Health reform law: Will it survive judicial scrutiny?

(from PBS, December 13, 2010)


GWEN IFILL: A federal judge in Virginia ruled today that a critical provision of the health reform law is not constitutional, setting off fresh debate and questions about whether the law will survive.

Health correspondent Betty Ann Bowser begins our coverage with this report.

BETTY ANN BOWSER: Almost as soon as the president signed the Patient Protection and Affordable Care act into law, legal challenges began to mount.

Many of the cases focus on the individual mandate, the part of the bill that requires most Americans to carry health insurance or pay a fine starting in 2014.

Today in Virginia, U.S. District Judge Henry Hudson, a Republican appointed by President George W. Bush, ruled the federal government could not force citizens to purchase insurance under the Commerce Clause of the U.S. Constitution.

In the 42-page opinion, he wrote, “Neither the Supreme Court nor any federal circuit court of appeals has extended commerce clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

But the judge declined to rule the entire law unconstitutional.

MAN: Mr. Attorney General?

BETTY ANN BOWSER: Hours later Attorney General Ken Cuccinelli, who filed the lawsuit, said today’s ruling was a critical milestone in the protection of the Constitution.

KENNETH CUCCINELLI (R-Va.), attorney general: Ordering Americans to buy health insurance, as the bill does, is beyond the Congress’ power under the commerce clause. It underscores that the Constitution’s limitations on federal power really do mean something.

The rule of law means something. Even the president and Congress must act within the boundaries set by the Constitution. The goals here were noble in this bill, but even noble goals may only be pursued within the powers of the Constitution.

BETTY ANN BOWSER: At the White House, Press Secretary Robert Gibbs said he believes the health care act is constitutional. He also said it was necessary to enforce the entire law in order to maintain elements of the bill Republicans like.

WHITE HOUSE PRESS SECRETARY ROBERT GIBBS: Our belief is that the health care act is — will go forward and that it is — that it is constitutional, that it improves people’s lives. And, particularly, this is the basis, as I have said, the provision that allows us to finally address the lingering discrimination against those who have a preexisting condition.

BETTY ANN BOWSER: So far, two federal challenges to the law have been struck down in separate lawsuits in Virginia and Michigan.

Twenty-five other legal challenges to the new law have been filed in federal courts, including a lawsuit brought by Florida. Nineteen other states have joined that case, which will be heard later this week in Pensacola. That suit also charges the individual mandate is unconstitutional, but goes further to say the new law places an unfair financial burden on already cash-strapped states by adding 16 million people to Medicaid.

Gibbs said he believes, ultimately, the courts will rule in the government’s favor in the Virginia case.

ROBERT GIBBS: The Department of Justice obviously is going to have to make some decisions about appealing this particular case. My sense is that that appeal decision is something they will likely make.

BETTY ANN BOWSER: The overall merits of the law are expected to end up before the U.S. Supreme Court.

GWEN IFILL: Now, for reaction to this ruling and insight into the broader battle still playing out over the health care law, we turn to Neera Tanden, former senior adviser to Health and Human Services Secretary Kathleen Sebelius. She’s now the chief operating officer for the Center for American Progress, a liberal advocacy group. And David Rivkin, lead counsel in another health care challenge, this one filed in Florida, as Betty Ann just reported. Attorneys general from 20 states have signed on to that lawsuit.

David Rivkin, how substantially does the judge’s decision today weaken the underlying health care law?

DAVID RIVKIN, former associate White House counsel: It’s a major blow.

It’s a well-reasoned decision that went to great degree in analyzing what lies at the heart, the problem at the heart of this statute. You can regulate commerce. Congress can regulate commerce. Congress cannot compel commerce. There’s no precedent for it.

If you go down in that direction, you produce the federal government exercising general police power. That’s reserved for the states. The goals, as General Cuccinelli said, are noble that underlie the statute. The government has done it in the wrong way. They have done it in a fundamentally unconstitutional way.

GWEN IFILL: Neera Tanden, your response to the same question. How much does it weaken the law?

NEERA TANDEN, senior vice president for academic affairs, Center for American Progress: Well, I think it weakens a fundamental protection of the law, which is preexisting conditions regulations, but it doesn’t actually overturn the overall law, which is what the Virginia attorney general requested.

It strikes at a particular provision, the individual mandate. But there’s a lot of other provisions that provide protections. So it’s a — it strikes at an important part. It’s not an unimportant part. But it does not undermine the whole law. But we believe this will be overturned. And we agree with the White House that this ultimately be resolved as constitutional.

GWEN IFILL: As Betty Ann reported, Ms. Tanden, we have seen two other challenges so far. And they have upheld the law. This one, at least this key critical provision, was not upheld. What’s the difference?

NEERA TANDEN: Well, the judge found differently. He took the same set of facts and disagreed with the finding that it’s constitutional.

Obviously, he found that this kind of activity, where people are choosing not to have health insurance in a system where — we live in a system where everyone gets health care at one point or another. And it’s just a decision when to get health care. They get coverage. They’re in — everyone who goes to the hospital is covered in our system.

And so it’s a question of purchasing health insurance. Other judges saw this same set of facts and said it would not be — it was not unconstitutional. He looked at the same set of facts and found them constitutional.

We’re seeing a partisan split amongst judges on this decision.

GWEN IFILL: Is this a partisan split? And whether it is or not, how does this affect what you do with the upcoming case in Florida?

DAVID RIVKIN: It provides some good reinforcement for our case. And we’re very optimistic about that.

Let’s get something off the table, very unfortunate to talk about it in a partisan sense. Frankly, when I go before a judge or judges, I even don’t check which president appointed them, because they’re not functioning in that mode anymore.

