Cato Institute Ilya Shapiro addresses RJC about ‘ObamaCare at Supreme Court’

April 16, 2012

The Obamacare oral argument may be over, but the Supreme Court isn’t expected to issue its opinion until June.  Until that time legal experts wil be venturing their own guesses about whether the Supreme Court will ax President Obama’s signature legislative achievement.
 
I was fortunate to be able to attend the Republican Jewish Coalition Chapter meeting headed by president, Dr. Michael Menis, on Wednesday, April 11, at which time “Obama Care at the Supreme Court” was discussed by Ilya Shapiro of the Cato Institute.  http://www.cato.org/people/ilya-shapiro  
 
Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.  Before joining Cato, Mr. Shapiro was a special assistant/adviser to the Multi-National Force in Iraq on rule of law issues and practiced international, political, commercial, and antitrust litigation at Patton Boggs and Clerary Gottieb.  http://www.cato.org/people/ilya-sapiro  
 
Given that Ilya Shapiro was heavily involved in the litigation regarding the Affordable Care Act or Obamacare, having filed brief on each of the four issues argued before the Supreme Court (Shapiro was also in the Court room during the duration of the oral arguments from March 26 – 28.), his RJC presentation offered a rare first-hand look into what he observed and perceived. 
 
Before introducing Ilya Shapiro, a waiver was presented by RJC president, Michael Menis, indicating that the speakers’ views did not necessarily represent those of the RJC. 
 
Ilya Shapiro’s remarks centered on the four issues on which oral arguments were heard by the Supreme Court Justices as they deliberate the constitutionality of Obamacare: 
 
1.  Anti-injunction issue.
 
2.  Individual mandate through expansion of the Commerce Clause.
 
3.  Severability.
 
4.  Medicaid expansion.
 
In recognition that Obamacare was of utmost importance to the Supreme Court, the Court allowed an historic six hours of oral argument over three days.  Only twice before has the Supreme Court allotted this amount of time and attention to a case:  1) Brown v. Board of Education and 2) Roe v. Wade.  
 
Anti-injunction issue
 
Before reaching the issue of the individual mandate, the Supreme Court had to grapple with a rather obscure law first enacted in 1867 that bars lawsuits that seek to prohibit a tax before that tax is assessed or collected.
 
All but one of the lower courts found the AIA law to be applicable to the Obamacare statue.
 
The debate centered on the difference between taxes and penalties (assessed if individuals fail to purchase health insurance). 
 
Justice Samuel Alito provoked a rather humorous moment in a rather formal hearing when Alito inquired of Solicitor General Verrilli whether today Verrilli would be arguing that the penalty was not a tax, while tomorrow Verrilli would be back to argue that the penalty was a tax. 
 
According to IIlya Shapiro, it quickly became clear that the justices would set aside any doubts they had to get to the heart of the Supreme Court case, the mandate. 
 
The individual mandate through expansion of the Commerce Clause:
 
Obamacare or the Affordable Care Act progressed to the Supreme Court when 26 states (two more in separate lawsuits) argued that the constitutional power to regulate interstate commerce through the Commerce Clause does not give the federal government the power to force people to buy stuff as in the individual insurance mandate whether they want to or not.  It was noted that the Supreme Court in the past has determined that the government does have the power to regulate local economic activity that has a substantial effect of interstate commerce. 
 
These two examples were cited:
 
The court allowed Congress in the 1940s to punish a farmer for growing wheat on his own land for his own use, on the theory that wheat prices would be affected if everyone behaved accordingly.
 
In 2005 the Court ruled that Congress could prohibit someone from growing marijuana in her yard for her personal medical use because federal laws against drugs are a kind of economic regulation.
 
In making its argument, the Obama administration argued a more expansive interpretation of the Commerce Clause in order to validate its Obamacare mandate. 
 
According to Ilya Shapiro: Solicitor General Donald Verrilli was unable to convey the government’s position of how to square the mandate with constitutional principles of limited federal government– even though Verrilli must have known this was the primary question he would face — because there just wasn’t a good explanation available for Verrilli to use as a principled reason to justify how the Commerce Clause could be expanded to mandate the purchase of insurance.
 
As explained by Ilya Shapiro:
 
1. We have a constitutional design that denies the federal government the sort of police power that states enjoy.  Should everyone be required to eat broccoli because a poor diet and lack of exercise very often leads to more healthcare spending?
 
2.  Just because Congress has the ability to concoct lots of well-intentioned national reform scheme, it doesn’t have the power to pursue those noble ends by telling individual citizen that they must act.  Such a move would change the relationship of the Federal Government to the individual in a fundamental way. 
 
