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Healthcare Reform: Litigation and Political Update

James D’AlessioVice President, Government Affairs

Litigation Update

Certiorari Granted – November 13, 2011Oral Argument – March 26 – 28, 2012

Litigation Update

“Is there any chance at all that 26 states opposing it have Republican governors and all of the states supporting it have Democratic governors?”

– Justice Antonin Scalia, 3/28/12

Washington, Colorado, Michigan, and Pennsylvania had Democratic Governors when they joined the suit (Michigan and Pennsylvania elected Republican Governors in 2010).

Litigation Update

United State Supreme Court Justices

Seniority

Presidential Appointment

Litigation Update

Four Key Issues before the Supreme Court

• Is the suit barred by the provisions of the Anti-Injunction Act?

•“Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.” [i.e., the individual mandate]

• “Whether the ACA must be invalidated in its entirety because it is non-severable from the individual mandate that exceeds Congress’ limited and enumerated powers under the Constitution.”

•“Does Congress exceed its enumerated powers and violate basic principles of federalism when it coerces States into accepting onerous conditions that it could not impose directly, by threatening to withhold all federal funding under the single largest-grant-in-aid program?”

Litigation Update

Four Questions Lead to Many Potential Outcomes

• Application of the Anti-Injunction Act?

• Application would delay a ruling on the mandate and severability questions.

• Would it really remove the politics?

• Requires a ruling that the mandate penalty is a tax.

• Both parties have argued that it is not a tax.

• Headline?: “Supremes Rule ACA a Massive Tax Increase”

Litigation Update

United States Supreme Court Justices

Does Anti-Injunction Act Apply?

Yes No

Litigation Update

Four Questions Lead to Many Potential Outcomes

• Can Congress impose the individual mandate?

• If upheld, limited impact in the policy arena; tremendous potential impact in the political arena.

• 63% oppose – Kaiser Family Foundation, Dec. 1, 2011.• 67% Court should overturn – ABC/WP, March 19, 2012.

“[A] favorable ruling offers Republicans a pointed campaign message for November: Remove Obama, repeal the law.”

– Bloomberg BusinessWeek, 3/20/12

“Frankly we already know how motivating opposition to the law is. Look at what happened in 2010.”

– Ken Cuccinelli. Virginia Attorney General

Litigation Update

“But your theory is that there is a market in which everyone participates because everybody might need a certain range of health care services, and yet you're requiring people who are not -- never going to need pediatric or maternity services to participate in that market?”

– Chief Justice John Roberts, 3/27/12

Litigation Update

United States Supreme Court Justices

Can Congress Impose the Individual Mandate?

Yes No???

Litigation Update

Four Questions Lead to Many Potential Outcomes

• Is the remainder of the Act severable from the individual mandate?

• Ninety minutes of oral argument suggests the Justices are more interested in this question than might have been anticipated.

• It may not be an all or nothing question.

• Without severability clause, the court is tasked with determining Congressional intent.

• The Department of Justice has been very vocal about the tie between the insurance reforms and the individual mandate, yet 11th Circuit held these, too, could be severed.

Litigation Update

“When you say judicial restraint, you are echoing the earlier premise that it increases the judicial power if the judiciary strikes down other provisions of the Act. I suggest to you it might be quite the opposite. We would be exercising the judicial power if one Act was -- one provision was stricken and the others remained to impose a risk on insurance companies that Congress had never intended. By reason of this Court, we would have a new regime that Congress did not provide for, did not consider. That, it seems to me can be argued at least to be a more extreme exercise of judicial power than to strike -than striking the whole.”

– Justice Anthony Kennedy, 3/28/12

Litigation Update

“I just don’t’ understand your position.”

– Justice Anthony Kennedy, 3/28/12

Litigation Update

United States Supreme Court Justices

Severable?

Yes NoPartially

Litigation Update

Four Questions Lead to Many Potential Outcomes

• Can Congress force the States to expand Medicaid eligibility?

• Widely expected that this will be upheld. The only issue upheld by all the lower courts.

• Projected impact for SC – $3.2 billion impact for CY 2014-2023, assuming 73% of the eligible population enrolls. (100% match until 2017). - Milliman

• “Actual participation in the Medicaid program after the expansion may exceed the participation rates noted in these other programs, since there will be an individual mandate for health insurance coverage under federal health care reform legislation.”

Litigation Update

“In other words, the Federal government is here saying, we are giving you a boatload of money. There are no -- there's no matching funds requirement, there are no extraneous conditions attached to it, it's just a boat load of Federal money for you to take and spend on poor people's healthcare. It doesn't sound coercive to me, I have to tell you.”

– Justice Elena Kagan, 3/28/12

Litigation Update

“And it seems to me that they have compromised their status as sovereigns because they are so dependent on what the Federal Government has done, they should not be surprised that the Federal Government, having attached the – they tied the strings, they shouldn’t be surprised if the Federal Government isn’t going to start pulling them.”

– Chief Justice John Roberts, 3/28/12

Litigation Update

United States Supreme Court Justices

Medicaid Expansion?

Yes No???

Congressional Action

2012 Electoral Landscape

• US Senate – Battle for Control• Currently 53 Dem, 47 GOP: GOP needs +4

• 23 Dem / 10 GOP seats up in 2012.• Senate Retirements – 7 Dems, 3 GOP

• Nelson (D-Nebraska)• Conrad (D-North Dakota)• Kohl (D-Wisconsin)• Webb (D-Virginia)• Bingaman (D-New Mexico)• Akaka (D-Hawaii)• Lieberman (I-Connecticut)• Snowe (R-Maine)• Kyle (R-Arizona)• Hutchison (R-Texas)

Congressional Action

2012 Electoral Landscape

• Cook Political Report – March 1, 2012• 1 Democratic seat is Likely R (Nebraska).• 7 Democratic seats are Toss Ups (MO,MT, NM,ND,VA,WI,HI).• 3 Democratic seats are Lean D (FL,MI,OH).• 7 of the 10 Republican seats are listed as either Solid or Likely

R. (NV, MA, ME are Toss Up).

• Predictions? Way too early, but let’s have some fun.• D’s pick up Maine, forcing +5.• R’s pick up NE,ND,MO,WI.• Control comes down to close races in FL,VA,MT,MA,NV.

Questions?