affordable Care Act. The administration and leaders of the Senate Finance Committee agreed not to include the proposal in the final legislation, as part of their infamous deal with the drug industry lobby. But that was a one-time deal, at least in theory, and congressional negotiators are looking seriously at enacting the proposal now.
The problem is lawmakers like Cantor, who oppose the idea. According to the Politico story, written by Matt Dobias, Cantor is making the same argument that the drug industry lobby does: That the proposal would amount to a form of government price controls, retarding economic growth and discouraging innovation.
The latter point is highly dubious: The reduction would bring reimbursement levels for these drugs very close to what they were a few years ago. Many experts, including the CBO, think the likely impact on research and development would be negligible. (Harvard economists Richard Frank and Joseph Newhouse addressed this issue at some length in Health Affairs a few years ago.)
As for the former suggestion, it’s true that any net reduction in government spending could reduce economic growth, at least at this particular moment. That’s why it’s not a good idea to be madly slashing government spending right now — and why, perhaps, congressional negotiators should delay implementation of this cut, like the others, so that it would take effect after the economy has more fully recovered.
But Cantor’s anxiety over the economic ramifications of spending cuts seems strangely selective. He hasn’t raised similar concerns about cuts to food stamps, Medicaid, and similar programs that would likely have a more devastating impact, both on the economy as a whole and the people who depend upon them for support.
Then again, food stamp recipients didn’t donate $168,000 to Cantor’s reelection campaign in the last cycle. The drug industry did.
By: Jonathan Cohn, The New Republic, July 15, 2011
Conservative Legal Luminaries Concede: The Individual Mandate Is No Unique Threat To Freedom, After All
As summarized one month ago in a post here on Jonathan Chait’s blog, conservatives reacted with fury to an article I wrote for Slate in which I pointed out that two major components of House Budget Committee Chair Paul Ryan’s Roadmap for America’s Future closely resemble the much-demonized “individual mandate” in the Affordable Care Act. In particular, I noted that the ACA provision requiring health insurance has precisely the same kind of impact on individual purchasing decisions as Ryan’s roadmap, and is, if anything, less coercive than the Roadmap proposal to provide a tax credit to individuals who purchase health insurance, as a replacement for the current exclusion from income of employer-sponsored health insurance. The ACA imposes a tax penalty on individuals who choose not to purchase health insurance. The Ryan Roadmap, on the other hand, provides a tax credit to individuals who choose to purchase health insurance—a technical distinction, I suggested, without an economic or other real-world difference.
National Review, the Weekly Standard, and Hot Air raised various objections to this point, which was seconded by Ezra Klein in the Washington Post and by Jonathan in TNR. But recent oral arguments before federal appeals courts hearing legal challenges to the ACA should quiet such protests once and for all. In these arguments, two of the most celebrated members of the Right’s legal elite acknowledged that there is no daylight between the ACA mandate-plus-penalty and a Ryan-type tax credit universally conceded to be constitutional.
The first instance of this occurred on June 1, when Sixth Circuit Judge Jeffrey Sutton, sitting on a three-judge panel in Cincinnati in a case brought by the conservative advocacy group Thomas More Law Center, floated the hypothetical idea of a tax credit alternative to the ACA approach. The Law Center’s attorney, Robert Muise, acknowledged that “you could provide a credit for health insurance, there’s no prohibition on that.” To which Judge Sutton responded:
You think it would be just as coercive to say to people, everybody pays the same additional tax, it’s a health care tax, everybody pays it and the only people that don’t pay it, i.e. get a credit, are those with insurance, you think that would be as coercive?
Muise contended that a tax credit was different because it encouraged activity—namely the purchase of health insurance—whereas the ACA provision penalized a “failure to act.” But Sutton didn’t buy it:
If that’s your view, then just pay the penalty, pay the penalty, don’t get insurance, don’t be forced to do anything, in that sense, if you think they’re equivalent, in that sense, no one is forced to do anything, because the economic incentives are the same in both settings, you can’t say the law requires you to buy it, the law just penalizes you if you don’t.
