Thursday, March 29, 2012

Day Three of Obamacare Arguments at the Supreme Court

Day Three of the arguments presented in the Supreme Court over Obamacare involved two separate questions:

1. Whether the individual mandate to purchase health insurance is severable from the remainder of the law.

2. Whether the Medicaid expansion provisions amount to coercion of state funding by the federal government.

The Texas Public Policy Foundation released the following summary:


KEY POINTS FROM THE ARGUMENT: While some justices seemed inclined to uphold the remainder of the law, others appeared open to striking the whole law down or to selectively invalidating parts of the law while leaving other provisions untouched. Justice Scalia: “My approach would say if you take the heart out of the statute, the statute's gone. That enables Congress to – to do what it wants in – 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 Ginsburg: “[I]t's a choice between a wrecking operation, which is what you are requesting, or a salvage job. And the more conservative approach would be salvage rather than throwing out everything.”

OUR ANALYSIS: Both parties advocate that, at a minimum, the guaranteed issue and community rating provisions should be struck down if the mandate is found unconstitutional. Because of this, it is unlikely that guaranteed issue and community rating will survive if the mandate is found unconstitutional. This will lessen the immediate likelihood of an adverse selection spiral. The remaining provisions still have the potential to drive up the costs of health care and health insurance. If the Court strikes down Titles I and II, the remaining provisions will have a much less significant impact. This is feasible considering the intent of Congress to achieve universal coverage. The individual mandate is vitally interwoven with Titles I and II of the law in the effort to provide universal coverage. As such, the Court should move to overturn at least Titles I and II in full along with the mandate.


KEY POINTS FROM THE ARGUMENT: The law’s challengers received their toughest questions on the Medicaid provision. One quote from Justice Roberts provided a good summary of the states’ current predicament: “[I]sn't [this] a consequence of how willing [states] have been since the New Deal to take the Federal government's money? And it seems to me that they have compromised their status as independent sovereigns because they are so dependent on what the Federal government has done, they should not be surprised that the Federal government having attached the – they tied the strings, they shouldn't be surprised if the Federal government isn't going to start pulling them.”

OUR ANALYSIS: More than 75 years ago, in United States v. Butler, the U.S. Supreme Court warned that unless the power of the federal government to condition federal grants is checked, it could “become the instrument for total subversion of the governmental powers reserved to the individual states.” This warning has proven all too prescient. As Justice Kennedy noted at today’s argument, conditional federal grants also break down the accountability that is necessary to our democratic system. For democracy to function properly, legislators must be responsive to local preferences and the federal government must be accountable for its own policies. Conditional grants may seem helpful, but in fact they subvert state government powers, defeat legislators’ ability to represent those who elected them, and blur accountability. If the Supreme Court does not fashion real restraints on the ability of the federal government to impose conditional grants on the states, action to restore state sovereignty will have to come from states themselves learning to resist the temptation that federal funds pose.

For real-time analysis of the Florida v. HHS argument, please visit

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