Healthcare Law's Fate Uncertain After Sharp Questioning from Supreme Court Justices

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Customized Briefing for Brett Houston March 28, 2012 From NAHU Legislation and Policy Senior Market News Leading the News Public Health and Private Healthcare Systems NAHU in the News

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Healthcare Law's Fate Uncertain After Sharp Questioning From Supreme Court Justices. Media reports and analyses last night and this morning portray the Supreme Court as leaning towards ruling against the constitutionality of the Affordable Care Act. Yesterday's hearing generated widespread coverage on both TV and print. However, only the CBS Evening News, among the three network newscasts, led with the court hearing. According to Brian Williams, on NBC Nightly News (3/27, story 2, 3:05), "A lot of the experts have been predicting that the law would probably stand, but after today, all bets are off." On the CBS Evening News (3/27, lead story, 4:40, Pelley) Jan Crawford said, "The healthcare law is considered President Obama's signature achievement, but...it appeared a majority of the Justices were ready to describe the individual mandate another way -- unconstitutional." According to the Washington Post (3/28, Fahrenthold, Aizenman), "By the end of Tuesday's long-awaited oral arguments, the individual mandate...seemed to be in trouble." Adam Liptak, in a front-page article for the New York Times (3/28, A1, Subscription Publication), also says "the available evidence indicated that the heart of the Affordable Care Act is in peril." Liptak continues, "If the indications from Tuesday's arguments are correct...the ruling may undo parts or all of the overhaul of the health insurance system, deal Mr. Obama a political blow in the midst of the presidential election season, and revise the constitutional relationship between the federal government and the states." Justice Kennedy gets the lion's share of the attention, and "skeptical" is, by far, the adjective most often used to describe the tone of his questioning. A Los Angeles Times (3/28, Savage, Levey) headline reading "Skeptical Kennedy Signals Trouble For Obama's Healthcare Law" is a concise summation of the day's analysis. In an analysis touted on the Drudge Report Tuesday, The Hill (3/27, Strauss) reported New Yorker legal analyst Jeffrey Toobin, on CNN (3/27, 12:07 PM EST), described the hearing as a "trainwreck for the Obama administration," and Kennedy as "enormously skeptical." Toobin added, "This law looks like it's going to be struck down. ... All of the predictions, including mine, that the justices would not have a problem with this law were wrong." Toobin also claimed Solicitor General Donald Verrilli "did a simply awful job," characterizing Verrilli as "nervous," and "not well spoken." On NBC Nightly News (3/27, story 2, 3:05, Williams), NBC's justice correspondent Pete Williams reported, "It does seem the majority of the justices are skeptical that Congress has the power to pass such a sweeping law." David Leonhardt, in an analysis for the New York Times (3/28, Subscription Publication), says, "Many legal scholars, including some conservatives, have been predicting that the Supreme Court will uphold" the ACA, but "after Tuesday's arguments, when several justices asked skeptical questions about the heart of the law, a political lens seemed relevant, too. ... Skeptical questions from the bench are often an indicator of how justices will ultimately vote -- and many court experts expressed surprise at the apparent agreement among the conservatives, including" Kennedy. Bill O'Reilly, in his opening monologue for Fox News' The O'Reilly Factor (3/27), said "most of the justices" were "openly skeptical about the power needed to impose Obamacare." O'Reilly added that "the consensus is" Verrilli "did not make a strong argument." Roll Call (3/28, Dennis, Drucker, Subscription Publication) quotes Senate minority leader Mitch McConnell as saying, "It was noteworthy that the four more liberal members of the court were mainly peppering the plaintiffs and the other five were mainly peppering the government, leading us to hope this awful law will be overturned." Sen. Ron Johnson added, "I was encouraged that they were asking the right questions." Fox News' Special Report (3/27, lead story, Bream) reported Kennedy "unleashed an unexpectedly candid assessment of the individual mandate today that has supporters terrified the Affordable Care Act could be toast." The Wall Street Journal (3/28, Kendall, Subscription Publication), in an article titled, "Kennedy Leaves Both Sides Hopeful," says some liberal analysts are still hopeful that Kennedy will side with the Administration. NBC's Pete Williams, on CNBC's The Kudlow Report (3/27), said, "It's quite clear the four conservatives...believe this law is unconstitutional, and it's equally clear that the four liberal members of the court...would vote to uphold it. ... But tonight I think the future of the healthcare law is very much in doubt." Williams, on MSNBC's Hardball (3/27, Matthews), added, "It wasn't a great day for the administration. ... It's quite clear they didn't pick up any of the conservatives," which means "the question comes down to" Kennedy, and "for most of the questioning...he showed great skepticism." The CBS Evening News (3/27, lead story, 