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A Supreme Court wrap up: School House Style.

Friday, March 30th, 2012

After a week of deciphering arcane acts and constitutional powers, one thing remains clear: the Affordable Care Act (ACA) is law. It was law last week, it is law today, and it will be law tomorrow. We all remember its development, passage and signing into law more than two years ago and for those who need a refresher on the process of becoming a law, see here. While the Courts mostly fixate on one provision in that law, we must remember that the road we’ve traveled is legitimate and the goal of health coverage for Americans is right. What comes next is months of speculation – everyone can do that –- so let’s review the facts of the week.

Anti-Injunction, what’s your function?
Of the three days, day one was the lightest, easing everyone into a week of intense questioning (this is what justices do) and media frenzy (this is what the media does).

Solicitor General Don Verrilli and his opponent Paul Clement began oral arguments regarding the constitutionality of the Affordable Care Act – beginning, actually, on the same side of the aisle. Both Verrilli and Clement argued that the Anti-Injunction Act (AIA) – a law that prevents a party from challenging a tax until it is levied – was not relevant to whether or not the Court could move the case forward.

Despite efforts made by Robert Long, a court-appointed attorney, the justices appeared suspect of the applicability of AIA to the ACA’s individual responsibility requirement (IRR. Without wading through the knit picky stances regarding jurisdiction, separation of the IRR from the penalty, and whether the penalty itself is a tax (see a great overview here), the government did get slapped (by Justice Scalia) for its stance that the IRR penalty is not a tax for the purposes of AIA. Verrilli found himself performing a delicate dance because on day two he would need to reframe the IRR, arguing that the tax clause (or Congress’ signature power to tax) supports the inclusion of the IRR in the ACA. But no matter, there is plenty of political posturing frosted over this entire week – no one emerges spotless.

Analysts agree that day one served as a warm up for everyone and that judgment on the IRR, severability of the IRR and Medicaid expansion would move ahead without delay.

Lolly, lolly, lolly, get your Individual Responsibility Requirement here!
As a refresher, day two was considered “the” day of argument to follow. ACA challengers maintain that the individual responsibility requirement (IRR) is unconstitutional. The justices focused on three main issues:

  1. What is the limiting principle – in other words, what keeps Congress from forcing us to buy broccoli, cell phones or burial slots? (Questioning led by Justices Roberts and Scalia)
  2. Is Congress creating commerce to regulate? (first question posed by Justice Kennedy)
  3. Why should healthy people subsidize care that they might never use? (comments suggested by Justices Roberts and Scalia).

For a legal recap, see here.

Though Verrilli’s performance was not the stellar performance many had hoped for, the oral argument is only one factor in determining the outcome. As succinctly put by Brad Joondeph, former law clerk for Justice Sandra Day O’Conner, “In a case of this magnitude, the idea that what was said at oral argument could change the outcome is probably fanciful.”

Despite the fact the more conservative elements of the Court dominated the discourse, both Verrilli and Clement faced a barrage of questioning—Clement slightly more (if you’re counting) than Verrilli. And if anyone needs reminding of why “we need our IRR here,” read through the comments made by Justices Ginsberg and Breyer – much more powerful arguments than broccoli and cell phones.

Remember the IRR School House ditty:

The IRR is an incentive…. (that’s all it is!)
That modifies an objective (Health coverage for all!)
And you see that it’s positively, very, very necessary.

And as we reflect on what is positively very, very necessary, let us recap the morning of day three – so inextricably linked to the day two arguments regarding the constitutionality of the IRR. Can the law stand without the IRR? If not, what provisions fall?

While day one left analysts certain that the Court would rule in June on the constitutionality of the ACA (justices appeared cool to embracing the AIA), and day two left opponents giddy that a ruling on the IRR would go in their favor (because the Court appeared divided during questioning), the morning of day three, left analysts frustrated because it became clear that speculation one way or another about anything is futile.

The usual suspects sided with the opponents of the law. For example, Justice Scalia even going so far as to say that his having to read the entire 2700 page law (oh, wait, I meant his law clerks) to search for provisions linked to the IRR was cruel and unusual punishment (yes, we wouldn’t want that). In the meantime, Justice Kennedy asked of Paul Clement “what test to do you suggest that we follow if we want to clarify our jurisprudence?” Indeed, this was the question of the morning. Justices Sotomayor and Kagan appeared hesitant to cut out any more than necessary. Perhaps the weight of striking of the individual responsibility requirement begins to come into focus – millions of newly covered lives focused.

Alas, to the afternoon of day three.

Medicaid Necessity
With her good intentions,
Where would this country be
Without her expansion?

We all know the answer: at least 16 million people by 2019 would lose out on gaining coverage.

Medicaid went on trial the afternoon of day three – with mixed reviews. The challengers maintained that expanding the Medicaid program – the federal/state partnership to provide health coverage to low-income people – infringes upon states’ rights (you cannot tell me what to buy and you cannot tell me what to do!). Paul Clement did his best to show that expanding the Medicaid program to such a large number of people as proposed by the ACA, instituted a threat of “your money or your life.” Clement maintained that states have no choice but to take a bite of the apple.

