Tag: Supreme Court

Replacing Obamacare: Cato Offers a Positive Solution

Now that the Supreme Court has ruled on Obamacare—the first of many challenges to reach it because, to paraphrase Nancy Pelosi, the more we learn about it, the more constitutional defects we find—the focus of public debate has returned to the policy arena. I’ve stepped to the side here because, as I said all along, I’m a simple constitutional lawyer, not a health care expert.

My colleagues Michael Cannon and Michael Tanner, however, have been doing yeoman’s work in describing what states should and shouldn’t do until we get federal officials willing to excise the Obamacare tumor from the body politic—and what Congress should then do to actually reform our health care system. They’ve collected their (and a few others’) work into a really cool e-book, Replacing Obamacare: The Cato Institute on Health Care Reform.

I’ll let the Mikes expound on their various policy analyses and prescriptions elsewhere, but just wanted to highlight the legal parts:

Chapter 25 - Bill ‘Reforms’ Constitution - Robert A. Levy and Michael F. Cannon

Chapter 26 - The Case against President Obama’s Health Care Reform: A Primer for Nonlawyers - Robert A. Levy

Chapter 27 - Elena’s Nanny State - Michael D. Tanner

Chapter 28 - Obamacare Is Unconstitutional - Roger Vinson

Chapter 29 - HHS v. Florida - Cato’s individual mandate brief before the Supreme Court

Chapter 30 -  Baking Some Humble Pie for Congress - Trevor Burrus

Chapter 31 - The Supreme Obamacare Question - Michael D. Tanner

Chapter 32 - That’s Not a Limiting Principle, Noah Feldman Edition - Michael F. Cannon

Chapter 33 - In Opposing Obamacare, We Were Serious the Whole Time - Ilya Shapiro

Chapter 76 - It Now Falls to Congress - Roger Pilon

Chapter 77 - We Won Everything but the Case - Ilya Shapiro

Chapter 78 - John Roberts, Judicial Pacifist - Ilya Shapiro

Chapter 79 - Health Law a Loser despite Court Victory - Michael F. Cannon

Chapter 80 - Chief Justice Roberts Sold Out the Constitution for Less Than Wales - Ilya Shapiro

Chapter 81 - ObamaCare’s Now a Bigger Mess - Michael D. Tanner

Chapter 82 - If ObamaCare Survives, Legal Battle Has Just Begun - Jonathan H. Adler and Michael F. Cannon

These are white papers, essays, op-eds, blog posts, and even a brief that you may have come across already (and can Google separately), but now you can get them all—along with all the great policy stuff —in one convenient e-book (whose table of contents you can see here).

Government Can’t Censor Book Promotion

This blogpost was co-authored by Cato legal associate Kathleen Hunker.

There’s a fine line between protecting the public from fraud and censoring unorthodox opinions—a line across which the government often stumbles. That was the case in September 2007, when the Federal Trade Commission filed a contempt motion against Kevin Trudeau, author of the best-selling book The Weight Loss Cure “They” Don’t Want You to Know About.

The FTC alleged that Trudeau had misrepresented the contents of his book in several “infomercials” by describing it as “easy” and claiming that dieters, by the end of the regimen, could eat anything they wanted without gaining weight. Despite the fact that Trudeau merely quoted the book when making these statements, the district court upheld the FTC’s findings and smacked Trudeau with a staggering $37.6 million fine. The court also imposed a rare “prior restraint” on speech, demanding that Trudeau post a $2 million bond before running any future infomercials.

The district court imposed these sanctions even though the FTC never proved that Trudeau misled a single consumer or violated any part of the FTC Act. On appeal, the Seventh Circuit affirmed the district court’s decision and ruled that Trudeau’s book promotion constituted misleading commercial speech and was therefore not entitled to any constitutional protection. If left unchallenged, the Seventh Circuit’s ruling would have a dire chilling effect on authors trying to promote their work and could give government officials broad censorial power, in effect permitting the FTC to tax fine through the backdoor what it could never regulate directly (sound familiar?).

Cato has thus filed an amicus brief supporting Trudeau’s request that the Supreme Court take the case and establish a constitutional standard that allows the FTC to protect consumers from fraud while respecting the First Amendment. We argue that courts should apply strict scrutiny to any government actions that restrict or punish advertisements that merely quote and summarize parts of a book (which enjoys full constitutional protection), as Trudeau’s infomercials did.

