WASHINGTON & SANTA FE, NM (By N.C. Aizenman and Robert Barnes, WP)) ― The Supreme Court will complete its review of President Obama’s health care law Wednesday by considering whether all of the law must fall if part of it is found unconstitutional, and whether the law’s proposed Medicaid expansion violates the federal-state partnership.
The Medicaid expansion decision might have the most lasting impact on the federal government’s ability to use its spending power to pressure state action. The Supreme Court has said there is a limit to what the government can force states to do in order to receive federal funds — a condition cannot be “so coercive as to pass the point at which pressure turns into compulsion.” But the court has yet to find a case where the federal government has gone too far.
The 26 states challenging the Patient Protection and Affordable Care Act say this is the case. They are protesting the law’s intent to open Medicaid to a far larger share of the poor. At least technically a voluntary program for states, Medicaid is jointly funded with state and federal dollars.
States argue it will cost them millions of dollars because of the number of poor that will access the program in order to meet the law’s requirement that almost all Americans must have health insurance by 2014.
The government responds that the law cannot be unduly coercive because the federal government will pay the full cost of covering the newly eligible individuals through 2016. Even in 2020 and thereafter, the federal government will pick up 90 percent of the tab. And states may drop out of Medicaid at any time.
But the states counter, in effect, that the government has them over a barrel. The Medicaid program has grown so large that it is impossible to forgo federal funds and still provide medical care for the poor, they say.
The federal government says an adverse ruling would cast doubt on one of its most fundamental powers, the power to spend money. And it could cause turmoil in a range of federal-state programs.
The severability question would come into play only if the court finds the health care law’s individual mandate unconstitutional.
One of the most sweeping and sprawling laws in recent memory, the Patient Protection and Affordable Care Act aims to vastly expand access to health insurance and curb spending on health-care, by fundamentally altering the architecture of the American health-care system: The law establishes new state-run marketplaces for the sale of private insurance, creates a new system of federal subsidies to help people purchase insurance, funds new fields of research, expands programs like Medicaid, reshapes the way Medicare pays for health care, and includes countless new rules on everything from how employers should treat breast-feeding mothers to how tanning salons should be taxed.
At issue is what should happen to all these measures in the event the Court rules the individual insurance mandate is unconstitutional.
In assessing severability, the court’s precedents say it should retain the parts of the law that are constitutionally valid, capable of functioning independently, and are consistent with Congress’s basic objectives in passing the statute.
Congress did not include a “severability” clause in the law specifying which other provisions are irrevocably entwined with the mandate. But the government argues that there are only two — both of them new regulations on insurers.
First is the prohibition against insurers turning away or otherwise discriminating against people with pre-existing conditions. Second are the law’s limitations on how insurers can set rates.
Under that rule, the only permissible basis for charging one customer a higher premium than the next will be the person’s age, geographic location, and whether they use tobacco. Insurers will also only be permitted to vary their rates within a narrow band — charging their oldest customer no more than three times the premium for the youngest participant in a plan, for instance.
The government’s contention is that if these insurance regulations were applied in the absence of the mandate the insurance market would essentially implode.
Healthy people could wait until they fall sick to enroll in a plan that would be forced to cover their costly care. Insurers could pull out of the market or seek to recoup the extra costs by dramatically increasing their rates — prompting even fewer healthy people to sign up and driving the spiral still further.
However, apart from these insurance regulations, argues the government, every other aspect of the law would remain workable without the mandate.
The law’s challengers agree that if the mandate is overturned so should the insurance provisions the government points to. But they argue this means the rest of the law should be overturned as well, because without those insurance provisions, “the impetus for the [law] would disappear, and the Act’s whole private insurance expansion would unravel, for insurance companies would remain free to turn away millions of the very same uninsured individuals to whom the Act promised insurance.”
The court has appointed a private attorney to argue the third option neither side supports — that the rest of the law will stand if only the mandate is ruled out.