Judge Sutton is not the first person to observe that the ACA’s allegedly freedom-destroying mandate is operationally indistinguishable from commonplace tax incentive provisions. But, apart from having actual decisional authority on the matter, Sutton enters this space with formidable ideological and professional credentials. One of the first batch of appeals court nominees picked by President George W. Bush, Sutton, though only 42 years old, earned his front rank position as the energizer bunny of the Rehnquist Court’s late 1990’s drive to shrink Congress’ domestic regulatory authority in the name of “federalism.” As a lawyer, Sutton argued and won, usually by bitterly contested 5-4 margins, a raft of decisions striking or narrowing provisions of the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Violence Against Women Act, the Clean Water Act, and regulations implementing the 1964 Civil Rights Act, among others. He famously once told Legal Times, “I really believe in this federalism stuff.” Sutton’s professional standing was unquestioned; appointed by the Supreme Court in 2001 to represent a prison inmate, Sutton won a unanimous decision and unusually explicit praise from its author, Justice Ruth Ginsburg, for “his able representation.”
Of course, Sutton’s verbal acknowledgement that the ACA individual mandate is not uniquely coercive, emphatic though it appeared, is no guarantee that he will not strike down a law that Republican orthodoxy demonizes as a drastic expansion of federal power. Nevertheless, his on-the-record statement leaves the case against the ACA mandate resting at best on a hypertechnical foundation lacking in substance.
The second acknowledgement of the ACA mandate’s kinship with uncontroversial tax incentives occurred a week later in Atlanta, at the June 8 argument before a panel of the Eleventh Circuit Court of Appeals in the case against ACA brought by 26 Republican state attorneys general and governors. During the argument, the Republicans’ counsel, Paul Clement, attempted to sound a reasonable note. He said, “There’s lots of different ways that Congress could incentivize people to get to the exact same result. They could have passed a new tax and called it a tax, and then they could have given people a tax credit for paying for qualifying insurance.”
Again, Clement’s observation was not original. But in addition to being the Republican opponents’ lawyer, Clement also served—with universally acknowledged distinction—as George W. Bush’s Solicitor General. Recently, he made headlines by resigning his 7 figure-per-year partnership in the Atlanta-based firm, King & Spalding, when the firm precipitously withdrew from representing his client, the House of Representatives, to defend the federal Defense of Marriage Act, aka DOMA.
The significance of Clement’s functional equivalence concession was not lost on Eleventh Circuit Judge Stanley Marcus. Marcus, originally named a district judge by President Ronald Reagan and subsequently to his current appellate position by President Bill Clinton, drew a logical implication subtly different from Judge Sutton’s observation that the ACA mandate is not uniquely coercive, but one that is potentially even more troublesome for the ACA opponents’ case. “Isn’t that just another way,” he asked rhetorically:
“[O]f saying they [Congress] could have done what they did better? More efficaciously, more directly, and they regulated perhaps inefficaciously, maybe even foolishly, but if it’s rational, doesn’t my job stop at the water’s edge? Isn’t it for the legislative branch to make those kinds of calculations and determinations?”
No constitutional lawyer could mistake where Judge Marcus was heading. How is it possible, he was saying, for courts to dictate which of two methods Congress must choose to implement its constitutionally enumerated powers, when both methods generate “the exact same result?” Judicial micro-managing on such a granular level, Marcus knows, violates the fundamental, black-letter standard established nearly two centuries ago by Chief Justice John Marshall. In his iconic 1819 decision, McCulloch v. Maryland, Marshall broadly interpreted the constitutional grant of authority to Congress “to make all laws which shall be necessary and proper for carrying into execution” its enumerated powers: “Let the end be legitimate,” he wrote in words memorized by first-year law students, “let it be within the scope of the constitution, all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”
To be sure, no one who listened to this Eleventh Circuit argument could predict the panels’ outcome any more confidently than could those who heard the previous week’s Sixth Circuit argument. But these unequivocal statements, by two of conservativism’s most eminent legal luminaries, that the ACA individual mandate is not a unique threat to Americans’ liberty after all, surely drain much of the juice from opponents’ legal case, and, ultimately, from their political case as well.
By: Simon Lazarus, Public Policy Counsel to the National Senior Citizens Law Center, Guest Post, The New Republic, June 17, 2011
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