Category Archives: healthcare

The Federalism Fallacy in King v. Burwell

By DAVID RIVKIN and ELIZABETH PRICE FOLEY, March 11, 2015

Last Wednesday, the Supreme Court heard oral arguments in King v. Burwell, the latest challenge to the Affordable Care Act (ACA). The case centers on a provision of Obamacare that authorizes federal tax subsidies for individuals only if they purchase health insurance through an “Exchange established by the State.” If an individual purchases insurance through a federal-run exchange (in the event that the state opts out of setting up its own exchange), can she still qualify for Obamacare subsidies? The Obama administration says yes; the King plaintiffs say no.

A great deal is at stake here. If the plaintiffs win, individuals in 34 states—the states that have opted not to operate a state insurance exchange—will still be subject to Obamacare’s individual mandate, but they won’t qualify for federal tax subsidies. As a result, their insurance will cost more out-of-pocket. Moreover, because individuals in these 34 states won’t get tax subsidies, employers in these states won’t be subject to the employer mandate, so they won’t have to offer health insurance and can’t be taxed for failing to do so. And yet, those states would be able to continue registering their profound opposition to the entirety of the Obamacare regulatory scheme, thereby undermining its legitimacy. Given these consequences, supporters of Obamacare are pulling out all the stops to prevent a plaintiffs’ victory.

One recent attempt to save tax subsidies in these 34 states has come from an amicus brief filed on behalf of four law professors, two of whom are former clerks to Justice Ruth Bader Ginsburg. During the King oral arguments, it became apparent that their argument had found favor with Ginsburg and three other liberal justices and had gained some traction with the court’s centrist, Justice Anthony Kennedy.

Ironically, the centerpiece of their argument is federalism—the division of powers between state and federal governments—a concept that, while a key part of the Constitution’s separation of powers architecture, is not particularly favored by liberals. Specifically, the law professors’ claim that the court should rule in favor of the Obama administration by invoking the “clear statement rule,” a legal doctrine designed to protect state sovereignty.

However, applying this rule to the King case would be unprecedented and deeply antithetical to federalism.Read more…

The clear statement rule is a doctrine that helps courts interpret laws in a way that prevents Congress from treading on the states unnecessarily. As the Supreme Court reiterated in Bond v. United States (2014), the clear statement rule counsels courts that they must be “certain of Congress’ intent before finding that a federal law overrides the usual constitutional balance of federal and state powers.”

For example, when interpreting federal statutes that touch upon state sovereignty or areas of traditional state police power, such as criminal law, the court has insisted on a clear statement by Congress of its intent to do so.

Particularly notable is this: In every single instance where the Supreme Court has invoked the clear statement rule, it has been to prevent Congress from using its enumerated powers in a manner that harms the states as states. The clear statement rule is utterly inapplicable, however, when Congress uses its power directly on citizens. And in the Affordable Care Act, when Congress exercises its taxing power to grant (or revoke) tax subsidies to individuals, that power operates directly on individuals, not on states.

This is an extremely important distinction. Indeed, the ability to legislate directly upon individuals, rather than through state intermediaries, was the primary motivation for writing the Constitution to replace the Articles of Confederation. As Alexander Hamilton observed in Federalist No. 15, the “great and radical vice” of the Articles of Confederation was that its legislative power operated only upon “STATES or GOVERNMENTS, in their CORPORATE or COLLECTIVE CAPACITIES, and as contradistinguished from the INDIVIDUALS of which they consist.” He further explained, in Federalist No. 16, that the federal government “must carry its agency to the persons of the citizens” and “must be able to address itself immediately to the hopes and fears of individuals.”

The clear statement argument being advanced in King embraces this notion of “state-as-intermediary” between the federal government and individual citizens. More specifically, the argument is this: If citizens lose tax subsidies, this harms the states as states because without clear notice of the consequences of declining to run a state exchange, states cannot make a meaningful choice to protect their citizens. Specifically, in the law professors’ amicus brief, they assert, “In order to function as sovereigns and protect the interests of their people, including in the legislative process itself, the States are entitled to know the legal consequences of their decisions to participate in a federal-state program.”

But denying tax subsidies to some citizens and making health insurance more expensive in the 34 states without state-run exchanges doesn’t hurt the states qua states. It admittedly hurts some citizens within those states, but hurting individuals within a state cannot be equated, under any existing clear statement or other federalism case law, with hurting states as sovereign entities. Indeed, this view of equating harm to state citizens with the harm to the states was decisively rejected by the Supreme Court in Massachusetts v. Mellon (1923). In that case, the justices ruled that, when the federal government exercises its taxing and spending power—as it has with the Obamacare tax subsidies—states are not representatives of their citizens in a parens patriae manner, as it is “no part of [a State’s] duty or power to enforce [its citizens’] rights in respect of their relations with the federal government.”

