What’s Surprising about the Virginia Ruling Striking the Individual Mandate?

Most everyone expected district Judge Hudson in Richmond VA to strike the individual mandate as unconstitutional, so the outcome of today’s decision is hardly surprising.  What was uncertain is: 1) what remedy he would grant; and 2) how he would handle the government’s strongest argument, which is based on the “necessary and proper” clause.  On both points, he either punted or fumbled.  (See also here and here.)

For the remedy, the tough choice is whether to strike most or all of the Affordable Care Act, realizing that the Act lacks a severability provision and that Congress obviously never would have enacted it without an individual mandate.  Banning medical underwriting without an individual mandate will wreak havoc on the market for individual insurance, perhaps causing many or most insurers to withdraw, as they’ve already done in the market for child-only insurance.  Despite all of that, the judge severed and struck only the individual mandate, leaving to Congress or administrative agencies the task of avoiding the train wreck of potential market collapse.

Other courts might not be so cavalier (subtle pun intended, for those from UVA), even if they were inclined to agree on the merits.  But then they would have to strike most or all of the ACA — a much bolder move.  Both the state and the federal government agreed that severing the individual mandate was not the right move — conceding, in effect, that the mandate is inextricably intertwined with the ACA’s regulation of insurance.  That naturally leads to the next issue: whether the mandate is necessary and proper.

On that question, the Richmond court reasoned inscrutably (p. 24) that

“Because an individual’s personal decision to purchase–or decline to purchase–health insurance from a private provider is beyond the historical reach of the Commerce Clause, the Necessary and Proper Clause does not provide a safe sanctuary.”

What??  I thought the whole point of the N&P clause was to expand powers beyond those enumerated.  If the Commerce Clause itself provided the power, then we wouldn’t need N&P; thus, the ONLY time we need N&P is when the power in question is beyond enumerated powers.

The court continued:

“This clause grants Congress broad authority to pass laws in furtherance of its constitutionally-enumerated powers. This authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power. . . . The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution. Therefore, the Necessary and Proper Clause may not be employed to implement this affirmative duty to engage in private commerce.”

What!?  (I’m channeling Jon Stewart here).  Doesn’t this reason that the power in question is untethered because it’s not tethered to itself?  Shouldn’t we be looking to link to OTHER powers or objectives that ARE within the Commerce Clause?  The government’s clearly stated position, summarized by the court itself, is obviously that regulating how insurance is offered and sold is easily within the core of the commerce power.  That forms the anchor to which the individual mandate is tethered - a straightforward position to which the court never responded.

Other quirks:  Although the court nodded to the challengers’ burden of persuasion and the presumption in favor of constitutionality, it emphasized the lack of any “specifically articulated constitutional authority . . . to mandate the purchase of health insurance” (p. 20).  And although the case was about government powers rather than constitutionally-protected individual rights, the judge said (p. 37) that, “At its core this dispute is . . . about an individual’s right to choose” to be uninsured.

These parts of the opinion read to me as someone determined to strike the mandate regardless of the force of argument in the way.

[Read here Professor Hall's prior articles in Health Reform Watch on the individual mandate : "Is it Unconstitutional to Mandate Health Insurance?" and "Are the Attorneys General's Constitutional Claims Bogus."]

Mark A. Hall, J.D., is the Fred D. & Elizabeth L. Turnage Professor of Law at Wake Forest University School of Law. He is one of the nation’s leading scholars in the areas of health care law and policy and medical and bioethics and a contributor to Health Reform Watch. The author or editor of fifteen books, including Making Medical Spending Decisions (Oxford University Press), and Health Care Law and Ethics (Aspen), he is currently engaged in research in the areas of consumer-driven health care, doctor/patient trust, insurance regulation, and genetics. He has published scholarship in the law reviews at Berkeley, Chicago, Duke, Michigan, Pennsylvania, and Stanford, and his articles have been reprinted in a dozen casebooks and anthologies.

Professor Hall also teaches in the MBA program at the Babcock School and is on the research faculty at Wake Forest’s Medical School. He regularly consults with government officials, foundations and think tanks about health care public policy issues, and was recently awarded the American Society of Law, Medicine and Ethics distinguished teaching award.

Reform Rodeo

1. Stem Cell News: A ban imposed by a federal district court on the use of federal funding for embryonic stem cells has been stayed by a court of appeals judge.

2. Important PPACA Case: Kaiser Health News notes that a closely followed hearing is scheduled in Florida for a case filed by 20 state attorneys general that challenges PPACA’s individual mandate.

3. Primary Care no Panacea: Maggie Mahar discusses new research which finds that a greater population of primary care physicians is not a sufficient condition to improving the quality of care.

4. Bending the Cost Curve: The New York Times discusses a new study by The Center for Medicare and Medicaid Services that outlines the future costs of health care under PPACA. The study itself can be found here.