4:40, Pelley) reported that the Administration "says the mandate will make sure that everyone has health care, while keeping insurance affordable, but opponents say it is a dangerous new power for the government, forcing citizens to buy a product." CBS's Jan Crawford added, "The conservative Justices and Kennedy, a moderate, expressed concerns the law gave Congress broad new powers to dictate behavior," while "all four of the Court's liberal Justices defended the law." McClatchy (3/28, Doyle, Lightman) reports that the justices "cast serious doubts on the Obama administration's signature health care law Tuesday, emboldening the Republicans who now are eagerly campaigning to kill it." According to McClatchy, Solicitor General Verrilli "stressed...that the 40 million uninsured Americans posed what he called 'an economic problem' that Congress is empowered to fix." McClatchy adds, "In a potentially sobering sign for the Obama administration, even [Kennedy] the justice most commonly considered to be a swing vote made pointed observations about the insurance-buying mandate." The Washington Post (3/28, Barnes, Aizenman) says Kennedy "suggested" that the Affordable Care Act "invoked a power 'beyond what our cases allow' the Congress to wield in regulating interstate commerce." Paul Clement, "the former George W. Bush administration solicitor general representing 26 states challenging the law, picked up on that theme, saying the government was defending an 'unprecedented' act by Congress with no limiting principle." The Los Angeles Times (3/28, Savage, Levey) notes Kennedy "described it as 'unprecedented' for the federal government to impose an 'affirmative duty' on people to buy a product." According to the Times, "In his closing argument, Verrilli urged the justices to defer to the choices made 'by the democratically accountable branches of government,'" but "the court, which has five Republican appointees, did not sound as though it was inclined to do so." Mike Sacks, in the Huffington Post (3/28), reports, "From the very start, things did not go well for the government's argument that" the mandate is "constitutional." Sacks says Verrilli "began his argument not with his usual calm and clear delivery, but rather with a case of coughs that seemed to take him off his game. And just as he was starting to recover his composure," Kennedy "asked, 'Can you create commerce in order to regulate it?'" which "adopted the framing of the case put forward by those challenging the mandate." The Wall Street Journal (3/28, Bravin, Subscription Publication) notes Justice Scalia said the Administration's argument was akin to saying: "Everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market. Therefore, you can make people buy broccoli." USA Today (3/28, Wolf, Heath) says the "conservative justices suggested they might be willing to send lawmakers back to the drawing board just months before a presidential election. ... Inside the courtroom...the most significant law signed by Obama came under sharp attack by justices appointed by his Republican predecessors. Outside, hundreds of demonstrators packed onto the sidewalk in front of the marble courthouse, shouting over each other." According to Politico (3/27, Brown, Gerstein, Haberkorn), "Before the arguments, many court watchers said they expected the law would be upheld, and a few even predicted that as many as eight justices would back the constitutionality of the mandate." But "after the session, court watchers said a 5-4 decision along partisan lines striking down the mandate was a distinct possibility -- harkening back to other politically divisive, sharply divided rulings from the court, such as Bush v. Gore in 2000." Sam Baker, in a post for The Hill (3/27), wrote, "The sense of a possible election-year defeat in the courtroom for the president's signature domestic achievement was unmistakable." However, on NBC Nightly News (3/27, story 3, 1:30, Williams), legal correspondent Savannah Guthrie said, "Oral arguments are not always an indicator of where the court will come out," and noted that in "the DC circuit, very conservative judges grilled the government's lawyers," but, "ultimately those conservative judges were in the majority upholding the healthcare law." The Washington Times (3/28, Cunningham) reports, "The justices also posed rigorous questions to...Clement and Michael Carvin, attorneys for the National Federation of Independent Businesses and 26 states, probing for answers to why they say the government can't require Americans to buy coverage ahead of time to pay for their own health care. ... 'When you are born, and you don't have insurance, and you will in fact get sick, and you will in fact impose costs, have you perhaps involuntarily -- perhaps simply because you are a human being -- entered this particular market?' Justice Stephen Breyer asked Mr. Carvin." Also reporting on the hearing are the AP (3/28, Sherman), Roll Call (3/28, Dennis, Drucker, Subscription Publication), the National Journal (3/28, Khan, Friedman, Subscription Publication), CQ (3/28, Norman, Subscription Publication), NPR (3/28, Totenberg) "Shots" blog, the Huffington Post (3/28, Young), Forbes (3/28, Fisher), the Detroit Free Press (3/28, Spangler), HealthDay (3/28, Esposito), Medscape (3/28), MedPage Today (3/28), WebMD (3/28, Lowes), and Modern Healthcare (3/28, Subscription Publication).