We note that the Supreme Court has held that commercial speech inextricably intertwined with otherwise protected speech deserves a high degree of First Amendment protection. Moreover, it is well-established that falsity alone may not remove speech from the shelter of the First Amendment.

Free speech loses its vitality when confronted with overzealous regulation; strict scrutiny of would-be government censors would give authors the necessary “breathing space” to publicize their work without the threat of exorbitant fines.

The Supreme Court will decide this fall whether to take the case of Trudeau v. FTC.

States Resist ObamaCare Implementation, Oklahoma Edition

The Washington Post reports:

The Supreme Court may have declared that the government can order Americans to get health insurance, but that doesn’t mean they’re going to sign up.

Nowhere is that more evident than Oklahoma, a conservative state with an independent streak and a disdain for the strong arm of government…

When it comes to health insurance, the effort to sign people up isn’t likely to get much help from the state. Antipathy toward President Obama’s signature health-care overhaul runs so deep that when the federal government awarded Oklahoma a large grant to plan for the new law, the governor turned away the money — all $54 million of it.

The idea that the federal government will persuade reluctant people here to get insurance elicited head-shaking chuckles at Cattlemen’s Steakhouse…

But some in Oklahoma aren’t so sure the population here will be easy to persuade, especially if the state government continues to condemn “Obamacare.”

“If we’re not being cooperative and all the rhetoric is hostile, then that’s going to be a real barrier to providing information to people,” said David Blatt, director of the Oklahoma Policy Institute, a state policy think tank. “There’s a lot of important outreach that needs to happen before January 1, 2014, and it’s going to be extremely difficult to do that when you have state leaders standing there saying, ‘Over our dead bodies.’ ”

Resistance remains strong in other states as well, with some governors promising to opt out of parts of the law.

Wait until states find out that they can block ObamaCare’s employer mandate just by refusing to create an Exchange.

Wisconsin Health Secretary: ‘No Such Thing as a State-Run Exchange’

Dennis Smith directed the Medicaid program for President George W. Bush and was a health care analyst at the Heritage Foundation before becoming Wisconsin Gov. Scott Walker’s (R) secretary of health. The following excerpts are from a [subscription only] article at WisPolitics.com:

In his first extensive interview since a U.S. Supreme Court ruling largely upheld the federal law, the Department of Health Services chief said fed deadlines are likely to change and that the lack of guidance on setting up the exchanges makes any state-run exchange “a fantasy.”

Part of the reason why Smith says Wisconsin hasn’t moved forward with a health exchange plan is because he believes the deadlines will be pushed back.

“We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,” Smith said. “No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.

Smith also said that none of the states currently setting up exchanges would likely meet federal regulations and that there’s “no such thing as a state-run exchange.”

“They were going to be asking for the resumes for the people who sit on the board of overseeing an exchange,” Smith said. “They were micromanaging the governance structure. They didn’t have to do that, they chose to do that. But that’s slowing the process and the decision making.”

The secretary especially pointed to questions on who will be eligible for the exchanges and the appropriate level of tax credits for participants. He claimed the rules on determining accuracy of tax credit payments were too “nonchalant,” and could result in the IRS having to recover thousands of dollars because of potential inaccuracies.

“It’s not that they don’t have answers because they’re withholding it from us, it’s that they don’t have answers because they don’t have answers,” Smith said. “These are critical policy issues, critical technical issues. Again, what are you building if you don’t know who’s eligible? What are you building if you don’t know what the flow is out of the treasury to the health plan?”

…”They have a mess on their hands,” Smith said… “You have to fundamentally say, ‘No, that just isn’t working, we have to go back to the drawing board.’

“And that is not being partisan in the slightest. That is facing reality.”

And that’s from a guy who continues to support the concept of a government-created health insurance exchange.

Roberts Was Against Treating the Mandate as a Tax Before He Was For It

On March 27, during the part of the Obamacare oral argument devoted to the individual mandate, Solicitor General Verrilli said that the Court has an “obligation to construe it as an exercise of the tax power, if it can be upheld on that  basis.”  To that, Chief Justice Roberts responded quite critically, interrupting the solicitor general and asking why then didn’t Congress call it a tax.  The Chief does not seem particularly convinced on this issue, with the SG having a nonsensical answer of “there is nothing I know of that illuminates that.”

Yet, that is the exact issue he later accepted.

