Three possible surprise rulings on the Affordable Care Act

Supporters of the Affordable Care Act would regard a Supreme Court ruling that the individual mandate is unconstitutional as a chaos-inducing disaster; a strike-down of the entire law as a catastrophe; and an unconditional upholding as an unlikely consummation devoutly to be wished.  There are, however, more ambiguous possibilities -- each unlikely in itself, but taken together, representing a reasonable chance of not-entirely-awful surprise.  Here are three.

1. Kick the can.  The first question the justices considered in oral argument is whether the constitutionality of the mandate can be challenged before anyone is subject to the mandate, which won't happen until the exchanges open in 2014. The case that they cannot rests on the Anti-Injunction Act, which bars challenges to a tax until the tax has been assessed. Both the government and the plaintiffs argued that the Anti-Injunction Act does not apply in this case; the Court appointed an outside attorney (Richard Long) to argue that it does. The arguments were arcane -- a plain-English summary is available on Scotusblog --  and most observers did not think that the justices seemed to seriously entertain the notion that the AIA applies in this case.

But a punt remains a legally viable option if five justices can't coalesce in a coherent decision to strike all or part of the law. What if, say, two justices want to strike the whole thing, and three want to strike the mandate alone, or in some way reshape it (see below), and they can't agree on instructions to give Congress if they leave a law on the books while destroying or reshaping a part that affects the whole? Mightn't they decide to defer decision until the mandate (and the exchanges) are actually operating?

Don Taylor envisions a distant healthcare compromise; might Justice Kennedy impose something like it next month?

At present it would seem that there is no common ground between the parties on healthcare -- though the Democrats built the ACA on Republican ground, which the GOP fled (and rhetorically bombarded) as soon as the Dems set foot on it.

Nonetheless, looking down the road and seeking the contours of a future compromise, Don Taylor, in his new book Balancing the Budget is a Progressive Priority, identifies Democrats' top priority as universal coverage, and Republicans', insofar as they have one, as ensuring that everyone has "skin in the game," i.e. is on the hook for some of the medical expense they generate.  He therefore envisions this future deal:

• Universal catastrophic coverage implemented through Medicare, with gap insurance available to persons wanting it (no mandate!) via state based exchanges
• With a massive deductible (I suggest $10,000/persons; $15,000/family to maintain a key role for private insurance; far larger out of pocket exposure than Bronze level cover in the ACA)

While such further compromise might strike most progressives as equal parts unlikely and undesirable, it caught my eye because, as I have noted repeatedly, there's an outside chance that Justice Kennedy (as swing vote) may impose something akin to it in the Supreme Court's ruling on the constitutionality of the mandate.

Misrepresentation of the mandate in the Supreme Court: why it still matters

I have made the case below piecemeal, across many posts. This is an attempt to make it as succinctly and completely as possible.
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In his oral argument against the constitutionality of the ACA's individual mandate on March 27, plaintiff's counsel Michael Carvin asserted, "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105).

That is not true -- the ACA provides the catastrophic coverage option for others exempt from the mandate, e.g. on grounds of financial hardship. And that factual error signals a greater distortion, one that was not countered and apparently made a major impression on Justices Alito, Roberts and Scalia: that the mandate forces Americans to buy coverage greatly in excess of what's required to offset the cost of catastrophic care for those lacking health insurance. No one pointed out that a) the ACA provides a catastrophic coverage option for those under 30; b) that it extends that option to others exempt from the mandate on financial or other grounds; or c) that the bronze plans offered in the exchanges, as the Kaiser Family Foundation recently detailed, might also reasonably be labeled "catastrophic" coverage.

It seems to me that a) the justices were misled on this potentially crucial point, and b) Kennedy and/or another might still be convinced, if not to accept the mandate as constructed, to divide the baby by further limiting it -- as Marty Lederman suggested they might:

Another 'limiting principle' to individual mandate: states can opt out

In the Supreme Court arguments over the constitutionality of the individual mandate in the Affordable Care Act, the justices who seemed hostile to the mandate challenged Solicitor General Donald Verrilli to articulate a "limiting principle" -- a rule that would place boundaries on Congress's right to mandate purchases. Verrilli did so, rather awkwardly:

When Congress is regulating -- is enacting a comprehensive scheme that it has the authority to enact that the Necessary and Proper Clause gives it the authority to include regulation, including a regulation of this kind, if it is necessary to counteract risks attributable to the scheme itself that people engage in economic activity that would undercut the scheme.

