Health Care law and "severability" - can anyone tell me what the deal really is?

[underpants]

So the Florida judge ruled against the Health Care law today and every news account that I read is saying that the whole thing is thrown out the window now- over - done.

The part that allows this to happen is the lack of a "severability" clause (nice move Dems) protecting the entire act from parts being ruled against in court. This has been a big talking point on rightwing radio- mostly prepping the battlefield of their listeners to think it is OVER if one judge (it's called court shopping) rules any part of it unconstitutional.

BUT from Talking Points memo (see below) the Roberts court - Roberts himself - may have already removed the need for a severability clause in a ruling on Sarbanes-Oxley.

I am not a lawyer so I was hoping for some clarification on this. Anyone have something to offer? Please?

=======

From Talking Points primer on severability

The obscure term of art here is "severability".

Quite often, legislators include what's known as a "severability clause" in their bills. These are meant to protect the bulk of a law in the event that a small portion of it is determined to be unconstitutional. That small portion must go, or be changed, but pretty much everything else is allowed to stand.

In a sin of omission, Democrats left such a clause out of the health care law, and now the plaintiffs in at least one of the cases against it want the court to take an axe to the whole thing if the judge decides that the individual mandate provision is unconstitutional.

The good news for supporters of the ACA, according to one leading expert on the reform plan and the suits against it, is that -- even under the worst case scenario -- most of the law will likely remain intact. The bad news is that some of its most important and popular provisions could become ensnared by a ruling against the mandate, and nixed by the court.

Jost says recent precedent makes it exceptionally unlikely that any of the lower courts will attempt to strike the entire law. In an opinion written this year, Chief Justice John Roberts struck one provision of the Sarbanes-Oxley bill, which lacks a severability clause. "We agree with the Government that the unconsti­tutional tenure provisions are severable from the remain­der of the statute," he wrote.

http://tpmdc.talkingpointsmemo.com/2010/11/conservative-suit-against-the-mandate.php

[BzaDem]

1. The severability part of his decision is nonsense, along with the rest of his decision.

The lack of severability clause means very little, as you point out, and much of the act could have been severed. (Perhaps not the pre-existing condition discrimination and insurance regulations, but much of the rest.)

What's really ironic is that the judge fully admits that the mandate was necessary for the pre-existing condition regulations to work. And he fully admits the pre-existing condition regulations were themselves constitutional. Those two admissions should seal the deal -- they mean the mandate is perfectly constitutional under the necessary and proper clause. As even Justice Scalia of all people has said,

“where Congress has the authority to enact a regulation of interstate commerce, it possesses every power needed to make that regulation effective.”

The way the judge got around that was a bunch of whining. Seriously. He didn't like the implications of what the Constitution clearly allowed, so he ignored it.

[librechik]

thanx again, BzaDem, for your excellent insight n/t

[pnwmom]

5. Yes. Scalia's previous opinions actually support the new law.

So there's a good chance, I hope, that it will be upheld.

[Imajika]

6. You are far more confident in Justice Scalia than I am...

I am almost 99% sure when this reaches SCOTUS that Scalia will be one of 4 or 5 Justices that votes to kill the individual mandate - effectively destroying the bill.

The only vote I think is in doubt is Kennedy. He could go either way. It's likely to be a 5-4 decision one way or the other.

[BzaDem]

10. Oh don't get me wrong -- I don't think for a minute Scalia will hold up the mandate.

He will rule the way he wants to rule, as he always does (likely against the mandate).

I'm just pointing out the delicious irony in being able to quote Justice Scalia to show what would otherwise still be obvious -- that the law is Constitutional.

[treestar]

41. Yep. Skimming the opinion, it was so full of value laden language

And personal opinion. Not a good analysis of the commerce clause.

[pnwmom]

2. They're wrong. It's not done. There have been conflicting rulings

in the Federal Courts, so it will have to be settled in the Supreme Court.

Ironically, some previous opinions of the most conservative Justices use reasoning that would actually support this law -- if they don't twist themselves into knots trying to defeat the law. We won't have an answer for a couple years, probably.

http://www.nytimes.com/2011/02/01/us/01ruling.html

A second federal judge ruled on Monday that it was unconstitutional for Congress to enact a health care law that requires Americans to obtain commercial insurance, evening the score at two-to-two in the lower courts as the conflicting opinions begin their path to the Supreme Court.

Judge Roger Vinson of Federal District Court in Pensacola, Fla., ruled that the law will remain in effect until all appeals are concluded, a process that could take two years.

