Bloomberg News

Health-Care Ruling Cloaked in Secrecy Spurs Guessing Game

June 18, 2012

Health-Care Ruling Cloaked in Secrecy Spurs Guessing Game

Protesters in front of the Supreme Court on the final day of arguments regarding the health care law signed by President Barack Obama. Photographer: Charles Dharapak/AP Photo

In the next two weeks, John Roberts will sit in his high-backed, black leather chair in the U.S. Supreme Court’s marble courtroom and tell a hushed crowd that the justices are about to rule on health care.

It will be the most dramatic moment in Roberts’s seven years as chief justice and one of the biggest for Barack Obama as president. The country will learn the fate of the law that has largely defined Obama’s presidency, a measure approved on a party-line vote in Congress with a promise to provide health insurance to almost every American while overhauling an industry that makes up about 18 percent of the economy.

“It’s the biggest case since Bush v. Gore,” said Kannon Shanmugam, a Washington lawyer at Williams & Connolly LLP who has argued 11 Supreme Court cases. “It’s the perfect storm of a substantial constitutional issue and an issue of enormous practical importance that affects millions of Americans. And the decision happens to be coming down right in the middle of a presidential campaign.”

The court is scheduled to issue the final nine rulings in its nine-month term by the end of next week, including decisions on Arizona’s immigration law and on the Federal Communications Commission’s crackdown on indecent programming. The justices will release opinions on June 21 and June 25 and will probably add days to their calendar next week.

While the health-care case could come on any of those days, the court often issues its most divisive decisions at the very end of its term. The justices issued four rulings today.

Menu of Options

No matter what the health-care decision says, it will alter the course of the presidential campaign. The presumptive Republican nominee, Mitt Romney, has called for the measure to be repealed and replaced with a plan relying more heavily on private markets.

Twenty-six states and a small-business trade group are contesting the law, focusing on the requirement that Americans either get insurance by 2014 or pay a penalty. The challengers say that mandate exceeds Congress’ constitutional power over interstate commerce by forcing people to buy a product.

It’s an argument that some justices such as Antonin Scalia have suggested they back.

There are four basic ways the court could rule:

It can uphold the entire measure. This would be the most straightforward approach and would give Obama an election-year triumph while focusing attention on Romney’s call for repeal.

Fifth Vote

Such a ruling would require at least one of the court’s five Republican appointees to side with the president. Three days of arguments in March suggested that Roberts and Justice Anthony Kennedy were the most likely candidates among the five to back the Patient Protection and Affordable Care Act.

The court would be keeping intact the law’s expansion of the Medicaid program for the poor to millions of additional people; the system of online insurance markets that will make it easier for millions more to buy policies; and payment cuts to providers under the Medicare program for the elderly.

The justices also would be leaving in force provisions -- already in effect -- that close a gap in Medicare prescription- drug coverage, allow 2.5 million young adults to stay on their parents’ insurance until age 26 and provide free mammograms, colonoscopies and flu shots.

A ruling upholding the law would let insurers, hospitals, drug companies and device makers continue preparing for the measure, which will take full effect in 2014.

“This does eliminate one level of uncertainty,” said Paul Heldman, a health-policy analyst at Potomac Research Group in Washington. “That said, the election outcome creates probably an equal level of uncertainty, or maybe something close to it.”

Partial Rejection

The court could invalidate part of the law. Such a ruling, which would start with the insurance requirement, would be a blow to Obama, undercutting his signature domestic achievement as he tries to convince voters he should be returned to office.

Should the court strike the insurance requirement, both the Obama administration and challengers say the justices must also toss out one of the law’s most popular provisions: its requirement that insurers offer policies to people with pre- existing conditions and charge them the same rates as other policyholders.

The administration says rejecting the mandate while keeping the pre-existing condition rule would create a “death spiral,” in which only patients with costly health issues would obtain insurance. That would lead to higher premiums, which would prompt healthy policyholders to drop coverage, causing more rate increases, the government says.

‘Worst’ Outcome

Heldman said that invalidating only the mandate while leaving the pre-existing condition rule intact would be “the worst of all worlds” for insurance companies such as UnitedHealth Group Inc. (UNH:US)

In addition to challenging the mandate, the states say the Medicaid expansion improperly coerces them into spending more of their own funds. Medicaid ties federal dollars to a state’s participation in the program under rules laid down in Washington. In a potential wrinkle to the case, the high court could throw out that expansion either in addition to, or instead of, the insurance mandate.

The court could throw out the entire statute. The justices could base their judgment on the grounds that Congress wouldn’t have enacted the measure without one of its core provisions.

New Deal

Such a ruling would mark the boldest rejection of a federal law since the 1930s, when the Supreme Court overturned part of the National Industrial Recovery Act during President Franklin Roosevelt’s New Deal.

It might also prove complicated. Cuts in Medicare- reimbursement rates have already formed the basis of millions of payments to providers, according to the administration. Other parts of the law have been amended, and their legal status might be unclear in the aftermath of the ruling.

Finally, the court could put off the ruling. The justices could deliver a surprise and say they can’t resolve the matter until the first penalties are assessed in 2015. They devoted the first day of the March arguments to that question, suggesting from the bench that they were inclined to rule now.

A 5-4 ruling striking down all or part of the law would almost certainly divide the court along party-based lines, with the Republican-appointed justices in the majority and the Democratic appointees in dissent. That sort of a split would leave the court open to criticism that its ruling was driven by politics, rather than legal reasoning.

Political Slant

“If five justices appointed by Republicans overturn the signature legislative accomplishment of this Democratic president, the public is likely to see it as judicial activism,” said Adam Winkler, a constitutional law professor at the University of California at Los Angeles School of Law.

Three-quarters of Americans say the Supreme Court will be influenced by politics when it rules on the health-care law, according to a Bloomberg National Poll conducted in March. A New York Times poll conducted May 31-June 3 found that 76 percent of those surveyed believed the justices sometimes let their personal or political views influence their decisions.

That’s one reason why the stakes may be as high for Roberts as for Obama.

“It’ll be the decision that his court is most associated with up till now,” said Irv Gornstein, executive director of the Supreme Court Institute at Georgetown University Law Center in Washington.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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