first, the justices consider whether the entire law should be struck down if the individual mandate is found unconstitutional. then the oral argument on the laws expansion of medicaid. after that, paul clement, one of the lawyers making the case against a health care law takes questions from reporters. >> you're watching c-span2, politics and public affairs weekdays featuring live coverage of the u.s. senate. weakness want to keep public policy events, and every weekend the latest nonfiction authors and books on book tv. you can see past programs and schedules at our website, and you can join in the conversation on social media sites. >> tomorrow morning on c-span2 house budget committee paul ryan in the top democrat to speak get a policy summit. it gets underway at 8:30 a.m.

eastern live here on c-span to. today was the third day of oral arguments in the constitutional sense of the president's health care law. this morning justices decided whether the entire law should fall if the individual mandate to buy health insurance is found unconstitutional. >> we will continue argument this morning in case number 11393, national federation of independent business and case 11400. mr. clement. >> mr. chief justice, and may it please the court, the individual mandate is unconstitutional then the rest of the act cannot stand. as congress found and the federal government concedes, the

community rating the guaranteed issue provisions of the act cannot stand without the individual mandate. congress found that the individual mandate was essential to their operation. not only can guaranteed issues of kiddy ratings not stand, not operate in the manner that congress intended, it would actually counteract congress's basic goal of providing base -- patient protection and affordable care. you can -- if you do not have the individual mandate that forces people into the market, a community rating guarantee issue will cause the cost of premiums to skyrocket. we can debate the order of magnitude of that, but we cannot debate that the direction will be a part. >> that may well be true. the economists are going back and forth on that issue. the figure varies from 10% to 30%. we are not in the habit of doing the legislative findings. what we do know is for those

states that found prices increasing but they found various solutions to that, in one instance unconstitutional massachusetts passed the mandatory coverage provision, but others adjusted some of the other provisions. why shouldn't we let congress do that if, in fact the economists prove, some of the economists prove right that prices will spiral? what is wrong with leaving it in the hands of the people he should be fixing this, not us? >> a couple of questions -- a couple of responses, justice sotomayor. it is very relevant that congress has before it as examples of some of the states that have tried to impose guaranteed issue and community rating and did not pose an individual mandate. congress rejected that model. so your question is quite right

in saying that it is on possible to have guaranteed rating without a mandate, but a model that congress looked at and specifically rejected if. then, of course, congress is on finding which was 43 a of the government's brief in the appendix. congress specifically found that having the individual mandate is essential to the operation of guaranteed in the -- guaranteed community rates. >> the city was essential to. i mean, i am looking at it. the exchange's, the state exchanges are affirmation gathering facilities that tells insurers with the various policies actually mean. and that has proven to be a cost saver in many of the states who have tried it. so why should we be striking down the cost saver? and if what your argument is was that congress was concerned about costs rising, what should we assume they would not have

passed the information? >> i think a couple of things. i would think you have to take the bitter with this week. if congress is going to look at the goal of providing patient protection but also affordable care, i don't think it works to just take the things that save money and cut out the things that are going to make premiums more expensive. >> the bottom line is why don't we let congress fix it? >> let me answer the bottom-line question. no matter what you do in this case, at some point there is going to be of use effect on the mandate something for congress to do. the question is really what patty want to give congress. to you want to give congress the task of fixing the statute after something has been taken out, especially a provision at the heart, or do you want to give congress the task of fixing health care. and that the gap would be better. >> if we strike down one provision we are not taking that power away from congress. congress to look at it without the mandatory coverage provision and say this model doesn't work.

let's start from the beginning. or you could choose to fix what it has off. we're not declaring one person doesn't force congress and to any past. >> of course that is right, justice sotomayor. no matter what you do congress will have the options available. if you strike down all the individual mandate covers can say the next day, well, as a last thing we ever wanted to do, so we will strike down the rest of the steps immediately into an fix the problem. whenever you do congress will have options. >> such distinctive of such a thing as legislative and their share, is in there? >> that is exactly where those going to say, justice scalia. the question for the score is we all recognize there is at seven and ship. the question is, what is the best result in light of the reality. >> the suggesting we should take on more power to the court? congress would choose to take one half rather than another. that is sort of taking on to the court more power than when i think would want. >> and i agree. we are simply asking this court

to take on straight on the idea of the basic remedial between the several ability, which looks to be the intent. >> why do we look to -- sure really to the intent. i thought that, you know, sometime congress says that these provisions will -- all the provisions of this act will be separate. we ignore that when the actual work. the remaining provisions just won't work. now, how can you square that reality with the proposition that we are looking for here is what would this congress have wanted? >> two responses, justice scalia. we could look on this court case. they'll formulate a little bit differently. >> they sure do. >> every one of the talks but congressional intent. >> it's true, but is a right? >> it is right to land here is tell us what is your question. when congress includes the seven

