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The Supreme Court on health reform: day three

Unlike each of the last two days, today's argument covered two distinct issues. The morning was devoted to severability: if the Court finds that some of the Act is unconstitutional, what should it do with the rest of it? The Court devoted the afternoon to the Act's Medicaid expansion, asking whether it was an unconstitutionally coercive use of Congress's undoubted spending power. Both discussions were messy, but interesting.

Severability is like washing dishes. It's boring, it doesn't get a lot of attention, but from time to time it has to be done. And while there might be agreement on good ways to wash dishes, there is very little agreement on how to "do" severability. As today's argument showed, there isn't even much agreement on what would count as a "good" result, whereas dishes, at least, can usually be classed as clean or dirty.

There are two big problems with this area of law: One is that it has inherent difficulties. In many of the cases, the Court takes the view that its goal is to do what Congress would want done if Congress knew that some provisions of an Act were unconstitutional. Should the Court "save" the part that it doesn't directly find unconstitutional or would Congress, in light of that new Court-made hole in the statute, prefer that none of the statute remain in effect? The problem, of course, is that there is absolutely no way to know what "Congress" would really want.

The second problem is that the Court's reports contain cases going all different ways on severability issues and only rarely with any useful statements about the reasons for their decisions. Precedent just isn't much help here - there are too many precedents and they are all over the map.

And, as if the Court didn't have enough problems with the issue, its difficulties were compounded by some dumb arguments, from parties and judges.

Paul Clement started this argument because his clients were appealing the lower court's decision that most of the statute should be preserved. He argued that the whole thing should be thrown out - lock, stock, and barrel (a musketry-based phrase that I should perhaps have saved for a Second Amendment case). Everything was connected to everything else and it all had to fall. It was pointed out that this Act was a "Christmas tree," loaded with barely relevant sections that, among other things, continued funding for some Native American health programs, changed something about Black Lung benefits, thoroughly revised how biological drugs are to be regulated once off patent (the Biosimilars Act), and so on - things whose only connection to health reform was that it had been a handy bill to attach them to. To which Clement said, basically, "Well, maybe."

On the other hand, Justice Scalia argued that who could tell why a provision was in the Act - that, for example, what he called the Cornhusker Kickback (a provision favoring Nebraska that was put into the Act to get a Nebraska) would never have gone into the bill except for the individual mandate. The problems with this are, first, as far as I could tell no court has ever taken that position before, and, second, it either invites the Court to figure out the reasons for every legislator's vote on every provision or tells the Court that no provisions can ever be severable (including things like the Biosimilars bill, but we know the Court has regularly found things severable.

On the third hand, Edwin Kneedler, arguing for the Solicitor General's office, did not redeem the Office's reputation. He kept insisting that most of the sections of the Act were not before the Court and therefore the Court could not, constitutionally, decide whether or not they were still good. That, he said, would have to wait for a party to sue over each section. This shared the disadvantage of being an (almost) unprecedented argument - he claimed one obscure case for it, but there are many where it is never considered - but then went one better by being largely incomprehensible, at least as Kneedler tried to explain. I have not read the Government's brief on this point - maybe that helps - but from the Justices evidence confusion, I suspect not. It also didn't help that Kneedler kept returning to this argument, in spite of "firm" requests from various justices that he move on.

And, last but not least, because both the government and the opponents agreed that, if the mandate were unconstitutional, at least some other parts of the Act would have to fall, the Court had appointed a lawyer with the perhaps unfortunate name of H. Bartow Farr, III, as amicus to argue for extreme severability. As several justices pointed out, it really is hard to see how guaranteed issue and community rating can happen without an individual mandate - a fact that Congress itself "found" in the introduction to the Act.

If the individual mandate is held unconstitutional, I think most of the Court will hold that the parts of the Act most closely connected to it - either logically or as a result of being placed in the same parts of the Act, Titles I and II - will also be struck down, but the others will not. Whether the Court can correctly guess what Congress would do is made less important by the fact that, in the aftermath of a decision striking down parts of the Act, Congress itself can pass another statute to strike down or reinstate whatever it then thinks should be law. A few justices, notably Justice Scalia, whose transcribed remarks gave off the impression of a shark smelling blood, will dissent, saying it all should be killed, but I think that will be a minority position.

If the Court holds the Medicaid provision unconstitutional, it is unclear what the severability issues will look like - in 91 minutes, and 84 pages, of argument, that got all of one question and under 100 words of discussion. And so, without the benefit of the lunch break the Court took, to Medicaid we now turn.