SNIP

[underpants]

Yes I also read that about the Hudson ruling on TPM

"I've had a chance to read Judge Hudson's opinion, and it seems to me it has a fairly obvious and quite significant error," writes Orin Kerr, a professor of law at George Washington University, on the generally conservative law blog The Volokh Conspiracy.

Kerr and others note that Hudson's argument against Congress' power to require people to purchase health insurance rests on a tautology.

The key portion of the ruling reads:

If a person's decision not to purchase health insurance at a particular point in time does not constitute the type of economic activity subject to regulation under the Commerce Clause, then logically an attempt to enforce such provision under the Necessary and Proper Clause is equally offensive to the Constitution.


Kerr notes that this is all wrong. The Necessary and Proper Clause allows Congress to take steps beyond those listed in the Constitution to achieve its Constitutional ends, including the regulation of interstate commerce. Hudson's argument wipes a key part of the Constitution out of existence. Kerr says Hudson "rendered a nullity."



In an interview with TPM this morning, Timothy Jost of Washington and Lee University, a supporter of the mandate, called the logic on this point "completely redundant."

"In Hudson's opinion he basically conflates the Commerce power and the Necessary and Proper power and says that each provision in a statute has to be looked at independently from every other provision, and each provision has to be independently authorized under the Commerce Clause," Jost said. "And if it isn't, the Necessary and Proper Clause doesn't grant any more authority."

http://tpmdc.talkingpointsmemo.com/2010/12/amateur-hour-va-judge-makes-elementary-error-in-health-care-ruling.php

[truedelphi]

3. It's a sad day when one has to wish that the bio tech people would

Clone Richard Nixon and get him involved in the process.

From the Democrats, we received a health care bill that shuts many of us who are still working out of the process. How can most self employed people pay fifteen to thirty thousand bucks a year for themselves, a spouse and a single child!

Nixon at least sponsored programs that involved price roll backs on insurers when their prices were out of line.

And whatever the Dems were thinking when they involved the "severability" notion as part of their law making, it may or may not work.

It all depends now on what the Supreme Court is persuaded to believe. (Not to suggest that the SCOTUS would ever be swayed by their influential friends in the Big Insurance/Big Pharma Industry.) <sarcasm meant>

[Imajika]

4. Umm, if the individual mandate goes, the whole thing goes...

The whole thing is predicated on the individual mandate.

If the Supreme Court rules against the individual mandate, even if the court finds severability is not an issue, Congress will end up repealing the whole thing - even Democrats and the President would have to go along. The entire Health Care bill hinges on the idea that millions of young healthy people will be required to buy insurance which effectively helps fund all the good things HCR has in it.

Take out the individual mandate, and this ends up being a do-over.

[Statistical]

7. Why?

There is no mandate yet millions of Americans purchase health insurance from their employers. One could simply institute a "qualified life event" type system like employee based system.

You can only change/drop/start covered either
a) during annual enrollment
b) within 30 days of qualified life event.

The overwhelming majority of employees opt for health insurance from their employer despite no mandate. The claim that we MUST have a mandate is an unproven, false claim.

[underpants]

8. I think the poster is saying that it would effective strip the funding of the act

and without that it would be very difficult to continue to implement.

[Imajika]

9. Pretty sure the pre-existing conditions piece is tied to the mandate...

Much of the additional coverages and subsidies are based on the underlying assumption that millions of young healthy people would now be buying into the system. Take them out and I think the bulk of HCR falls apart.

I mean, some parts of it could still work, but I am pretty sure without the Individual Mandate the whole thing becomes largely unworkable.

[Statistical]

13. Once again wny?

Current employer plans are prohibited from having pre-existing condition exclusions (with limited exemptions). There is no mandate required.

Tehcnically only the sickest employees could get coverage and all the healthy ones past. There is no proof a mandate is required.

[BzaDem]

15. If you opt out of your insurance at your employer, do you get the full amount of the

employer-paid-for portion added to your wages?

[Statistical]

17. No but I could get about $3000 (roughly half).

There is still a significant portion paid for by me. The point is people choose to opt-in despite not being required.

One could CHOOSE to opt-out while young and healthy and the CHOOSE to opt-in when old and unhealhty. While some may do that the overwhelming majority don't. Even when young and healthy they CHOOSE to opt-in.

There is no PROOF there MUST BE A MANDATE. The Congress chose to go a mandate route because it was the "Easiest" it doesn't mean it was the best route or only route to achieve the goal of universal coverage.

For example. If the govt offered significant subsidies per person it is unlikely many people would opt out even if they are healthy (much like very few people, even healthy people opt out of employer based coverage).

[BzaDem]

18. So if you don't get insurance, you end up paying thousands to ensure your ability to buy insurance

later without discrimination on the basis of pre-existing conditions (since you aren't getting that form of compensation anymore).

