Obama Administration, States Take Health-Care Fight to Court in Florida

The Obama administration’s defense of its health-care reform shifts to Florida today, three days after a judge in Virginia ruled part of the new law unconstitutional.

U.S. District Judge C. Roger Vinson in Pensacola will hear arguments from lawyers for 20 states and the Justice Department on whether the measure meant to provide health insurance for all Americans exceeds the boundaries of federal power.

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

“If this were allowed to stand, Congress could make you do anything,” Randy E. Barnett, a Georgetown University law professor who filed a brief in the Virginia case attacking the law, said in a phone interview. “It would turn citizens into subjects.”

The portion of the Patient Protection and Affordable Care Act that says individuals must obtain coverage or face a cash penalty was declared unconstitutional on Dec. 13 by U.S. District Judge Henry E. Hudson in Richmond, Virginia. The yearly penalty can be as much as $2,085 per family for most Americans.

“Neither the Supreme Court nor any federal circuit court of appeals,” Hudson wrote, has extended the power under the U.S. Constitution “to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

States in the Florida case are seeking to have the entire bill declared void, not just mandatory insurance.

Central Element

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.

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.

The administration won prior rulings from federal judges in Detroit and in Lynchburg, Virginia. A senior official in the administration said its loss in Richmond, Virginia, will probably be appealed.

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.

Independent Decision

“Judge Vinson will reach his decision independent of the three previous federal judges,” Barnett said in the Dec. 13 interview.

The Pensacola judge on Oct. 14 denied a government bid for dismissal. More than 15 friend-of-the-court briefs have since been filed in the 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.

Economists’ Argument

“The requirement to obtain a minimal level of health insurance is predicated on the unique characteristics of the health-care market,” the economists said, including “the unavoidable need for medical care,” the unpredictability of that need and the inability of care providers to decline care in an emergency.

Timothy S. Jost, a law professor at Washington and Lee University in Lexington, Virginia, said the universality of that need makes health care unlike any other commodity, placing it within the purview of congressional regulation.

“The Commerce Clause is about regulating commerce,” he said in a Dec. 13 telephone interview. “It is basically economic decisions that are regulated. The decision not to purchase health insurance has a profound effect on interstate commerce.”

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

State Costs

Florida and the other states argue they’ll be forced to assume “billions of dollars of unaffordable new costs,” if the act’s expansion of liabilities under Medicaid, the joint state- federal health insurance program for the poor, is allowed to stand.

“The states cannot avoid these crushing new costs,” they said in a brief, because there is no readily available alternative program for providing health care to the indigent.

The Obama administration, in its own submission the same day, countered that the states’ increased Medicaid costs would be offset by other provisions of the legislation.

Vinson said he will allow each side one hour to argue.

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.

Party Divide

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.

Hudson, the judge who threw out the key provision of the law in Virginia this week, was appointed by Republican President George W. Bush.

Judges who ruled in favor of the administration on the health law, George Caram Steeh in Detroit and Norman K. Moon in Lynchburg, were appointees of Democrat Bill Clinton.

Vinson, the Pensacola judge, was named by Republican Ronald Reagan.

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 reporter on this story: Andrew M. Harris in Pensacola, Florida, at aharris16@bloomberg.net.

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

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