The Final Day of Legal Arguments over the Health Care Law

Henry Aaron attended all three days of the Supreme Court’s hearings on the Patient Protection and Affordable Care Act and provided daily commentary on the Brookings Up Front blog. Aaron summarized the events of each day while providing insight into each sides’ oral arguments.

Read about the second day and the first day of the hearings.

Near the end of the final segment or oral arguments on the constitutionality of the Affordable Care Act, dealing with whether the Medicaid extensions are constitutional, Chief Justice Roberts turned to Solicitor General, Donald Verilli, and said, “Mr. Verilli, you have fifteen minutes left.” Verilli responded, wryly “Lucky me.”

Shortly afterwards, Verilli ended his presentation on Medicaid with a peroration meant to wrap together all four of the issues on which the court heard arguments. In the name of judicial restraint, Verilli called on the justices to leave to the political process the final disposition of the Affordable Care Act. The message was that the bill was crafted to achieve an important and emotionally compelling end—the extension to the uninsured of the personal freedom that flows from the knowledge that illness will be treated. If the American people find the ACA wanting, Verilli argued, they can say so at the ballot box. He urged the court to forbear from substituting its well for that of the electorate.

Mr. Verilli’s “lucky me” comment expressed his justifiable fatigue after having argued three of the four issues on which the court was hearing arguments. It also came at the end of a segment during which, paradoxically, the tone was generally favorable to the government’s position—that the Medicaid extension is constitutional—even as Mr. Verilli was pushed around fairly roughly by Justices Scalia, Roberts, and Alito. The issue was whether the power granted to the Secretary of Health and Human Services to cut off all federal funding for Medicaid to any state that did not agree to extend Medicaid coverage as specified in the Affordable Care Act constituted “coercion.” The potentially coercive power arises because the law authorizes the Secretary of Health and Human Services to cut off all Medicaid funds to a state that refuses to extend coverage as called for in the Affordable Care Act. That is not coercive, said Mr. Verilli, because the coverage extension is a veritable gift to the states, as the federal government will be covering all of the costs of the extension for a few years and then covering 90 percent ever after.

Justice Breyer, interceding almost as joint counsel for the government, argued that although the HHS secretary has the power to withdraw all funds if the states do not comply, it would be legally unreasonable to do so and could therefore be challenged under the Administrative Procedures Act. In addition, numerous past Medicaid extensions carried similar requirements and have never triggered such action by the HHS Secretary. The HHS Secretary could and probably would withhold funds for the newly-added categories of Medicaid beneficiaries if the states refused to enroll them, but going further would not occur—or, if it occurred, would not be sustained, Breyer maintained. Besides, such blanket withholding of funds has never occurred.

Of course not, responded Justices Scalia and Roberts. The fact that the threat has never been carried out doesn’t mean that the power to cut off funds is not coercive; it just means that the states knew that they had a fiscal gun to their heads. Furthermore, they argued, the fact that the law currently promises to cover virtually all of the costs of the extension does not bar Congress from cutting back the federal match at some time in the future. Verilli struggled, inexplicably, with this latter point, failing to note that Congress is always free to cut back, increase, or modify matching percentages or conditions attached to federal matching funds and that this is never regarded as legally impermissible.

Another colloquy occurred around a question posed by Justice Alito on whether the federal government could offer matching funds linked to a requirement that the states do things that the federal government is constitutionally barred from doing. The relevance of this extended exchange was not clear, as the Medicaid provisions of the ACA do not ask the states to do anything that is constitutionally barred to the federal government.

The morning session was devoted to the question of what should be done with the rest of the law if the individual mandate is declared unconstitutional. There were three positions.

The plaintiffs argued that if the mandate goes, the whole law should go. The reasoning is that the mandate is connected to the rate bands (the limits on how widely premiums are permitted to vary based on age and other characteristics) and mandatory issue, which are in turn connected to subsidies and the exchanges, and so on. If all of the linked provisions go, one is left, counsel Paul Clement argued, with an “empty shell.” Rather than do that, the whole bill should go.

The government’s position was that if the mandate is declared unconstitutional, then the rate bands and mandatory issues should be invalidated, but nothing else! Needless to say, this position proved hard to defend. What is the principle or bright line that distinguishes the provisions to be left standing from those that are invalidated? None was forthcoming.

Since neither the government nor the plaintiffs were prepared to argue for severability—leaving the rest of the bill standing if the mandate is invalidated—the court appointed a lawyer—an amicus—to argue that position.

As the questioning proceeded, it seemed clear to me that the government’s position was untenable. Indeed, it is quite possible that the government did not expect to win, but was using the argument to show how the comparatively unpopular and legally controversial mandate is linked to the very popular and clearly constitutional rate bands and mandatory issue provisions, thereby improving chances to preserve the individual mandate.

Thus, the real dispute is the mandate. If the mandate is declared invalid, will the whole bill be left standing or swept away? In various exchanges among the justices, the rationale for each position was pretty clearly stated.

For the liberals, the position is: Many of the provisions are clearly unrelated to the mandate and can go ahead without change even if it is invalidated. For the provisions that will be affected if the mandate goes, problems may arise, but they can function more or less well. If problems demand attention, Congress can deal with them as they arise. Furthermore, congressional intent to allow severability can be inferred because many provisions of the bill take effect long before the mandate does. Judicial restraint requires that the court disturb stated congressional intent as little as possible.

For the conservatives, the position is a virtual mirror image of the liberals’ stance. If the mandate is invalidated, many elements of the bill will not work as intended. To allow the rest of the bill to stand would not be judicial restraint, but judicial activism, as it would mean that the court is giving the green light to a bill that deviates from congressional intent. Justice Kennedy, a potential swing vote, articulated this position pretty forcefully. To be sure, Congress can enact changes to the law, but it would be cleaner to clear things away and let them start anew.

Several of the justices expressed concern about getting into a provision-by-provision consideration of which provisions are so close to the mandate that they should be invalidated if the mandate falls. That led to an amusing exchange in which Justice Kagan quipped that such an effort should cause Justice Scalia no problem as he believes in strict textual interpretation. Combing through the bill might cause his clerks some headaches, she allowed. Justice Scalia replied that giving his clerks headaches didn’t bother him at all.

Going into these hearings, I had thought that the law was likely to be sustained, probably by a wide margin. That view rested on what I thought were the extremely powerful decisions by two conservative appellate court judges, Sutton and Silberman, that would prove persuasive to Justice Scalia, and that if he voted to sustain the law, Justices Roberts and Kennedy were likely to do so as well. I had also speculated that those on the losing side of the mandate issue might invoke the Tax Anti-Injunction Act to delay a decision and a loss.

Listening to three days of oral arguments has made those theories untenable. It appears quite unlikely that the justices will use the Anti Injunction Act to delay a decision. Justices Scalia and Alito consistently indicated impatience with the governments arguments on the mandate and Medicaid. Their question made it seem likely that they would oppose severability. While impressions during oral arguments are notoriously unreliable as guides to final votes, I should be most surprised if either Justice Scalia or Alito (or Justice Thomas, who preserved his durable record of silence during public oral arguments) votes to sustain the individual mandate or the Medicaid extensions. The decision, as many others expected from the beginning, looks to be in the hands of Justices Roberts and Kennedy. It also seems quite likely that there will be multiple opinions, since there are four separate issues that were argued orally and various line-ups are possible.