... just like the mandate and its fine.

No one ever said a mandate was the only way to achieve universal coverage. Obviously single payer is as well.

But if Congress wants to go along the route of making it illegal for private insurance companies to discriminate on the basis of pre-existing conditions (which it undisputedly has the power to do), a mandate is required. If the mandate falls, so do the pre-existing condition regulations. The government CONCEDES that.

[Statistical]

20. No it isn't.

Once again today this very second it is illegal for private for profit employer based health insurance plans to discriminate against persons with pre-existing coverage.

Yet despite the fact that there is no mandate, no penalty tens of millions of healthy employees voluntarily choose to get coverage even when they are healthy despite the fact they *could* simply wait until they are sick.

"The government CONCEDES that."
The same government which came up with this worthless profit expander for insurance companies? Really? I don't give a shit if they concede it. The HCR is simply a method to maximize profits for health insurance companies without doing ANYTHING to lower cost of care, or improve quality of care.

[BzaDem]

21. You are confusing two types of discrimination.

I am not talking about employers discriminating against employees within a firm. I am talking about insurance companies discriminating against employers.

If Firm A has a healthy workforce and firm B has a sick workforce, firm A is going to be paying more for insurance than B. The cost of insurance at firm A will be distributed equally to the employees of firm A, and likewise for B, but the two firms pay different amounts (unless state law bans this practice by instituting community rating for the small group market). If this weren't the case, Colorado and other states wouldn't have to have state laws specifically addressing this. (http://www.businessword.com/index.php/weblog/comments/2957)

"Yet despite the fact that there is no mandate, no penalty tens of millions of healthy employees voluntarily choose to get coverage even when they are healthy despite the fact they *could* simply wait until they are sick."

That is nonsense. The penalty is THOUSANDS per year in forgone compensation.

[Statistical]

22. Yet they don't wait do they.

"That is nonsense. The penalty is THOUSANDS per year in forgone compensation"

Congress could have structured the bill such that subsidizes not acted upon would have been in effect thousands in forgone compensation.


There is no logical basis that people must be forced to opt into insurance coverage. They don't for employer based plans and health people continue to opt-in year after year.

Of course if your goal is to structure a bill so worthless that it provide negligible benefit to the participants and massive benefit to insurance shareholders they you likely WILL need punitive mandates to force compliance.

[BzaDem]

24. "Congress could have structured the bill such that subsidizes not acted upon"

Huh? When an employee decides not to get health coverage through their employer, the employer still gets thousands of the employee's dollars. Without a mandate, when a citizen decides not to get health coverage, the subsidies they don't take from the government do NOT go to the insurance companies.

That means the insurance company has less premium dollars to cover more sick people, and the price per person will therefore skyrocket. JUST LIKE IT ALREADY HAS in states that have tried this. This is trivial economics.

The truth is, you could avoid a mandate by simply having the government pay premiums to insurance companies when someone opts out (just like people essentially pay thousands of dollars per year to their employers when they opt out). Do you really want that? Giving health insurance companies more money, without any actual insurance return? Wouldn't that be much worse from your point of view?

[Statistical]

25. What do you think the current bill does? Gives insurance companies more money.

No mandate is required.

Insurance companies don't benefit when an employee opts out of an employer based plan.
Insurance companies don't beneift when an individual opts out of govt subsidies.

Somehow the first one requires no mandate to force compliance.
Somehow the second one requires punitive mandates enforced by the IRS to force compliance.

Maybe just maybe.
People find value in employer based coverage.
The govt knows nobody will find value in the private market coverage and thus must be forced.

[BzaDem]

26. "Insurance companies don't benefit when an employee opts out of an employer based plan."

The EMPLOYER benefits. That way, when insurance companies raise rates on the EMPLOYER when those with conditions opt back in, the employer doesn't have to pass on the entire rate hike to the employee in the form of massively reduced wages (since it has all this money pocketed from the opt-out-ers when they opted out). The distinction between the employer and the insurance company is basically irrelevant, since the costs are passed on either way.

And in many cases, large employers ARE the insurance company. They pay for all care out of pocket.

This situation is not at ALL analogous to your proposed no-mandate world. You are just papering over a critical distinction, and your argument will not make sense unless you can somehow actually address it.

[Statistical]

28. No the govt would save money when people opt out of subsidies.

Either way there are thee three same entities.

Insurance company
Employer - partial benefit payer
Employee - beneficiary and partial benefit payer

Insurance company
Government - partial benefit payer
Citizen - beneficiary and partial benefit payer

Anything that benefits the employer would benefit the government. Anything that makes it more difficult for government would make it more difficult for employer.

