Supreme Court justices appear poised to sweep aside entire health-care law

With the centerpiece of President Obama’s health-care reform law in constitutional peril, the US Supreme Court on Wednesday turned its attention to the thorny question of what happens to the rest of the law if the so-called individual mandate is struck down.

At oral argument Tuesday, the conservative wing of the court, including swing Justice Anthony Kennedy, had peppered Solicitor General Donald Verrilli with a barrage of critical and skeptical questions.

The session led many analysts to conclude that the heart of the Patient Protection and Affordable Care Act, the individual mandate, may be declared unconstitutional by five justices of the nine-member court.

That same split was on full display in two sessions Wednesday, with the conservative justices arguing in the morning that the entire 2,700-page statute must be invalidated in full, while the court’s liberal wing favored striking down only those sections of the law closely tied to the individual mandate. In the afternoon the conservatives attacked the constitutionality of a plan to expand Medicaid as part of the reform law.

The conservative majority's consistent challenges to the health-care law in three days of hearings suggest more than the law's individual mandate may be in jeopardy. The court now appears poised to strike down the law in its entirety.

The underlying issue the justices were addressing in the morning is called severability. It arises whenever a court strikes down a portion of a law and must decide whether other parts of the law can still function.

Justice Ruth Bader Ginsburg said many of the features of the health reform law were unconnected to the individual mandate and that it would be wrong to force Congress to reauthorize all of them.

The choice she said was between approaching the task as a wrecking operation or as a salvage job. “The more conservative approach would be salvage rather than throwing everything out,” she said.

Justice Antonin Scalia disagreed. “My approach would say if you take the heart out of the statute, the statute is gone,” he said. “That enables Congress to do what it wants in the usual fashion. And it doesn’t inject us into the process of saying: this is good, this is bad, this is good, this is bad.”

Justice Scalia added: “It reduces our options the most and increases Congress’s the most.”

Paul Clement, representing the 26 states challenging the law, urged the justices to invalidate the entire reform law and allow Congress to start over with “a clean slate.”

Deputy Solicitor General Edwin Kneedler countered during his argument that there were a full range of measures in the law that deserved to remain active and enforceable.

“This is a huge act with many provisions that are completely unrelated to market reforms,” he said.

He cited the provision that allows parents to maintain their adult children on their own medical insurance plans until age 26. He said 2.5 million more Americans have health insurance because of that one provision, which is not tied to the individual mandate.

The individual mandate requires every American to purchase a government-approved level of health insurance or pay a penalty.

The provision was enacted in part to increase the size of the national risk pool to help pay for expensive reforms that Congress wanted in the law. Among them is the guaranteed issue provision, a requirement that insurance companies may not reject a potential customer based on a prior medical condition or history. Another, the community rating provision, bars insurance companies from charging higher premium rates based on existing medical conditions.

Without the larger risk pool assembled under the individual mandate, some analysts believe the central provisions of the health-care law might collapse in a “death spiral” from a confluence of too many expensive benefits promised by Congress and too few premiums from relatively healthy individuals to pay for those benefits.

Others estimate that the guaranteed issue and community rating provisions would cause health insurance premiums to increase 10 to 25 percent without support from the individual mandate. 

Mr. Clement and the Obama administration are both arguing that if the individual mandate is declared unconstitutional the court should also invalidate the community rating and guaranteed issue provisions.

To facilitate a broader debate, the Supreme Court appointed Washington lawyer H. Bartow Farr to argue the position that the individual mandate – if struck down – is severable from all the remaining provisions of the health care law. In other words, the rest of the law would remain in full force in its entirety. That would include the expensive guaranteed issue and community rating provisions.

Whenever a court strikes down part of a law, there is a general presumption that the rest of the law will remain unchanged. But the test is whether Congress would have wanted the remaining provisions of the law to stand.

In arguments on Wednesday, Chief Justice John Roberts said that in the case of the health reform law, the test of severability poses an impossible task for the court.

He said there is no way to know how many of the provisions are central to the law and how many were tacked onto the massive health-care bill at the last minute as compensation for the support of a lawmaker.

Justices Sonia Sotomayor and Elena Kagan both suggested that half a loaf would be better than none.

Some justices expressed concern over the potential financial fallout should expensive provisions in the law remain in full force without the revenue producing individual mandate.

Justice Samuel Alito cited a friend-of-the-court brief that suggested insurance reforms in the law would impose 10-year costs of $700 billion to the insurance industry.

The costs were to be partly offset by an expected $350 billion in new revenues from new insurance premiums under the independent mandate. If the mandate was struck down and the $350 billion lost, what would happen to the insurance industry, Justice Alito asked.

Deputy Solicitor General Kneedler said the justices should confine their analysis to the text of the statute, or risk becoming a kind of shadow budget committee. He then mentioned that the Medicaid expansion in the reform law could provide some reimbursement to insurance companies.

That’s when Chief Justice Roberts dropped a bombshell of a question: “Does the government have a position on what should happen if the Medicaid expansion is struck down?”

The comment came shortly before the court met for an hour of argument Wednesday afternoon on whether the government’s expansion of Medicaid violated the sovereignty of the states by forcing them to carry out the Obama administration’s health-care reform policy at the state level.

Kneedler replied that if the Medicaid expansion was struck down, the rest of the health reform law could operate.

After that exchange, Justice Kennedy returned to Alito’s question about the potential financial risk to the insurance industry.

“Is it within the proper exercise of his court’s function to impose that kind of risk,” Kennedy asked. “Can we say that the Congress would have intended that there be that kind of risk?”

Kennedy continued: “If we lack the competence to even assess whether there is a risk, then isn’t this an awesome exercise of judicial power?”

Kneedler said no. “The court’s function is to look at the text and structure of the act and what the substantive provisions of the act themselves mean,” he said.

At one point, Justice Scalia took issue with conducting a page-by-page review of the massive law – suggesting such a process would amount to cruel and unusual punishment.

“What happened to the Eighth Amendment,” he asked Kneedler. “Do you really want us to go through these 2,700 pages?”

The comment drew laughter in the courtroom.