While the more conservative justices appeared moved by this argument, analyst Lyle Denniston of SCOTUSBlog warns, “once the Court started down the road of second-guessing Congress’s use of its spending authority, it would never hear the end of it.” In other words, take down Medicaid – what falls next? Hmmm, what is the Court’s limiting principle on that one?

Justice Sotomayor and others countered Clement, coming to the defense of Medicaid. Sotomayor stated, “I guess my greatest fear, Mr. Clement, with your argument is the following: The bigger the problem, the more resources it needs. We’re going to tie the hands of the Federal Government in choosing how to structure a cooperative relationship with the States. We’re going to say to the Federal Government, the bigger the problem, the less your powers are. Because once you give that much money, you can’t structure the program the way you want.” Nailed it….!

As a reminder, no lower court agreed with the Medicaid coercion argument.

What’s for homework?
While our school house might have been rocked this week, it is currently intact and there is plenty of homework.

1) Continue educating the public about the ACA. Mitt Romney is here to help explain the IRR if you need assistance – see the video here. Keep to the facts: Obamacare is good for you.

  • – 86 million Americans used provisions in the Affordable Care Act to get preventative care through their insurance plans with no co-pay
  • – 2.5 million seniors have saved an estimated $1.5 billion thanks to prescription drug discounts
  • – At least 2.5 million young people now can stay on their parents’ health insurance until age 26
  • – 4 million small businesses can now claim a tax deduction for providing health insurance to their employees

2) Continue the good work of implementation – many states know that this is good policy – protecting lives through health insurance coverage, increasing access through Medicaid expansion and health insurance exchanges, and saving money through innovation and cost saving measures. We must continue to prepare for 2014.

Remember, those that work hard, get ahead – so, stay the course…

 – Eva  Marie Stahl, Policy Analyst

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Medicaid Makes States an Offer That Is Too Good To Refuse

Wednesday, March 28th, 2012

Today, the Supreme Court will hear arguments on whether the Affordable Care Act (ACA)’s Medicaid expansion (the planned increase in the number of low-income adults who are able to receive Medicaid coverage in 2014) is constitutional.

The plaintiffs will argue that the ACA’s Medicaid expansion constitutes coercion because the federal government is requiring them to expand Medicaid and to fund (a small portion of) that expansion. But the truth is that state participation in Medicaid is entirely voluntary, not at all coerced. States that don’t want to comply with the expansion can drop out of Medicaid at any time.

The plaintiffs’ response is that dropping out of Medicaid is not a real option – their budgets rely too heavily on the stream of federal Medicaid dollars they receive. Their argument essentially boils down to “the Medicaid program is such a good deal, we’d be crazy to drop out!”

As the case has made its way through the legal process, no lower court has made the leap from “a really good deal” to “coercion,” and it’s hard to believe that the justices of the Supreme Court will be the first to buy that faulty logic. Most legal scholars agree that SCOTUS will uphold the Medicaid expansion, and the Medicaid expansion will still stand even if they rule against the individual mandate.

Upholding the expansion is potentially life-saving for the 15 million people who will gain coverage through Medicaid in 2014. It will also put SCOTUS on the side of the American public as a whole: a recent poll shows that 70 percent of the public supports the Medicaid expansion (roughly the same percentage as support the most popular elements of the law, like eliminating pre-existing condition discrimination).

And ultimately, even though they’re arguing against it in court, it’s good news for states and their budgets. The federal government will foot more than 95 percent of the bill for the newly eligible in the first five years of the expansion. In return for their relatively small investment in this expansion, states will see the number of uninsured adults with incomes below 133 percent of the federal poverty level (FPL) drop by almost half.

Higher rates of insurance coverage means lower state and local spending on mental health care and on uncompensated care for safety-net hospitals. It also means reduced costs for the states that already cover these low-income adults in Medicaid. A 2011 Urban Institute report finds that rather than burden states with new costs, the ACA will lead states overall to spend $92-129 billion less from 2014 to 2019.

Without the federal government stepping in to help, states will eventually have to try to find a solution to the growing number of uninsured. It’s hard to imagine how they would find a better deal than this.

–Katherine Howitt, Senior Policy Analyst

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At last. A Supreme Day in Court.

Monday, March 26th, 2012

After a week of celebrating the second anniversary of the Affordable Care Act (ACA), it is increasingly difficult to dismiss all the good that health reform is doing. Whether you are someone with a pre-existing condition who now has access to health insurance coverage or you are under 26 years old and can remain on your parent’s health policy or you are no longer burdened with co-pays for preventative care visits, the good touches us all in some way. With 2014 promising even more coverage gains for people from all walks of life, we must be steadfast in our support of the ACA.

The Supreme Court begins hearing oral argument today and those who oppose health reform are determined to undermine all the benefits of the law. Since anniversary week demonstrated how health care reform is working, it’s worth asking ourselves; how did we end up in the nation’s highest court?