5. On Defensive Medicine: Joe Paduda describes recent research that reveals only a minimal cost for defensive medicine.

Florida Attorney General McCollum Falls Victim to Collective Mandate, Loses Bid for GOP Nomination for Governor

Attorney General Bill McCollum, noted of late for spearheading the state suits against the Individual Mandate in health reform, has lost his bid for the Republican Party nomination for governor of Florida. Political newcomer Rick Scott, a self styled “conservative outsider” and former hospital corporation CEO, poured over $30 million of his own money into the race and won the nomination.  According to Fox News/AP, Mr. Scott, who has never run for any office before, “was active last year opposing the health care legislation in Washington.”

With 93 percent of precincts reporting, Scott led McCollum 47 percent to 43 percent.

Fox/AP also reports that the result is the culmination “of months of personal attacks, name-calling and negative TV ads….”

And that

McCollum, who racked up endorsements from big Republican names, hit Scott hard for past Medicare fraud allegations. Scott was the CEO of HCA/Columbia Hospitals when it settled the biggest Medicare fraud case in history — Scott, who was forced out as CEO by his board amid the government investigation in 1997, has said repeatedly that he didn’t know about any criminal activity and was never charged.

Tip of the Hat to JanetHasty via good ol’ twitter.

Virginia, the First State to Challenge the Health Care Law in Court

Effective 2014, as part of the new health care law, most U.S. citizens will be required to obtain some type of health care insurance or be hit with a tax penalty.  This federal mandate is part of an effort by the Obama administration to use the penalty (or tax) to prevent uninsured Americans from shifting their $43 billion in healthcare costs to others.

However, this mandate did not sit well with some states, as many have filed suits seeking to invalidate the law.  Virginia was the first to butt heads with the federal government in court.  In a two-hour hearing, the federal government and Virginia both made their arguments before U.S. District Judge Henry E. Hudson.

The NY Times reports that Judge Hudson, “who was appointed by the first President George Bush, questioned both sides aggressively and said he would rule within 30 days. The judge predicted that the challenges to the health care law ‘will at some point in time define the outer boundaries’ of federal regulatory power.”

Although the hearing primarily concerned the issue of whether Virginia had legal standing to bring this claim, part of that analysis requires the court to look at the likliehood of the party seeking standing to have the injury alleged redressed. The requirements for standing are nicely stated in “The ‘Lectric Law Library“:

Standing. The legal right to initiate a lawsuit. To do so, a person must be sufficiently affected by the matter at hand, and there must be a case or controversy that can be resolved by legal action.There are three requirements for Article III standing: (1) injury in fact, which means an invasion of a legally protected interest that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal relationship between the injury and the challenged conduct, which means that the injury fairly can be traced to the challenged action of the defendant, and has not resulted from the independent action of some third party not before the court; and (3) a likelihood that the injury will be redressed by a favorable decision, which means that the prospect of obtaining relief from the injury as a result of a favorable ruling is not too speculative. Lujan v. Defenders of Wildlife, 112 S. Ct. 2130, 2136 (1992) (Lujan). The party invoking federal jurisdiction bears the burden of establishing each of these elements. Id.

The state here would seem to bear the burden of showing, among other things, that any harm that may or may not be experienced by its individual citizens is a concrete and particularized harm to the state itself. As for the crux of the issues beyond standing, The NY Times reports:

[States'] central argument is that the Commerce Clause of the Constitution cannot be interpreted to allow government penalties on Americans for refusing to buy a product, or as Virginia’s lawsuit puts it for “an absence of commerce.”

“We’re saying you can’t draft someone into activity so you can regulate him,” Virginia’s solicitor general, E. Duncan Getchell Jr., told Judge Hudson.

Mr. Getchell said the Justice Department’s defense of the law “evinces hostility to federalism.” He called the law “a radical, radical claim of power” that, if upheld, would allow the federal government to require citizens to buy most any commercial product in the name of advancing the national interest.

Ian H. Gershengorn, a deputy assistant United States attorney general, countered that the insurance requirement fitted well within the Supreme Court’s parameters for Congressional regulation of interstate commerce. A choice not to obtain coverage, he said, is not inactivity, as Virginia and the other state plaintiffs claim, but an active decision to pay for future medical care out of pocket.  Because many Americans cannot afford the cost of surgeries and hospitalization, their choice to go uninsured shifts the uncompensated cost of their care to hospitals, taxpayers and commercial policyholders.

Despite Virginia’s efforts to protect the interest of the state and its citizens, not everyone in Virginia is pleased with the state’s action to nullify the new health care law.  Some citizens of Virginia seemed more concerned about affordable health care than state’s rights.  As one small business owner puts it, “…seems to me that our attorney general and our current administration are putting politics first and are not taking care of the citizens of the commonwealth of Virginia.”

The Attorney General of Virginia, Ken Cucinelli “said at a news conference after the hearing that the state has “a better than even chance of prevailing” at each step along the way to the lawsuit’s ultimate destination: the U.S. Supreme Court.”

Judge Hudson’s comment, that “the health care law ‘will at some point in time define the outer boundaries’ of federal regulatory power,” is interesting in this context. It seems to denote a question, even if not answered at this time, as to where the line lay.

Professor Mark Hall, in posts here at HRW and later picked up by the Washington Post and New York Times, would beg to differ with Mr. Cucinelli (and perhaps Judge Hudson). Professor Hall’s posts appear below:

Is it Unconstitutional to Mandate Health Insurance?