Incidentally, the last time the law professors’ argument was seriously advanced was during the pre-Civil War era, when Confederate states asserted that various federal government actions, such as those devaluing a slave-owner’s property interest in his slaves, harmed state sovereignty by harming the state’s citizens. Indeed, the Nullification Crisis of 1832, the brainchild of Sen. John Calhoun of South Carolina, was based on the argument that states didn’t have to obey a federal tariff law because it harmed Southern farmers. This political philosophy—that states are harmed when their citizens are harmed in some way by the federal government—was the heart of the Confederate states’ defense of slavery. We fought a Civil War to put this notion to rest.

The ultimate irony of the clear statement argument in King is that the much-discredited notion that states have a duty to interpose themselves between the federal government and their citizens is a philosophy that’s hardly consonant with the court’s liberal justices. It is thus more than a little odd that these law professors have opportunistically embraced this outdated vision of state sovereignty merely because it could provide a means to accomplish the desired goal of saving Obamacare’s tax subsidies.

But there’s more: Even assuming, however, that one is willing to embrace openly this theory of states-as-intermediaries, the clear statement rule still wouldn’t apply under the facts in King. The amicus brief by the four law professors contends, “states were led to make choices about participation in this federal program with virtually no notice of the consequences of those choices.” And, if states did have notice of the consequences for failing to operate a state exchange, Kennedy suggested during the oral argument that the choice may have been unconstitutionally coercive, “It does seem to me that if [the plaintiffs’] argument is correct, this is just not a rational choice for the States to make and that they’re being coerced.”

The salient questions are therefore whether the states had notice of the consequences of their choice to operate a state exchange and, if so, was this a “real” choice or a coercive one?

States were given perfectly clear notice by the plain language of the statute itself—which makes it clear that tax subsidies are available only to individuals who purchase insurance on an “exchange established by the State”—and which the states were perfectly capable of comprehending; to suggest otherwise, is an affront to the intelligence of state officials and lawyers. But the notice is also evidenced by the fact that in January 2012, seven states asked the Obama administration for a legal opinion or court declaration confirming whether the administration’s announced interpretation of the law—which extended subsidies to individuals purchasing insurance on federal-run exchanges—was correct. This indicates that states were both aware of, and concerned about, the dubious legality of the administration’s position extending subsidies to individuals in states without state-operated exchanges.

Moreover, a well-publicized lawsuit filed by Oklahoma challenged the Obama administration’s interpretation asserting that tax subsidies couldn’t be granted in Oklahoma precisely because Oklahoma had decided not to operate a state exchange. If nothing else, this lawsuit should reasonably have alerted other states to the possibility that citizens in states without state exchanges might not receive tax subsidies. And even so, multiple states decided not to operate a state exchange.

Assuming states were, in fact, aware that declining to operate a state exchange would result in lost tax subsidies for their citizens, this doesn’t mean that their choice to do so was a “coercive” one, forced on them by the federal government, and necessitating invocation of the clear statement rule. Even if Congress had been crystal clear about this consequence, there would be no state coercion triggering federalism concerns. Indeed, if it were otherwise, virtually any exercise of Congress’s taxing and spending power that depends on a state’s decision to opt in (or out) of federal largesse would be considered coercive if opting out would harm the state’s citizens. The entire Medicaid program would thus be unconstitutionally coercive, as would welfare programs such as Temporary Assistance for Needy Families (TANF), as these programs require an initial choice by states to either participate, or not participate. If states decline to participate, the poorest citizens in these states are undoubtedly harmed, in the sense that they will not be eligible for Medicaid or welfare benefits, as are citizens in other states. But no one has ever suggested, until now, that such harms to citizens renders states’ initial choice—to participate or not—coercive. This argument, if accepted, would render this country’s biggest social safety net programs unconstitutional.

Indeed, if the choice given to states under the ACA—to operate a state exchange or not—is coercive, presumably the correct remedy is for the court to strike down the Act’s individual tax subsidy, as it’s the seed from whence the unconstitutionally coercive choice sprouted. The Supreme Court could perhaps mitigate the perceived state coercion by rewriting the law to grant subsidies when purchasing insurance on any kind of exchange. This is what many believe the court did, in an effort to save the ACA’s mandatory Medicaid expansion in NFIB from constitutional infirmity. But engaging in such contortions seems unlikely, as the court is undoubtedly sensitive to the need to preserve its institutional legitimacy as a neutral interpreter of the law and avoid the perception that it is acting (again) as a council of revision.

Moreover, it should be noted that the court has never employed the clear statement rule in a situation involving a new regulatory bargain being offered to states by Congress. In the case of a new law such as Obamacare, the choice being presented to the states wasn’t altering states’ long-established expectations, as it was in NFIB v. Sebelius. In that case, the court concluded that Obamacare’s mandatory Medicaid expansion, in fundamentally revising Medicaid’s nature, was a coercive “gun to the head” of states, who had chosen years ago to operate Medicaid programs but under very different terms.