The case.
Directly after the signing of the Affordable Care Act (ACA) in March 2010, then Florida Attorney General (AG) Bill McCollum filed a lawsuit against the federal government. McCollum and others argue that the individual responsibility requirement (IRR) is unconstitutional (in other words, the federal government cannot tell you what to buy). While the IRR is the focal point of the legal challenge, McCollum and friends (plaintiffs) also accuse the federal government (defendants) of coercing states to participate in the Medicaid program, maintaining that the Medicaid expansion is unconstitutional. Profiting from shifting political winds, McCollum swiftly built a list of co-plaintiffs to include 26 states, the National Federation of Independent Business (NFIB), and a handful of private parties.

During 2010-2011, multiple legal challenges unfolded in addition to Florida ― most notably in Virginia (4th circuit) and Michigan (6th circuit). However, Florida became the poster child of opposition due to its vast plaintiff list. The Florida case traveled through the court system in a relatively predictable manner. It began in the U.S. District Court in Northern Florida where Judge Roger Vinson, a known conservative judge, struck down the IRR and subsequently the entire law, granting conservatives a big win. The Obama administration appealed the Vinson decision, sending the case to the 11th Circuit Court of Appeals in Atlanta. A three judge panel ruled 2-1 that the requirement to purchase insurance was unconstitutional. The panel, however, found the IRR to be severable from the rest of the law, meaning that all other ACA provisions remain intact. The appeals panel also confirmed that the Medicaid program is a legitimate federal mechanism to expand coverage to the uninsured, dismissing the charge of coercion as “more rhetoric than fact.” The Obama administration then appealed directly to the Supreme Court.

To better understand the pathway to the Supreme Court, see this flowchart.

During these two years of legal wrangling, it is noteworthy that not all judges followed party lines. Two high profile conservative judges upheld the IRR. Sixth Circuit Judge Jeffrey Sutton, a former law clerk for Justice Antonin Scalia, and DC Circuit Judge Laurence Silberman supported IRR constitutionality. These actions suggest that even the most conservative Supreme Court justices have a legal path to constitutionality of the ACA.

The timeline.
Beginning today, the Supremes will hear three distinct arguments over three days and six hours. This is the longest allotted time for oral argument in 45 years. While the second and third days focus on arguments raised by the Florida case, the first day allots time to address the Anti-Injunction Act (AIA), an issue raised in a separate case heard in the 4th circuit. By doing this, analysts believe that the court is trying to represent all the legal challenges being pursued nationwide. The week’s schedule shapes up like this:

Monday: Anti-Injunction Act: 90 minutes
Tuesday: Individual Responsibility Requirement: 120 minutes
Wednesday: Severability of the Individual Responsibility Requirement: 90 minutes and Medicaid expansion: 60 minutes

Want to dig deeper into these legal arguments? Read a summary of the arguments here and check out all of our resources here.

Now that we’ve reviewed how we got here, you might ask, who’s who?

The legal eagles…
For those of you unfamiliar with the lawyer food chain, lawyers who specialize in Supreme Court practice are few in number and highly skilled. High-profile cases, such as this one, are the stuff of lawyer dreams.

In one corner, you have the heavyweight, seasoned attorney representing the attorneys general and friends. In the other corner, you have the intense, straight shooter solicitor general representing the defense.

Paul Clement. According to a recent New York Magazine article on Clement, he is a quiet and gifted legal mind, noted for his ability to remove the partisan element from an argument. His technique includes targeting the Justice that he needs most; he has made more than four Supreme Court appearances this year alone. Watch (or listen) for him to hit hard on Justice Anthony Kennedy ― viewed as the swing vote on the Court.

Solicitor General Verrilli. Verrilli is the newly appointed solicitor general, replacing Elena Kagan (newest Supreme Court justice). He is known for his hard-hitting work on first amendment rights related to the telecommunications and music industry as well as his work on the rights of death row inmates. He is gifted at cutting through jargon, articulating the basic argument in understandable terms.

The decision makers…
The Supremes. The justices are often described as split 4-4 with Justice Kennedy as the decider (or swing vote). To understand more about the justices, who appointed them and their political leanings, scroll over their photos here. All of those stereotypes aside, the anti-ACA case is an interesting one that tests the conservatives in the pack. (See Michael Miller’s blog here.) Analysts feel relatively certain as to how the liberal slated crew will cast their votes but less sure about how Justice John Roberts (who likes to live in the majority and drive the opinion) and Justice Antonin Scalia (who’s past rulings are cited in favor of retaining the IRR).

Stay tuned this week for more coverage of these hearings. Look for our daily blogs and check out our Supreme Court resource page.

 – Eva Marie Stahl, Policy Analyst

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The Insider: I don’t even play one on T.V.

Friday, March 23rd, 2012

As the Supreme Court prepares to hear arguments next week on the constitutionality of the Affordable Care Act, most legal experts expect the court to uphold the law . I’m not a constitutional scholar or even a lawyer (and who knows what this court will do), but applying facts and reason to the plaintiffs’ case would result in an easy win for the ACA. The two main arguments in the case against the ACA are that the Medicaid expansion is coercive and the Individual Responsibility Requirement exceeds Congressional authority under the Commerce Clause.

Let’s take these contentions in turn; first, the Medicaid argument. Ask yourself: Does Congress have the authority to repeal the Medicaid statute? (Answer: of course, yes). Second: Can they pass a new program that is purely voluntary for states that provides federal support for state health coverage programs provided those programs conform to eligibility rules determined by Congress? Again, yes – no brainer. So…case over. This argument is just plain lacking in merit.

