Are The Attorneys General’s Constitutional Claims Bogus?

Professor Mark Hall, Wake Forest University School of Law

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?"]

Health Reform, a Class Act

Class Act

Thomas (Tim) Greaney
Director, Center for Health Law Studies
Saint Louis University School of Law

A few headlines from coverage of the passage of the health reform bill:

Winners, Losers in the House Healthcare Bill (Reuters)

Health Reform: What’s in it for you? (US News) 

Already Insured? Get Ready to Pay More (CBS)

Almost immediately after the House vote on Sunday, the media switched its “horse race” coverage from analyzing the politics of the affair to what it characterized as a clash of economic classes. Analysts were often quick to suggest that the average American might find himself in the loser column.  Others offered the conventional  ”on the one hand, on the other hand” pseudo-journalism, probably leaving most to assume (not unreasonably, based on their experience under trickle-down economics) that they have little to gain.  And inevitably, confusion spawns cynicism: The first question on Monday from my 91 year old uncle  was:  ”Do I still have Medicare?”

If we are going to do a triage by economic class, lets get it right:  I’m still waiting for a headline writer to capture the real story of the legislation: Health Reform Law Reallocates Opportunity to the Working Class

One unassailable fact that emerged from the year-long legislative debate is that the working poor and those in the middle economic stratum are the primary victims of our dysfunctional health system.  It is widely recognized that health care debt ranks at or near the top causes of personal bankruptcies. Less commented on, however, is the effect of widespread financial insecurity resulting from the high cost and lack of access to care.  More than 4 in 10 people earning under $40,000 per  year say their household has had problems paying medical bills over the past year. Not only does that statistic imply that many households are adjusting their budgets away from socially-important expenditures, like childcare and education, but it also reveals the personal toll imposed on lower income individuals and families. For those who have insurance, increasing premiums have forced them to take on more risk: Nearly one in five Americans say cost increases caused them or their employer to switch to a less comprehensive health plan, while almost half of all people purchasing insurance in the dysfunctional individual market say they have had to switch to a less comprehensive plan.

The misinformation spread throughout the debate has lent credence to those who would paint health reform as a victory for elites.  Judging from the expressions of outrage about health reform by some middle class citizens, many appear to carry the misapprehension that the primary beneficiaries of the legislation are those unwilling to work.  Nothing could be further from the truth; today’s uninsured are predominantly found in working families. In fact over 15% of employed workers and a stunning 41% of low income workers lack health insurance. And given the stampede of employers dropping health care coverage for their workers, the epidemic of uninsurance or underinsurance is undoubtedly spreading upward in the economic class order.

Also under-reported are the many ways the current health care system works to disadvantage the working class. Most prominent is the tax benefit which gives a significant and regressive tax subsidy to wealthy elites.  Excluding employer contributions for health insurance from taxable income–at $168 billion per year– is the largest “tax expenditure” in the budget– and obviously benefits the higher brackets more than the lower ones. (Revising this indefensible and economically inefficient  redistribution would have been a sensible way to help fund reform, but Congress settled for adding some progressivity to the payroll tax and some other taxes aimed at upper income citizens).

In addition, the health care system perversely redistributes wealth in a variety of other ways.  For example, as Mark Hall and Carl Schneider have made clear, hospitals and physicians price discriminate against those with lower incomes:  the uninsured and those in the individual market –who generally lack the bargaining power to command lower prices–pay higher prices to hospitals (often as much as two or three times higher) than those with group insurance.

Even less widely acknowledged is the fact that insurance favors the upper classes in subtle ways.  Co-pays, for example, burden those with low incomes much more severely than upper class insureds. Havinghurst and Richman aptly summarize the “distributive injustice” of the system:

[C]onditioning eligibility for insurer payments on patients’ willingness to make certain out-of-pocket payments causes lower income participants in employee health plans to get disproportionately fewer benefits than their more affluent coworkers receive in return for equivalent premiums

To be sure, the health reform legislation does not assure equal access to care among the social classes; but it certainly is a big step in the right direction.

