BIG DECISION

Fu­ture of Af­ford­able Care Act looks un­cer­tain af­ter jus­tices de­bate le­gal chal­lenges to health­care over­haul

Modern Healthcare - - FRONT PAGE - Joe Carl­son

As the dust set­tled on last week’s live ar­gu­ments be­fore the U.S. Supreme Court, even ex­perts who sup­ported the health­care re­form law said the ques­tion for the jus­tices seemed to be­come not whether to in­val­i­date parts of the law, but how much of it.

Much can hap­pen dur­ing pri­vate dis­cus­sions, how­ever, be­fore the jus­tices re­lease final opin­ions by June 29.

Con­ser­va­tive-lean­ing jus­tices on the court brought out the long knives for the Obama ad­min­is­tra­tion’s lawyers dur­ing the three days of oral ar­gu­ments last week, openly crit­i­ciz­ing the Pa­tient Pro­tec­tion and Af­ford­able Care Act as an un­prece­dented ex­er­cise of power and de­fy­ing gov­ern­ment at­tor­neys to an­swer even ba­sic in­quiries such as defin­ing the lim­its of Congress’ power.

Put on the de­fen­sive, U.S. Solic­i­tor Gen­eral Don­ald Ver­rilli Jr. fell back on two well-trod ar­gu­ments in fa­vor of the law.

First, he said, the man­date to pur­chase in­sur­ance is sim­ply a mat­ter of reg­u­lat­ing the tim­ing of the pur­chase of health­care, since ev­ery Amer­i­can will use it at some time in his or her life but some will shift their costs to oth­ers. And sec­ond, Ver­rilli said, ex­pand­ing reg­u­la­tion in the in­ter­state in­sur­ance mar­ket is clearly al­lowed by past Supreme Court prece­dents on the Con­sti­tu­tion’s com­merce clause.

“I’m not sure that sold the day,” said Wil­liam Pe­tas­nick, pres­i­dent and CEO of Froedtert Health in Mil­wau­kee and a past guest lec­turer in health­care con­sti­tu­tional law at the Univer­sity of Wis­con­sin at Madi­son.

Pe­tas­nick — who read the ar­gu­ment tran­scripts—said that de­spite the skep­ti­cal tone of some jus­tices’ ar­gu­ments dur­ing the March 26-28 hear­ings, the jus­tices will also have time for deeper de­lib­er­a­tions about the long-term con­se­quences of their rul­ing be­fore is­su­ing any opin­ions.

“If I were a bet­ting per­son lis­ten­ing to the ar­gu­ments and hear­ing the tran­scripts, I would come away and think they would throw out the man­date,” Pe­tas­nick said. “But I think there is some case law and prece­dent that might move them in a dif­fer­ent way

be­cause of the con­se­quences.”

Sev­eral ob­servers said that ques­tions dur­ing the ar­gu­ments seemed to show that Jus­tice An­thony Kennedy was the clear swing vote, though oth­ers have said Chief Jus­tice John Roberts is likely to place him­self on the win­ning side of the de­bate no mat­ter which side wins, which would al­low the chief jus­tice to con­trol who writes the ma­jor­ity opin­ion.

Pointed ques­tions

Only min­utes into the week’s main event, the Day Two de­bate over the in­di­vid­ual man­date, Kennedy fired a dart at Ver­rilli that echoed the main crit­i­cism of the law’s op­po­nents: “Can you cre­ate com­merce in or­der to reg­u­late it?” Kennedy asked.

“That’s not what’s go­ing on here, Jus­tice Kennedy, and we are not seek­ing to de­fend the law on that ba­sis,” Ver­rilli said.

Ilya Shapiro, a se­nior fel­low on con­sti­tu­tional stud­ies with the lib­er­tar­ian Cato In­sti­tute, which op­poses the re­form law, said he was heart­ened to watch from the au­di­ence as Kennedy started off with that line of ques­tion­ing.

“Just see­ing that, my heart be­gan to race,” Shapiro said. “It was like: They’re get­ting it, they’re get­ting it.’”

Kennedy went on to ask Ver­rilli other pointed ques­tions: “I un­der­stand that we must pre­sume laws are con­sti­tu­tional, but, even so, when you are chang­ing the re­la­tion of the in­di­vid­ual to the gov­ern­ment in this, what we can stip­u­late is, I think, a unique way, do you not have a heavy bur­den of jus­ti­fi­ca­tion to show au­tho­riza­tion un­der the Con­sti­tu­tion?”

And: “Well, then your ques­tion is whether or not there are any lim­its on the com­merce clause. Can you iden­tify for us some lim­its on the com­merce clause?”

Joel Ario, for­mer di­rec­tor of HHS’ Of­fice of Health In­sur­ance Ex­changes who now works in pri­vate in­dus­try for Manatt Health So­lu­tions, be­lieves the in­sur­ance man­date con­forms to decades of court prece­dent, but he noted it would only take five jus­tices’ votes to change the prece­dent. The de­bate on sev­er­ing other as­pects of the law be­sides the in­sur­ance man­date struck him as more murky.