Now let’s look at the attack on the Individual Responsibility Requirement (IRR). You don’t even need to get as far as the Commerce Clause to dismiss this argument. The reason is that the plaintiffs’ contention does not align with the facts. The argument that the ACA forces people to buy health insurance, the heart of the opposing argument, is simply untrue. For people who don’t have employer- sponsored insurance, the ACA rebalances the financial calculus that determines whether people will purchase insurance. It changes the equation by substantially reducing the cost of being insured (via tax credits) and by modestly increasing the cost of being uninsured via penalties for those who can afford, but do not purchase coverage. There is no true mandate, no forced enrollment and no legal sanctions for failure to purchase coverage. Although people react differently to subsidies and tax penalties, in reality, they are not that different. They both operate to change the cost of making a decision to purchase insurance or not, without compelling any particular decision. You can read a similar argument that is heavy on the legalese here.

Long story short—the real question in this case is whether the conservatives on the Supreme Court can separate out their political preferences and rule on the merits. If the answer is yes, the ACA will be easily upheld, but from the folks, at least some of whom brought us Bush v. Gore, anything is possible.

 – Michael Miller, Policy Director

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Administration Up 2-1 in ACA Court Challenges

Friday, September 9th, 2011

The US Court of Appeals for the 4th Circuit released two opinions on Thursday in support of the Affordable Care Act (ACA), placing the Obama Administration ahead 2-1 in appellate rulings. The 4th Circuit rejected arguments from both Virginia and Liberty University that the individual mandate – or requirement that people purchase insurance or pay a penalty – is unconstitutional.

The Judges in the case were all Democratic appointees – Judge Diana Motz was appointed by President Clinton and Judges James Wynn and Andre Davis by President Obama. In this regard, many view the rulings as expected. However, both cases offer some twists that may provide the Supreme Court some new options for delaying a decision during a heated election year.

Virginia cannot stand in the way of the ACA
According to the appeals panel, Virginia has no standing to challenge the ACA. Having no standing means that Virginia could not prove there was an injury due to the ACA, and thus could not bring a lawsuit against it. Rather, Judge Motz criticizes Virginia for passing a state law exempting Virginians from having to purchase health insurance only days after the passage of the ACA to create an injury. She notes, “Under Virginia’s standing theory, a state could acquire standing to challenge any federal law merely by enacting a statute.” Since the court ruled Virginia had no standing, there was no need to review the merits of the lawsuit. Therefore, the panel did not review the constitutionality question surrounding the individual mandate.

Liberty to tax?
In the second opinion, the panel – unlike other courts – accepted the argument that the penalty associated with the individual mandate is a tax. Therefore, according to Judges Motz and Wynn, Liberty University cannot challenge the tax until its levied (they cite the Anti-Injunction Act). While Judge Davis did not concur with this opinion, he argued that the individual mandate is justified under the Commerce Clause. The interesting twist in the Liberty case is that, if the reasoning is accepted, the case cannot be heard until a penalty is charged – that moves any claim of injury out until after 2014 when the individual mandate is implemented.

Next stop SCOTUS…
It remains clear, regardless of the victory for the ACA reflected in the 4th Circuit rulings, that the Supreme Court of the United States will review the Affordable Care Act – namely the constitutionality of the individual mandate. The differing substantive issues in the cases will force SCOTUS to step-up. However, one blogger noted that as more rulings are unveiled, there are more lines of reasoning floating around – offering the Justices additional latitude to schedule when they will decide the future of the ACA.

– Eva Marie Stahl, Policy Analyst

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6th Circuit Rattles the Right

Thursday, June 30th, 2011

In the highly-partisan political and legal battle over implementation of the Affordable Care Act, the US Circuit Court of Appeals for the Sixth Circuit offered America a glimmer of reason yesterday. A three-judge panel delivered a 2-1 ruling upholding the constitutionality of the individual mandate, or the requirement that everyone who can afford insurance must obtain it by 2014 or pay a penalty.

Shaking up partisanship: a win for legal objectivity
The majority opinion in Thomas More Law Center v. Obama caused a small earthquake in conservative blocs as Republican-appointed Judge Jeffrey Sutton joined with his Democrat-appointed colleague Judge Boyce Martin to affirm the legality of the individual mandate. While no hand-holding was sighted, the decision’s sweet smell of non-partisanship was a welcome surprise.

For supporters of the Affordable Care Act (ACA), the verdict is a resounding victory. Meanwhile opponents of health care coverage for all Americans are dismissing the verdict simply as “wrong” and irrelevant. However, it is relevant and here is why: Judge Sutton’s affirmation of the individual mandate specifically and the ACA generally shows that there is living space above partisan politics.

While this suit is one of a handful of candidates likely to end up before the Supreme Court (4th Circuit/ Virginia and 11th Circuit/ Florida are both awaiting decisions), yesterday’s 6th Circuit decision may offer a blueprint for winning conservative support for the individual mandate. Its author, Sutton, is a respected conservative Judge who formerly clerked for Supreme Court Justice Antonin Scalia.

