Nel's New Day

November 14, 2011

Supreme Court Takes on Health Reform Law

The U.S. Supreme Court announced today that it would hear the constitutionality of the health care law, passed 18 months ago. On the same day, Health Care for America Now, a coalition of more than 1,000 organizations that joined to overhaul the nation’s health care system and then protect the recent law, announced that state insurance regulators are having secret meetings tomorrow to gut the new control on insurance premiums.

The current law requires insurance companies to spend at least 80% of their premiums on medical care. The meeting tomorrow will consider a resolution to revive stalled legislation removing insurance sales commissions from industry administrative costs for purposes of calculating the medical loss ratio and count much of the sales commission as “health care” instead of an overhead expense. If passed, the resolution would cost consumers $1 billion. Clicking here would send a message to your state insurance commissioner.

The Supreme Court will consider the health care law’s constitutionality, the separating the mandate for everyone to have health insurance from the law, Medicaid expansion, and the question of whether or not the mandate is a “tax.” The ruling would probably be one of three choices: declare the entire law constitutional; declare the entire law unconstitutional; and declare just one or more pieces, i.e., making mandated health insurance, unconstitutional. Another possibility, however, is  the ruling that no one has any standing because the law has not gone into effect, negating any ruling about the law’s constitutionality.

Justices have assigned five and a half hours for oral argument, more than any other in the past century. They may hear these arguments in March and issue a decision in June.

Those opposed to the federal health care law argue that the decision to not do something, for example, not buy health insurance—is economic inactivity, rather than activity, and therefore cannot be regulated by the federal government. Supporters argue that the decision to not purchase health insurance has an economic effect. For example, a person without health coverage may not have the money to pay for an emergency room visit, forcing hospitals or taxpayers with the bill. Therefore not purchasing health insurance is an economic decision.

Earlier this year, the Eleventh Circuit Court of Appeals ruled the mandate piece of the health reform law to be unconstitutional. Courts in Washington, D.C. and in Michigan both upheld this mandate to be constitutional. The Virginia-based 4th Circuit Court of Appeals dismissed two cases against the health reform law because penalties for not purchasing health insurance don’t start until 2014. As a result, no one had suffered any injury and could not bring a case against it. Decisions don’t seem to be partisan. Clinton-appointee Judge Frank Hall in the 11th Circuit ruled against the law; Reagan-appointee Judge Laurence Silberman in the DC Court of Appeals defended the law.

Since the 1930s, the court has consistently held that Congress has broad constitutional power to regulate interstate commerce, including authority over not only goods moving across state lines but also the economic choices of individuals within states that have significant effects on interstate markets. Using this standard, judges could determine the law constitutional because of the multitrillion-dollar interstate health insurance industry.

The argument against the ban on discrimination based on pre-existing conditions may not be successful. Allowing healthy or risk-prone individuals to opt out of insurance would lead to unacceptably high premiums for the other people just as individual Social Security taxes would rise if people were given a choice of whether to participate . The court unanimously recognized in 1982 that it would be “difficult, if not impossible” to maintain the financial soundness of a Social Security system from which people could opt out. Restricting certain economic choices of individuals ensures the vitality of a regulatory regime clearly within Congress’s power to establish, an argument reasonable for the health care law.

The argument regarding the theory that Congress is entitled to regulate only economic “activity,” not “inactivity” is specious. Individuals who refuse to buy insurance choose to take a free ride on the health care system. If they need emergency-room care that they can’t pay for, the public will pick up the tab. They know that, and this conscious choice carries serious economic consequences for the national health care market, which makes it a proper subject for federal regulation.

Another argument that the health care law is constitutional comes from Congressional power to impose taxes. Conservative justices’ earlier votes show their willingness to impose the law’s power on the people in this country.

Antonin Scalia upheld in 2005 Congress’s power to punish those growing marijuana for their own medical use; a ban on homegrown marijuana, he reasoned, might be deemed “necessary and proper” to effectively enforce broader federal regulation of nationwide drug markets. Anthony Kennedy determined in 1995 that Congress has the power to regulate—in this case possession of guns near school—in a way that is not in itself “commercial” or “economic” but may set off a cascade of economic effects.

Elena Kagan has been asked by some people to disqualify herself because of questions about her involvement in the health-care law when she was an Obama administration attorney. On the other hand, Antonin Scalia and Clarence Thomas, were feted at a Federalist Society dinner, a longstanding group dedicated to advocating conservative legal principles, in part sponsored by the law firm that will argue the case before the high court. Samuel Alito was also present as was Sen. Mitch McConnell (R-KY), an avowed opponent of the healthcare law and one of 2009’s 15 most corrupt members of Congress, according the Citizens for Responsibility and Ethics.

Paul Clement, the most likely lawyer who will argue the case and U.S. solicitor general for George W. Bush, is with Bancroft PLLC, one of almost two dozen firms that helped sponsor the event. A firm that sponsored the dinner, Jones Day, represents one of the trade associations that challenged the law, the National Federation of Independent Business, and another sponsor was pharmaceutical giant Pfizer Inc, which has an enormous financial stake in the outcome of the litigation.

Several dozen Congressional Democrats signed a letter earlier this year saying that Thomas’ wife’s work for the Heritage Foundation, which opposed health care, should disqualify her husband. A federal law requires justices to recuse themselves in a number of circumstances where real or perceived conflicts of interest could arise, including in cases where their spouses could have a financial interest, but this law is not in effect for the U.S. Supreme Court.

This is not the first case in which Virginia Thomas’ work might present a conflict of interest for Thomas. Common Cause asserted that Thomas should have withdrawn from deciding the 2010 landmark Citizens United case on campaign finance because of both Virginia Thomas’s founding of another conservative political group in 2009 and his appearance at a private political retreat organized by Charles Koch, a prominent conservative financier.

However the nine people in robes decide, the actions of the Supreme Court will  impact the elections of 2012, the Supreme Court, and the people of the United States.

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