Are The Attorneys General’s Constitutional Claims Bogus?

photo credit, kjd via Flickr

States Disclaim Own AG’s Suit

A few days ago we published Professor Mark Hall’s post, “Are The Attorneys General’s Constitutional Claims Bogus?” It seems he is not the only asking that question. As noted in The Plum Line, The Governors of four states,  Chris Gregoire of Washington, Bill Ritter of Colorado, Ed Rendell of Pennsylvania, and Jennifer Granholm of Michigan, have expressed their dismay at the prospect of the AG’s suit in a letter to US Attorney Eric Holder:

We believe their legal efforts will fail in court, unnecessarily delay the urgent need to get our citizens access to health care and waste our state tax dollars. As you prepare and deliver your defense of this landmark legislation, you have our commitment to work with you, at your request, to assist in this effort.

Again courtesy of The Plum Line, read the full letter here.

Are The Attorneys General’s Constitutional Claims Bogus?

Immediately after passage of health care reform, over a dozen state A.G.s sued to declare it unconstitutional, as violating states’ rights.  The Florida complaint is here, and Virginia’s here. Reminiscent of southern governors in the 1960s blocking their state universities’ gates, these legal officers in effect are saying “not on our sovereign soil.”  Since the constitutional issues have already been hashed through so thoroughly, what’s new to talk about?

First, the Florida complaint, which a dozen other states joined (AL, CO, ID, LA, MI, NE, PA,SC, SD, TX, UT, WA), focuses mainly on the financial burdens of expanding Medicaid.  This is challenged under the “commandeering” principle, as requiring states to devote sovereign resources to achieve federal aims.  But, as we know, states are free to withdraw from Medicaid, so the argument seems to fall entirely flat.  The complaint makes a bait-and-switch type of estoppel argument , that states got into Medicaid without any expectation of this expansion, and now it’s too damaging for them to withdraw.  So, in effect, states argue that the Constitution allows them to keep the federal carrot but refuse the federal stick.  Good luck selling that to an appellate court.

Second, these states complain about having to implement the insurance purchasing exchanges and their rules, but here again, states are entirely free to opt out and let their citizens use the federal exchange.  The only reason states have to implement exchanges is that they insisted the legislation give them this option, rather than forcing everyone into a single national exchange.  States can hardly complain about the responsibilities they asked for, especially when they’re still free to duck them.

Third, there are procedural problems.  States probably have no standing to enforce arguments about violation of individual rights (which is the main concern regarding the individual mandate).  Also, consider the remedy if states were to prevail:  It would wreak havoc to overturn the mandate to purchase, but not the mandate for insurers to sell without any medical underwriting.  Doing that would cause massive adverse selection and probably destroy some companies and some portions of the market, so a court would have little option but to strike down most or all of the entire law.  Surely that measure is extreme enough to give even the most activist judge pause, and so will compel most courts to find every possible way to uphold constitutionality, regardless of political persuasion.

Finally, do state nullification statutes like Virginia’s make a difference?  Not according to Harvard’s Charles Fried (who was Reagan’s Solicitor General):

The notion that a state can just choose to opt out is just preposterous…. As long as the federal law is independently constitutional, it doesn’t matter what Virginia says… It’s like Virginia saying we don’t have to pay income tax….One is left speechless by the absurdity of it.

This leaves only the well-worn arguments about exceeding powers to regulate commerce and to tax for the general welfare.  On these, most legal scholars are loud and clear about the merits.  In sum, as Sandy Levinson’s (Univ. Texas) says, “The argument about constitutionality is, if not frivolous, close to it.”

Originally posted at the O’Neill Institute for National and Global Health, Legal Issues in Health Reform.

[Ed. Note: Also Read Professor Hall's prior post on Health Reform Watch, "Is it Unconstitutional to Mandate Health Insurance?"]

States’ Attorneys General Get Busy With Health Reform

Across our nation, states’ attorneys general are stepping up in the fight for health reform.  Not too long ago, Modern Healthcare (subscription required) ran a piece called “When Attorneys General Attack,” featuring health reform-oriented attorneys general.  Among them was Michigan’s Mike Cox (who is aggressively working to preserve state oversight of Blue Cross and Blue Shield of Michigan), Minnesota’s Lori Swanson (who filed a suit against a major hospital and clinic network alleging illegal interest rates), and Texas’ Greg Abbott (who alleged, and forced a settlement, that Memorial Herman orchestrated an agreement among health insurance providers not to do business with facilities owned by Memorial’s competitors).

Cuomo’s interest in health reform doesn’t stop there.  As reported in my last post (States Respond to College and University Health Care Practices), Cuomo heads one of the nation’s leading state efforts investigating college and university health care practices.  The head of Cuomo’s Health Bureau, Timothy Clune, recently spoke to a seniors home in Middletown, New York and highlighted Cuomo’s commitment to helping New Yorkers with their medical and health insurance problems.  The Times Herald-Record reports Clune as stating that the Attorney General’s office “handle[s] health-care issues from the $60 denial to ensuring that people get the life-saving care they’re entitled to.”

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