What is in the decision?
There are many key take-aways from Wednesday’s ruling; however, the most important is how Judge Sutton unravels the issue of economic “activity.”

The lawsuit’s plaintiffs asked the court to determine if a person who declines to purchase health insurance and opts to self-insure is engaging in an “economic activity.” This is an important legal question because the Commerce Clause grants the federal government authority to regulate economic activity if it substantially affects interstate commerce.

Sutton meticulously dissects the activity question: “no one is inactive when deciding how to pay for health care, as self-insurance and private insurance are two forms of action for addressing the same risk. Each requires affirmative choices; one is no less active than the other; and both affect commerce.” Everyone is an active participant in the health care economy and therefore, the federal government has the authority to regulate this activity, such as by requiring all Americans to have some minimum level of health insurance coverage.

Finally, Sutton’s opinion clearly states that the individual mandate passes constitutional muster – even for those who do not like the idea, “Call this mandate what you will—an affront to individual autonomy or an imperative of national health care—it meets the requirement of regulating activities that substantially affect interstate commerce.” The decision is a reminder to all of those who attempt to stand in the way of implementation that the Constitution may not be available as their personal road block.

What comes next?
The plaintiffs in the 6th Circuit case have two options – they can ask the 6th Circuit for a full panel of nine judges to review the decision (called a review en banc), or they can appeal their loss to the Supreme Court. In the interim, we await two other rulings out of the 4th and 11th Circuits. Legal analysts still believe, despite the ruling Wednesday, that the 11th circuit case is more likely to end up in the Supreme Court. However, most legal analysts agree that a case will be on the Supreme Court docket next term, which would likely result in a decision by June of 2012. Yet there are optimists who believe that a series of decisions similar to that of the 6th Circuit would keep the case from ever reaching the high court – hope springs eternal.

– Eva Marie Stahl, Policy Analyst

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And we all March forward…

Tuesday, March 15th, 2011

The Department of Justice, upon the request of Judge Roger Vinson, filed a request for an expedited appeal to the Eleventh circuit last Tuesday. This, in exchange for a clear issuing of a ‘stay’ from the Judge that requires states to continue implementation of the Affordable Care Act (ACA) while the appeals court determines the case. This is important to all parties involved – first, because the Administration wants implementation to proceed and second, because opponents want the individual mandate challenge to reach the Supreme Court of the United States (SCOTUS).

Currently, there is a flurry of legal activity. In the Fourth U.S. Circuit Court of Appeals, a hearing is scheduled for mid-May that combines two cases (one lower court ruling in support of the ACA – Liberty University) and one against (Virginia). In the Sixth U.S. Circuit Court of Appeals, a Michigan ruling in support of the ACA is being challenged by the Thomas More Law Center on grounds that the ACA’s use of an individual mandate (requiring citizens to purchase health insurance) is unconstitutional. The Sixth U.S. Circuit Court of Appeals case is scheduled for the beginning of June. But the big story last week was that the Eleventh U.S. Circuit of Appeals would enter the march to SCOTUS by scheduling hearings beginning early summer.

So what?
First, the Fourth and Sixth Circuit rulings appear less likely, according to legal analysts, to make it to SCOTUS. The larger case brought by multiple states and Attorneys General and led by Florida is the focus of the ACA court challenges – first, because the ruling by Judge Vinson effectively dismantled the entire law and second, the plaintiff list is lengthy and includes over 20 states. The prime focus of the case is the individual mandate.

There is some good news.
The directive to states: No more whining – implement. The resulting stay from Vinson, even with strings attached, clearly tells states that they must implement the ACA while the case moves through the court system. This is great news for advocates and Americans. Need an Exchange? Build it. Have a pre-existing condition? We’ve got you covered. Under 26 with no health insurance? Give Mom and Dad a call.

And we all march forward…
If these cases move rapidly enough to land on the 2012 SCOTUS docket, then it will be a challenge for ACA supporters. This is because the issue of health reform will once again be the center of attention during election season in lieu of a much more pressing issue – joblessness. While this is a frustrating outlook, the path to success does not change. All roads lead to public education – the ACA is the opportunity to give American’s a fair chance to have a healthier life. Spread the word.

– Eva Marie Stahl, Policy Analyst

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The Insider: The Politics of State Flexibility

Monday, March 7th, 2011

What’s behind the President’s embrace of state flexibility?
President Obama surprised a lot of people, including, apparently, Congressional Democrats, when he came out in favor of moving up the date when states could seek “global waivers” under the Affordable Care Act to craft their own health policy solutions. The waiver provision in the ACA, which would let states opt out of the Individual Responsibility Requirement (IRR), the Exchange and other provisions of the law as long as they can provide coverage that is equally comprehensive, equally affordable and doesn’t add to the federal deficit, goes into effect in 2017. The President announced his support for moving that date up to 2014. Republicans lost no time in trashing the President’s announcement. At the same time, there was conspicuous silence from Congressional Democrats, suggesting there is little chance a waiver date change could move through Congress.

There are also some technical challenges to implementing a waiver in advance of establishing any baseline for coverage or spending, but the President’s support for changing the date should be viewed through a political rather than policy lens. It was more designed to change the conversation about health care reform than to change policy.

