Tuesday, March 27, 2012

HHS v Florida, Round 2

For transcrips, clicky-clicky.

The Players

SG Donald Verilli. He was a clusterf#$k. At one point he needed Ginsberg and Sotameyer to answer his questions.

For the state of Florida, Paul Clement and Michael Carvin. Carvin was hit and miss, but came through when it matterred. Clement for MVP.


To be honest, the only Justice whose vote is in doubt is Justice Kennedy. So let's make the highlights about him.

GENERAL VERRILLI: Under the Commerce Clause, what Congress has done is to enact reforms of the insurance market, directed at the individual insurance market, that preclude -- that preclude discrimination based on pre-existing conditions, that require guaranteed issue and community rating. And it uses -- and the minimum coverage provision is necessary to carry into execution those insurance reforms -
JUSTICE KENNEDY: Can you create commerce in order to regulate it?
GENERAL VERRILLI: That's not what's going on here, Justice Kennedy, and we're not seeking to defend the law on that basis.
In this case, the -- what is being regulated is the method of financing health -- the purchase of health care. That itself is economic activity with substantial effects on interstate commerce.

Translation: yes, we are creating commerce, and we are regulating it.

JUSTICE KENNEDY: Could you help -- help me with this. Assume for the moment -- you may disagree. Assume for the moment that this is unprecedented, this is a step beyond what our cases have allowed, the affirmative duty to act to go into commerce. If that is so, do you not have a heavy burden of justification?
I understand that we must presume laws are constitutional, but, even so, when you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution?

Translation: Kennedy is setting the bar very high since, theorhetically, this kind of power has never been granted to Congress.

JUSTICE KENNEDY: Well, then your question is whether or not there are any limits on the Commerce Clause. Can you identify for us some limits on the Commerce Clause?
GENERAL VERRILLI: Yes. The -- the rationale purely under the Commerce Clause that we're advocating here would not justify forced purchases of commodities for the purpose of stimulating demand. We -- the -- it would not justify purchases of insurance for the purposes -- in situations in which insurance doesn't serve as the method of payment for service -
JUSTICE KENNEDY: But why not? If Congress -- if Congress says that the interstate commerce is affected, isn't, according to your view, that the end of the analysis.
GENERAL VERRILLI: No. The -- we think that in a -- when -- the difference between those situations and this situation is that in those situations, Your Honor, Congress would be moving to create commerce. Here Congress is regulating existing commerce, economic activity that is already going on, people's participation in the health care market, and is regulating to deal with existing effects of existing commerce.

Translation: Justice Kennedy wants to know specifically what limit to Congressional power will be. If, in fact the government believes they can just influence interstate commerce, or is there some broader scope of government influence the government is willing to define. One could almost see the SG flopsweat this one.

I don't think Kennedy was happy with the vague answer.

BTW, Chief Justice Roberts jumps in at this point with the broccoli analogy. Justice Scalia seen visibly drooling*.
*we would think

p. 25
JUSTICE KENNEDY: I'm not sure which way it cuts, if the Congress has alternate means. Let's assume that it could use the tax power to raise revenue and to just have a national health service, single payer. How does that factor into our analysis? In one sense, it can be argued that this is what the government is doing; it ought to be honest about the power that it's using and use the correct power. On the other hand, it means that since the Court can do it anyway -- Congress can do it anyway, we give a certain amount of latitude. I'm not sure which the way the argument goes.
GENERAL VERRILLI: Let me try to answer that question, Justice Kennedy, and get back to the question you asked me earlier. The -- the -- I do think one striking feature of the argument here that this is a novel exercise of power is that what Congress chose to do was to rely on market mechanisms and efficiency and a method that has more choice than would the traditional Medicare/Medicaid type model. And so, it seems a little ironic to suggest that that counts against it. But beyond that, in the sense that it's novel, this provision is novel in the same way, or unprecedented in the same way, that the Sherman Act was unprecedented when the Court upheld it in the Northern Securities case; or the Packers and Stockyards Act was unprecedented when the Court upheld it, or the National Labor Relations Act was unprecedented when the Court upheld it in Jones & Laughlin; or the dairy price supports in Wrightwood Dairy and Rock Royal. And -
JUSTICE SCALIA: Oh, no, it's not. They all involved commerce. There was no doubt that what was being regulated was commerce. And here you're regulating somebody who isn't covered.
By the way, I don't agree with you that the relevant market here is health care. You're not regulating health care. You're regulating insurance. It's the insurance market that you're addressing and you're saying that some people who are not in it must be in it, and that's -- that's different from regulating in any manner commerce that already exists out there.