Employer's can't force employees to participate. They encourage participate via subsidies. Somehow employer based coverage is very successful despite no mandates and most healthy young employees still participate.

The government doesn't HAVE to force citizens to participate. They *COULD* encourage participation via subsidies.

The only time you need a mandate is when you know the system sucks SO BAD it presents no or negligible value to the beneficiary that even with subsidies they would choose not to participate if given a choice.

[BzaDem]

30. What you are saying would only be true if the government took unused subsidies and gave them to

insurance companies. Otherwise, the situations are not at all analogous.

Right now, employers take unused subsidies and give them to insurance companies (more specifically, use them to avoid wage cuts when rates go up due to opt-outers joining in again).

This is COMPLETELY different than the current bill, since the government does NOT take unused subsidies and give them to insurance companies. This is a critical distinction.

[Statistical]

31. Employers don't take unused subsidies and give them to insurance companies.

Where do you get this idea from?

[BzaDem]

32. Money is obviously fungible.

Insurance costs go up for employers when opt-outers re-join in after they get sick. And employers have the money they saved by not giving subsidies.

Whether they keep separate bank accounts or cash vaults for this is irrelevant. Employers get more from employees who opt out, and they pay more to insurance companies when they opt back in sick. Money is fungible. This is obviously true for the huge large group self insurance market (where employers ARE the insurance companies), but it is no less true when the employer is an intermediary. Formalism doesn't change economics.

[Statistical]

35. So the same benefits and costs apply to federal govt.

The federal govt saves subsidies when people opt out and uses them if/when they rejoin.

Neither the employers, employees, or insurance companies suffer under the current employer based system.
Opt-in rates are extremely high. No mandate is required.

[BzaDem]

36. ... no. The subsidies saved by the federal government do not go to the insurance companies.

This means everyone's rates end up being raised by a proportional amount, which starts the death spiral of extremely high rates and more people leaving because of them.

It is completely different from the employer system, where money saved by employers IS used to prevent skyrocketing rates for employees. Because these savings are used to make sure the rates do not skyrocket, there is no death spiral.

It is amazing to me how you continue to defend this, when this has been TRIED in the State of New York and has resulted in exactly the effects that trivial economics 101 would predict. The individual market was decimated, with enrollment falling by a factor of 30.

Let's say you want insurance for a family of 4 in New York on the individual market. They have no discrimination on the basis of pre-existing conditions. You can pay 1500/month for a $5,000 deductible, plus 10% of all fees after deductible up to $7500 (with no out of network coverage at all). Or, if you want any out of network coverage at all, you can pay 1800/month with $5k deductible plus 20% of all fees after that up to $10000. (You can only get the above two plans if you are self employed.)

Or, if you don't want a $5k deductible, you can get a plan without a deductible. For $4,000 every month.

Now, let's look in Massachusetts for the same family. You can pay around 980 for a $2,000 deductible plan, 1240 for a $1,000 deductible plan, or 1700 for the 0 deductible plan. New York costs 2.3 times as much.

[pnwmom]

34. Not true under the old law.

When my husband changed companies my pregnancy was a preexisting condition and wasn't covered under his new policy. I had to pay COBRA to keep the old insurance in effect till the baby was born. If I had had some condition like cancer, his group policy wouldn't have covered me for a year.

[BzaDem]

12. Even the Obama administration concedes in court that the pre-existing condition regulations cannot

be severed from the mandate. Other stuff can, but not the insurance regulations.

If you want to see what insurance would look like on the individual market without a mandate, just look at New York state. They have pre-existing condition regulations, but no mandate. The number of individual market policies has fallen from over 700k to around 30k in the last 15 years since the regulation was enacted, since it now costs an astronomical amount to become insured in the individual market.

[pnwmom]

33. Because otherwise there is no way to pay for dropping the ban

against preexisting conditions.

[FBaggins]

11. I don't think that it was an omission... the non-severability was intentional.

Without the mandate, much of the bill falls apart (and certainly wouldn't have passed).

The parts that are desired without it, could easily pass on their own.

[BzaDem]

14. "The parts that are desired without it, could easily pass on their own."

... no.

You are correct that SOME of the act isn't severable (namely, the insurance regulations). They need the mandate to work.

But the huge expansion of Medicaid in all 50 states is certainly severable. That was a huge part of the bill (hundreds of billions of dollars). And there is NO WAY that would "easily pass" on its own.

[FBaggins]

16. How are you determining severability?

It isn't an issue of whether we think that part is related to the mandate.

But yes... the expansion would not pass on its own.