Here is the full exchange (from pages 49–50 of the transcript), including the preceding relevant exchange between Justice Kagan and the SG:

JUSTICE KAGAN: I suppose, though, General, one question is whether the determined efforts of Congress not to refer to this as a tax make a difference. I mean, you’re suggesting we should just look to the practical operation. We shouldn’t look at labels. And that seems right, except that here we have a case in which Congress determinedly said this is not a tax, and the question is why should that be irrelevant?

GENERAL VERRILLI: I don’t think that that’s a fair characterization of the actions of Congress here, Justice Kagan. On the—December 23rd, a point of constitutional order was called to, in fact, with respect to this law. The floor sponsor, Senator Baucus, defended it as an exercise of the taxing power. In his response to the point of order, the Senate voted 60 to 39 on that proposition.  The legislative history is replete with members of Congress explaining that this law is constitutional as an exercise of the taxing power. It was attacked as a tax by its opponents. So I don’t think this is a situation where you can say that Congress was avoiding any mention of the tax power.  It would be one thing if Congress explicitly disavowed an exercise of the tax power. But given that it hasn’t done so, it seems to me that it’s—not only is it fair to read this as an exercise of the tax power, but this Court has got an obligation to construe it as an exercise of the tax power, if it can be upheld on that basis.

CHIEF JUSTICE ROBERTS: Why didn’t Congress call it a tax, then?

GENERAL VERRILLI: Well—

CHIEF JUSTICE ROBERTS: You’re telling me they thought of it as a tax, they defended it on the tax power. Why didn’t they say it was a tax?

GENERAL VERRILLI: They might have thought, Your Honor, that calling it a penalty as they did would make it more effective in accomplishing its objective. But it is—in the Internal Revenue Code it is collected by the IRS on April 15th. I don’t think this is a situation in which you can say—

CHIEF JUSTICE ROBERTS: Well, that’s the reason. They thought it might be more effective if they called it a penalty.

GENERAL VERRILLI: Well, I—you know, I don’t—there is nothing that I know of that illuminates that, but certainly…

What a difference a few weeks make.

H/t to a frequent co-author who must remain nameless due to his current occupation.

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

‘Temporary’ Takings That Cause Permanent Damage Still Require Just Compensation

This blogpost was co-authored by Trevor Burrus.

The Arkansas Game and Fish Commission owns and operates 23,000 acres of land as a wildlife refuge and recreational preserve; the preserve’s trees are essential to its use for these purposes. Clearwater Dam, a federal flood control project, lies 115 miles upstream. Water is released from the dam in quantities governed by a pre-approved “management plan” that considers agricultural, recreational, and other effects downstream.

Between 1993 and 2000, the federal government released more water than authorized under the plan. AGFC repeatedly objected that these excess releases flooded the preserve during its growing season, which significantly damaged and eventually decimated tree populations. In 2001, the government acknowledged the havoc its flooding had wreaked on AGFC’s land and ceased plan deviations. By then, however, the preserve and its trees were severely damaged, so AGFC sued the government, claiming damages under the Fifth Amendment’s Takings Clause.

The district court awarded $5.8 million in lost timber and reforestation costs based on the substantiality of the government’s flooding and the foreseeability of the damage it caused. The U.S. Court of Appeals for the Federal Circuit reversed that decision, holding that flooding can never be a taking unless that flooding is permanent. It further held that, in determining whether the government’s flooding was permanent or temporary, courts must focus on the character of the policy behind the intrusion rather the effects of the intrusion itself. A taking cannot have occurred here because each deviation from the plan constituted a “temporary” policy, the court concluded, so AGFC had no constitutional remedy.

In December, Cato joined the Pacific Legal Foundation on an amicus brief urging the Supreme Court to take the case, which it did. Now Cato again joins the Pacific Legal Foundation, as well as the Atlantic Legal Foundation, on a new brief urging the Court to uphold the Fifth Amendment rights of property owners whose land is destroyed by the federal government.

We argue that the length of time of the government’s physical invasion of property should not be used to determine whether a taking occurred, but rather only for calculating how much damage the taking caused. We further argue that the Federal Circuit’s focus on the “intent” of the government action—whether the flooding resulted from a “permanent or temporary policy”—is likewise irrelevant to whether a taking occurred. Instead, the inquiry should be whether the government caused permanent damage and, if so, how much. The lower court erroneously created a rule—that so long as it might be “temporary,” no government flooding can be remedied under the Fifth Amendment—that runs afoul of a constitutional provision meant to compensate property owners for government intrusions on their land.

The Supreme Court will hear the case of Arkansas Game & Fish Commission v. United States in October or November.