Medicaid ‘Very Serious’ Issue in Health Care Challenge, States’ Lawyer Says

Medicaid ‘Very Serious’ Issue in Health Care Challenge, States’ Lawyer Says

By Jane Norman, CQ HealthBeat Associate Editor

One of the top lawyers representing those challenging the health care law said Monday that even opponents were surprised that the Supreme Court ordered arguments on the measure’s Medicaid expansion. And a second plaintiff attorney characterized it as a “very serious issue” that goes to the heart of the question of the overhaul’s constitutionality.

Their remarks again underlined the significance of the unexpected entry into the legal fight of the law’s provision that states must expand their Medicaid rolls to uninsured adults earning less than 133 percent of the federal poverty level. States say that requirement usurps a traditional federal-state partnership and crosses the line into coercion because if they opt out, they’d have to give up the federal Medicaid funding that makes up a large portion of state budgets.

Although federal district courts and appeals courts ignored states’ protests, the Supreme Court has slotted an hour of argument about Medicaid on March 28 as the finale to three days of battle over the overhaul (PL 111-148, PL 111-152). Some supporters of the law fear that if the court strikes down the Medicaid expansion, it could also lead to a wider unraveling of the federal government’s power to impose conditions on state spending (See related story, CQ Weekly, Nov. 21, 2011).

Randy Barnett, who’s among the lawyers representing the National Federation of Independent Business, and Paul Clement, who represents the 26 state attorneys generals and governors fighting the law, appeared at a Georgetown University Law Center event to discuss the suit. NFIB and the states are plaintiffs along with four individuals. Also on the panel was Randy Moss, a partner at WilmerHale and assistant attorney general for the Office of Legal Counsel during the Clinton administration.

States have long argued that the law disrupts their sovereignty, including its requirement that they expand their Medicaid rolls to cover poor adults, said Barnett.

“That’s a very important part of the litigation. It became more important than any of us imagined when the Supreme Court granted cert on that issue,” he said. The addition of the Medicaid issue also has helped to set up the suit to be one of the most important cases in the nation’s constitutional history when it comes to the scope of federal powers, he said.

That’s because Congress uses its power under the Commerce Clause of the Constitution and its spending power as authority for nearly everything it legislates, he said. “If a court is actually going to do something important on one side of the line, the commerce side of the line, it would be very good for them to be mindful of what’s happening on the spending side of the line,” Barnett said.

Clement warned, “Don’t forget about the Medicaid part of the case.” He said that constitutional lawyers are “really excited” about arguments in the case over whether or not the individual mandate violates the Commerce Clause and tend to miss the separate question of whether states have been coerced into increasing their Medicaid case load.

Clement said the Medicaid expansion is the mechanism through which many very poor people will comply with the individual mandate. “But there’s no other way in the statute for the poorest of the poor to get qualifying coverage,” he said. “There is no Plan B for a very good reason: No state given their current dependency on Medicaid can make a rational, voluntary decision to refuse the expanded terms of the Medicaid provision.”

Government lawyers have defended the expansion as permissible because it was done in accordance with previous court rulings. Those rulings say such a provision must provide for the general welfare of Americans, have a “reasonable” relationship to the goals of the law, allow states to “knowingly” exercise a choice and not force states to take unconstitutional actions.

A federal district court judge who ruled the rest of the health care law unconstitutional in January 2011 said that there was “simply no support” for the Medicaid coercion claims by the states.

Neither Barnett nor Clement would predict how the high court might rule, though Barnett dismissed as “spin” predictions by some legal experts that it might turn out to be an 8-1 or 7-2 decision. “I think this is a difficult case and that’s part of the reason the court allocated so much time to it,” he said. “I would discount those who make that prediction and whether they even believe it themselves.”

Moss, however, predicted that the court will uphold the law, though he said justices likely will look for a principle — raised by Barnett — that addresses whether there are any limits on Congress’ ability to make individuals enter into contracts with private companies, such as health insurance companies.

Moss said that as a lawyer reviewing legislation at the Office of Legislative Counsel, he would not have objected to the health care law. “I don’t think I would have raised any constitutional concerns,” he said, because it appears legal under the Commerce Clause and deals with a large portion of the economy. “There’s no doubt this legislation plays a very significant role in the regulation of interstate commerce,” Moss said.