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Supreme Court Wraps Up Health Reform Law Hearings: What’s Next?

March 28, 2012 at 12:00 AM EST
In the final day of Supreme Court hearings on the Affordable Care Act, justices questioned the constitutionality of requiring states to expand Medicaid coverage to more individuals. Betty Ann Bowser reports, and Marcia Coyle and Susan Dentzer discuss with Gwen Ifill whether the law could survive without an insurance mandate.
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JEFFREY BROWN: What, if anything, of President Obama’s health care overhaul will survive? That was the question after the U.S. Supreme Court wrapped up three days of hearings this afternoon.

Today, the justices considered what happens to the broader law if they strike down the requirement to buy insurance. They also looked at the expansion of Medicaid.

Once again tonight, NewsHour health correspondent Betty Ann Bowser begins our coverage.

BETTY ANN BOWSER: The morning arguments focused on whether parts of the law could survive without the mandate, the so-called severability issue.

Justice Ruth Bader Ginsburg questioned attorney Paul Clement about the logic of revoking the entire law. Clement represents 26 states opposed to it.

RUTH BADER GINSBURG, associate justice, U.S. Supreme Court: It’s a question of whether we say everything you did is no good, now start from scratch, or to say yeah, there are many things that have nothing to do, frankly, with the Affordable Health Care Act, and there are some that we think it’s better to let Congress to decide whether it wants them in or out.

So why should we say that it’s a choice between a wrecking operation, which is what you are requesting, or a salvage job, and the more conservative approach would be salvage rather than throwing out everything?

PAUL CLEMENT, former U.S. solicitor general: What makes this different is that the provisions that have constitutional difficulties, or are tied at the hip to those provisions that have the constitutional difficulty, are at the very heart of this act.

And then, if you look at how they are textually interconnected with the exchanges, which are then connected to the tax credits, which are also connected to the employer mandates, which is also connected to some of the revenue offsets, which is also connected to Medicaid, if the you follow that through, what you end up with at the end of that process is just sort of a hollow shell.

BETTY ANN BOWSER: This afternoon, the justices took up the final issue before them this week, and that’s the expansion of Medicaid under the Affordable Care Act. Medicaid is a shared federal-state program to provide health care for people with low incomes. Participation is voluntary, but currently all 50 states are in the program.

Though little public attention has focused on the expansion of Medicaid, it’s a vital component of the law. Half of the 32 million people who would get new coverage would receive it through Medicaid. Here’s how that would work. Starting in 2014, the federal government would pick up 100 percent of the cost of newly eligible parents and childless adults.

That starts to ramp down in 2017, when the government pays 95 percent. By 2020 and moving forward, the federal government would pay 90 percent of the tab. States have the right to opt out of the Medicaid program, but if they do, they lose huge amounts of federal money to pay for care for people with low incomes.

DR. ALIETA ECK, opposes health care reform law: Obamacare is going to expand Medicaid, and the taxpayers absolutely can’t afford it.

BETTY ANN BOWSER: Several dozen people demonstrated in front of the court again today against what they say is an overreach of federal power.

Thomas Miller is a resident fellow at the American Enterprise Institute, a conservative think tank in Washington.

THOMAS MILLER, American Enterprise Institute: The states say, we can’t even afford the current Medicaid program, and this would in effect give them no flexibility to make any adjustments that are reasonable adjustments, and say maybe can cover some more people in a certain way, but not under the rigid federal rules.

BETTY ANN BOWSER: People who say they have been helped by Medicaid came to the mike today outside of the court to tell their stories.

DR. L. TONI LEWIS, supports health care reform law: As a doctor, I tell you that Medicaid works for seniors, it works for kids, it works for people with disabilities, and it works for families.

BETTY ANN BOWSER: Ron Pollack, executive director of Families USA, also says that ultimately states will save money under the law, even with higher costs for Medicaid.

RON POLLACK, executive director, Families USA: If you take the Affordable Care Act in its entirety, the states actually are going to save in the aggregate about $100 billion in the next six years, because they’re no longer going to have to pay for the care of people who are uninsured.

BETTY ANN BOWSER: The justices will now have to weigh the merits of all four major arguments made this week. Decisions are expected some time in late June.