Republicans have generally concentrated their fire against the means in the ACA rather than the ends. By declaring his support for greater flexibility over the means, President Obama is challenging Republicans to come up with an alternative that will work as well as the ACA or, failing that, forcing them to admit that they do not support comprehensive affordable coverage for all Americans.

Support for greater state flexibility also creates some daylight between the President and the IRR, which is probably the least popular provision in the ACA. At the same time, it creates some tension between Congressional Republicans and Republican governors. While the governors have been largely on board with the Congressional repeal strategy, if push comes to shove and they really do have to implement the ACA, they’d rather have more flexibility. For Congressional Republicans, however, any move to “fix” the ACA would blunt their attack messages and so must be rejected out of hand.

Since there is no sign that Democrats in either branch are interested in pursuing the idea, “state flexibility” could be a one-day blip in the 24/7 news cycle, but don’t be surprised to see it return as a talking point as the Presidential election gets closer.

That Settles That (for the moment)
For all those wondering whether Judge Vinson’s ruling that the entire ACA must be struck down because the IRR is unconstitutional halts implementation of the law pending appeal, the answer came down last week—it doesn’t. However, in an effort to speed final resolution, the Judge demanded that the Justice Department speed its appeal to either the 11th circuit or directly to the Supreme Court. The main effect of the judge’s ruling is that is should tamp down state resistance to implementation. For a scary look at the legal reasoning that underpins the challenges to the ACA and the consequences if that reasoning was widely applied, check out this issue brief by Simon Lazarus at the American Constitutional Society for Law and Policy.

Good news for beneficiaries/ bad news for millionaires
New poll results show the American people do not want to see cuts to Medicare and Medicaid and generally do not believe that such cuts are necessary. In fact, cutting Medicare and Medicaid are among the least popular options for dealing with the budget deficit. Most popular approaches are raising taxes on the wealthy, eliminating unnecessary weapons systems and reducing tax subsidies for the oil industry.

– Michael Miller, Policy Director

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The Insider: (Budget) Love Don’t Come Easy

Tuesday, February 15th, 2011

Legal Scene: You Can’t Hurry Love
Although VA Attorney General Cucinelli is seeking expedited review of the case against the Individual Responsibility Requirement (IRR), most court-watchers think this is unlikely to happen. The Supremes rarely reach down to bypass lower courts and do so even more rarely if the Justice Department opposes the move (which in this case it does). Meanwhile “guess how they’ll vote” remains an active pastime. For those who like to back up their speculation with a little cash, the online futures market is predicting that the IRR will be found constitutional (about a 70 percent chance) in light trading.

Want to do something more useful than speculating or gambling? Go out and educate people on the benefits of the ACA. The court won’t make its decision in a vacuum and what people think, matters.

You may be recused
When the SCOTUS finally does get the case, how many justices will actually hear it? Legislators on both sides of the aisle are already battling over this. Orrin Hatch is demanding Elena Kagan recuse herself because when she was Soliciter General, she had taken part in discussions of the ACA within the administration. Democrats are countering with a demand that Clarence Thomas recuse himself because of his wife’s political activities in opposition to the ACA.

Meanwhile, some Democrats in the Senate are not waiting for the Court ruling on the IRR, they are going out and seeking alternatives. This is a misguided effort. First, from a policy perspective, the alternatives will work less well. Perhaps, more importantly, the search for an alternative presumes that a consensus can be built within Congress for constructive modifications when in fact no such consensus is possible. The goal of the current Republican leadership is to bury the ACA, not to modify it.

There are slasher films and then there are slasher films
Remember that movie last year about the guy who was trapped while hiking and had to amputate his own arm in order to stay alive? That seems like a good metaphor for the Obama budget — it’s nasty and painful. But it’s better than the alternative if the proposals from House Republicans for the remainder of FY 2011 are any guide — $1.3 billion cut to community health centers and elimination of all funding for the national health service corps, which provides funding for doctors to work in underserved communities — the political equivalent of the Texas Chainsaw Massacre.

The U.S. economy has yet to really emerge from the worst economic crisis since the Great Depression. Although there are some signs of improvement, there are also many signs of continuing weakness, including in the housing market. With state and local job cuts already a drain on the economy, and more public employee cuts on the horizon in the next state fiscal year, it is premature to be contracting federal spending. While some commentators are making this point, it seems to have little traction on Capitol Hill where the main debate is between the President and his critics on the right. As a result, the budget debate appears to be shaping up as a rerun of the debate on the expiring Bush tax giveaways, and we already know how that movie ended.

Does the public support cuts?
In pursuing spending cuts, aren’t politicians just responding to the demands of their constituents? That’s a hard question. As with questions about health reform, it depends on how you ask. In general, the public seems to prefer the abstract idea of cuts over taxes, but is much less willing to embrace specific spending reductions.

Meanwhile, advocates for programs across the federal budget are rallying around their specific area of concern. This is understandable, but the moment seems to require a broader approach. Arguments that accept the basic premise that spending on human needs must be reduced but posit that somebody else should be cut increase the chance of a food fight over a shrinking pie. For an alternative approach, check out the good work being done by the folks at the Coalition for Human Needs There’s still time to sign on to their statement on budget priorities.