“Based on the oral ar­gu­ments, you’d say the place where they were go­ing to de­part from prece­dent would be the man­date,” Ario said. “Where they talked about sev­er­ing other parts of the act, that felt more like a po­lit­i­cal ar­gu­ment.”

Re­gard­ing in­sur­ance re­form, the four main op­tions be­fore the court are: Do noth­ing. Strike down the in­di­vid­ual man­date to pur­chase in­sur­ance.

Strike down the man­date along with two closely re­lated re­forms pro­hibit­ing dis­crimi- na­tion in is­su­ing in­sur­ance.

In­val­i­date the en­tire law, un­der the the­ory that do­ing so would cre­ate no un­in­tended con­se­quences.

Im­pact of 19th-cen­tury law

The court heard ar­gu­ments over whether a com­plex ju­ris­dic­tional ques­tion in­volv­ing an 1867 fed­eral law called the Anti-in­junc­tion Act could de­lay con­sid­er­a­tion of the rule un­til af­ter the in­sur­ance rules go into ef­fect in 2014, though most ob­servers said that seemed an un­likely out­come.

Fi­nally, the court con­sid­ered a re­lated but sep­a­rate ques­tion of whether Congress can force states to ex­pand their el­i­gi­bil­ity cri­te­ria for Med­i­caid to 138% of the fed­eral poverty level by threat­en­ing to re­voke a state’s mas­sive fed­eral Med­i­caid sub­si­dies if they don’t agree to the new terms.

Dr. Steve Mans­field, pres­i­dent and CEO of Methodist Health Sys­tem in Dal­las, said his op­ti­mism for the law’s sur­vival at the high court was slightly damp­ened af­ter hear­ing the ar­gu­ments.

Los­ing the in­di­vid­ual man­date would leave the in­dus­try with the same bro­ken sys­tem that al­ready ex­ists, he said, which is why the in­dus­try needs some di­rec­tion from gov­ern­ment to re­form a health­care

de­liv­ery sys­tem that “has been patched and patched and … patched.”

Mans­field, who sup­ports the law, said the de­bate over sev­er­abil­ity left the court look­ing overly wor­ried about ham­string­ing Congress and other real-world con­sid­er­a­tions. “That’s very dif­fer­ent from see­ing the the­ory and kind of the con­sti­tu­tional in­ter­pre­ta­tion of the law, which is more typ­i­cally what you see from the court,” Mans­field said.

The 906-page re­form act was ap­proved fol­low­ing a full year of de­bate by both cham­bers of Congress, with­out a sin­gle Re­pub­li­can vote in fa­vor of the final law, and signed by Pres­i­dent Barack Obama on March 23, 2010. The law con­tained hun­dreds of pro­vi­sions, from es­tab­lish­ing demon­stra­tion pro­grams for ac­count­able care or­ga­ni­za­tions to ex­tend­ing as­sis­tance for ru­ral doc­tors, ex­pec­tant moth­ers and suf­fer­ers of black lung dis­ease.

Im­me­di­ate chal­lenges

A wave of lit­i­ga­tion en­sued in fed­eral courts across the coun­try, with the first law­suits filed lit­er­ally min­utes af­ter the ink from Obama’s pen dried on the pres­i­den­tial sig­na­ture line.

One law­suit, filed in U.S. Dis­trict Court in Pen­sacola, Fla., even­tu­ally had 26 state gov­ern­ments join as plain­tiffs, along with two pri­vate cit­i­zens and the Na­tional Fed­er­a­tion of In­de­pen­dent Busi­ness. Four le­gal ques­tions aris­ing out of that law­suit were granted oral ar­gu­ments be­fore the Supreme Court.

As the le­gal chal­lenges per­co­lated through the lower courts, the most con­tro­ver­sial as­pect proved to be the re­quire­ment for nearly all Amer­i­cans to pur­chase health in­sur­ance or face a penalty on their in­come taxes ef­fec­tive in 2014. The only peo­ple ex­empted from the in­sur­ance man­date were il­le­gal im­mi­grants, in­car­cer­ated pris­on­ers and cer­tain re­li­gious ob­jec­tors.

Re­form­ing the way health­care was dis­pensed and funded had been a po­lit­i­cal goal of lib­er­als and con­ser­va­tives for decades.

How­ever, the Af­ford­able Care Act be­came law at a time of peak­ing par­ti­san acrimony in the U.S., pro­vok­ing crit­ics to is­sue state­ments in grave terms, like one last week from Louisiana At­tor­ney Gen­eral James Cald­well: “This bill re­quires that ev­ery per­son, ev­ery month, pay a pri­vate in­sur­ance com­pany un­til they die,” Cald­well in­toned at a news con­fer­ence in­side the Florida House, across the street from the Supreme Court, on March 26. “This will lit­er­ally help shut down this coun­try.”

