States, Businesses Hedge Bets on SCOTUS Decision
05/09/12
By Hadley Heath
It's horserace season, and all gamblers are excited for potential wins at the derby. But now Americans are facing a different kind of wager: The future of the health care law.
What are the odds? Kaiser Health News has a report on various analyses:
Bernstein Research stock analyst Ana Gupte laid 50 percent odds recently on chances that the court will strike down the Affordable Care Act’s individual mandate along with strict coverage requirements. Over at Intrade, a “prediction market” for current events, the betting Tuesday morning gave chances of about 58 percent that the court will disallow the mandate, which requires people to obtain health coverage or pay a fine.
On the FantasySCOTUS Web site, 54 percent of an audience composed largely of law students and clerks predicted the mandate will be thrown out.
So if you're interested, at Intrade, you can actually make a bet on the outcome of the Court's ruling!
But in all seriousness, certain players have a lot to lose if they misread the direction of the Court.
First: Insurance Companies
Insurance companies have a lot to lose if the Court offers them an unfriendly ruling. Of course, their worst nightmare is that the individual mandate (the source of new revenue for them) is struck down while the rest of the law stands (the rest of the law being the micromanagement of their business and the costly requirement to offer guaranteed-issue insurance even to some people at below-market rates).
So insurers must be prepared for every outcome. Their best hope is to lobby Congress to repeal the rest of the law should the Court choose to strike only the mandate (unlikely, but possible).
Second: States.
The Affordable Care Act (ObamaCare) asks a lot of states. Maybe "ask" is the wrong word. They "shall" erect a statewide exchange, an entity for consumers to purchase health insurance when it is not provided through their employer and when they do not qualify for Medicaid. To prepare to do this, states must pass legislation defining how the exchange will operate (to an extent... they only have so much flexibility), and they must work with insurers, doctors, and hospitals to determine what qualified plans will look like and how citizens will purchase them, etc.
This process can cost billions of dollars.
But what if ObamaCare is struck down? This uncertainty is keeping many states from acting. If the whole of ObamaCare is struck down, and states have already sunk costs into building and preparing an ObamaCare-compliant statewide exchange, their money will be wasted. We may find that the states who've refused to implement the exchanges - or at least the states who've delayed this task - were the wise ones.
Third: Employers of more than 50 workers
Employers who have 51 or more workers shouldn't bank on the employer mandate getting thrown out. That's certainly a possibility, but if you're an employer who's not prepared to offer qualified health insurance to your workers, you may want to think about how to do that, or how to rearrange your company to avoid getting hit with a penalty of $2,000 or $3,000 per worker. We can expect that many employers will begin work now to figure out how to reorganize or fracture their work into entities of 50 or fewer people in order to avoid the employer mandate. Many companies are avoiding hiring for this very reason - that they are unsure about the future of health insurance costs and/or the federal penalty that they might pay instead.
It seems that neither side can count on the Court either way. When the odds are set at 50 percent... clearly it's anybody's game. But in a sense, we are all losers when we consider the lost time, wasted energy, and stalled productivity that's come out of efforts to understand and mitigate the effects of a complex, perhaps unconstitutional law.
Holder Responds to Request from 5th Circuit Judge
04/05/12
By Hadley Heath
The Department of Justice has responded to the Judge Jerry Smith's request for a 3-page letter regarding the President's remarks from Monday.
Bottom line:
Holder writes that while the power of the Courts to review Acts of Congress is beyond dispute, challengers must bring a case that "invokes the jurisdiction of a court and presents a justiciable challenge." Although Holder does not repeat President Obama's remarks anywhere in the letter, he ends the letter saying, "The President's remarks were fully consistent with the principles described herein."
5th Circuit Judge Challenges DOJ after Obama's "Unelected" Comment
04/04/12
By Hadley Heath
After reports from SCOTUS indicated that the constitutional defenses for ObamaCare were weaker with Justices than anticipated, President Obama wasted no time responding.
His words, Monday at a North American summit with Canadian and Mexican leaders present as well, were:
"There is not only an economic element to this, a legal element to this, but there is a human element to this. And I hope that's not forgotten in this political debate. Ultimately, I'm confident that the Supreme Court will not take what would be an unprecedented extraordinary step of overturning a law that was passed by a strong majority of a democratically elected congress. And I would like to remind conservative commentators that for years what we have heard is that the biggest problem is judicial activism and that an unelected group of people would somehow overturn a duly constituted and passed law. Well, this is a good example and I’m pretty confident this court will recognize that and not take that step."