Translation: Kennedy, reasserting his earlier point thinks this might be unprecedented and is looking for other implementation standards. Verrelli cites case law stating that this isn't really unprecedented. Judge Scalia...took exception to that characterization.


p. 27
GENERAL VERRILLI:And I do think, Justice Kennedy, getting back to the question you asked before, what -- what matters here is whether Congress is choosing a tool that's reasonably adapted to the problem that Congress is confronting. And that may mean that the tool is different from a tool that Congress has chosen to use in the past. That's not something that counts against the provision in a Commerce Clause analysis.


JUSTICE SCALIA: Wait. That's -- it's both "Necessary and Proper." What you just said addresses what's necessary. Yes, has to be reasonably adapted. Necessary does not mean essential, just reasonably adapted. But in addition to being necessary, it has to be proper. And we've held in two cases that something that was reasonably adapted was not proper, because it violated the sovereignty of the States, which was implicit in the constitutional structure.
The argument here is that this also is -- may be necessary, but it's not proper, because it violates an equally evident principle in the Constitution, which is that the Federal Government is not supposed to be a government that has all powers; that it's supposed to be a government of limited powers. And that's what all this questioning has been about. What -- what is left? If the government can do this, what -- what else can it not do?
GENERAL VERRILLI: This does not violate the norm of proper as this Court articulated it in Printz or in New York because it does not interfere with the States as sovereigns. This is a regulation that -- this is a regulation -
JUSTICE SCALIA: No, that wasn't my point. That is not the only constitutional principle that exists.

I don't think Justice Scalia should have left him off the hook on this one. Justice Kennedy politely asked that SG Verrilli define the limits of Congressional power. Scalia pressed him again and didn't get an answer. And really, at this point, I don't think we need one given the nature of the authoring regime. MOVING ON.

p. 30
JUSTICE KENNEDY: But the reason, the reason this is concerning is because it requires the individual to do an affirmative act. In the law of torts, our tradition, our law has been that you don't have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him, absent some relation between you. And there is some severe moral criticisms of that rule, but that's generally the rule.
And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the Federal Government to the individual in a very fundamental way.
GENERAL VERRILLI: I don't think so, Justice Kennedy, because it is predicated on the participation of these individuals in the market for health care services. Now, it happens to be that this is a market in which, aside from the groups that the statute excludes, virtually everybody participates. But it is a regulation of their participation in that market.

Translation: Justice Kennedy is still looking for a reason the government can compel people to enter commerce in a market. SG Verrilli states it's not forcing individuals to participate, but is a regulation of participation. This is why people don't like lawyers.

And that's it for Justice Kennedy on the record when Verrilli is questioned; 23 more pages of back and forth blah blah blah.