A more mod­er­ate Re­pub­li­can, Ohio At­tor­ney Gen­eral Mike Dewine, said at the same news con­fer­ence that while Amer­i­cans fa­vor some part of the bill, they didn’t fa­vor the man­date. He urged Congress to im­me­di­ately be­gin work on a new bi­par­ti­san bill: “The cli­mate is there, the cli­mate for change,” Dewine said.

Protests out­side court

Through­out the three days of Supreme Court ar­gu­ments crit­ics and sup­port­ers alike crowded the side­walk in front of the high court, wav­ing signs with mes­sages such as “Hands off my health care” and spawn­ing rally cries like, “Hey hey/ho ho/oba­macare has got to go.”

Richard Umb­den­stock, pres­i­dent and CEO of the Amer­i­can Hospi­tal As­so­ci­a­tion, said his or­ga­ni­za­tion sup­ports the law— in­clud­ing a $155 bil­lion re­duc­tion in Medi­care pay­ment in­creases over 10 years— be­cause it seeks to ex­pand the num­ber of pa­tients with in­sur­ance to pay their med­i­cal bills by 32 mil­lion.

Umb­den­stock said the as­so­ci­a­tion won’t change its plans un­til the Supreme Court rules. “We’re just go­ing to stay the course and as­sume that this is what we are work­ing to­ward, un­til we know oth­er­wise,” Umb­den­stock said in an in­ter­view. “There were some things (in the law) that we weren’t happy with, but it was a good first step to re­form. It wasn’t the last step to re­form.”

The group po­si­tioned squarely at the cen­ter of the de­bate are the 50 mil­lion Amer­i­cans who the U.S. Cen­sus Bureau said lacked in­sur­ance cov­er­age in 2010. Dur­ing the ar­gu­ments, both crit­ics and sup­port­ers of the law claimed they were speak­ing out for the rights of peo­ple who do not have in­sur­ance.

Ver­rilli opened his state­ments about the in­sur­ance man­date with an ob­ser­va­tion about their rights: “For more than 80% of Amer­i­cans, the in­sur­ance sys­tem does pro­vide ef­fec­tive ac­cess,” he said. “But for more than 40 mil­lion Amer­i­cans who do not have ac­cess to health in­sur­ance ei­ther through their em­ployer or through gov­ern­ment pro­grams such as Medi­care or Med­i­caid, the sys­tem does not work. Those in­di­vid­u­als must re­sort to the in­di­vid­ual mar­ket, and that mar­ket does not pro­vide af­ford­able health in­sur­ance.”

But Paul Clement, at­tor­ney for the 26 states that sued the HHS, said the young and healthy are seen as the “golden geese” who would pay for the in­sur­ance re­forms.

“One of the things Congress sought to ac­com­plish here was to force in­di­vid­u­als into the in­sur­ance mar­ket to sub­si­dize those that are al­ready in it, to lower the rates,” Clement said. “And that’s just not my spec­u­la­tion, that’s Find­ing 1 at 43A of the gov­ern­ment’s brief … that’s one of the clear find­ings.”

In­sur­ers’ con­cerns

Karen Ig­nagni, pres­i­dent and CEO of in­surer trade group Amer­ica’s Health In­sur­ance Plans, said in an in­ter­view that in­sur­ance com­pa­nies aren’t ar­gu­ing for or against the con­sti­tu­tion­al­ity of the man­date as a stand-alone ques­tion.

Rather, her in­ter­est is in mak­ing sure that if the man­date for young and healthy peo­ple to buy cov­er­age is tossed out, then so too should the re­quire­ment that in­sur­ers of­fer poli­cies to any older and sicker pa­tients who ap­ply—re­forms known as guar­an­teed-is­sue and com­mu­nity rat­ing.

She cited a re­vised study AHIP re­leased last week that found eight states that en­acted guar­an­teed is­sue and com­mu­nity rat­ings laws in the 1990s with­out cov­er­age man­dates saw ris­ing in­sur­ance prices, which ended up even­tu­ally driv­ing down en­roll­ment.

“In ev­ery state, the cost spi­raled up be­cause the younger and the health­ier peo­ple thought it was get­ting too costly to par­tic­i­pate, so you ended up in a death spi­ral in those states,” Ig­nagni said.

“That doesn’t help any­one if that’s the cy­cle that is un­leashed,” she said. “And we’ve been spend­ing a great deal of time mak­ing sure peo­ple un­der­stand that, be­cause noth­ing trumps the state ex­pe­ri­ence.” <<

—with Ashok Sel­vam

AP PHOTO

U.S. Solic­i­tor Gen­eral Don­ald Ver­rilli Jr. makes his case to the jus­tices on Day Two of the ar­gu­ments, the day ded­i­cated to the in­di­vid­ual man­date.

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