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States Mull Implementation Options Following Ruling on Health Care Law

By Jane Norman, CQ HealthBeat Associate Editor

February 1, 2011 -- States were scrambling to figure out how and if to implement the health care law after a federal judge in a multi-state legal challenge in Florida ruled the entire measure is unconstitutional.

On the day after the ruling a second prong of the GOP-led attack on the law materialized in the Senate where Senate Minority Leader Mitch McConnell, R-Ky., sought to attach a health law repeal as an amendment to a pending Federal Aviation Administration reauthorization bill.

All of this is happening while state lawmakers in session around the nation have begun work on dozens of bills they would need to pass in order to comply with the law.

Some states that are plaintiffs in the suit appeared ready to stop implementing the measure, though details of how they would do that and for which parts of the law was not clear.

In Wisconsin, Attorney General J.B. Van Hollen said in a statement that District Court Judge Roger K. Vinson did not issue an injunction to stop the law, but that Vinson said in his decision that the declaratory judgment he made deeming the law unconstitutional was the "functional equivalent" of an injunction.

"This means that, for Wisconsin, the federal health care law is dead—unless and until it is revived by an appellate court," said Van Hollen, a Republican. "Effectively, Wisconsin was relieved of any obligations or duties that were created under terms of the federal health care law."

Steve Means, executive assistant for the Wisconsin Department of Justice, said in an interview that how the court decision is applied in practical terms will have to be discussed by Van Hollen and Gov. Scott Walker, a Republican. Other states face similar decisions, he said. But, Means said, "when a law is declared unconstitutional, it's taken off the books."

In Florida, Republican Gov. Rick Scott, a longtime foe of the law, told reporters that he doesn't see the point of continuing to implement the measure.

According to the Orlando Sentinel, Scott said that he has no plans to phase in any provisions that would take effect between now and whenever the Supreme Court might render a decision, perhaps in 2012. "I've personally always believed it was going to get repealed or declared unconstitutional, because it's a significant job killer," Scott said. "We're not going to spend a lot of time and money to try and get ready to implement that."

Administration Defends Law

Obama administration officials continued to insist that Vinson's decision in favor of a 26 states who brought the suit was wrong and simply one opinion of one judge in one court.

"Implementation will continue," said Stephanie Cutter, White House director of special projects, in a blog post. Two other federal district court judges have upheld the law, she stressed. Expectations are in the U.S. Supreme Court that ultimately will decide on the law's legality.

But legal experts suggested that the Obama administration might have to quickly seek a stay of the decision to keep the health care law's implementation on track in state legislatures and on the federal level. Unlike an earlier decision by a Virginia judge that only declared the individual mandate that goes into effect in 2014 as unconstitutional, Vinson ruled against the entire law and its provisions currently in effect.

If the Justice Department can't get a stay from a district or appellate court, or if the states challenge such a stay, the issue might be sent to the Supreme Court.

That could possibly provide an early look at the justices' sentiments when it comes to the health care law, said Brad Joondeph, a law professor at Santa Clara University who's been closely following the suits. "My guess is they will seek a stay," he said.

A Department of Justice spokeswoman said that lawyers were continuing to analyze the decision and decide what steps, if any, to take prior to an appeal to the Court of Appeals for the 11th Circuit in Atlanta.

Cutter said that the Department of Justice "has made clear that it is reviewing all of its options in responding to this case, as it does in all cases."

GOP AGs Differ On Implementation

A parade of Republican attorneys general and governors appearing on Fox News offered varying perspectives on what they'll do in the meantime, though they agreed they'd like the Supreme Court to settle the issue quickly.

South Carolina Gov. Nikki R. Haley said she planned to contact other governors and send a letter to President Obama asking him to expedite a Supreme Court ruling. "You know, this is something that you've got every state in chaos," said Haley. "We've got to make sure that we are taking care of this quickly so that we can move forward with our states."

Texas Attorney General Greg Abbott said on Fox that he's told state lawmakers that the ruling is important but it's still unclear what the Supreme Court will decide. "I think it is prudent for our legislature to continue making preparations so we can be ready in the event this district court ruling is overturned," said Abbott.

Michigan Attorney General Bill Schuette, asked if his state would operate as if the law did not exist, said, "Well, the judge made it clear in his declaratory ruling that he expects federal officials to adhere to his judgment. What I'm going to do is talk to the governor. We have a great new governor in the state of Michigan. We'll talk this through."
State legislatures, though, are at work on initiatives related to the health care law, said Richard Cauchi, program director for health at the National Conference of State Legislatures. He said lawmakers are in session now in 44 states and the NCSL has identified at least 250 bills related to implementation, with more likely to be introduced because some legislatures have only been in session a short time.

Cauchi said that more than 70 state bills deal with consumer protections, patient appeals, premium rate reviews, medical payouts, coverage for those with preexisting conditions and child-only insurance. "Many others address the question of establishing a state-administered exchange," he said in an e-mail. "Others propose structures, funding and authorization, Medicaid adjustments and other specific areas. More than 50 bills propose that their state challenge or not participate in certain elements of reform."

Obama administration officials and congressional Democrats defended the law in the aftermath of the ruling. "It would be a real mistake to have this law go down," said Centers for Medicare and Medicaid Services (CMS) Administrator Donald M. Berwick, speaking to reporters after a briefing on accountable care organizations at the Brookings Institution. "The benefits to seniors and to the country as a whole are enormous."

And Senate Finance Committee Chairman Max Baucus, D-Mont., an author of the law, noted that "the score is two to two" on court rulings, with two judges declaring the law unconstitutional on its merits and two upholding it.

"It'll be resolved by the Supremes," said Baucus. "We'll have to wait and see what that is." Asked if some states are dragging their feet now on implementation, he said it depends on the political makeup of states.

"Some states, I'm sure, are following verbatim repeal provisions that are proposed in other states," he said. "It's regrettable, but it happens. I just urge people in all areas, including this one, just to listen to the other side."

The Senate Judiciary Committee will hold a hearing on the constitutionality of the health care law that will feature both supporters and opponents. Witnesses will be John Kroger, the Oregon attorney general; Randy E. Barnett, professor of legal theory, Georgetown University Law Center; Michael A. Carvin, partner, Jones Day; Walter Dellinger, professor emeritus of law, Duke University School of Law; and Charles Fried, professor of law, Harvard Law School.

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