[BzaDem]

19. It actually is an issue of whether the expansion could operate independently of the mandate.

And it definitely can.

[FBaggins]

27. Where are you getting that from?

Severability is usually written right into the bill. It's either there or it isn't.

[BzaDem]

29. Whether severability is written into the bill is only a small factor in whether provisions can be

severed. Courts (including the Supreme Court) routinely sever provisions of unconstitutional bills without severability clauses.

[FBaggins]

37. It is by no means a "small" factor.

It isn't the only factor... but it's a big deal.

Particularly when such a clause was at one point included in a bill and then later removed. That's evidence that Congress did not intend for the act to be severable.

[BzaDem]

38. Actually, there is a real reason why they missed it for this bill.

These kinds of things are dropped off accidentally during frantic last minute staff bill writing all the time.

Where does it all get fixed? Conference committee. There isn't a huge amount of attention paid to the technical minutia during the first round Senate passage, since it always has to go through Conference anyway. That's where all this stuff gets corrected by the legal experts. Conference committee is where everything is checked, double-checked, and triple-checked.

Except... what happened with this bill? It never made it to conference committee, since Scott Brown got elected. That meant the House had to pass the Senate bill word for word -- imperfections and all. They couldn't add a severability clause like they would if they had a conference committee. This was further made clear by the fact that the reconciliation bill -- the one that was pre-negotiated and that they could change in the Senate with 50 votes -- had a severability clause.

In any case, my point was just that courts routinely sever portions of bills even when they don't have severability clauses. The Supreme Court did it again last year, and lower courts do it all the time. The lack of a severability clause does not lead to a presumption against severability -- even judge Vinson admitted that. He acknowledged the normal rule was to sever even when there was no severability clause -- he just said that it would be too hard for this complicated bill, so he'll just throw out the whole law. There is no way his severability analysis (if you could even call it that) will stand up on appeal.

[FBaggins]

39. A real reason that doesn't help... it hurts.

Except... what happened with this bill? It never made it to conference committee, since Scott Brown got elected. That meant the House had to pass the Senate bill word for word -- imperfections and all.

Right. Which is evidence that the bill with the severability clause would have failed... and the one without was able to pass. That's what legislative intent is all about. There's clear evidence that there wasn't a governing majority wanting the provision to be severable. The fact that it was in there and then removed in the version that passed is just more ammunition for a court that wants to kill the entire thing.

There really isn't a legislative intent argument that goes "oops... that one slipped". Congress has the ability to fix such slips if that's their intent. They didn't.

In any case, my point was just that courts routinely sever portions of bills even when they don't have severability clauses.

I don't know about "routinely", but yeah, it happens all the time. They also kill bills when an important provision is unconstitutional. The judge did cite at least one specific exeption that dealt with this same intent issue.

They knew that severability would be an issue in these court challenges... and they knew that the language wasn't in there. The lack of the language isn't an oversight so much as it is a reflection on the change in Congress. I don't know how a pro-corporate but anti-obama SC majority is going to rule... but there's enough wiggle room in this one for them to rule as this judge did.

[BzaDem]

40. Intent that there wasn't a majority to fix a mistake is not the same as intent for the mistake to be

made in the first place.

In other words, the fact that it was changed is not at all evidence that there wasn't a majority that wanted severability, since those things are usually added during conference.

The real question is: based on legislative history, was there intent to make it not severable? And the answer is no. There is not one speech, one comment, or one ounce of testimony to remove the normal presumption of severability that exists even without a clause. That's why the Supreme Court in its most recent severability case (about Sarbanes-Oxley) severed out the unconstitutional provision in the most narrowest way possible last year -- without a single dissenting vote on that point, and with no clause.

I would agree that the lack of the clause gives the Supremes another arrow in their quiver to pull another Bush v. Gore and ignore case law. So maybe we agree somewhat. But the lack of the clause is not going to be the deciding factor. It isn't even decisive if the clause exists -- they can still choose not to sever in the presence of a clause if they don't think the severed statute would have passed both houses. The truth is, they are going to make a decision, and then they are going to justify whatever decision they make as much as they can. If they want to sever, they'll sever, and justify it. If they don't, they won't, and justify it. While it is an interesting legal issue, I highly doubt it is going to be decisive to whatever goes on in their minds in a case like this.

[MisterP]

23. it's like a "poison pill" but in reverse--a fig leaf, if you will

like yoking unemployment funding to the tax cut extension for the superrich, or the requirement to cover preexisting conditions (if you can afford it, natch) together with the individual mandate (Baucus's big matzoh ball)
if they give us a little good to go with the big bad, they think we peasants will just be grateful and take it sitting down