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Justices Debate Medicaid Expansion, Which Branch Should Settle Severability Question

By Jane Norman, CQ HealthBeat Associate Editor

March 28, 2012 -- Liberal and conservative justices at the Supreme Court last week sharply questioned lawyers on whether it's their job or Congress's responsibility to decide what will happen to the rest of the health care law if the court decides to strike down the individual mandate.

Later on in an afternoon session devoted to whether the law's Medicaid expansion is constitutional, the court's liberal wing attacked an argument by 26 states that the health care law (PL 111-148, PL 111-152) has unconstitutionally coerced them into serving millions of uninsured once the law goes into effect in 2014. Justice Elena Kagan told the lawyer for the states, Paul Clement, that getting a "boatload of federal money" to spend on poor people's health care "doesn't sound coercive to me."

Conservative Justice Antonin Scalia asked if it was "possible" that the 26 states objecting to the expansion are led by Republican governors. "There's a correlation," said Clement.

Justices were so interested in their sparring with Clement that they went over the half-hour they had allotted each side for the Medicaid dispute and then extended additional time as well to Solicitor General Donald Verrilli.

On the question taken up in the morning session of whether the health care law ought to be killed entirely or partly preserved if the individual mandate is struck down, the government argued that the rest of the 2010 health care overhaul should stay, while those challenging the measure argued the entire law should be thrown out. There was also the question of whether consumer protections should be kept that, for example, bar discrimination on the basis of pre-existing conditions and prevent insurers from increasing premiums on the basis of gender.

Justices said they didn't know how they could sort through which items Congress would have included in the law independent of the mandate.

The policy implications are profound. The insurance industry has warned repeatedly that the health insurance market will be thrown into chaos if the mandate is killed but the consumer protections are kept. The justices alluded to those arguments. The mandate draws in younger, healthier people who broaden the insurance risk pool and without them premiums will rise rapidly for the higher-risk enrollees, insurers contend.

"Mr. Kneedler, what happened to the Eighth Amendment? You really want us to go through these 2,700 pages?" conservative Justice Antonin Scalia asked Deputy Solicitor General Edwin Kneedler. Scalia also said the entire law is tied together because specific provisions were put in to get the votes needed to pass the measure, including, as he termed it, the "what do you call it, Cornhusker kickback." Scalia described that provision as "the constitutional proscription of venality." It was added by the law's supporters to ensure a yes vote from Sen. Ben Nelson, D-Neb.

Aides to Nelson said that the senator's vote was never tied to the provision. Nelson asked Senate leaders to expand the Medicaid funding for all states, and they put in the Nebraska provision as a placeholder, said Jake Thompson, Nelson's communications director.

Scalia's wasn't the only pot shot across First Street Northeast. Kagan said the court normally doesn't "try to figure out exactly what would have happened in the complex parliamentary shenanigans that go on across the street" and instead studies the text of laws.

Justice Sonia Sotomayor forcefully made the argument that if one part of the law was struck down, the rest of the law could stand and that the legislative branch could repair it. "What's wrong with leaving it in the hands of the people who should be fixing it, not us?" she asked. And Justice Elena Kagan said that if the law is stripped of its mandate the rest should stay because "half a loaf is better than no loaf."

Justice Anthony M. Kennedy, considered a swing vote, appeared undecided as to what to do with the rest of the law if the mandate goes. "I'm still not sure what is the test" for how to decide what to sever along with the requirement that all Americans have health insurance, he said.

At one point during the 90 minutes of oral arguments, Justice Stephen G. Breyer held up the three volumes that make up the text of the law. He noted that it includes many provisions beyond the issues at question before the court this week, including breastfeeding and long-term care insurance. "What do you suggest we do other than spending a year redoing all this and arguing it?" he asked. Breyer also proposed that lawyers on both sides attempt to get together and work out between them what parts of the law should be kept.

Justices threw many tough questions about the mandate at Solicitor General Donald Verrilli last week. And while it was not clear at the end of the day how they might rule, Scalia seemed sure that the mandate is in trouble so Congress might as well go back to the drawing board.

"There is no way that this court's decision is not going to distort the congressional process," Scalia said. "Whether we strike it all down or leave some of it in place, the congressional process will never be the same. One way or another, Congress is going to have to reconsider this, and why isn't it better to have them reconsider it ... in toto."

Clement, however, speaking afterward on the courthouse steps, refused to be optimistic. "I would never get in the business of being a prognosticator. Justices are taking this case very seriously. The deliberation process for them has just begun," he said.

Meanwhile, at the White House, a statement was issued expressing confidence in Verrilli after his performance was blasted on left-leaning blogs and by some legal observers. And Josh Earnest, a White House spokesman, told reporters that the Obama administration is not considering contingency plans for the law should the court strike down all or part of it.

The Medicaid arguments found Chief Justice John G. Roberts Jr. appearing skeptical to the states at first, when he told Clement that states have been accepting considerable federal funding since the New Deal era, so it's a little late to complain. "They tied the strings. I don't think they should be surprised the government is pulling them," he said. But he also interrogated Verrilli at length on what the limits might be to the conditions that the federal government places on the states when it extends funding to them. And he said that power has been used in the past by the federal government to "threaten" states into action.

The afternoon session on Medicaid wrapped up three days of oral arguments in the case, and Verrilli urged the justices to let voters decide if Congress did the right thing in passing the law. Clement retorted that it is a "very funny conception of liberty that forces somebody to purchase a health insurance policy whether they want it or not."

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