It’s interesting. Ms. Tanden used the word activity. And that’s the key problem. This statute does not regulate activity. This statute regulates or purports to regulate inactivity.

GWEN IFILL: Explain in non-legalese what that means to people who don’t follow that.

DAVID RIVKIN: Well, the individuals — if you look at all the commerce clause jurisprudence, the federal government regulates you, Gwen, because of what you do, because of things you manufacture, because of things you buy, because of you traveling in the course of business.

It reaches activities. And the entire jurisprudence dealing with the commerce clause reaches activities. Here, we’re being told that your decision not to enter the stream of commerce has economic impacts.

And you know what? Even if it’s true, the problem with that logic, that everything you do, if you go to sleep tonight, your decision to go to sleep means you’re not working. That has an impact on the labor market. There’s no limiting principle. The Department of Justice has labored mightily both in our case and the Virginia case to come up with some limiting principle to tell the court, if you find for us here, if you sustain this mandate, you wouldn’t have to do it again and again.

And they have failed. And that is why I believe this case is going to come out in our favor at the end of the day.

GWEN IFILL: Neera Tanden, you can respond.

NEERA TANDEN: This notion of inactivity or activity is a doctrine that is made up by constitutional conservatives.

The issue here really is that we have a health care system. For example, 30 economists, two Nobel Prize-winning economists, filed an amicus brief exactly on this point of economic activity. We have a system in our country where, if you get sick, you go to the hospital, they have to cover you.

So, what does that mean? That means that there’s $40 billion in cost in the health care system for people who don’t have health insurance, but get care because of sickness. And that — costs don’t just magically disappear. They’re shifted on to other people.

So every decision by a sick person to get — to go to the emergency room, I and you are paying for in your premiums. It’s that health care is a different kind of market. It’s different from buying widgets. We’re all interconnected. And that’s the issue with Affordable Care Act. It’s interconnected.

NEERA TANDEN: So, if we want — I’m sorry.

GWEN IFILL: That’s all right.

I just wanted to move on to another point before we find ourselves out of time, because another key part of this argument, Mr. Rivkin, turned on the question about whether the penalties for non — or any — the costs of noncompliance actually constitute a penalty or a tax. What difference does that make?

DAVID RIVKIN: Well, because if this was a valid tax, the government could support the mandate using its tax authority. But this is not a tax.

GWEN IFILL: Which is what they argue.

DAVID RIVKIN: Which is what — why they argued — the paradox here, of course, is the people who enacted this bill, including the president, argued vociferously that it’s not a tax, and that, even if it were a tax, it wasn’t a valid way of using it.

But let me just mention one very important point. Under Ms. Tanden’s logic, the same problems would occur again. For example, people roughly — unfortunately, Americans default on over $80 billion worth of credit card bills every year. And that money gets passed on to those who do pay their credit card bills.

Under her logic, the government can impose a mandate on everybody who has credit cards to carry insurance that pays for that. Look at the mortgage disaster, over a trillion dollars worth of mortgages. Why shouldn’t the federal government require people to purchase special insurance that guards against default?

There’s no limiting principle. Every activity, under her logic, every human behavior would provide that kind of result.

GWEN IFILL: Let’s allow her to defend her logic.

NEERA TANDEN: The difference there is, there is a federal law. It’s called EMTALA. It requires everyone who gets sick, needs emergency care, to be able to go to the emergency room.

There are no sick provisions. There’s no such law in other areas. Conservatives don’t want to take on the essential rule that the sickest amongst us get coverage when they’re sick, when they’re sick, when they have an emergency room. They don’t want to take on that law, but they want to take on this one.

And that law underpins this Affordable Care Act and why it’s important that it is maintained, so that we can actually keep things like preexisting conditions, so people who have cancer, who have other illnesses can actually get the protection of this law.

These pieces are interrelated. They’re critically important. And they’re interconnected. And just on the tax issue, I would say this is an area where the judge clearly overreached. This is part of the IRS code. He chose to determine that it is not a tax. He just made that determination on his own. Other judges have looked at this differently. And I think that’s another grounds for appeal.

GWEN IFILL: She said everything was interconnected here, which brings us to the question of severability.

The judge very specifically only ruled on this one part and stayed away from knocking down the whole law or saying that anything that happened here would affect any other part of the law.

Was he correct in that?

DAVID RIVKIN: I believe the decision doesn’t go as far as it should. In our case, we are making this argument very forcefully. In fact, we’re challenging, as you said, not only the individual mandate, but the Medicaid expansion and unconstitutional burden it imposes on the states.

We feel the entire statute is not constitutional, because, indeed, it’s all integrated. But I want to add one fundamental point. Everything that the government is seeking here, universal coverage, better access, could be done.

The problem of this bill is not the goals. The government chose to do it in an unconstitutional way, quite frankly, I think for reasons of political expediency. We can have a better approach to covering the uninsured, broadening and decreasing participation, and providing better costs in the insurance market. But it cannot be done about — violating the Constitution. And that’s what this bill does.

GWEN IFILL: Mr. Rivkin, you got the first word. Neera Tanden, you get the last word.

NEERA TANDEN: The irony here is that, if the federal government issued a public plan for every American, as it does with Medicare, it wouldn’t be held unconstitutional.

If this was a more centrist decision, if the president chose to use an individual mandate, which conservatives have supported like Mitt Romney and Stuart Butler, it is well within the purview of the president and the Congress and the federal government to do that, because it is simply ensuring that people who free-ride in the system, who don’t get health care coverage, but get sick, that they have — take the responsibility for their own health care.

GWEN IFILL: Neera Tanden, David Rivkin, thank you both very much.

DAVID RIVKIN: Good to be with you.



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