Next up, State of Florida. Clement bats leadoff.

p. 56 
JUSTICE KENNEDY: Is the government's argument this -- and maybe I won't state it accurately. It is true that the noninsured young adult is, in fact, an actuarial reality insofar as our allocation of health services, insofar as the way health insurance companies figure risks. That person who is sitting at home in his or her living room doing nothing is an actuarial reality that can and must be measured for health service purposes; is that their argument?
MR. CLEMENT: Well, I don't know, Justice Kennedy, but, if it is, I think there's at least two problems with it. One is, as Justice Alito's question suggested earlier -- I mean, somebody who is not in the insurance market is sort of irrelevant as an actuarial risk. I mean, we could look at the people not in the insurance market, and what we'd find is that they're relatively young, relatively healthy, and they would have a certain pool of actuarial risks that would actually lead to lower premiums. The people that would be captured by guaranteed rating and community issue -- guaranteed issue and community rating would presumably have a higher risk profile, and there would be higher premiums. And one of the things, one of the things, Congress sought to accomplish here was to force individuals into the insurance market to subsidize those that are already in it to lower the rates. And that's just not my speculation, that's Finding (I) at 43a of the Government's brief that -- it has the statute. And that's one of the clear findings.
JUSTICE GINSBURG: Mr. Clement, doesn't that work -- that work the way Social Security does? Let me put it this way: Congress, in the '30s, saw a real problem of people needing to have old age and survivor's insurance. And, yes, they did it through a tax, but they said everybody has got to be in it because if we don't have the healthy in it, there's not going to be the money to pay for the ones who become old or disabled or widowed. So, they required everyone to contribute. There was a big fuss about that in the beginning because a lot of people said -- maybe some people still do today -- I could do much better if the government left me alone. I'd go into the private market, I'd buy an annuity, I'd make a great investment, and they're forcing me to paying for this Social Security that I don't want. But that's constitutional. So, if Congress could see this as a problem when we need to have a group that will subsidize the ones who are going to get the benefits, it seems to me you're saying the only way that could be done is if the government does it itself; it can't involve the private market, it can't involve the private insurers. If it wants to do this, Social Security is its model. The government has to do -there has to be government takeover. We can't have the insurance industry in it. Is that your position?

Translation: Justice Kennedy asks why...ah, shit I am really not sure what's going on here. Just think that somehow Justice Ginsberg stated social security did was enacted and compels people to enter without people wanting to enter. Personally, I think the analogy is flawed in that people can choose to work. Also, social security sounded like a good idea; in truth it's a Ponzi scheme. Just sayin'...

p. 70
MR. CLEMENT: And with respect to the health insurance market that's designed to have payment in the health care market, everybody is not in the market. And that's the premise of the statute, and that's the problem Congress is trying to solve. And if it tried to solve it through incentives, we wouldn't be here; but, it's trying to solve it in a way that nobody has ever tried to solve an economic problem before, which is saying, you know, it would be so much more efficient if you were just in this market -
JUSTICE KENNEDY: But they are in the market in the sense that they are creating a risk that the market must account for.
MR. CLEMENT: Well, Justice Kennedy, I don't think that's right, certainly in any way that distinguishes this from any other context. When I'm sitting in my house deciding I'm not going to buy a car, I am causing the labor market in Detroit to go south. am causing maybe somebody to lose their job, and for everybody to have to pay for it under welfare. So, the cost shifting that the government tries to uniquely associate with this market -- it's everywhere. And even more to the point, the rationale that they think ultimately supports this legislation, that, look, it's an economic decision; once you make the economic decision, we aggregate the decision; there's your substantial effect on commerce. That argument works here. It works in every single industry.

Translation: Kennedy is taking the opposite side of the mandate argument to contend that people not in the health care market ultimately do effect commerce. Clement answers that any inaction in a given market effects commerce. Good job.

BTW, Justice Breyer is not having fun at this point. He's eminating stinklines.

Next to bat for the state of Florida is Michael Carvin.