Beyond this fundamental understanding of when the concept of coercion can be properly applied, it’s important to realize that states had a meaningful choice, with pros and cons of both sides, regarding whether to operate a state exchange. If a state decided to operate a state exchange, it would cost it millions of dollars, but its residents would qualify for subsidies when they bought health insurance on the exchange. By contrast, if a state opted not to operate a state exchange, its residents would lose tax subsidies, but the state itself would save millions of dollars. And perhaps most importantly, the employers in that state would avoid the employer mandate and be able to create more jobs with the money saved.

Avoiding the ACA’s employer mandate would obviously be an economic boon for employers, and a victory for employers’ liberty. This is salient because the court has made it clear, most recently in a unanimous decision in Bond v. United States (2011), that “by denying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from arbitrary power.” If, in King, the court concludes that states can’t opt out of the employer mandate, the liberty-enhancing function of federalism will be thwarted. If employers are subject to the employer mandate regardless of whether their state operates a state exchange, this is a net reduction of liberty for employers, with no net increase in liberty for individuals, who are subject to the individual mandate regardless of where they live. Since the purpose of federalism is to preserve individual liberty, this strongly suggests that the plaintiffs’ interpretation, not the Obama administration’s, furthers federalism.

The bottom line is that declining to operate a state exchange has both good and bad consequences—and each state is free to weigh those consequences as it thinks best. In this regard, as Oklahoma Attorney General Scott Pruitt argued in a recent Wall Street Journal op-ed, “The states are not children that the federal government must paternalistically ‘protect’ from the consequences of their choices by rewriting statutes. In our constitutional system, states are free to make decisions and bear the political consequences, good or bad, of those choices.” He further explained that declining to operate an exchange “allowed Oklahoma to voice its strong political opposition to the Affordable Care Act as a whole,” as well as proclaim that it didn’t want the “employer mandate … to have effect within its borders.” While Oklahoma’s citizens lost tax subsidies, the state believed the benefits of declining to operate an exchange outweighed this cost. And its choice, while difficult, “was a choice the state was happy to make.”

States thus had good reason to decline operating a state exchange. The fact that declining to operate a state exchange would have negative consequences for some of those states’ citizens isn’t the same as a negative consequence for the state qua state. Even if it is—which would be a novel interpretation of the clear statement rule indeed—there is no reason to believe that the states made the choice to opt out with anything less than eyes wide open.

Invoking the clear statement rule in King would thus turn the Court’s federalism case law on its head, converting it from a principle that requires giving states a choice to one that forbids giving them a choice if they might make a “wrong” choice that hurts some of their citizens. The not-so-subtle insinuation is that states are incapable of making difficult choices and should be paternalistically protected from doing so. This would transform federalism and the clear statement rule from a shield designed to protect state sovereignty into a weapon that can be used to disregard state choices and impose a one-size-fits-all, top-down federal solution. This interpretation, in short, is a perversion of the clear statement rule and the federalism principle that animates it. It cannot be countenanced by anybody who is truly committed to federalism.

David Rivkin served in the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. He practices appellate litigation with particular focus on constitutional law at Baker Hostetler LLP and represented the 26 states that challenged the constitutionality of Obamacare. Elizabeth Price Foley is professor of constitutional law at Florida International University College of Law. She is the author, most recently, of The Tea Party: Three Principles.

Source: http://www.politico.com/magazine/story/2015/03/king-v-burwell-supreme-court-obamacare-subsidies-case-federalism-argument-115997.html

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When bad Obama policies collide

By Elizabeth Price Foley and David B. Rivkin Jr. — Tuesday, March 10, 2015

Since its partisan passage in 2010, Obamacare has traversed a rocky road. President Obama has taken numerous executive actions to delay and modify the poorly written law in an effort to ease the political consequences of full implementation and make it work. However, in the president’s zeal to rewrite yet another area of law — immigration — he’s sabotaged one of Obamacare’s primary goals: expanding employer-sponsored health insurance.

The president’s executive actions on immigration — the major one of which is currently on hold due to a court order — confers two specific benefits upon approximately 6 million individuals who have entered this country illegally or overstayed their visas. First, they are completely exempted from deportation. Second, they are granted work permits. These unilaterally conferred benefits are powerful evidence that the president isn’t just exercising executive “discretion” by prioritizing enforcement of existing immigration law — he is rewriting it.

This massive influx of now-lawful workers will predictably reduce job opportunities for U.S. citizens and lawful residents. But beyond this obvious negative impact, granting work permits to these individuals will have a subtler, equally pernicious effect: It will encourage employers to hire these 6 million individuals over U.S. citizens and legal residents. This is due to Obamacare’s structure.