Most of the cases challenging his namesake law are on hold, but there are a few that have continued to move ahead because they challenge portions of the law not related to the Supreme Court case. One such case is Physicians Hospitals of America v. Sebelius (see the case profile here). This case basically challenges the law's prohibition on the creation or expansion of physician-owned hospitals because it arbitrarily discriminates against physicians and favors the operation of hospitals owned by individuals who are not physicians. Under appeal at the Fifth Circuit Court of Appeals, this case made national headlines yesterday when Judge Jerry E. Smith took advantage of the oral argument hearing to call Obama out for his comments:
"I want to be sure that you are telling us that the Attorney General and the Department of Justice do recognize the authority of the federal courts through unelected judges to strike acts of Congress or portions thereof in appropriate cases,"
(Ring, ring!) But Smith went even further, ordering the Department of Justice lawyer to prepare a 3-page letter on the authority of the judicial branch to strike down unconstitutional laws:
"The letter needs to be at least three pages, single spaced, no less and it needs to be specific. It needs to make specific reference to the president's statements."
Maybe it's a bit theatrical to ask the DOJ to file a letter with the court on such an obvious topic, but it gave me a good laugh to see someone from the judicial branch stand up for the separation of powers and poke fun at Obama's inappropriate and unwise remarks. I look forward to reading this letter from the DOJ.
...And about the "strong majority" (219-212 in the House) of "a democratically elected Congress" ...Did Obama not realize he relied on the votes of five unelected Senators to pass the Affordable Care Act?
From the American Healthcare Education Coalition:
1. Sen. Roland Burris (D-Illinois). Burris was appointed by now-convicted former Governor Rod Blagojevich (D) to fill the Senate seat vacated by Barack Obama after he was elected President. Certainly President Obama knew yesterday that his unelected successor was one of five deciding votes that passed ObamaCare. Burris would retire at the end of the 111th Congress and never face voters for his vote for ObamaCare. This U.S. Senate seat is now held by Republican Mark Kirk who was elected by the people in 2010.
2. Sen. Ted Kaufman (D-Delaware). Kaufman was appointed to fill the Senate seat vacated by Vice-President Joe Biden after the 2008 election. Like Burris, Kaufman would retire at the end of the Congress without ever having to face the voters for his vote for ObamaCare.
3. Sen. Michael Bennet (D-Colorado). Bennet was appointed to fill the vacancy created when Ken Salazar resigned to become Obama's Secretary of the Interior. He was elected in his own right to the Senate in 2010.
4. Sen. Kirsten Gillibrand (D-New York). Gillibrand was appointed to fill the vacancy created when Hillary Clinton resigned to become Obama's Secretary of State. Ironically, the man who appointed Gillibrand to the Senate, Gov. David Paterson (D), was himself never elected Governor (he became governor after Elliot Spitzer resigned from office in disgrace). Gillibrand was elected in her own right to the Senate in 2010.
5. Sen. Paul Kirk (D-Massachusetts). Kirk was elected to fill the vacancy created by the death of Sen. Ted Kennedy (D). Like Burris and Kaufman, Kirk would retire at the end of the Congress without ever having to face the voters for his vote for ObamaCare. This Senate seat is now held by Republican Scott Brown who won a special election running against ObamaCare.
Justices Take Historic Vote Today
03/30/12
By Hadley Heath
Although their decision will not become public until late June, the nine Justices will conference today to take a vote on the health care case.
If you are as much of a Supreme Court nerd as I am, you'll be curious how this conference goes. There's not a lot of argument or discussion. Just a simple vote, and the Justices may say a couple of sentences each. After the vote, the opinion-writing assignments will be made. For more details on how this conference typically goes, check out this AP story:
By custom, they shake hands. Then Roberts will take his seat at the head of a rectangular table. Scalia, the longest serving among them, will be at the other end. The other seven justices also sit according to seniority, the four most junior on one side across from the other three.
"They generally find out how the votes line up at the conference," said Orin Kerr, a George Washington University law professor who worked for Justice Anthony Kennedy nine years ago.
The uncertainty may be especially pronounced in this case, where the views of Roberts and Kennedy are likely to decide the outcome, Kerr said in an interview Thursday. "I don't think anyone knows. I'm not sure Justice Kennedy knows."
No one's vote counts more than the others', but because they speak in order of seniority, it will become clear fairly quickly what will become of the health care overhaul.