What does it all mean for health care activists?
The approach being pursued by Congressional Republicans is clearly a health care disaster. President Obama’s budget is more of a mixed bag. Although there are some good proposals to reduce health care spending — such as eliminating the ability of drug companies to pay generic drug firms to delay market entry (“pay-for-delay”) — there are also some painful reductions. Most troubling is a proposal to reduce the ability of states to use provider taxes to help fund their Medicaid budgets. While the proposed reduction in allowable taxes, from 6 percent in FY2014 to 3.5 percent in FY2017 and beyond, does not start phasing in until 2015, there are two likely effects. First, it will likely have a chilling effect on states that might be considering these taxes to help balance their budgets in the short run, making cuts in benefits more likely. Second, it will force states to find alternative revenue sources at roughly the same time they are expanding eligibility under the ACA, adding substantive and political challenges to implementation. In general, our view is that the federal government should be doing more, not less to help finance the Medicaid program.

Still, for the most part, the President’s budget spares health care programs from serious harm. But we shouldn’t rest easy. The debate in Congress is sure to be difficult and health care will not emerge unscathed. As difficult as the current budget moment may seem, it is likely that even greater challenges lie ahead when the focus of debate moves from FY2012 to long term debt reduction, which will put health care squarely in the spotlight.

– Michael Miller, Policy Director

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The Insider: Putting Things in Perspective

Tuesday, February 1st, 2011

Putting the Florida Legal Ruling in Perspective
The media is full of stories this morning about the ruling yesterday of Judge Vinson, not only that the Individual Responsibility Requirement (IRR) of the ACA is unconstitutional, but also that the entire law must fall as a result. While this sounds dramatic, there is rather less than meets the eye.

Essentially the ruling has no immediate practical significance other than providing fresh ammunition for the attack dogs who were quick to seize on it. It doesn’t really change the calculus with regard to implementation. Federal regulators will certainly move ahead and the situation is not much different in the states. Since all or most of the ACA that pertains to states is likely to survive the legal challenges, the consequences of inaction are too significant for state government to sit back and do nothing while the court cases play out. For example, state administrations politically opposed to the ACA who want to use this ruling as an excuse for inaction risk turning over the operation of the Exchange (and the keys to Medicaid eligibility) in their state to the federal government.

The main concern about the ruling is that it opens up new ground on the far right, moving the Virginia ruling — which struck the IRR while upholding the rest of the law — into the center. This could create cover for the Supreme Court to follow suit in dumping the IRR while upholding the rest of the law.

If it comes, a Supreme Court ruling along the lines of the Virginia decision would create a major challenge for ACA backers. If the law, minus the IRR, remains intact, there could be significant adverse selection in private insurance pools. Technically, there are a number of alternatives that could be put in place to allow ACA implementation to move forward without major disruption.

The challenge is political. Bipartisan cooperation would be needed to enact an alternative. Republican opponents of the ACA could demand other major changes in return for an agreement to enact an alternative mechanism to prevent adverse selection.

During the debate on expiring tax cuts, Congressional Republicans showed themselves willing and able to avail themselves of this type of “hostage taking” opportunity to preserve tax breaks for the wealthy. They seem likely to attempt a similar strategy both with regard to completing the work on the FY’11 budget and the upcoming vote to raise the federal debt ceiling (see below). During the tax debate, neither the Obama administration nor Democrats in Congress were willing to play hardball. It remains to be seen whether the same dynamic plays out with respect to health care.

Stay tuned for more detail on the Vinson ruling.

The Next Dragon in the Road
The much-hyped House vote on ACA repeal is already fading into the rearview mirror. While Senators Reid and McConnell jockey over scheduling a similarly symbolic Senate vote, far more significant threats loom ahead that advocates must be prepared to meet. One critical fight that is rapidly approaching is a likely vote on whether to amend or repeal the Medicaid Maintenance of Effort (MoE) requirement contained in the ACA.

The ACA prohibits states from reducing Medicaid eligibility or putting in place new administrative enrollment barriers for most adults prior to 2014 and for kids until 2019. Recently, Republican Governors sent a letter to President Obama and Congressional leaders calling for repeal of the MoE. Even more recently, the National Governors Association (which includes all of the nation’s governors — Democrats as well as Republicans) sent another letter that, while less explicit in calling for repeal, also took a stance in opposition to the MoE requirement.

Medicaid is the foundation on which the ACA rests. The repeal attempt on the MoE is the opening move in what will be a sustained effort to undermine both the ACA coverage expansion and the entitlement nature of Medicaid itself, which is why we can be sure that Congressional opponents of the ACA will push it.

MoE repeal would not only lead to an increase in the number of uninsured, it would also create new barriers to full expansion in 2014. States that rolled back coverage would have to reinstate that coverage at their regular Medicaid match rate, making the 2014 expansion more difficult. Politically, moderate Senate Democrats, especially those up for reelection in 2012, may be reluctant to hold the line on eligibility given the poor fiscal condition of states and the looming expiration of enhanced federal Medicaid matching dollars. MoE is an especially hard vote for ACA supporters because, unlike total repeal, MoE repeal, will be scored by CBO as a budget saver, making it attractive to Senators eager to burnish their credentials as deficit cutters or for use as a “pay for” for another priority that has a price tag attached.

