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Obama Health Care Law Should Be Completely Thrown Out, States Lawyer Says

The Obama administration’s health- care reform should be thrown out because it overreaches the federal government’s authority, opponents argued in a Florida lawsuit three days after a judge in Virginia ruled part of the law unconstitutional.

“The entire act has to fall,” Deputy Florida Attorney General Blaine Winship told U.S. District Judge C. Roger Vinson in Pensacola yesterday. Vinson heard arguments from lawyers for 20 states and the U.S. government on whether the act exceeds legitimate federal power.

Led by Florida Attorney General Bill McCollum, the states sued the day President Barack Obama signed the legislation in March, arguing it burdens state budgets and unconstitutionally compels people to buy coverage.

A federal judge in Richmond, Virginia, on Dec. 13 invalidated the mandatory coverage portion of the Patient Protection and Affordable Care Act that Obama signed into law on March 23, while leaving the remainder of it intact. The administration won prior rulings from federal judges in Detroit and in Lynchburg, Virginia.

The government has called the minimum-coverage provision the linchpin of the reform effort because it would push younger and healthier people into the insurance pool.

The individual mandate and expansions of Medicaid and employer-based coverage would extend health coverage to 32 million more people by 2019, according to the Congressional Budget Office. Mandatory coverage would start in 2014.

‘Alternative Ways’

“There are lots of alternative ways to provide health care to the needy without imposing on individual liberties and freedom of choice,” Vinson said during yesterday’s hearing.

The sweeping 955-page law -- its table of contents alone requires 13 pages -- bars insurers from denying coverage to people who are sick and from imposing lifetime limits on costs. It also includes pilot projects to test ideas like incentives for better results and bundled payments to medical teams for patient care.

Winship and outside counsel David B. Rivkin sparred with U.S. Justice Department attorney Ian Gershengorn over whether the government’s constitutional authority to regulate commerce includes power over the “inactivity” of not buying insurance.

“Inactivity cannot be regulated under the Commerce Clause,” Rivkin said. “Supreme Court law is perfectly consistent on this over the decades.” Otherwise, under the government’s logic, “every inactivity is economic,” he said.

‘Innocent Bystanders’

“The uninsured are not inactive,” Gershengorn countered. “This is not a situation of innocent bystanders standing to the side,” he said, adding that those who weren’t purchasing insurance were making the economic decision to pay later or shift the cost.

The $2.5 trillion national health care market is unlike the market for anything else, said the attorney for the U.S. government.

Medical care providers will not refuse to treat those who cannot pay “because that would be barbarous,” Gershengorn said.

Vinson asked Rivkin whether the government’s theory would allow regulation of any behavior with an economic impact.

“They can decide how much broccoli everyone should eat each week?” Vinson asked.

“Certainly,” replied Rivkin, an attorney in the Cleveland-based law firm Baker Hostetler LLP.

Government’s Lawyer

“We’ve always exercised the freedom whether we want to buy or not buy a product,” Vinson told the Obama administration’s lawyer.

Gershengorn said health insurance is “a financing mechanism,” not a product. “It’s not shoes,” he said. “It’s not cars. It’s not broccoli.”

The states said in court papers that they would be forced to accept costly changes in Medicaid -- the state and federal partnership program to provide health care for the indigent -- which under the act would be expanded to cover everyone under age 65 with an income as high as one-third above the federal poverty level.

Dropping out would be a practical impossibility, they said.

“No federal program besides Medicaid funds health-care services for the states’ poorest residents, and the states plainly are unable to establish, fund and implement a Medicaid- like replacement program, much less to do so immediately,” the states said.

States “have no real choice but to accept this new Medicaid regime,” Winship said yesterday.

“Congress knew perfectly well it was not the states’ choice,” he said. “They knew they were wielding a stick and not a carrot.” He called the expanded program “Medicaid on steroids.”

Offsetting Benefits

The administration argued in court papers that the states’ higher Medicaid costs would be offset by other parts of the law.

U.S. District Judge Henry E. Hudson in Richmond ruled Dec. 13 that requiring people under 65 obtain coverage or pay a cash penalty was unconstitutional.

The government lacks the authority to “compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market,” wrote Hudson, who was named to the bench by Republican President George W. Bush.

Vinson, named to the bench in 1983 by Republican Ronald Reagan, told Gershengorn that he paid out of pocket for the delivery of his first child, at a rate of about $100 per pound.

Law’s Linchpin

In Washington, debate over the law is turning toward the U.S. Supreme Court, which advocates on both sides say probably will decide its future.

Judges in the cases decided in favor of the Obama administration, George Caram Steeh in Detroit and Norman K. Moon in Lynchburg, were appointees of Democrat Bill Clinton.

More than 15 friend-of-the-court briefs have been filed in the Florida case.

They include submissions from U.S. Representative John Boehner, an Ohio Republican slated to be speaker of the House in January; caucus member Michele Bachmann of Minnesota; 62 of her colleagues; and 32 Republican senators including Minority Leader Mitch McConnell of Kentucky and 2008 presidential candidate John McCain of Arizona.

Organizations including the retiree advocacy groups AARP, Gray Panthers and American Academy of Pediatrics submitted a memorandum supporting the act.

Defending the administration’s stance in their own brief are almost 40 economics scholars including Nobel laureates Eric Maskin, George Akerlof and Kenneth Arrow.

Commerce Regulation

Timothy S. Jost, a law professor at Washington and Lee University in Lexington, Virginia, said the universal need for medical care makes it unlike any other commodity, putting it within the purview of congressional regulation.

“The decision not to purchase health insurance has a profound effect on interstate commerce,” he said in a Dec. 13 phone interview.

More than $40 billion in health-care costs for the uninsured is shifted annually to providers, insurers and taxpayers, Jost said, citing the economists’ brief.

Joining Florida in the suit are Alabama, Alaska, Arizona, Georgia, Idaho, Indiana, Louisiana, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, South Dakota, Texas and Utah.

State Attorneys General

The attorneys general of Colorado, Michigan, Pennsylvania and Washington also joined in the Florida suit. The governors of those states filed a brief in support of the administration.

The chief legal officers, Colorado’s John Suthers, Michigan’s Mike Cox, Pennsylvania’s Tom Corbett and Washington’s Rob McKenna, are Republicans. Their respective governors, Bill Ritter, Jennifer Granholm, Ed Rendell and Christine Gregoire, are Democrats.

“I have a decision to make, and I will make it as quickly as possible,” Vinson said yesterday after hearing nearly three hours of argument. The judge offered no specific timetable for his ruling.

“This is ultimately about freedom,” Texas Attorney General Greg Abbott told reporters outside the courthouse. He said that if allowed to stand, the legislation would lead to a “giant expansion” of Congress’s power to regulate Americans under the Commerce Clause.

“Liberty and freedom are being fought for in this courthouse today,” he said.

Ron Pollack, executive director of the consumer advocacy group Families USA, supports the healthcare act. Addressing reporters outside the court, Pollack said it isn’t the threat that Abbott and others say it is.

‘Outlandish’ Comment

Winship’s “Medicaid on steroids” comment was “outlandish,” he said.

“The attorney generals want us to believe this will bankrupt their states,” Pollack said. “The states do pick up some costs but it is only a tiny portion. Most of the states will save money when this legislation goes into effect.”

The case is State of Florida v. U.S. Department of Health and Human Services, 10-cv-00091, U.S. District Court, Northern District of Florida (Pensacola).

To contact the reporters on this story: Andrew M. Harris in Pensacola, Florida, at aharris16@bloomberg.net; Duwayne Escobedo in Pensacola, Florida, at duwayne.escobedo@gmail.com.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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