Constitutionality of the ACA Overview and Predictions

1. Constitutionality of the ACA Overview and Predictions Michael R. ShpieceKitchDrutchas Wagner Valitutti & Sherbrook  One Woodward Ave, Ste 2400Detroit, MI 48226Direct Line: (313) 965-7994Fax: (313) 965-7403michael.shpiece@kitch.com Horace W. GreenGreen & HumbertThe Mills Building220 Montgomery Street, Suite 1418San Francisco, CA 94104(415) 837-5433(415) 837-0127 (Fax)horaceg@lifehealthlaw.com

2. TOPICS TO COVER • What does PPACA do • Relevant Constitutional provisions • Constitutional challenges • How will Supreme Court rule • Recusal issue • Other challenges

3. BACKGROUND • The Patient Protection and Affordable Care Act, P 111-48 • The Health Care and Education Reconciliation Act of 2010, PL 111-152.

4. What Does ACA Do? • 1. Increase the number of people with health care coverage. • - Adult Children covered to age 27 • - Prohibit rescissions. • - Coverage for high-risk individuals with pre- existing conditions. • 2. Decrease costs for individuals and employers. -Various tax credits and other programs -Reinsurance and grants for early retiree coverage

5. What Does ACA Do (cont.)? • 3. Increase the “comprehensiveness” of coverage. -Reduce “donut hole” in Medicare Part D -Eliminate annual and lifetime maximums -Cover Preventative Care • 4. Improve Quality/Effectiveness of health care. -Research and Pilot Projects -ACOs, Medical homes • 5. Establish Health Exchanges and other means to improve accessibility.

6. What Does PPACA Do (cont.)? • 6. Increase rate regulation and Insurance Market reforms. • 7. Improve Program Integrity/Enforcement/ Accuracy of payments. • 8. Increase availability, education, and training of Health Care Workers. • 9. Improve availability of Drugs and Innovative Therapies. • 10. Other Provisions: Nursing Mothers/“Economic Substance” Doctrine/ Funding for Elder Justice Programs/Simple Cafeteria plans/Health FSA limits/Wellness programs 2d Amendment

7. Relevant Constitutional Provisions

8. COMMERCE CLAUSEArt. I, Sec. 8, Clause 3. The Congress shall have the Power: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

9. NECESSARY AND PROPER CLAUSE, Art. I, Sec. 8, Clause 18 Congress shall have the Power: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

10. Tax and Spending ClauseArt. I, Sec .8, Clause 1 • The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States

11. The 10th Amendment The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

12. Constitutional Challenges

13. Preliminary Issues 1. Standing 2. The Anti-Injunction Act

14. Do the Plaintiffs Have Standing to Challenge the ACA • (1) Injury in fact, (2) fairly traceable to the statute, (3) redressed by favorable judgment • State of Florida (11th Cir) – individuals can challenge mandate, States can challenge Medicaid • Thomas More Law Center v. Obama – mandate’s requirements “imminent” & affected current spending habits

15. No Standing to Challenge the ACA • Virginia v. Sebelius (4th Cir.) – State lacks standing to challenge individual mandate • N.J. Physicians, Inc. v. President of the United States (3d Cir.) – no allegation of present impact or whether claimant would be exempt in 2014 • Baldwin v. Sebelius (9th Cir.) – no allegation that claimant currently lacked insurance or had to save now to buy insurance in 2014

16. The Tax Anti-Injunction Act • 26 U.S.C. Sec. 7421(a) • “no suit for the purposes of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such a person is the person against whom such tax is assessed."

17. Does the Anti-Injunction Act bar challenges to the ACA? • Yes - Liberty University v. Geithner(4th Circuit) – employer & ind. mandates held “taxes” = any exaction enforced by the Internal Revenue code; “penalty” label not dispositive • No - Thomas More v. Obama (Judge Sutton, concurrence); State of Florida v. DHHS; Susan Seven Sky, et al., v. Holder; - Act refers to “penalty”: mandate’s goal is not to raise revenue

18. Individual Mandate • All “applicable individuals” • Excludes religious opponents, health care sharing ministry members, illegal immigrants, prisoners, low income individuals, and members of Native American tribes • Must maintain “minimum essential coverage” • Government sponsored programs (such as Medicare, Medicaid, and/or veteran’s health care programs); employer-sponsored plans; individual plans; grandfathered health plans; or state benefit risk pools. • If no “minimum essential coverage”, penalty = $95 per person ($285 per family) in 2014, $350 ($1,050) in 2015, and $750 ($2,250) in 2016 and thereafter (subject to cost of living increases).