From NAHU

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NAHU in the News

Health Insurance Industry Withholding Reaction To Justices' Line Of Questioning. The Wall Street Journal (3/28, Mathews, Radnofsky, Subscription Publication) reports the reactions of health insurers to the Supreme Court case, particularly with regard to the possibility of the mandate for health insurance coverage being struck down and the remainder of the law being left intact. Following the line of questioning of certain Supreme Court justices, some health insurance stocks traded down. Members of the health insurance industry themselves were withholding reaction. The article quotes Justine Handelman, a vice president at the Blue Cross and Blue Shield Association, as calling the individual mandate requirement a "critical link," while also quoting Jessica Waltman, who is senior vice president of government affairs for the National Association of Health Underwriters. Waltman, who voiced hesitancy to read anything into the lines of questioning on Tuesday by the Supreme Court Justices, stated, "A lot of people that do what we do are going to be parsing these words for weeks."

Legislation and Policy

Senate May Vote On Malpractice Caps, IPAB Repeal. Modern Healthcare (3/28, Daly, Subscription Publication) reports an act of the US House of Representatives that repeals the Independent Payment Advisory Board and sets "federal malpractice caps...could come up for a Senate vote as early as this week." It has been "formally placed on the Senate's legislative calendar, although no specific date for a vote has been set." And "senate observers did not expect the measure to receive a Senate vote because the chamber's Democratic leadership is strongly opposed to both of its main components."

Democrats Budget Relies On Affordable Care Act For Medicare, Medicaid Cost Cutting. Modern Healthcare (3/28, Daly, Subscription Publication) reports, "The House Democrats' budget introduced this week would cancel the $1.2 trillion in deficit-reduction moves scheduled to begin in January, which include cuts of up to 2% in Medicare provider payments." But "unlike the House Republican budget plan, which would transition Medicare to an insurance premium subsidy model, the Democrats' measure would maintain its current design and implement the cuts and other changes planned under the Patient Protection and Affordable Care Act." As a result, "Medicare costs would grow 82% over the next 10 years" while "other federal healthcare spending would grow 143%." Politico (3/28, Kim) reports, "House Democrats want to make a clear, election-year statement: they're not going to touch Medicare and they're going to raise taxes on the wealthy." The proposal "would keep Medicare and Medicaid largely intact, relying instead on cost-saving measures outlined in the Affordable Care Act that Democrats say will help contain costs for Medicare."

Study Shows Individual Mandate To Impact "Relatively Few Americans." CQ (3/28, Reichard, Subscription Publication) reports on a study by the Urban Institute, which found that "relatively few Americans would be affected by" the individual mandate provision of the Affordable Care Act. The study "estimates that just six percent of the U.S. population, 18 million people, would have to 'newly purchase' coverage under the individual mandate provision of the health overhaul law." The piece notes that "Linda J. Blumberg, one of the three authors of the study," said "that "there has been a 'communications failure' in explaining why the mandate is needed, which is to bring good risks into the insurance pool to make coverage more affordable." High Court To Hear Challenge To Medicaid Expansion. Politico (3/28, Feder) reports on the Supreme Court's hearing today considering "whether expanding Medicaid health care coverage to more poor people is constitutional." In the series of hearing on the Affordable Care Act, "the court will devote the sixth and final hour to Medicaid expansion." The 26 states challenging the measure "argue that the health law oversteps constitutional boundaries by requiring them to start covering an estimated 16 million more low-income people with Medicaid in 2014." But "most legal experts -- including conservative legal analysts critical of the law -- are skeptical of the states' argument."

Kansas Senate Approves Joint Committee To Oversee Kansas Medicaid Reform. The Kansas Health Institute (3/27) reports, "The Kansas Senate today approved by a wide margin a bill that would create a joint legislative committee to oversee the implementation of KanCare ... the Medicaid makeover plan proposed by Gov. Sam Brownback" that "would move virtually all of the state's 380,000 Medicaid beneficiaries into fixed-price managed care plans." As approved, "the 11-member committee would include six House members and five from the Senate" selection of the committee's chairman would alternate between the Senate president and the House speaker.