Much of the oral argument focused on the plaintiff's claims that the mandate exceeded the scope necessary to fulfill this purpose --  that it was was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk," as Michael Carvin's brief put it -- an argument that seemed to make a deep impression on Justices Alito, Roberts and Scalia. I have argued in several posts that the drafters of the ACA in fact took care on several fronts to limit the scope of the mandate to the minimum required to create a viable private market for affordable health insurance (e.g., by providing catastrophic coverage and limited-coverage options)-- in effect, that the mandate is self-limiting. I have further suggested that Justice Kennedy, who seemed troubled by the scope of the mandate but also recognized  the need to draw the relatively young and healthy into the insurance market, might either recognize the relatively narrow scope in his ruling or divide the baby by limiting the mandate to catastrophic coverage -- an argument developed with considerably more legal precision by Marty Lederman, who served in Obama's Office of Legal Counsel.

Here I want to focus on an element in Donald Verrilli's reply brief  that provides a complementary path to arguing either that the mandate is already sufficiently limited or that it might be further limited.

Jonathan Cohn tells the justices: the ACA has catastrophic coverage options

Jonathan Cohn, one of the foremost bloggers on the U.S. healthcare system and healthcare reform, has taken up the cudgels regarding the Supreme Court justices' apparent ignorance of catastrophic coverage options provided in the Affordable Care Act.  While Cohn is wary of catastrophic coverage on the merits, he regards the "bronze" plans, the cheapest option in the subsidized healthcare exchanges, as providing it, noting too that the ACA allows people under 30 (and others exempt from the mandate, I would add, e.g. those showing financial hardship) to buy catastrophic coverage more strictly construed.

Cohn does not think that the availability of catastrophic coverage in the ACA ought to matter on the legal merits, and there I would take partial issue with him. He writes:

Even if the Affordable Care Act didn’t have a catastrophic coverage option and established a higher standard for benefits, you could make the same constitutional arguments for it—that the law is a perfectly reasonable exercise of federal power to tax, regulate interstate commerce, and do what is “necessary and proper” for carrying out its duties.  

That might be true in a depoliticized legal vacuum.  But the plaintiffs' arguments plainly made a deep impression on Alito, Robert, Scalia -- and, somewhat more equivocally, on Kennedy, all of whom voiced various aspects of those arguments. And Michael Carvin's brief on the individual mandate hammered home relentlessly the claim that the mandate was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk" (p. 38); that the mandate would "compel the uninsured into engaging in economic activity that is harmful for them but beneficial to third parties" (p. 1), etc. etc. -- and the conservative justices seem to have bought this argument.

Marty Lederman concurs: individual mandate could be trimmed not killed

On March 31, I put up a post (updated 4/2) arguing that a highly germane provision of the Affordable Care Act went unmentioned during the Supreme Court grilling of Verrilli: the option for adults under 30 and others showing financial hardship to buy catastrophic coverage only, rather than a bronze, silver or gold plan on the exchanges. That was germane because Alito, Roberts and Scalia all asserted that not everyone in the market needs the range of services that policies offered in the insurance exchanges are required to cover -- implying that the young and healthy were being treated as "golden geese," as plaintiff's attorney Paul Clement later claimed, being tapped to finance coverage for the older and sicker.

Given the concern that the government's intrusion be as limited as possible, I wondered "whether the catastrophic care option for those under 30  does not suggest a way out: it could be extended. Could the judges rule that the mandate can extend to catastrophic care only -- in effect, legislating from the bench?  I am pleased to note that Marty Lederman at Balkinization, former deputy assistant attorney general in the Obama administration's OLC, has raised the same possibility.