They just can’t help themselves
Although posing as defenders of Medicare helped Republican candidates rack up positive vote margins with older voters, some members of the House GOP caucus seem eager to cough up those gains. Republican House leaders are considering a measure to convert the Medicare program into a voucher system as part of the House budget proposal, which could take shape within a month. The proposal being considered would convert Medicare into a voucher by 2021 and would also raise the eligibility age for Medicare to 69 (a change that would add substantially to employer health costs). The same idea is likely to be advanced during the debate over an increase in the debt ceiling expected to occur this spring.

Eyes of the Beholder
Did CMS Actuary Richard Foster validate the supporters or opponents of the ACA (or some of both)? Both Democrats and Republicans claim that Foster’s testimony before the House Budget Committee bolstered their views of the ACA. Democrats say that Foster agreed that the ACA would reduce the budget deficit. Republicans point to his statements relating to overall health costs and whether people could stay on their current plans as support for their criticism of the ACA. Let’s take a closer look at these two latter statements.

First, Foster said the claim “if you like what you have, you can keep it” is not true in all cases. Given the way he qualified his statement, on this point, he seems obviously correct. Although Foster may have had changes to Medicare Advantage in mind, conceding that the ACA will force junk insurance off the market isn’t anything that ACA supporters should apologize for. Sooner or later (and generally speaking the sooner, the better) plans that take subscribers money without offering them either reasonable value or adequate financial protection in the event of a serious illness will be forced off the market. People who have them now and like them only like them because they are cheap, and will only like them as long as they don’t get really sick. Just because it’s cheaper to have cars without working brakes or airbags does not mean they should be allowed on the streets.

The more serious contention is that the ACA will not contain health care costs. The statement rests on the Office of the Actuary’s (OACT) projection of total health spending under the ACA and whether the Medicare cost containment provisions will actually be implemented.

The OACT is quite pessimistic about the cost containment potential of the ACA relative to other analysts like the CBO or Council of Economic Advisors. This is a general tendency of the office, not unique to the ACA. For example, the OACT overestimated the cost of Medicare Part D by 25 percent. Nonetheless, their analysis concludes that the ACA will expand coverage to over 30 million uninsured people with virtually no net increase in health spending. Since uninsured people get only about half the care of the insured, this large coverage expansion with a negligible increase in cost is actually an endorsement, rather than a rejection of the ACA’s cost containment effect.

Most importantly, Foster is making a political rather than analytic judgment that the Medicare cost containment provisions won’t be sustained. The endless replay of the drama around how to prevent the cuts in physician fees mandated by the Medicare Sustainable Growth Rate would seem to bolster his view, but, as Paul Van de Water of CBPP points out, the SGR is the exception rather than the rule when it comes to Medicare cost containment efforts. Notwithstanding the routine fee increases approved by Congress, savings from reductions in Medicare physician fees still exceed the levels projected at the time of SGR passage.

Don’t hold your breath
While the repeal and harass parts of the repeal, replace and harass strategy seem well underway, replace seems to be lagging and the likelihood of a coherent replace strategy emerging is much lower. The problem is that most of the ideas previously advanced by House Republicans don’t actually work—having at most a modest effect on health spending and even less on coverage, while failing to adequately protect those with preexisting condition exclusions. Even McCain advisor Douglas Holtz-Eakin, a vociferous critic of the ACA says, “If it’s all they do, it’s not a serious effort.”

Nonetheless the old Boehner bill constitutes too much government intervention for some in the incoming class of freshman Republicans. As a result, coming up with an alternative to the ACA is likely to prove much harder than trying to unravel it by picking at the less popular provisions. In addition, an alternative acceptable to the House majority may not be very popular with the American people who like most of the provisions of the ACA.

In their own little corner
The health care debate in the rest of the country may be focused on repeal, replace, defund and harass or on the fiscal challenges facing state budgets, but a different story is unfolding in Vermont. Newly elected Governor Shumlin campaigned on single payer, and he is taking the issue seriously. Shumlin contracted with William Hsiao, who, among other things, helped design the national health system in Taiwan, and Jonathan Gruber, who modeled coverage expansion costs in Massachusetts and for Congress during the ACA debate, to help design a single payer plan for Vermont. Their report, released a week ago, showed that a single payer system would significantly lower health care costs and create jobs while covering more people with coverage at least as good as offered by the ACA. (They also modeled the ACA and found that it too would create jobs and lower health care costs relative to the status quo, but not as much.)

Even with a supportive governor and a Democratic legislature, there are still many legal, operational and political challenges ahead. How the plan is received by the provider community, whether there would be a role for the state’s Blue Cross plan (which now has a 75 percent market share), and the distribution and reaction of winners and losers among employers in the proposed shift from premiums to payroll taxes, are all likely to play a large role in the ultimate fate of the effort. To date, the national news media have paid relatively little attention to the Vermont effort, but if the state succeeds in establishing a single payer plan, VT could become the mouse that roared in health policy terms.

– Michael Miller, Policy Director

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