GWEN IFILL: As Betty Ann mentioned, there were two separate arguments on the health care docket today.

Here to explain is the rest of the team that’s been covering the case for us: Marcia Coyle of The National Law Journal and NewsHour health analyst Susan Dentzer, editor in chief of the journal Health Affairs.

So, Marcia, justices seemed skeptical that this bill could — that this law can remain intact even if this individual mandate goes away, the severability clause. Explain how that played out.

MARCIA COYLE, The National Law Journal: Okay

Well, here’s sort of the bottom line for the court. All of the justices seem not to want to have to go through a 2,700-page law to find out which provisions are interrelated or so connected to the individual mandate that they should be severed.

So what do they do? Justice Sotomayor, for example, expressed one approach. States that have experimented with health care insurance like the federal plan, when they have had problems, their state legislatures have adapted to those, have made changes. So she said, why not let Congress do this? If we have to eliminate the mandate, let Congress deal with the problem. That is their function. It’s an exercise of judicial restraint to let Congress deal with it.

On the other hand, Justices Scalia and Kennedy said, but if the mandate is really the heart of this law, as Mr. Clement argues, what is left for Congress is this shell. It does not operate the way Congress intended to operate. So it’s been distorted so much, maybe we — it’s more an exercise of judicial restraint to strike it down and let Congress start over.

GWEN IFILL: Let’s listen to part of this exchange between Justice Anthony Kennedy and the Deputy Solicitor General Edwin Kneedler, who is making the government’s case about just that point.

ANTHONY KENNEDY, associate justice, U.S. Supreme Court: If the $350 million from the individual mandate were to be lost, what would happen to the insurance industry, which would now be in the hole for $350 billion over 10 years?

EDWIN KNEEDLER, deputy U.S. solicitor general: We don’t think it’s in the court’s place to look at the budgetary implications, and we also. . .

ANTHONY KENNEDY: But isn’t that the point, then, why we should just assume that it is not severable?

EDWIN KNEEDLER: No.

ANTHONY KENNEDY: If we lack the competence to even assess whether there’s a risk, then isn’t this an awesome exercise of judicial power. . .

EDWIN KNEEDLER: No, I don’t. . .

ANTHONY KENNEDY: . . . to say we’re doing something and we’re not telling you what the consequences might be?

EDWIN KNEEDLER: No, I don’t think so, because when you’re talking about monetary consequences, you’re looking through the act, you’re looking behind the act, rather than — the court’s function is to look at the text and structure of the and what the substantive provisions of the act themselves mean.

GWEN IFILL: So what role are the justices supposed to play in this? That’s what they were arguing about.

MARCIA COYLE: Absolutely.

And really, for years, the court has had something of a presumption that when it strikes down one provision in a law, it will not dismantle the entire law if there are — if that law can continue to operate independently of the provision that was struck down and consistent with Congress’ intent.

And that’s why Mr. Kneedler is saying, look at the text, look at the structure, but don’t try to be economists figuring out how it is going to affect the insurance industry.

GWEN IFILL: Let’s talk about that, Susan, what the Congress’ intent, but, also, we don’t whether the court would strike down this separate — this statute, but — this part of the statute.

SUSAN DENTZER, Health Affairs: Right.

GWEN IFILL: But, if they were to, what remains? Is it a hollow shell, as some of the justices are saying?

SUSAN DENTZER: I think a close reading of those 2,700 pages would find plenty in there that doesn’t meet the standard of a hollow shell, Gwen.

For example, some provisions, very small, completely unrelated to insurance expansion, a requirement that national chain restaurants, as of this year, have to post on their menus the calorie content of their foods. Why that would have to fall in conjunction with the minimum coverage requirement, it doesn’t make sense.

Other provisions to make the health care system cost less and be more efficient, so lots of innovations around payment and delivery system reform that are already going on. In addition to that, many, many other provisions around prevention, to get Americans to be healthier, a large prevention and public health fund that is channeling grants from the federal government to the states and communities to put in place diabetes prevention programs and other things.

So, if you walk through the whole law, there is a whole lot, as I said, that has nothing to do with the minimum coverage requirement.