Under Obamacare, employers must pay a tax — called the “employer responsibility” tax — if they either fail to offer insurance altogether, or they offer “substandard” insurance. The employer responsibility tax is hefty, ranging between $2,000 to $3,000 per year, and is payable for every full-time employee who buys health insurance on an exchange and receives a tax subsidy as a result. The idea is to incentivize employers to offer generous insurance coverage, thus keeping workers off the exchanges, and away from tax subsidies. If no full-time worker receives a tax subsidy for buying health insurance, the employer will pay no employer responsibility tax.

Under this scheme, the “ideal” worker — in terms of minimizing exposure to the employer responsibility tax — is a worker who is incapable of obtaining a tax subsidy for buying health insurance. Who are these workers? One large category is the 6 million immigration action beneficiaries. As Homeland Security Secretary Jeh Johnson confirmed at a recent hearing of the House Homeland Security Committee, beneficiaries of the president’s immigration actions “will not be eligible for comprehensive health care, ACA.” That is, they won’t receive government subsidies to purchase health insurance.

Because the 6 million immigration beneficiaries aren’t eligible for Obamacare tax subsidies, hiring them reduces employers’ chances of triggering the employer responsibility tax. Employers have a powerful financial incentive to hire them in place of U.S. citizens and permanent residents. The president’s unilateral grant of work permits, combined with the fact that these workers cannot trigger the employer responsibility tax, makes those workers significantly more attractive.

To make matters worse, recent reports indicate that millions of U.S. citizens and lawful residents — who are eligible to receive Obamacare tax subsidies — have opted to defy the individual mandate and forego buying expensive health insurance. Under the statute, that’s supposed to trigger a tax, too, but the president has effectively gutted this provision by unilaterally creating 19 categories of exemptions, including a blanket one for “general hardship.”

Because individuals who don’t buy health insurance won’t be claiming any Obamacare tax subsidies, they — like the 6 million immigration action beneficiaries — cannot trigger the employer responsibility tax. Both of these categories of workers are more attractive to hire, because they will not, by definition, have subsidized health insurance under Obamacare. The inevitable result is that more workers will lack employer-provided health insurance coverage.

The president isn’t a one-person lawmaker. He doesn’t have the power in our constitutional regime to fix laws he thinks are broken. When a president does so, he not only intrudes on Congress’ power, but also creates unpredictable repercussions for other laws. It’s no small irony that, by unilaterally attempting to fix our immigration law, Mr. Obama has undermined his own signature legislative achievement.

Elizabeth Price Foley is a constitutional law professor at Florida International University College of Law. David B. Rivkin Jr. is a partner at the firm Baker Hostetler LLP, and served in the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations.

Source: http://www.washingtontimes.com/news/2015/mar/10/elizabeth-price-foley-david-rivkin-jr-obamas-amnes/

Your DNA and your First Amendment

David Rivkin Jr. and Andrew Grossman 

 The FDA is blocking 23andMe’s genome service. But the real target is free speech.

Did you know that you cannot be trusted with knowledge of your own genetic background? That’s what the Food and Drug Administration decreed late last month when it ordered 23andMe to stop marketing its Personal Genome Service.

23andMe is at the cutting edge of mass-market genomics. For $99 the company tests a saliva sample to identify genetic markers that correspond to various conditions and predispositions, as well as ancestry. Based on these markers, the company produces a report describing genetic health risks and inherited traits, along with citations to the research that backs up its analysis and the current scientific “confidence” for each point.

The FDA does not claim that 23andMe is a scam or could cause direct injury. Instead, its concern is that people using the genome service may begin to self-manage their treatments. Essentially, the agency wants to “protect” patients from knowing about their own health.

Proactive prevention

The service is not marketed as a diagnostic tool but as a way for individuals to take a proactive approach to their health through prevention and management, while providing themselves and their physicians with more information to make better choices.

The agency worries that individuals, with information about their genetics, could make the wrong choices. As an example, the agency suggests a customer informed of a heightened risk for breast or ovarian cancer might undergo unnecessary prophylactic surgery or chemotherapy. But this could not happen without first consulting a doctor and undergoing diagnostic tests.

The FDA also claims that individuals shouldn’t be able to receive health information based on their genes, unless and until the underlying correlations have been subjected to rigorous clinical validation the same as an approved drug or medical device. Last week, a $5 million class action suit was filed against 23andMe by one dissatisfied customer claiming its test results are not supported by scientific evidence.

Anne Wojcicki, co-founder of 23andMe, responded that her company and the regulators are entering uncharted territory. She said the FDA is set up to approve individual tests, not the millions of tests her company does on a person’s DNA.

To be sure, the FDA does have a legitimate interest in ensuring that consumers are not misled by false claims and bad products. But that’s not at issue here.

The interpretation of genetic markers is grounded in recent discoveries and could be tentative. 23andMe, like others in the field, acknowledges this and is constantly revising its interpretation of genetic data. But that fact does not mean these services aren’t useful to consumers, particularly when combined with traditional diagnostics.