19. COMMERCE CLAUSE ISSUES 1. Heart of Atlanta Motel, Raich, and Wickard v. Morrison and Lopez 2. Activity v. Non-Activity 3. Federalism /10th Amendment

20. RELATED ISSUES Necessary and Proper Clause Taxing and Spending Clauses (Medicaid expansion)

21. Is the Individual Mandate Constitutional? - Yes • Thomas More Law Center v. Obama (6th Circuit) • Susan Seven Sky, et al., v. Eric H. Holder, Jr. et al. (D.C. Circuit Court)

22. Is the Individual Mandate Constitutional? - No • State of Florida v. Dept. of Health and Human Services (11th Circuit) • (This is the case in which the Supremes granted cert)

23. Severability • Test: would Congress have enacted the rest of the law without the unconstitutional section? If severable, does the whole law fall or only those sections closely related to the unconstitutional provision? • Presumption in favor of severability • Effect of severability or non-severability clause • Is ind. mandate an essential feature?

24. Is the Individual Mandate Severable from the Affordable Care Act? • Yes – State of Florida v. Dept. of Health and Human Services (Circuit court) • No – Florida v. DHHS (Dist. Court);U.S. Senate amicus brief;

25. Medicaid Expansion • States required to cover adults under 65 incomes below 133% of poverty level & their children • Maintain existing eligibility until Exchanges are operational • Children under 26 now Medicaid eligible • Increase Medicaid payments to primary physicians to 100% of Medicare rates for 2013-14 • Govt pays add’l cost 2014-16

26. Does the Act's Expansion of Medicaid Violate the Spending Clause? • Issue – violates 10th amendment by using spending power to coerce states to comply with federal objective • No – Florida v. DHHS – Congress reserved right to amend statute; Fed. Govt. bearing most of cost; states can decide to opt out

27. How will the Supreme Court Rule?

28. Justice Alito - NO • 1986 memo (as A.G.) - “it is the States, and not the federal government, that are charged with protecting the health, safety and welfare of their citizens.” • U.S. v. Rybar dissent (cited Lopez) - concern re “meaningful limits on congressional power” BUT also emphasized importance of Congressional findings

29. Justice Breyer - YES • Has never found a law unconstitutional on Commerce Clause grounds • Voted with majority in Raich, dissents in Morrison and Lopez • Lopez dissent – “courts must give Congress leeway in determining connection between regulated activity and interstate commerce” • Morrision dissent – “rational basis”

30. Justice Ginsburg - YES • Has never found a law unconstitutional on Commerce Clause grounds • Voted with majority in Raich, dissents in Morrison and Lopez • Has also dissented from other Tenth and Eleventh Amendment decisions vindicating the interests of state sovereignty.

31. Justice Kagan - YES • Appointed by Administration that is largely responsible for the form and content of the Act • Confirmation hearing – Sen. Coburn’s “eat your vegetables” question – “whether it is a dumb law is different from . . .whether it’s constitutional. . .the courts would be wrong to strike down laws that they think are senseless, just because they’re senseless”

32. Justice Kennedy - YES • Voted with majorities in Lopez, Morrison, and Raich • Judicial duty to enforce limits on govt. v. federal power to regulate a national economy • Lopez concurrence – “the Federal Govt. undertakes activities today with would have been unimaginable to the Framers . . .”

33. Chief Justice Roberts - YES • Confirmation hearings - Raich as showing Congress "has the authority to determine when issues affecting interstate commerce merit legislative response at the federal level." • U.S. v. Comstock – “If . . . the means adopted are really calculated to attain the end . . . the relationship between the means adopted and the end to be attained, are matters for congressional determination alone.”

34. Justice Sotomayor - YES • Appointed by Administration that is largely responsible for the form and content of the Act • Joined majority in U.S. v. Comstock

35. Justice Scalia - NO • Voted with majority in Lopez and Morrison • Raichconcurrence mentions “activity” 42 times • Jointed Thomas’ dissent in U.S. v. Alderman - "Today the Court tacitly accepts the nullification of our recent Commerce Clause jurisprudence."

36. Justice Thomas - NO • Voted with majority in Lopez and Morrison • Raich dissent – “substantial effect” test is “rootless and malleable” • Lopez concurrence – “wrong turn” in 1930’s from “a century and a half of precedent” • U.S. v. Alderman – “nullification of our recent Commerce Clause jurisprudence”

37. Other Issues • Recusal (Kagan, Thomas) • Physician Hospitals of America, et al., v. Sebelius (challenge to Medicare payment cuts to physician owned hospitals) • Wollschlaeger v. Farmer (possible 1st Amendment challenge to firearms data in wellness programs)

38. Recusal • Justice Kagan - Solicitor General when the Administration briefed/defended ACA • Justice Thomas – wife is paid lobbyist/consultant opposing the law

39. Standards • 28 U.S.C. § 455 - a) Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. • (b) He shall also disqualify himself in the following circumstances: • (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy;

40. Standards (cont.) • (b) He shall also disqualify himself in the following circumstances: • (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person: • (iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; • (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse . . .

41. Standards (cont.) • Justices decide for themselves whether recusal warranted • No higher court to review a Justice’s decision not to recuse • Canon 14 of the original 1924 Canons of Judicial Ethics: 'should not be swayed by partisan demands, public clamor or considerations of personal popularity or notoriety, nor be apprehensive of unjust criticism’.

42. Thank You!