GWEN IFILL: And how big a part of the law is the part that they were arguing about later this afternoon, which is the expansion of Medicaid that Betty Ann was describing?

SUSAN DENTZER: A very major part.

If we think about health insurance as being a series of security blankets, and we have security blankets of different types — we have private coverage, some of us. Some of us have Medicare. Some of us have Medicaid. What this whole law was about was stretching all the blankets, right?

So the private health insurance blanket was going to be stretched to incorporate more people into that. The Medicaid blanket got stretched. A very large group of people who have historically been left out of Medicaid, as Betty Ann said in her piece, are adults who don’t have dependent children.

Congress made a point of covering pregnant women. Congress made a point of covering women with children. Congress left out these adults who didn’t have dependent children. So, on the basis of this law, Congress said, you know what, we forgot about these people. We’re going to come back and expand coverage and include them.

And although the Congressional Budget Office has said there will probably be 16 million of them, the truth is, we don’t know. There could be 22 or 25 million of those adults who could be covered under Medicaid.

GWEN IFILL: And yet — and yet at least 26 state represented by the former Solicitor General Paul Clement said today that they feel that they would be coerced to join this program.

Let’s listen to part of the exchange between Justice Sandra — Sonia Sotomayor and Paul Clement about this very issue.

SONIA SOTOMAYOR, associate justice, U.S. Supreme Court: The uninsured are a problem for states only because they, too, politically, just like the federal government, can’t let the poor die.

And so, to the extent they don’t want to do that, it’s because they feel accountable to the citizenry. And so if they want to do it their way, they have to spend money to do it their way, if they don’t want to do it the federal way.

So I just don’t understand the logic of saying, states, you can’t — you don’t — you’re not entitled to our money, but once you start taking it, the more you take, the more power you have.

PAUL CLEMENT: We’re not here to tell you that this is going to be an area where it’s going to be very easy to draw the line.

We’re just telling you that it’s exceptionally important to draw that line, and this is a case where it ought to be easy to establish a beachhead, say that coercion matters, say there’s three factors of this particular statute that make it as obviously coercive as any piece of legislation that you’ve ever seen, and then you will have effectively instructed Congress that there are limits and you have laid down some administrable rules.

GWEN IFILL: Why does coercion matter, Marcia? Why is that an important part of this argument?

MARCIA COYLE: Well, first of all, the court has said in the past, in a couple decisions, that there may come a point under Congress’ spending power where inducements to have the states do something in exchange for federal funds crosses the line from inducement or pressure to coercion, and then Congress is acting outside of the limits of its spending power.

And its spending power is broad and huge. So — but the court has never said where that line is, where that point is reached. And it’s also never struck down a voluntary federal-state spending program because it’s coercive.

And there was a lot of skepticism today. I think this was one of Mr. Clement’s more difficult arguments to make. The justices are struggling with finding where that line of coercion is. Justice Sotomayor, Justice Kagan, they don’t see that – you know, they look — I think Justice Kagan said, this is a boatload of money and very few strings are attached to it.

States still have the option of pulling out. Mr. Verrilli, deputy — Solicitor General Verrilli said, sure, it’s not an easy decision to opt out of this. It’s a lot of money. But, still, the states have the choice.

GWEN IFILL: Solicitor General Verrilli and Paul Clement both gave summations at the end. One made the argument that represented the administration that this was — that this health care law was about the blessings of liberty. And Paul Clement said it’s a funny conception of liberty.

MARCIA COYLE: Right.

Mr. Verrilli, I think, tried to bring back today from three days of arguments what’s really at stake here in terms of Congress’ authority under the Constitution. He said Congress struggled with this problem of 43 million uninsured Americans, and it came up with this solution, which it thought was the best solution.

With Medicaid expansion, he said there are going to be millions of Americans who have chronic conditions, such as diabetes, who now, if they get health care, will be unshackled from that disease and will be able to enjoy the blessings of liberty.

Mr. Clement, though, did say it was a very funny concept of liberty to force people to buy insurance plans they don’t want.

GWEN IFILL: Decision in June.

Thank you both for helping us through this, this week.

MARCIA COYLE: My pleasure.

SUSAN DENTZER: Thanks, Gwen.