ability krauss is a tustin the abstract. it does not say no matter which averages to strike down we absolutely positively what what -- >> the consequence of your proposition, would congress have enacted it without this provision? okay. that is the consequence. that would mean that if we start down nothing in this legislation but, what's it called, the cornhuskers kickback, okay, we find that to violate the constitutional upon prescription banality. [laughter] when we strike that down it is clear that congress would not have passed it without that. it was -- it was in means of getting the less necessary vote in the senate, and you're telling us that the whole statute would fall because the court has to kick back is bad. that can't be right. >> well, justice scalia, i think

it can be the basic proposition that it's irrational intend to govern. everyone on this court has a slightly different way of dividing a legislative intent. i would suggest the one common ground among every member of this court, as i understand it, is to start with the test. >> so let's start with the test. you suggest, and i think this is right, that there is a text tool basis for saying that the guarantee issue in the community reid provisions of a tight to the mandate. you pointed to where that was in the findings. is there a textual basis for anything else to make because i have been unable to find one. it seems to me if you look at the text, a sharp dividing line is between guarantee issue community ratings on the one hand and everything else and the other. >> well, justice kagan, i would be delighted to take you through my view of the text and why there are other things. the first place i would ask you look is finding jake. as i read that, that is a finding that the individual mandate is essential to the

operation of the exchange's. there are other links between guaranteed issue and community rating in the exchanges. there the way these changes are supposed to worked and the text makes this clear, they're supposed to provide a market where people can compare community rated insurance. that is what makes the exchanges function. >> of the the stains function perfectly well in utah where there is no mandate, they function differently, but the function. the question is always if congress wants half a loaf, have to look better than no loaf? on something like the exchanges is seems to be a perfect example where half a loaf is better than no loaf. exchanged do something, they will do everything that congress envisioned. >> well, justice kagan to my think there are occasions where half a loaf is actually worse. if i can stick with this the exchanges, i do think the question that this court is supposed to ask is not just whether they can live along and operate independently of whether

they operate in a manner that congress intended, and that is where i think the stage is really fall down because the vision of the exchanges was that if you have gotten out of this situation where health insurance is basically individualized price based on individualized underwriting and do provide a community rating then it's going to be very easy for people to say, okay, well, this is a silver policy and a bronze policy in the gold policy. epic which insure provides what i think is going to be the best service based on the comparable provisions. >> mr. clement, you just said something which you say a lot in your brief. the question is the manner in which it would have operated. and i think that is not consistent with our cases, and i guess the best example would be booker where we decided not to several provisions : notwithstanding the sentencing guidelines clearly operate in a different manner now than they did when congress passed them. they operate as advisory rather

than mandatory. >> well, justice kagan, at the booker supports our point as well because the two aspects of the emirate -- remedial holding, in the first part which i think very much supports our point is where the majority rejects the approach of the descent which actually would have required nothing in the statute to have been struck, not a single word. nonetheless, this court said, well, if you do that then all of the sentencing is basically going to be done by a combination of jerry's and prosecutors and judges will be cut out. the court said the one thing we know is that is not the manner in which congress thought this should operate. later they made different judgments about the -- which particular provisions to cut out, but i do think booker is consistent with this we're looking at it, certainly consistent with the opinion we rely on. the court only reach that part of the opinion after they already found that the most higher provision operated functionally independence from the legislative vetoes. >> mr. cummins, there are so many things in this act.

and unfortunately, okay, i think you would concede that the authorization of the indian health care improvement act, changes to the benefit, why make congress reidy those? and me, the question of whether we say everybody, start from scratch or to say there are many things that have nothing to do who, frankly, with this affordable health care. and there -- we think it is better to let congress to decide whether we want the men are out. so why should we say that the choice between the operation, which is what you profess to more so this job. the more conservative approach would be selvage rather than throwing everything. >> well, justice ginsburg, two

kinds of responses. i do think there are some provisions that i will identify as being at the periphery of the statute and i would admit the case for severing those is perhaps the strongest. i do think it is fundamentally different because if we were in here arguing that some provision on the periphery of the stats, like the bio were some of the provisions that you have mentioned, unconstitutional, you strike it down and don't even think hard about seven ability. what makes this different is the provisions that have cussed additional difficulties cited the head to those provisions that have the constitutional difficulty, the very heart of this act. and if you look at to actually interconnected with the exchanges which the then connected to the tax credits which are also connected to the employer mandates which is also connected to some of the revenue office and also connected to medicate to my if you follow that through what you end up with at the end of that process is just sort of a hollow shell. and if that it is right at think their is a strong argument for not sending kids. congress would have passed that

