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How Vinson’s Ruling Could Affect the Repeal Effort, and Other Comments



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I spend a lot of time in the weeds of health-care policy, because even a throwaway line in a 2,700-page law can have dramatic consequences for how individuals and their families obtain health care. But it’s important to remember that Obamacare is about fundamental philosophical questions: Do individuals have the right to make health-care decisions for themselves? Should America live within its means?

Judge Vinson’s ruling is a big deal. It reminds us that another, even more fundamental principle is at stake: Does Congress have unlimited power to do whatever it wants, or is Congress constrained by its enumerated powers under the Constitution? Here are a few further thoughts on these questions and others.

Commerce Clause Confusion.     We are where we are today because of 75 years of tortured jurisprudence on the Commerce Clause. As a reminder, Article I, Section 8 of the Constitution grants Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” However, thanks to the Supreme Court, the Commerce Clause has been twisted beyond all recognition.

Is a man growing wheat on his own land to feed his own chickens engaging in interstate commerce? Apparently, yes (Wickard v. Filburn, 1942). Is a 12th-grader carrying a concealed .38-caliber revolver to school engaging in interstate commerce? Not necessarily (United States v. Lopez, 1995). Is a woman growing marijuana in her own home, for her own use, engaging in interstate commerce? Apparently, yes (Gonzales v. Raich, 2005). Is a man who declines to purchase health insurance engaging in interstate commerce? To be determined.

Florida v. HHS gives the Supreme Court the opportunity to finally clean up this mess. However, with Anthony Kennedy effectively in charge, we can’t be optimistic that they will.

What Happens Next.     The Vinson ruling has big implications for the 112th Congress. House Republicans are planning to launch legislation to repeal the individual mandate, if and when the initial PPACA repeal effort runs aground. Now that Vinson has overturned the law, however, it might be a mistake for Congress to repeal the mandate without allowing the Supreme Court the opportunity to first rule on its constitutionality. There is a non-zero chance that the Supremes could uphold Vinson’s opinion, overturning the entirety of Obamacare.

Even if the Supreme Court rules more narrowly, the likelihood that they void the individual mandate has gone significantly up. As Ezra Klein put it today, Vinson’s ruling makes Henry Hudson’s more narrow one — in which the mandate was overturned but the rest of PPACA preserved — “seem more modest and appealing.” In other words, the center has shifted rightward. Congress should afford the Supreme Court one more opportunity to constrain the Commerce Clause and thereby the power of the federal government.

There is a lot of uncertainty today as to what Vinson’s ruling means for the implementation of Obamacare. The likely answer is, not much. Vinson declared the entire law unconstitutional, but declined to enjoin it. A source of Jonathan Cohn’s believes this was a clever tactical move by Judge Vinson:

If he had entered an injunction, the US would immediately have sought a “stay pending appeal.” That means the injunction can’t be enforced while the case is on appeal. The US would seek the stay from him; if he denied it, from the 11th Circuit; if the 11th Circuit denied it — which would be inconceivable, in this case, in my view — from the [Supreme Court]. Technically, a [declaratory judgment] does not have to be stayed, because it doesn’t require the US to do anything. But my guess is that the US will seek a stay anyway, just to make things clear.

There is a risk that if the US seeks a stay, and the court of appeals says “we’re not granting a stay, because you don’t need it, since this is only a DJ” then that will be portrayed as a loss for the US. Vinson’s little maneuver — I’ll enter a DJ, and I’ll suggest you have to comply right away, but I won’t make it an injunction — is just jerkiness, designed to put the government in an awkward position without Vinson’s owning up to what he’s doing.

David Rivkin, lawyer for the 26 states represented in Florida v. HHS, has declared: “With regard to all parties to this lawsuit, the statute is dead.” However, the White House is promising to continue implementing Obamacare, and has expressed its intention to appeal the case to the Eleventh Circuit in Atlanta. Note that the Eleventh Circuit has a reputation as one of the most conservative appellate courts in the country, and there is therefore a reasonable likelihood that Vinson’s ruling will be upheld at the appellate level.

What Are the Implications for Repealing Obamacare via Reconciliation?     Based on my “End of the Beginning” piece from a month ago, I’ve gotten a lot of questions as to what would happen if the Supreme Court overturned the individual mandate, but left the rest of PPACA intact.

The Congressional Budget Office, last June, projected that repealing the mandate would reduce the deficit by $252 billion in the 2011-2020 timeframe. If the Court were to overturn PPACA, but leave the rest of the law intact, à la Judge Hudson’s ruling in Virginia v. Sebelius, repealing the rest of Obamacare as a separate measure would correspondingly be scored by the CBO as increasing the deficit by a substantial amount: approximately the sum of the $252 billion from the mandate and the $145 billion from repealing PPACA as a whole. That’s roughly $400 billion.

In other words, if the Supreme Court overturns the individual mandate, but keeps the remainder of PPACA, repealing the remainder of PPACA via the reconciliation process will be scored as adding $400 billion to the deficit, and therefore not pass parliamentary muster, unless the Senate is able to compensate for that $400 billion with offsetting savings, or by successfully modifying the CBO’s assumptions.

The same problem holds true if the 112th Congress were to repeal the mandate without offsetting the $252 billion in savings by repealing some of PPACA’s spending cuts, such as its elimination of support for Medicare Advantage.

The bottom line: Congressional Republicans should think long and hard before they decide what to do next.

Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co. in New York City. He blogs on health-care issues at The Apothecary.



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