Suppressing speech

Yet the FDA maintains that 23andMe has to keep that knowledge away from its customers. Forget about the FDA’s medical device claims, its stance puts the agency in direct conflict with our free speech rights. Shuttering a service such as 23andMe is no different from censoring home medical references or any of myriad websites that link symptoms with medical conditions.

In fact, the Supreme Court has long rejected the premise that government may substitute its judgment as to how best to speak for that of speakers and listeners. While the FDA may prefer that scientific research be limited to professionals and then filtered through a physician or FDA-approved service for the rest of us, the First Amendment prevents it from suppressing speech.

What’s troubling is that the FDA knows this. Two years ago, the Supreme Court struck down on First Amendment grounds a state law that blocked pharmacists from disclosing information about doctors and their prescribing habits to pharmaceutical manufacturers, who would use it for research and marketing. As the court observed, the free flow of information has “great relevance in the fields of medicine and public health, where information can save lives.”

That connection is far more direct here. The knowledge that a person is at heightened risk for a particular disorder could prompt lifestyle changes to reduce the risk or encourage early detection and treatment.

For now, 23andMe has voluntarily taken its service off the market. The FDA, of course, does not want Americans to make bad health choices, but it does seem determined to keep them in the dark about how to make good ones.

Rather than regulate by assuming that consumers are incapable of understanding their personal genetics, the FDA should be thinking about the enormous opportunities to improve health offered by widespread, affordable genetic testing.

SOURCE: http://www.usatoday.com/story/opinion/2013/12/09/23andme-fda-suit-dna-column/3926589/

David Rivkin and Andrew Grossman practice law in the Washington, D.C., office of BakerHostetler. Rivkin served in the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations.

Why the President’s ObamaCare Maneuver May Backfire

By postponing the employer mandate, Obama has given millions of Americans the legal standing to sue.

By  DAVID B. RIVKIN JR. AND LEE A. CASEY

President Obama’s announcement on July 2 that he is suspending the Affordable Care Act’s employer health-insurance mandate may well have exposed his actions to judicial review—even though that is clearly what he sought to avoid.

The health-care reform law’s employer mandate requires businesses with more than 50 employees to provide a congressionally prescribed set of health-insurance benefits or pay a penalty calculated at about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Mr. Obama has “postponed” its application until 2015. His aim, the administration said, was to give employers more time to comply with the new rules. But it was also seen as a way to avoid paying at least part of ObamaCare’s mounting political price in the 2014 congressional elections.

Whatever the reason, the president does not have the power to stop the implementation of a law. If there is one bedrock constitutional legal principle, it is that the president must “faithfully execute” federal statutes. He cannot suspend laws he dislikes on policy grounds or because he fears their political consequences.

Mr. Obama, however, has made a habit of exercising an unlawful suspending power, refusing to enforce selected federal laws, including various provisions of the immigration laws against young, undocumented aliens; work requirements enacted as part of the 1996 federal welfare reform law; and the testing accountability provisions of the No Child Left Behind education law.

One key problem with suspension power—aside from the fact that it destroys the balance of power between the two political branches—is that, when skillfully exercised, it sidelines the judiciary. The Constitution requires that a party commencing litigation must have what is commonly called “standing,” i.e., the party must have suffered or will suffer a legal injury that a court can redress. A determined president can head off litigation by effectively rewriting federal statutes in ways that do not create individual injuries so no party has standing.

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue.

Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This inquiry usually arises when courts, having invalidated on constitutional grounds part of a statute, must determine whether or not Congress would have wanted the valid remaining parts of the law to remain in effect. The relevant constitutional doctrine is called “severability.”

As the Supreme Court noted in the leading severability case, Ayotte v. Planned Parenthood of Northern New England (2006), the ultimate fate of the revised statute is decided based on the “legislative intent.” In the case of the Affordable Care Act, if the courts were, for example, to determine that the employer insurance mandate is unconstitutional, the well-established severability analysis would lead them to conclude that the individual mandate (and likely the entire law) must also fall because Congress did not intend those provisions to operate in the absence of the employer insurance mandate. The president’s suspension of that part of the law, therefore, should also produce the same result, rendering the remainder of the statute unenforceable.

This argument should find favor with judges who are weary of the use of suspension power that improperly aggrandizes presidential authority, diminishes congressional power, and denies the judiciary an opportunity to have its say. Courts would have to conclude that the whole statute must fall while the president’s suspension is in effect. While reaching this conclusion, they might also declare the suspension itself unconstitutional. Both results would mark a significant win for the American people.

Source: http://online.wsj.com/article/SB10001424127887323368704578596360026187772.html?mod=wsj_streaming_stream

An ObamaCare Board Answerable to No One

The ‘death panel’ is a new beast, with god-like powers. Congress should repeal it or test its constitutionality.

