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The Supreme Court Justices Try on Their Health Policy Hats

By Jane Norman, CQ HeathBeat Associate Editor

March 29, 2012 -- During three days of oral arguments on the health care law, the nine Supreme Court justices espoused many views that went far beyond constitutional law and delved deep into the realm of health policy. How the justices regard these policy issues is important as they withdraw from public view to decide among the several alternatives that emerged during their long hours of debate.

Based on their questions and statements about the Tax Anti-Injunction Act, it appears doubtful that they will decide that that law applies and therefore postpone a decision on the health care overhaul's constitutionality until after penalties for not having insurance are collected in 2014.

That would leave them picking from among the choices of keeping the law (PL 111-148, PL 111-152) in its entirety, striking down all of it or finding a middle ground that preserves some portions of the measure but excises others, such as the individual mandate or the Medicaid expansion. Their decisions will involve not just the technicalities of the law but policy as well.

For example, liberal Justice Elena Kagan expressed a view on exchanges that may have startled the Obama administration. During arguments on whether the rest of the law should survive if the mandate is struck down, Kagan said health benefits exchanges "function perfectly well in Utah, where there is no mandate" to buy insurance.

"They function differently, but they function," she said. "And the question is always, does Congress want half a loaf? Is half a loaf better than no loaf? And on something like the exchanges, it seems to me a perfect example where half a loaf is better than no loaf." The exchanges, she said, "will do something—they won't do everything that Congress envisioned."

While Kagan was assuming, for the sake of argument, that the individual mandate would be struck down, the Utah exchange, which was created before enactment of the health care law, likely would not be a first choice for Democrats and consumer groups. It is most often cited by Republicans as a model because it is far leaner and less regulatory than a similar exchange created in Massachusetts. Plans on the exchange in Utah also can deny sick people coverage or charge them very high rates.

"The overarching philosophy of Utah's approach to health reform is that the invisible hand of the marketplace, rather than the heavy hand of government, is the most effective means whereby reform may take place," says a description of the Utah exchange on its website.

Another frequent topic throughout the days of argument was what would happen to health insurance if the requirement to have insurance is tossed but consumer protections are kept that, for example, bar insurers from charging higher premiums on the basis of gender. This is a nightmare scenario for insurance company officials who predict chaos in the market and skyrocketing premiums.

Justice Sonia Sotomayor was willing to agree that prices would leap, as insurers predict. But she also explored alternatives to the mandate that she said Congress could consider.

"What we do know for those states that found prices increasing, that they found various solutions to that," she said. Massachusetts passed an individual mandate, but "others adjusted some of the other provisions," she said. "Why shouldn't we let Congress do that if, in fact, the economists'' are proven right that "prices will spiral?" she asked.

As for Justice Samuel A. Alito Jr., he likely won the hearts of insurers by worrying about their fate should the individual mandate be struck.

He asked about an argument made in a brief filed by economists that changes imposed by the law on the insurance industry will cost them $700 billion over 10 years, offset by $350 billion in new revenue from the newly insured subject to the mandate. "Assuming they are in the ballpark, if the $350 billion from the individual mandate were to be lost, what would happen to the insurance industry, which would now be in the hole for $350 billion over 10 years?" he asked.

Justice Antonin Scalia struck a similar chord: "That's going to bankrupt the insurance companies, if not the states, unless the minimum coverage provision comes into effect." And Justice Anthony M. Kennedy wondered whether it was a "proper exercise" of the court's authority to "impose that kind of risk."

Justice Ruth Bader Ginsburg said if the mandate is struck down, "it's nice that Congress made it possible for more people to be covered, but the reality is they won't because they won't be able to afford the premiums." Kagan said she could see a situation where "the whole system crashes and burns, becomes unsustainable."

Last week, during a discussion of the mandate, the justices turned to the question of what to do about uncompensated care, a prime reason why the law was enacted, so that the costs of such care are spread among all insurance holders and taxpayers. Kagan said, "You are entitled to health care when you go to an emergency room, when you go to a doctor, even if you can't pay for it."

This may be a little optimistic. While emergency rooms accept all comers, a doctor's office is not the same. Some doctors, for example, will agree to see only people with private health insurance, a major problem for the health care system and one that the law seeks to solve with an expanded system of community health centers that will treat people on Medicaid.

The justices also spent time exploring why Congress did not decide to instead mandate that people buy health insurance when they are admitted to a hospital, rather than before they get sick. "Did Congress consider those alternatives?" Kagan asked. "Why did it reject them?"
Kennedy, considered a swing vote, was thinking about how the health care law's mandate might change a person's role in society. He said the mandate is "concerning" because it "requires the individual to do an affirmative act" when it comes to health care that isn't required in other areas of life.

He added: "In the law of torts, our tradition, our law has been that you don't have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him, absent some relation between you. And there is some severe moral criticisms of that rule, but that's generally the rule.

"And here the government is saying that the federal government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the federal government to the individual in a very fundamental way."

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