That's because Roberts speaks first, followed by Scalia, then Kennedy. If the three men hold a common view, the Obama health care overhaul probably is history. If they don't, it probably survives.
Medicaid - the Gun to the Head
03/30/12
By Hadley Heath
The final hour of argument the Supreme Court heard on ObamaCare had little to do with the individual mandate. It focused instead on the 26 states’ challenge to the Medicaid expansion. They say it is coercion: They can expand Medicaid to fit ObamaCare’s eligibility requirements, or they face the threat of losing all federal Medicaid funding to their state.
Much of the discussion in the courtroom sought to clarify whether or not states could actually lose all Medicaid funding if they “opted out” of the new rules.
As evidence that this was a realistic threat, lawyer for the states Paul Clement pointed to a letter from Secretary Sebelius to the State of Arizona.
MR. CLEMENT: I mean, in -- there was a record in the district court, and there is an Exhibit 33 to our motion to summary judgment. It is not in the joint appendix. We can lodge it with the Court if you'd like. But it's a letter in the record in this litigation, and it's a letter from the secretary to Arizona, when Arizona floated the idea that it would like to withdraw from the CHIP program, which is a relatively small part of the whole program. And what Arizona was told by the secretary is that if you withdraw from the CHIP program, you risk losing $7.8 billion, the entirety of your Medicaid participation. So this is not something that we've conjured up.
Here is a copy of the letter that the states lodged with the Northern District of Florida. You can see Sebelius did indeed write (emphasis mine):
We want you to be aware that it appears that your request triggers one of these provisions. Specifically, it appears that your request would result in a loss of Medicaid funding for Arizona under section 2105(d)(3) of the CHIP statute, as amended by sections 2101 and 10203 of the Patient Protection and Affordable Care Act of 2010, which was enacted on March 23, 2010. Arizona currently receives about $7.8 billion in Federal Medicaid funding per year and this funding is potentially at risk as a result of eliminating the CHIP program (KidsCare).
This letter obviously deeply concerned some of the Justices, who continued to bring up this letter in later questions:
CHIEF JUSTICE ROBERTS: Could you give me some assurance? We heard the question about whether or not the Secretary would use this authority to the extent available. Is there circumstances where you are willing to say that that would not be permissible? I'm thinking of the Arizona letter, for example. I mean, if I had the authority and I was in that position, I would use it all the time. You might -- you want some little change made? Well, guess what; I can take away all your money if you don't make it. I win. Every time. It seems that that would be the case. So, why shouldn't we be concerned about the extent of authority that the government is exercising, simply because they could do something less? We have to analyze the case on the assumption that that power will be exercised, don't we?
GENERAL VERRILLI: Well, Mr. Chief Justice, it would not be responsible of me to stand here in advance of any particular situation becoming -- coming before the Secretary of Health and Human Services and commit to how that would be resolved one way or another. But that -
CHIEF JUSTICE ROBERTS: No, I appreciate that. I appreciate that, but I guess -
GENERAL VERRILLI: That discretion is there in the statute, and I think there's every reason to think it's real, but I do think, getting back to the circumstances here -
JUSTICE KAGAN: Well, General, what's the - been the history of its use? Has the Secretary in fact ever made use of that authority?
GENERAL VERRILLI: That's correct, Justice Kagan. It's never been used -
CHIEF JUSTICE ROBERTS: What about the Arizona letter we just heard about today?
GENERAL VERRILLI: It has never been used to cut off -
CHIEF JUSTICE ROBERTS: It's been used to threaten -
JUSTICE SCALIA: Of course not.
CHIEF JUSTICE ROBERTS: Of course no State is going say, okay, go ahead, make my day, take it away. They're -- they're going to give in.
The Chief Justice at another time referred to this as “holding a gun” to states’ heads. And Kennedy was concerned too:
JUSTICE KENNEDY: There's no real -- there's no realistic choice. There's no real choice. And Congress does not in effect allow for an out -- opt out. We just know that. And it's -
GENERAL VERRILLI: Well, I guess I -
JUSTICE KENNEDY: -- it's substantial.
While Clement’s performance was formidable on Wednesday yet again, opponents of the Medicaid expansion should not get too excited. This was the most difficult issue for the law’s challengers, given that decades of expanding federal power provide little guidance for a firm test for what is “coercion.”
Justices will vote today, and announce their ruling in late June.
Important Links:
Audio file of Medicaid oral arguments