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Day 3 of Supreme Court’s health care hearings take on new urgency

Supreme Court

By Bill Mears, CNN Supreme Court Producer

WASHINGTON (CNN) — The Supreme Court wraps up its last day of hearings Wednesday over the future of health care reform with renewed focus on an issue once dismissed by many legal and political analysts as trivial.

It follows Tuesday’s fascinating, monumental court discussion about the constitutionality of the Affordable Care Act’s key provision: the individual mandate requiring most Americans to have health insurance or face a financial penalty. The mandate’s future appeared to be in trouble, based on questioning from the court’s conservative majority.

At issue: Must the entire law’s 450 or so provisions be scrapped if the mandate — the key funding mechanism of the law — is found unconstitutional? And are states being “coerced” by the federal government to expand their share of Medicaid costs and administration, with the risk of losing that funding if they refuse?

Suddenly the question of “severability” — whether the rest of the law can stand if one part of it is invalidated — becomes more important since the mandate’s legal survival remains very much in constitutional jeopardy.

The justices have scheduled two and half hours of debate in two oral arguments, one in the morning and one in the afternoon.

“Oral arguments do tend to give you a good sense of what troubles the justices and generally where they are at,” Thomas Goldstein, publisher of SCOTUSblog.com told CNN. “In the case like this one, where it’s clear that the government has four votes on its side, but is searching for the fifth one [for a majority], it’s a little bit more of a dangerous game.

“So five of the conservatives are clearly troubled by the mandate, clearly troubled by the scope of the administration’s argument, clearly searching for a limiting principle. And when all five of them express doubts, you come out of that courtroom and you think, gosh, the mandate is on life support.”

The Wednesday arguments give the administration another chance to go on the rhetorical offensive and defend the entire law’s vitality. Many legal observers concluded the Obama administration’s Solicitor General Donald Verrilli did little to boost the individual mandate’s constitutionality in two hours of intense arguments Tuesday.

This day’s first argument deals with severability, but most court watchers but think of it as the “domino effect” issue. If the individual mandate section is ruled unconstitutional, must the entire law collapse as well?

A federal judge in Florida had so ruled in February 2011: “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void.” But a federal appeals court subsequently overruled on the severability question while upholding the individual mandate’s unconstitutionality.

Opponents of the law say the individual mandate is crucial to its overall impact, since it is the main funding mechanism for the expansion of a range of other programs. This might be the one question on which the justices will ultimately agree in favor of the government.

Then comes the Medicaid “coercion” question, which can be seen as the” national policy implications” issue.

Twenty-eight GOP-led states bringing separate lawsuits say the new law’s significant expansion of the social safety net unconstitutionally “coerces” state governments. That program is administered by the states with a combination of federal and state money, currently requiring coverage only for poor children and their parents or caretakers, adults with disabilities and poor individuals 65 or older. The “coercion” issue was surprisingly added to the health care debate by the justices.

Both sides of the issue agree what the high court decides on Medicaid could have broad implications for the regulatory ability of the federal government to set long-term national policy goals in areas such as the environment, education and the workplace.

Some states have long complained their autonomy is being eroded by creeping federal intervention on spending matters.

Article 1 of the Constitution gives Congress the power to “lay and collect … taxes to pay the debts and provide for the common defense and general welfare of the United States” and to “regulate commerce … among the several states.”

Such authority has long been broadly interpreted, including when imposing conditions on recipients, be they individuals or states. No federal court has ever ruled states have been unlawfully coerced when they accept conditions or strings attached to federal funds. The Supreme Court in 1987 affirmed that congressional discretion.

Starting in 2014, the health care law’s Medicaid changes would make millions of additional Americans eligible for benefits by raising the income level they earn and still qualify.

That would include all adults up to 133% of the federal poverty line. The tricky question is that states are not forced to agree to the law’s incremental Medicaid increases, spread out over six years. But the states say abandoning their participation as a result would be a financial, social and political catastrophe — one which they cannot realistically foresee.

Their needy citizens rely on Medicaid, states argue, but the law’s expansion of the program could cripple state budgets, currently on average about 20%. That could threaten other state spending priorities.

So the long-standing fight over “federalism” and the leverage the national government wields over states might soon reach epic levels with a high court decision either strengthening or limiting congressional authority on this and potentially a host of other regulatory areas.

All the rhetorical energy may have been spent on Tuesday’s main question over the mandate, but don’t dismiss the last day’s question-and-answer sessions. They may ultimately surprise and reinvigorate the political debate over the national economy and the longstanding tensions over state sovereignty.

The cases to be argued Wednesday are National Federation of Business v. Sebelius (11-393) and Florida v. Department of Health and Human Services (11-400).

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