The use of the Constitution’s “Necessary and Proper Clause” was used by Solicitor General Donald Verrilli  to argue that the magnitude of the healthcare problem facing this nation required that there be an individual healthcare insurance mandate to fix the situation. 
 
Severability issue
 
Ninety minutes of oral arguments were scheduled for the severability issue.  If the Supreme Court strikes down the individual mandate, what would it do to the rest of the law?
 
1.  The act could be tossed out in its entirety.
 
2.  If the mandate were tossed out, the remainder of the act could be allowed to stand as is.
 
3.  The act could be stripped of some combination of its core provisions, like those which focus on health insurance reforms, Medicaid expansion, and the exchange related subsidies, with the rest of the law left standing. 
 
Proponents of the law argued that the close connection between the mandate and the rest of the law makes the mandate constitutional under the Necessary and Proper Clause of the Constitution.
 
Noted was that if the mandate is struck down (severed) in a law that has already been passed, how can the remainder operate without the mandate?  For without the mandate requiring the purchase of insurance by all, the operational revenue source to enact Obamacare would be no more. 
 
Expansion of Medicaid
 
Even if the insurance mandate is struck down, Medicaid expansion is still part of the Affordable Health Care law. 
 
Even though no lower court has struck down the Medicaid expansion of the law, the Supreme Court did think the issue was important enough to grant it an hour or oral debate.
 
In 2014 Obamacare’s key provisions will kick in.  Among them is a huge expansion of Medicaid. 
 
Although initially the government would fund one hundred percent of individuals younger than 65 with incomes up to 133 percent of the poverty level, by 2017 states would be obligated to pay 5% of those costs and by 2020 state funding would increase to 10%
 
Furthermore, Obamacare forces states to continue participation in the Medicaid program by threatening them with the loss of every penny of federal funding if they try to withdraw and don’t accept the new Medicaid terms.
 
An article posed by Alyene Senger on April 5 related how the Obamacare Expansion of Medicaid will make a big problem worse:
 
According to the Centers for Medicare and Medicaid Services, “This expansion, together with greater participation by individuals eligible under current rules, is projected to add 14.9 million people to enrollment in 2014 and 25.9 million people by 2020.
 
This means that by 2020, Medicaid enrollment will reach 85 million, or approximately one in four Americans.  This level of dependence distorts the original purpose of the government program which was intended to serve as a safety net for only the most vulnerable.”
 
It stands to reason that increased Medicaid obligations will strain state budgets, many of whom are already mired in debt as here in Illinois.  This increase in mandatory Medicaid spending will force states to limit funding for other priorities like education, transportation, and law enforcement. 
 
As Medicaid is already a broken program, allowing the Medicaid mandate of Obamacare to stand would only worsen both federal and state budgets.
 
Remarks of clarification by Ilya Shapiro:
 
1.   Obamacare can rightly be called Obamacare rather than its formal name, “The Affordable Care Act,” because President Obama used the term himself. 
 
2.   The Supreme Court’s decision regarding Obamacare will having a lasting impact upon the American people, as it will fundamentally change the relationship between the government and its people.
 
3.   Obamacare, if passed, would take over 17 to 18% of this nation’s economy.
 
4.   It is likely that the mandate will be struck down.
 
5.   The decision will likely be a 5-4 one with Kennedy as the swing vote.
 
6.   If struck down, healthcare reform will have to go back to the drawing board.
 
7.   There is no upside for the Obama administration if Obamacare is axed, for Obamacare was to be the President’s major achievement in his first  term.
 
8.   There is an upside for Republicans as axing Obamacare would energize its base and Independents.
 
9.  The  President’s words of caution for the Supreme Court were spoken as a setup for Obama to run against the Supreme Court should the Obamacare mandate fails.
 
10. Even among individuals who like Obamacare, an overall 74% majority think the mandate is not constitutional.
 
11. The Supreme Court decision, one way or the other, will be forthcoming at the and of June.
 
12.  Mr. Shapiro doesn’t see 60 votes (a filibuster proof Senate) for an immediate appeal of Obamacare should the mandate be allowed to stand in its entirety.
 
13.  The government’s Solicitor General, Donald Verrilli, was given a high rating as a competent individual by Mr. Shapiro for having obtained this high position.
 
14.  In Shapiro’s opinion there was no reason for Supreme Court Justice Alana Kagan to have recused herself.
 
A lively and thoughtful question and answer period followed Ilya Shapiro’s presentation.  After the meeting Mr. Shapiro was available for further consultation. 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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