Public Health and Private Healthcare Systems

TriWest Protests Award Of $20B Military Contract. Bloomberg News (3/28, Miller, Ivory) reports TriWest Healthcare Alliance filed a protest with the Government Accountability Office (GAO) on Monday regarding its loss of a $20.5 billion military contract to UnitedHealth Group, "saying the nation's largest health insurer has a record of poor performance and legal issues." David McIntyre Jr., TriWest president and chief executive, called the decision "inexplicable" as "TriWest's bid was lower than UnitedHealth's offer and also included 'several hundred million dollars' in discounts that the government failed to include in its review." McIntyre also claimed the Pentagon only consulted five references provided by UnitedHealth, which he deemed "like buying a house without an inspection." The Sacramento Business Journal (3/28, Robertson, Subscription Publication) cited several other TriWest objections, including that "the government failed to adequately analyze the areas where transition risk might negatively impact beneficiaries and providers," and that "significant disruption from the turnover will cost the government and taxpayers hundreds of millions of dollars." UnitedHealth spokesman Mike Stearns called the protest "unfortunate," adding that "TriWest's unfounded public assertions will only cause beneficiary and provider confusion about the government evaluation process and administration of the contract." The Minneapolis Star Tribune (3/28, Bjorhus) quoted Ralph White, the head of the GAO's bid protest forum, who said the organization has to make a decision within 100 calendar days of a protest being filed. While protesters win in about 18 to 20 percent of the cases where protests go to a final decision, White says most bid protests don't reach that point. "More often, the government agency that awarded the contract pulls back the award and finds another way to resolve the dispute, White said." Stars And Stripes (3/28, Hlad) noted that all transition activities will be put on hold while the protest is examined. McIntyre assured TriWest would "responsibly convert" any remaining contracts and business to a company they trust if the protest does not succeed. "We will not leave anyone at the side of the road," he said. Similar coverage was provided by the Washington Post (3/28, Vogel), The Minneapolis-St. Paul (MN) Business Journal (3/28, Stych, Subscription Publication), and the AP (3/28).

Insurers Offer Rebates To Point Consumers To Cheaper Care. NPR /Kaiser Health News (3/28, Andrews) reports in its "Shots" blog that a voluntary "pilot program" called Compass SmartShopper "pays cash rewards, usually about $100, when employees go to cheaper providers than the ones their physician recommends. Nearly 40 services are covered, including mammograms and colonoscopies, knee replacements and cataract surgery." While "some doctors have expressed reservations about the price-driven program, which doesn't factor in quality measures, such as complication rates, into its recommendations," such "concerns don't seem to be stopping consumers from using the program." Rob Graybill, president of Compass Healthcare Advisers, which manages the SmartShopper program for Anthem says that of those members who sign in or call to inquire about providers, 61 percent opt for the less expensive SmartShopper provider.

Humana To Divest In Order To Acquire Arcadian. Modern Healthcare (3/28, Subscription Publication) reports that "Humana will divest Medicare Advantage plans in five states in order to acquire Arcadian Management Services, the insurer said."

Highmark Now Promoting Telehealth Medical Services. The Pittsburgh Business Times (3/28, Mamula, Subscription Publication) reports, "Health insurer Highmark Inc. has begun piloting telehealth medical services, allowing members to be evaluated remotely by a doctor for minor illnesses." According to the Business Times, "Highmark is teaming with Teladoc Inc. to offer members around the clock access to a physician for a fee of $38 per session. Participating members will complete a medical history disclosure, then request a consultation."

Senior Market News

AARP Members Urge Funding For Community-Based Services. The Jackson (MS) Clarion Ledger (3/28) reports a push from AARP Mississippi members for lawmakers to use surplus fund for home- and community-based services in the state. "Ex-Gov. Haley Barbour last year sought to apply an estimated $42 million Medicaid budget surplus to home and community-based services. The budget surplus was later set at $32 million, with $16 million allotted to home- and community-based services. The other half went toward increased funds for education and mental health services."

Tuesday's Lead Stories

• Justices Expected To Reject Postponing Ruling On Healthcare Reform Challenge. • Maryland Legislators Advance Healthcare Overhaul Implementation. • Cuts In Medicaid, Property Taxes Pose Challenges To Illinois Hospitals. • Connecticut Committee Approves Bill To Allow Hospices To Offer Inpatient Services.

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