ABA panel discusses Obamacare opinion; attorneys say Medicaid ruling will have biggest impact

Bethany Krajelis Aug. 9, 2012, 12:29pm





When the U.S. Supreme Court handed down its decision over President Obama's healthcare reform package in June, attorneys had to flip through nearly 200-pages to find out exactly how the court ruled.

Once Carter Phillips, a partner at Sidley, Austin in Washington D.C., got through the ruling that included several concurring and dissenting opinions, he said, "I was surprised in so many different respects."

Although he predicted the court would uphold the law's provision requiring individuals to purchase health insurance, Phillips said he didn't expect the decision to be based on Congress' taxing powers since the debate had up until that point, focused on Congress' authority to regulate commerce.

Phillips shared his take on the court's ruling during a panel discussion, "The health care reform cases: The court speaks on the limits of Congressional power," which took place last weekend at the American Bar Association's annual meeting in Chicago.

He was joined by Jonathan Franklin, a partner at Fulbright & Jaworski in Washington D.C., Gillian Metzger, vice dean of Columbia Law School in New York, and Clare Connor Ranalli, a partner at Holland & Knight in Chicago who moderated the discussion.

While many of the panelists voiced their surprise over the majority reliance on Congress' taxing powers, they were unsure exactly what precedential impact the ruling will have.

Phillips said he grew up in an era where there was a fear there was no limit to what Congress could accomplish under the Commerce Clause. But with the majority of the court's decision to push the Commerce Clause aside in favor of taxing powers, Phillips said the tide might be turning.

While it's not obvious to him yet how Congress' commerce powers will be affected by the ruling in future cases, he said "it will be interesting to see how it plays out."

As a constitutional law professor, Metzger said the court's recent ruling has given her some great material for class.

She said she typically doesn't get around to teaching her students about constitutional taxing powers because it's not an issue that typically sits at forefront of people's minds. The court's decision over Obamacare, however, has changed that.

Metzger said one of the more interesting aspects of the court's ruling deals with labels. She said Roberts noted in one of the majority opinions that the individual mandate is a tax even though Congress described it as a penalty during debates on the law.

Roberts' distinction, she said, raises questions over when a financial imposition becomes too big to be deemed a tax, as well as concerns over constitutional avoidance.

Although the ruling leaves many questions unanswered, all of the panelists agreed that the court's decision to strike down the law's provision on Medicaid funding will have major consequences going forward.

A separate majority of the court struck down the part of the Affordable Care Act that would have required states to comply with new eligibility requirements in order to receive funding under the act's Medicaid expansion.

Franklin said under the Tenth Amendment, Congress can't force states to enact a federal program, but can attach conditions to federal funds under the Constitution's Spending Clause.

He said while the nation's high court has previously indicated that such conditions could be considered coercion, it had never sustained such a claim until its opinion in June.

In 1987, Franklin said the court in South Dakota v. Dole upheld a requirement that states had to raise the drinking age to 21 or would lose 5 percent of its federal highway funds.

Franklin said the court described the condition as "relatively mild encouragement" because it amounted to less than .5 percent of South Dakota's budget.

In contrast, however, he said Roberts wrote that the Medicaid provision under Obamacare would be equal to a "gun to the head" because federal funding for Medicaid makes up about 10 percent of state budgets on average.

Unlike the taxing powers and Commerce Clause issues raised in the court's ruling, Franklin said the majority's decision on Medicaid has the potential to affect numerous federal programs that set conditions to the states' cut of federal funding, such as education funding provided under the No Child Left Behind Act.

He said the court's decision on this aspect could provide "a new weapon" to states looking to exempt themselves from federal programs and change the way Congress enforces amendments to Spending Clause programs.

Although the ruling makes it clear that the federal government cannot coerce states into participating in federal programs with threats over funding, Franklin said it is not clear how coercion is measured.

He said based on the court's ruling, the line apparently falls somewhere between 0.5 percent of states' budgets, which was upheld in South Dakota v. Dole, and 10 percent, which was struck down in the Obamacare case.

Franklin said states now will have to decide whether to change their eligibility requirements to participate in the Medicaid expansion or lose federal funding.

He said governors in at least five states, including Florida, Louisiana, Mississippi, Nebraska and South Carolina, have said their states will not participate in the expansion.

History of Medicaid, however, shows that most states, if not all, will eventually participate in the expansion because of the number of people it affects, he said.

Despite the questions left unanswered in the court's ruling, Ranalli, the Chicago lawyer who moderated the panel discussion, said lawyers will have to continue to try to navigate their business clients through the new law.

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