By David B. Rivkin Jr. and Elizabeth P. Foley

Signs of ObamaCare’s failings mount daily, including soaring insurance costs, looming provider shortages and inadequate insurance exchanges. Yet the law’s most disturbing feature may be the Independent Payment Advisory Board. The IPAB, sometimes called a “death panel,” threatens both the Medicare program and the Constitution’s separation of powers. At a time when many Americans have been unsettled by abuses at the Internal Revenue Service and Justice Department, the introduction of a powerful and largely unaccountable board into health care merits special scrutiny.

For a vivid illustration of the extent to which life-and-death medical decisions have already been usurped by government bureaucrats, consider the recent refusal by Health and Human Services Secretary Kathleen Sebelius to waive the rules barring access by 10-year old Sarah Murnaghan to the adult lung-transplant list. A judge ultimately intervened and Sarah received a lifesaving transplant June 12. But the grip of the bureaucracy will clamp much harder once the Independent Payment Advisory Board gets going in the next two years.

The board, which will control more than a half-trillion dollars of federal spending annually, is directed to “develop detailed and specific proposals related to the Medicare program,” including proposals cutting Medicare spending below a statutorily prescribed level. In addition, the board is encouraged to make rules “related to” Medicare.

The ObamaCare law also stipulates that there “shall be no administrative or judicial review” of the board’s decisions. Its members will be nearly untouchable, too. They will be presidentially nominated and Senate-confirmed, but after that they can only be fired for “neglect of duty or malfeasance in office.”

Once the board acts, its decisions can be overruled only by Congress, and only through unprecedented and constitutionally dubious legislative procedures—featuring restricted debate, short deadlines for actions by congressional committees and other steps of the process, and supermajoritarian voting requirements. The law allows Congress to kill the otherwise inextirpable board only by a three-fifths supermajority, and only by a vote that takes place in 2017 between Jan. 1 and Aug. 15. If the board fails to implement cuts, all of its powers are to be exercised by HHS Secretary Sebelius or her successor.

The IPAB’s godlike powers are not accidental. Its goal, conspicuously proclaimed by the Obama administration, is to control Medicare spending in ways that are insulated from the political process.

This wholesale transfer of power is at odds with the Constitution’s separation-of-powers architecture that protects individual liberty by preventing an undue aggregation of government power in a single entity. Instead, power is diffused both vertically—with the federal government exercising limited and enumerated powers and the states exercising all remaining authority—and horizontally, with the powers of the federal government divided among the executive, legislative and judicial branches.

This diffusion of power advances another key liberty-enhancing constitutional requirement: accountability. Accountability enables the people to know what government entity is affecting them, so that they can hold officials responsible at the polls. Congress can also hold the executive responsible through oversight and measures like impeachment.

As Chief Justice John Marshall observed in Wayman v. Southard (1825), Congress may delegate tasks to other bodies, but there is a fundamental constitutional difference between letting them “fill up the details” of a statute versus deciding “important subjects,” which “must be entirely regulated by the legislature itself.” Distinguishing between the two, the court said, requires an inquiry into the extent of the power given to the administrative body.

The power given by Congress to the Independent Payment Advisory Board is breathtaking. Congress has willingly abandoned its power to make tough spending decisions (how and where to cut) to an unaccountable board that neither the legislative branch nor the president can control. The law has also entrenched the board’s decisions to an unprecedented degree.

In Mistretta v. United States (1989), the Supreme Court emphasized that, in seeking assistance to fill in details not spelled out in the law, Congress must lay down an “intelligible principle” that “confine[s] the discretion of the authorities to whom Congress has delegated power.” The “intelligible principle” test ensures accountability by demanding that Congress take responsibility for fundamental policy decisions.

The IPAB is guided by no such intelligible principle. ObamaCare mandates that the board impose deep Medicare cuts, while simultaneously forbidding it to ration care. Reducing payments to doctors, hospitals and other health-care providers may cause them to limit or stop accepting Medicare patients, or even to close shop.

These actions will limit seniors’ access to care, causing them to wait longer or forego care—the essence of rationing. ObamaCare’s commands to the board are thus inherently contradictory and, consequently, unintelligible.

Moreover, authorizing the advisory board to make rules “relating to” Medicare gives the board virtually limitless power of the kind hitherto exercised by Congress. For instance, the board could decide to make cuts beyond the statutory target. It could mandate that providers expand benefits without additional payment. It could require that insurers or gynecologists make abortion services available to all their patients as a condition of doing business with Medicare, or that drug companies set aside a certain percentage of Medicare-related revenues to fund “prescription drug affordability.” There is no limit.

If the Independent Payment Advisory Board exercises these vast powers, political accountability will vanish. When constituents angrily protest, Congress, having ceded its core legislative power to another body, will likely just throw up its hands and blame the board.

