Experts: Medicaid Expansion Will Stand; Mandate's Fate Unclear

by George Lauer, California Healthline Features Editor

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The expansion of Medicaid appears to have a green light, but the individual mandate's fate is less clear, according to legal and policy experts contacted by California Healthline after three historic days of arguments on the Affordable Care Act before the U.S. Supreme Court.

Although they were divided in their predictions about specific challenges to the law, all of the experts agreed that substantive changes to the law could have profound impacts on plans to reform California's health care system.

"If the mandate is struck down and Medicaid funding requirements are struck down, California has to find new ways to provide care for all those people," said Erwin Chemerinsky, founding dean of UC-Irvine School of Law and author of seven books, most recently, "The Conservative Assault on the Constitution."

"Maybe California will need to consider doing what Massachusetts did (pass a state version of the individual mandate). But given the problems with the California budget, a decision like that will be very difficult," Chemerinsky said.

Francisco Silva, general counsel for the California Medical Association, said California has a lot riding on the Supreme Court's rulings expected in June.

"We're so far ahead of most states in setting up our exchange, for California to all of a sudden have to switch gears and shift course would be difficult," Silva said.

"Policymakers certainly have the will to keep reform going, but if they throw out key provisions of the health care law, would our exchange even be viable? Could we figure out how to get the financial resources to sustain expanded coverage? I'm not sure about the answers to any of those questions," Silva said.

Joel Hay, professor at the Schaeffer Center for Health Policy and Economics at University of Southern California, agreed.

"If the mandate or Medicaid expansion gets overturned, the state of California is going to have real problems in terms of getting things done," Hay said.

"It's certainly possible to try to re-engineer a state system, but without those subsidies and with California's budget the way it is, we're not going to be in position to do much at all at the state level," Hay said.

Emily Spitzer, executive director of the National Health Law Program, said she hopes California marches onward no matter what.

"I hope California continues to move forward, especially with the exchange. It's so critical that we create these marketplaces where insurance is better regulated. There are so many things in this law that are consumer-friendly, I hope states can figure out ways to make them work if parts of the law are struck down."

'Reading Tea Leaves'

"I'm always nervous about reading tea leaves, but I feel good about the Medicaid expansion after what I heard today," said Spitzer, who was in Supreme Court chambers Wednesday for the final day of oral arguments. One of the subjects du jour that day was the expansion of Medicaid eligibility called for under ACA and whether it is coercive because it would require states to comply or risk losing federal funding.

"I think the court fully understands that this is a voluntary program, not coercive. I also think justices understand the enormous implications of finding this expansion unconstitutional," Spitzer said. "Where would it end?"

Daniel Zingale, senior vice president for policy at the California Endowment, said that although he sees severe problems in moving reform forward without an individual mandate, he was most concerned by the challenge to expanding Medicaid.

"Expansion of Medicaid is a key part of reform. That's where most of our attention has been. It was heartening to see that the constitutionality of Medicaid expansion came across in a strong light today. I don't think the arguments against expansion were compelling,'' Zingale said.

Zingale, one of the architects of California's attempt to reform its health care system under Republican Gov. Arnold Schwarzenegger four years ago, noted that California's 2008 plan -- approved by the Assembly but killed in the Senate -- included a statewide version of the individual mandate.

"California came very close to enacting an individual mandate. California has been in the vanguard in so many ways with health care reform," Zingale said.

Individual Mandate Harder To Predict

While most experts agreed that the court is not likely to not block Medicaid expansion, the reading on the individual mandate was less clear.

"It's much more uncertain what will happen with the individual mandate," Chemerinsky said.

Basically there's a clear split in the court with one or two justices leaning one way or the other to decide it, Chemerinsky said. "If (Justice Anthony) Kennedy joins with the liberals, my instinct is that (Chief Justice John) Roberts will, too, so that he could then write the majority opinion," Chemerinsky said.

Bradley Joondeph, professor at Santa Clara University's law school and former clerk to Supreme Court Justice Sandra Day O'Connor, said the future doesn't look bright for the provision to require almost all Americans to secure health insurance.

"I don't think it went especially well for the administration that day," Joondeph said of Tuesday's arguments over the individual mandate. "It sure seemed as if the five Republican appointees are all against upholding that part of the act."

Five of the nine Supreme Court justices were nominated by Republican presidents: Samuel Alito, Kennedy, Roberts, Antonin Scalia and Clarence Thomas. Three of them -- Alito, Scalia and Thomas -- are considered most likely to vote against part or all of the ACA.

Four justices nominated by Democrats and generally regarded as the liberal side of the court -- Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor -- are widely expected to uphold the reform law.

Kennedy, nominated to the Supreme Court by Ronald Reagan, is considered the key vote by many.

"Kennedy's signals were ambiguous enough, but on balance, he sure seemed to be against the idea of an individual mandate," Joondeph said.

Edward Kleinbard, professor at University of Southern California's Gould School of Law and former chief of staff of the U.S. Congress Joint Committee on Taxation, expects the individual mandate to survive intact.

"I am confident that the individual mandate will be upheld as constitutional," Kleinbard said. "It's really not a very close question as a matter of constitutional doctrine.

"I believe that the 'penalty' is clearly within the taxing power. No one in fact is 'forced' to buy insurance. You pay a tax (called the penalty) or get excused (in effect a credit against the tax) if you buy your own insurance. 'Forced' and similar words imply the exercise of a police power that is absent here. And in addition, the mandate/penalty falls squarely within the commerce clause."

No other reading is possible after Scalia's opinion in Raich v. Gonzalez, Kleinbard said, referring to a California case dealing with interstate commerce that has been cited frequently during the ACA debate.

Single Payer Stock May Rise if ACA Falls

Some see the potential for a quicker move toward single payer solutions if all or part of the ACA is ruled unconstitutional. Leaders of the Green Party earlier this month announced their support for striking down the individual mandate, saying it would clear the path toward their goal of Medicare for all.

While he didn't go so far as to call for provisions of the ACA to be struck down, Bill Skeen, executive director of the California chapter of Physicians for a National Health Program, did see potential for progress in such a scenario.

"If the ACA is dismantled, I don't predict there will be an easy road for single payer, but there is the sort of last-man-standing feeling that -- OK, the plan Congress put together isn't holding up. Single payer is the last best option."

Skeen pointed to a single-payer plan adopted in Vermont as a possible path for California.

"They're working on establishing a 'fewer-payer' system in Vermont now, eventually leading to single payer. We hope California will be the second state to go that route," Skeen said.


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