I doubt that most Americans accept the idea that social class should dictate vast differences in opportunity for our citizens.  The capacity of health reform to lessen the economic and physical burdens imposed on the working class then should be headline news.

[Ed. note, post script: See excellent analysis published after this post by David Leonhardt characterizing the bill as "the federal government's biggest attack on economic inequality since inequality began rising more than three decades ago"
http://www.nytimes.com/2010/03/24/business/24leonhardt.html?src=me&ref=homepage]

Entrepreneurs, Rejoice!

Cabbage Market, Vaclav Maly (1874-1935)

Among the many jeremiads on the moderate-to-conservative health reform legislation just passed, David Brooks’s lamentation stands out. Brooks describes the legislation as one more drain on America’s entrepreneurial energies:

The essence of America is energy — the vibrancy of the market, the mobility of the people and the disruptive creativity of the entrepreneurs. . . . Today, America’s vigor is challenged on . . . [and] the country is becoming geriatric.

With the word security engraved on its heart, the Democratic Party is just not structured to cut spending that would enhance health and safety. The party nurtures; it does not say, “No more.”

But the legislation, in the long run, cuts the deficit. And people just starting out in the workforce–including many entrepreneurs–will find that the legislation greatly increases their flexibility. Just try out this calculator to see. As I noted three years ago, entrepreneurs have a lot to gain from a steady source of insurance.

The Health Care Reform Bill, Text & Summaries, Amendments & Provisions at a Glance

As the dust settles and we come now to live with the Health Reform bill, it may prove useful to have links to the bill, summaries, amendments and various provisions on hand. Granted, this list was culled from the Speaker of the House’s website, but the text is the text and although some of the links have a decidedly pro-bill slant, the links in totem provide a nice overview. In addition, the exact language of the bill itself is something we’ll all need to become accustomed to.

Tip of the hat to Ezra Klein for pointing the way to this resource.

UPDATE: YOU CAN ALSO SEE THE LAW IN FULL AND BROKEN INTO ITS VARIOUS TITLES ALONG WITH THE RECONCILIATION IN THE FIRST SIDE COLUMN (SCROLL DOWN PAST THE THUMBNAIL PICTURES AND “SIBELIUS WATCH” UNTIL YOU COME TO “HEALTH REFORM LAW (PPACA) COMPLETE TEXT.”)

LEARN MORE ABOUT THE LEGISLATION

Bill Text (Posted on Rules.House.gov on March 18, 2010 at 2:07pm):

• Health Care and Education Affordability Reconciliation Act of 2010 Text»
• Text of the Senate Amendments to H.R. 3590 (Senate health reform bill)»
• 9-Page Manager’s Amendment - posted on 3/20»

CBO Score:

• Four Key Points You Need To Know About the New CBO Score»
• Full CBO Score»

Summary Documents:

• 3 Page Summary»
• Summary of the Manager’s Amendment»
• Section by Section of the Reconciliation Bill»
• Reconciliation Bill Makes Key Improvements To Senate-passed Bill»
• Regular Procedure to Pass Health Insurance Reform»
• Health Care By the Numbers: Open & Transparent Process»
• Immediate Benefits»
• Cost of Inaction»
• Health Care By The Numbers: Why We Need Reform»
• Fact Sheet»
• District By District Impact»

Provisions At A Glance:

• Timeline for Implementation»
• Helping Small Businesses»
• Consumer Protections & Insurance Market Reform»
• Preventing Waste, Fraud & Abuse»
• Making Coverage Affordable»
• Employers and Health Reform»
• Prevention & Wellness»
• Strengthening Medicare»
• Medicare Part D»
• Medicare Advantage»
• Shared Responsibility»
• The Health Insurance Exchange»
• Innovative Delivery System Reform»
• Strengthening The Nation’s Health Workforce»
• Guaranteed Benefits»
• Summary of Revenue Provisions»
• Cost Containment»
• Addressing Health and Health Care Disparities»
• Rural America & Reform»

Support:

• Statement of Administration Policy»
• List of Organizations Expressing Support For Health Reform Legislation»