Since ObamaCare eliminates both judicial review for any of the board’s decisions and public-participation requirements for rule making, this unprecedented insulation of the board guts due process. Even the president’s limited ability to check the board’s power—since he can remove members only for neglect or malfeasance—represents a more circumscribed standard than usual for presidential appointees.

The bottom line is that the Independent Payment Advisory Board isn’t a typical executive agency. It’s a new beast that exercises both executive and legislative power but can’t be controlled by either branch. Seniors and providers hit hardest by the board’s decisions will have nowhere to turn for relief—not Congress, not the president, not the courts.

Attempts to rein in government spending are laudable, but basic decisions about how and where to cut spending properly belong to Congress. In the 225 years of constitutional history, there has been no government entity that violated the separation-of-powers principle like the Independent Payment Advisory Board does.

While the board is profoundly unconstitutional, it is designed to operate in a way that makes it difficult to find private parties with standing to challenge it for at least its first several years in operation. An immediate legal challenge by Congress might be possible, but also faces standing difficulties. Unless and until courts rule on IPAB’s constitutionality, Congress should act quickly to repeal this particular portion of ObamaCare or defund its operations.

Mr. Rivkin, a partner at Baker Hostetler LLP, served in the Justice Department under Presidents Reagan and George H.W. Bush and represented 26 states in challenging ObamaCare. Ms. Foley is a professor of constitutional law at Florida International University and the author of “The Law of Life & Death” (Harvard, 2011).

Source: http://online.wsj.com/article/SB10001424127887324634304578539823614996636.html

The opening for a fresh ObamaCare challenge

By defining the mandate as a tax, one that will not be uniformly applied, the Supreme Court ran afoul of the Constitution.

By DAVID B. RIVKIN, JR. AND LEE A. CASEY

ObamaCare is being implemented, having been upheld as constitutional by the Supreme Court in June in a series of cases now known as National Federation of Independent Business v. HHS. It is becoming increasingly clear, however, that the court took a law that was flawed but potentially workable and transformed it into one that is almost certainly unworkable. More important, the justices also may have created new and fatal constitutional problems.

ObamaCare, or the Affordable Care Act, was conceived as a complex statutory scheme designed to provide Americans with near-universal health-care coverage and to effectively federalize the nation’s health-care system. The law’s core provision was an individual health-insurance purchase mandate, adopted by Congress as a “regulation” of interstate commerce. The provision required most Americans to buy federally determined minimum health-care insurance, or to pay a penalty more or less equivalent to the cost of that coverage.

Equally important were provisions requiring creation of state-run health-care insurance exchanges (where middle-income earners could obtain the prescribed coverage) and an expanded Medicaid program (also administered by the states) to cover people with incomes up to 133% (later upped to 138%) of the federal poverty level. An income of up to $31,809 for a family of four would qualify for Medicaid. States that failed to join in the Medicaid expansion were threatened with the loss of all federal Medicaid dollars, nearly a quarter of all state expenditures.

In the ObamaCare ruling, the Supreme Court correctly held that Congress could not impose the individual mandate as a constitutional regulation of interstate commerce and that Congress could not constitutionally use its spending power to coerce the states to expand Medicaid. Rather than strike down the law, however, the court construed the insurance-purchase mandate and its penalty as a “tax” on the failure to have health insurance. The justices also interpreted the Medicaid-expansion requirements as optional—permitting states to opt out of these provisions while staying within the traditional Medicaid program. Given that interpretation, the court’s majority upheld the statute as constitutional.

The court’s determination to preserve ObamaCare through “interpretation” has exacerbated the law’s original flaws to the point that it has become palpably unworkable. By transforming the penalties for failing to comply with the law’s requirements into a “tax,” the court has given the public a green light to ignore ObamaCare’s requirements when it is economically beneficial. Law-abiding individuals, who might otherwise have complied with the law’s expensive purchase mandate to avoid being subjected to financial penalties, can simply now choose to pay a tax and not sign up for coverage. There is certainly no stigma attached to simply paying a tax, and noncompliance with the law’s other requirements—such as those imposed on employers—is arguably made more attractive on the same basis. This effect fundamentally undercuts Congress’s original purpose, which was to expand health-care coverage to the greatest number of people, not to improve federal revenues.

Similarly, having reviewed the likely costs and benefits, states are now taking advantage of the court-granted flexibility. Seven states, including Texas, Mississippi and Georgia, have so far opted out of the Medicaid-expansion provisions, and eight (with more certain to come) are refusing to create the insurance exchanges, leaving this to a federal bureaucracy unequipped to handle these new administrative burdens. As a result, a growing number of low-income Americans will be unable to obtain the free or cost-effective insurance that Congress originally meant them to have, although they remain subject to the mandate-tax.