Note: Justice Breyer goes on for 5 pages reflecting on a mystery epidemic that wipes people out and the government's response. Going out on a limb here, but I just don't think Justice Breyer likes Florida's position. He then has this interesting exchange with Carvin:

JUSTICE BREYER: -- and say that in fact it turns out that 90 percent of all automobiles driving interstate without certain equipment put up pollution, which travels interstate -- not 100 percent, maybe only 60 percent. Does the EPA have the power then to say you've got to have an antipollution device? It's statistical.
MR. CARVIN: What they can't do -- yes, if you have a car, they can require you to have an anti-pollution -
JUSTICE BREYER: Then you're not going on statistics; you're going on something else, which is what I'd like to know what it is.
MR. CARVIN: It's this. They can't require you to buy a car with an anti-pollution device. Once you've entered the market and made a decision, they can regulate the terms and conditions of the car that you do, and they can do it for all sorts of reasons. What they can't do it compel you to enter the market.
JUSTICE BREYER: Now we -- now you've changed the ground of argument, which I accept as -- as totally legitimate. And then the question is 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, which is a market for health care?
MR. CARVIN: If being born is entering the market, then I can't think of a more plenary power Congress can have, because that literally means they can regulate every human activity from cradle to grave. thought that's what distinguished the plenary police power from the very limited commerce power. I don't disagree that giving the Congress plenary power to mandate property transfers from A to B would be a very efficient way of helping B and of accomplishing Congress's objectives. But the framers-
JUSTICE BREYER: I see the point. You can go back to, go back to Justice Kagan. Don't forget her question.

/lights cigarette. inhales deeply.
That was awesome. Carvin drinks for free. He finally found his voice. Moving on

MR. CARVIN: It is clear that the failure to buy health insurance doesn't affect anyone. Defaulting on your payments to your health care provider does. Congress chose, for whatever reason, not to regulate the harmful activity of defaulting on your health care provider. They used the 20 percent or whoever among the uninsured as a leverage to regulate the 100 percent of the uninsured.
JUSTICE KENNEDY: I agree -- I agree that that's what's happening here (ed - BOOM).
JUSTICE KENNEDY: And the government tells us that's because the insurance market is unique. And in the next case, it'll say the next market is unique. But I think it is true that if most questions in life are matters of degree, in the insurance and health care world, both markets -- stipulate two markets -- the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries. That's my concern in the case.
MR. CARVIN: And, Your -- I may be misunderstanding you, Justice Kennedy. I hope I'm not. Sure, it would be perfectly fine if they allowed -- you do actuarial risk for young people on the basis of their risk for disease, just like you judge flood insurance on the homeowner's risk of flood. One of the issues here is not only that they're compelling us to enter into the marketplace, they're not -- they're prohibiting us from buying the only economically sensible product that we would want, catastrophic insurance. Everyone agrees the only potential problem that a 30-year-old, as he goes from the healthy 70 percent of the population to the unhealthy 5 percent -and yet Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance. And the reason they do that is because they needed this massive subsidy. Justice Alito, it's not our numbers. CBO said that injecting my clients into the risk pool lowers premiums by 15 to 20 percent. So, Justice Kennedy, even if we were going to create exceptions for people that are outside of commerce and inside of commerce, surely we'd make Congress do a closer nexus and say, look, we're really addressing this problem; We want these 30-year-olds to get catastrophic health insurance. And not only did they -- they deprived them of that option. And I think that illustrates the dangers of giving Congress these plenary powers, because they can always leverage them. They can always come up with some public policy rationale that converts the power to regulate commerce into the power to promote commerce, which, as I was saying before, is the one that I think is plenary.

Translation: Justice Kennedy didn't buy the "health insurance market is unique" argument. Carvin agrees and expands the point.

And that's it.

Final Analysis

The Justices have their votes set. Kennedy is in the middle. Kennedy just wants to know what the implications of the mandate are, the government's rationale for forcing people into commerce, and what the precedent is. I think the government fell very short of the Kennedy bar.

Still, Kennedy can find a reason to uphold, he will.

It was encouraging that when it mattered most, the government could not articulate there position in such a way to sway the undecided, i.e. Justice Kennedy had to keep asking the same question which remained unanswered. That will have to do for now.

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