Medicaid expansion
The Act requires the states to expand the Medicaid program, a joint federal-state program to provide health care for the poor. Basically, the federal government agrees to pay 90 percent of the new costs if the states kick in 10 percent. The states' arguments turn on a provision that has been in the Medicaid statute since its initial passage in 1965 that says that if a state does not choose to expand to cover a new federally approved benefit, the Secretary of Health and Human Services has the power to take all federal Medicaid money away from the state. This, the states claim, mean that the federal government is forcing them, unconstitutionally, the expand the program.

Paul Clement again argued first, because his side had lost this argument below. In fact, I don't believe any court in any of the cases agreed with this position by the states. This so-called "cooperative federalism" is a long-standing and well-accepted practice. The federal government gives the states money but attaches strings to the condition. The Supreme Court has expressly approved it before, most recently in the early 1980s when it allowed Congress to tell states that they had to raise their drinking ages to 21 or forfeit some federal highway aid.

Clement's argument depended on a statement in that case that if the deprivation of the federal money would amount to coercion, then the action might be an unconstitutional infringement of state's rights. Clement was pushed hard by the four liberal justices on just why this case was different from all other conditioned spending grants. He had three (alleged) reasons. First, it was a lot of money. Second, it was in connection with an unconstitutional and clearly coercive individual mandate (the relevance of which to this point he made no attempt to point out, probably wisely), and, besides, here Congress had created an entirely new class of beneficiaries so it was coercive to tie the benefits to the previous beneficiaries to the state's acceptance of benefits for the new ones.

I may not be doing justice to the argument, but it did not make much sense. It isn't that the coercive power of federal money is unclear - it is very clear. It is why this use of federal spending power is more coercive, or more unconstitutional, than other uses, including, but certainly not limited to, the existing Medicaid statute.

There was much discussion of this idea of the Secretary pulling all funds from state that refused to take the new money to cover large chunks of its population. No one could point to any case where the Secretary of HHS had done so, in Medicaid or elsewhere, or, in fact, where any cabinet secretary had done something similar. The closest anyone could come was a letter from an HHS secretary threatening to pull Alaska's Medicaid money if it did not join the Children's Health Insurance Program, a threat was never carried out. Ah ha, said the opponents - that it was never carried out proves that it was coercive. This was taken to the extreme where it was argued that if all the states signed up for the new benefit that would prove, not that it was a good benefit, but that they were coerced.

Justice Breyer, a former law professor and expert on administrative law, had an interesting administrative law tangent. The Secretary might have the power under the Medicaid statute to strip a state of money, but that action would itself be subject to the Administrative Procedures Act and would have to be reasonable. It will be interesting to see if that argument surfaces in the opinions.

Solicitor General Verrilli made the Government's argument, but, not surprisingly, everyone seemed to have run out of questions and energy before time was up. At one point Chief Justice Roberts said, "You have another fifteen minutes." General Verrilli replied "Lucky me," which may have been his best line of the week. The argument trickled on for a few more pages before Paul Clement got a few saved minutes for rebuttal. Those minutes passed with merciful speed.

By this time in the week, it seemed energy levels, and perhaps attention spans, were falling. It was a bit harder to read the Justices' positions on this argument. Rather like the individual mandate question, Justices seemed to be looking for a stopping point - a line that would prevent the federal government from bribing a state into doing absolutely anything - just as earlier it was looking for a line that would prevent the dreaded broccoli apocalypse, where the federal government could force people to buy broccoli. Clement did his best to give them some; unfortunately for him, none of the distinctions he suggested really made sense and could only in very arbitrary ways distinguish this Medicaid expansion from many other federal actions, including past Medicaid expansions. As Chief Justice Roberts noted at one point, the States had crossed the line of dependence on the federal government a long time ago.

I think this government will win this issue, although I wouldn't bet the house on it. One interesting possibility is that the Court might give the states a "little win" here, say by holding that they might be able to challenge the Medicaid expansion as applied but not in the abstract, "on its face," or holding that the Secretary would be limited in how she could pull all Medicaid funding from the states. Particularly if the Court ends up ruling in favor of the constitutionality of the individual mandate, some gesture toward the opponents might be attractive. But I'd be quite surprised if they flatly struck down this Medicaid expansion as unconstitutional. (They could, however, if they found the individual mandate unconstitutional, strike down the Medicaid expansion as part of their severability analysis of the rest of the statute.)

That's all for tonight. I'll finish tomorrow with one last post, summing up my impressions of Health Reform Week at the Supreme Court.

Hank Greely, JD, is a Stanford law professor and an expert on the legal, ethical, and social issues surrounding health law and the biosciences. He is director of the Center for Law and the Biosciences, and he chairs the steering committee of the Stanford Center for Biomedical Ethics.

Previously: The Supreme Court on health reform: day two and The Supreme Court on health reform: day one

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