Policy problems aside, by transforming the mandate into a tax to avoid one set of constitutional problems (Congress having exceeded its constitutionally enumerated powers), the court has created another problem. If the mandate is an indirect tax, as the Supreme Court held, then the Constitution’s “Uniformity Clause” (Article I, Section 8, Clause 1) requires the tax to “be uniform throughout the United States.” The Framers adopted this provision so that a group of dominant states could not shift the federal tax burden to the others. It was yet another constitutional device that was simultaneously designed to protect federalism and safeguard individual liberty.

The Supreme Court has rarely considered the Uniformity Clause’s reach, but it cannot be ignored. The court also refused to impose meaningful limits on Congress’s power to regulate interstate commerce for decades after the 1930s, until justices began to re-establish the constitutional balance in the 1990s with decisions leading up to the ObamaCare ruling this summer. And although the court has upheld as “uniform” taxes that affect states differently in practice, precedent makes clear that a permissible tax must “operate with the same force and effect in every place where the subject of it is found,” as held in the Head Money Cases (1884). The ObamaCare tax arguably does not meet this standard.

ObamaCare provides that low-income taxpayers, who are nevertheless above the federal poverty line, can discharge their mandate-tax obligation by enrolling in the new, expanded Medicaid program, which serves as the functional equivalent of a tax credit. But that program will not now exist in every state because, as a matter of federal law, states can opt out. The actual tax burden will not be geographically uniform as the court’s precedents require.

Thus, having transformed the individual mandate into a tax, the court may face renewed challenges to ObamaCare on uniformity grounds. The justices will then confront a tough choice. Having earlier reinterpreted the mandate as a tax, they would be hard-pressed to approve the geographic disparity created when states opt out of the Medicaid expansion. But that possibility is inherent in a scheme that imposes a nominally uniform tax liability accompanied by the practical equivalent of a fully off-setting tax credit available only to those living in certain states. To uphold such a taxing scheme would eliminate any meaningful uniformity requirement—a result that the Constitution does not permit.

ObamaCare was always a poorly conceived and constitutionally deficient statute. The Supreme Court’s ruling upholding the law has simply made it worse. In the future, that decision is likely to be seen as a prime reason that the federal courts should judge and never legislate—even in the cause of rescuing an otherwise unconstitutional law from oblivion.

Messrs. Rivkin and Casey are lawyers in the Washington, D.C., office of Baker & Hostetler LLP. They pioneered the constitutional arguments against the individual mandate and represented 26 states in challenging ObamaCare before the trial and appellate courts.

A version of this article appeared December 6, 2012, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: The Opening for a Fresh ObamaCare Challenge.

Source: http://online.wsj.com/article/SB10001424127887324705104578151164101375482.html?mod=djemEditorialPage_h

The Supreme Court ruling on federal government’s police powers: The good, the bad, and the Fig Leaf

The Supreme Court ObamaCare ruling is the topic at a Federalist Society forum on October 4 at Florida International University College of Law. David Rivkin, who led the 26-state case against the US government, and Prof. Elizabeth Foley will present.

FOR IMMEDIATE RELEASE


PRLog (Press Release)
 – Oct 01, 2012 –

The issue of government takeover of healthcare isn’t going away. While Chief Justice John Roberts’ opinion on the legality of ObamaCare put limits on Congress’ power to regulate citizens’ activity, it gutted limitations on Congress’ taxing power.

David Rivkin, who led the 26-state case against the U.S. government in Florida’s 11th District Court (whose judge, Roger Vinson, ruled in the plaintiffs’ favor), said that the Supreme Court decision in June was both “excellent and bad.” The Supreme Court ObamaCare ruling is the discussion topic on Thursday, October 4, at Florida International University College of Law.Prof. Elizabeth Foley, a “founding faculty” of the FIU College of Law, will serve as commentator for the event.

Over the past decades, Congress has enacted legislation that increasingly broadened its regulatory powers, assuming that any regulation is justified by the Constitution’s Commerce Clause. The Supreme Court decision established limits on Congress’ power to do so. For those interpreting the Constitution as limiting and enumerating the powers of government, this aspect of the ruling was good news.

Unfortunately, according to Rivkin, the Supreme Court’s decision to uphold ObamaCare required that they effectively rewrite the law and broaden Congress’ tax authority. They converted the individual mandate into a tax for not purchasing insurance. Rivkin asserted that this expansion of the taxing power enables Congress to tax inactivity—crossing a constitutional barrier into police powers.

Rivkin has observed that the Supreme Court adheres to the principles of federalism, i.e., the dual sovereignty of the federal government and the states, only when ruling on laws that are not important—a position commonly known as “fig leaf federalism.”

For more information about David Rivkin, visit http://www.fed-soc.org/events/detail/the-health-care-mand…

Source: http://www.prlog.org/11988497-the-supreme-court-ruling-on-federal-governments-police-powers-the-good-the-bad-and-the-fig-leaf.html