hollow shell. >> it would have passed parts of that hollow shell. a lot of this is reauthorization of appropriations that have been reauthorize for the previous average in years. it was is more convenient for congress to throw it in in the middle of the 2700 pages then to do it separately. i mean, can you really suggest, the black lung benefits act, has nothing to do with any of the things we are talking about. >> well, mr. chief justice, they tried to make and germane, but i am not here to tell you -- surely there are provisions that are just looking for the next legislative vehicle that will make it across the finish line, and someone will attach it to anything that is moving, and i admit that. the question is, when everything else in the center of the act is interconnected and has to go, if you follow me that far then the question is would you keep this a love that show. >> i'm still not sure what the test is. the cornhuskers. i need to know what is the

standard you're asking me to apply. is it weather as a rational matter the separate parts to still functioned or does a focus on the intent of the congress? suppose you had party a once proposal number one. party be once proposal number two completely unrelated. one is -- and they decide been together. procedural rules. they have to be voted on as one. they both passed. one is declared unconstitutional and the other can operate completely independently. we know that tigers would not have intended to pass one without the other. is that the end of it? is there some different tests because we don't want to go into legislative history that is intrusive. so we ask whether not an objective -- as an objective rational matter. i still don't know what the test is, but this is the same question the justice earlier

asked. could you give me some help. >> sure. the reality is that think this court's opinion seven various times applied both strains of the analysis. >> and what test do you suggest that we follow if you want to clarify our jurisprudence? >> i am a big believer in objective tests, justice kennedy and would be perfectly happy to a plan more to actually based objective approach. i think there are certain justices that are more inclined to make more of a peak of legislative history, and i think if you like it the legislative history of this it would only fortified the conclusion that you would reach from a very textual inquiry, but tampa and -- i'm happy to focus the court and the objective textual in korea. >> and that is? >> whether the subject of upper in the manner that congress intended. >> no statute can do that. once we chop of the piece of it by definition it is not the statute trespassed. so as to be something more than that. >> justice sotomayor, if you

have a formulation for several ability, if you interpret it it becomes chronological. and justice blackmun and noted this in footnote seven. of course it is not just operate exactly in the matter because it does not have all the pieces, but you still make an inquiry as to whether -- congress least two provisions together and one really we will work. >> so the presumption that our law says, which is, we presume that congress would want. wouldn't that be the simplest and most objective test? going past what justice scalia says we have done, okay, get rid of legislative intent altogether , with some of our colleagues in other contexts have promoted and just say, unless congress tells us directly it is not severable, we shouldn't separate. we should let them fix their problems. you still have not answered me why in a democracy structured like ours where each branch does

different things, why we should involve the court in making the legislative judgment. >> let me try to answer the specific question and then the big picture question. the specific question is, you could do that, about a new rule that basically says -- >> is that a new rule. the presumption in some cases. but call that judicial action. >> i think in fairness, justice sotomayor, get to the point you're wanting to get to you have to ratchet up the present and a couple of ticks and the stale. >> was wrong with that? >> well, one thing that is wrong with that, it's inconsistent with every statement which all talk about congressional intent. >> is not inconsistent with our practice. i'm not sure even then you could find a piece of legislation that we refused to sever for this

reason. >> i don't think that's right, justice kagan. there are greater examples whispers and this is a way to get to my broader point, the case involving the state statute, not a federal statute. is randall against sorrow were this court struck down various provisions of the vermont campaign finance law. there are other contribution provisions that were not touched by the theory that the court used to strike down the contribution limits, but this court at the end of the opinion said, you know, there is no way to think that the vermont legislator, these handful of provisions and the cut to be his side. the strike on all think. if i could make the broader point, i think the reason it makes sense, being a democracy was separation of powers to in some cases several of thing is because sometimes i have a love is worse. a great example, if i dare say so, is buckley. in buckley discord looked at the statute that tried to, in a coherent way, strike down limits on contributions and closely related expenditures.

this court struck down the ban on expenditures, lest the contribution ban in place. for four decades congress has tried to fix what is left of the statute. leslie unsuccessfully. as for a much better for the democratic and separation of our standpoint of the car would have said, expenditures, you cannot limit expenditures of the contribution. the contribution provision point, give congress a chance to actually fix the problem. >> a few questions. a practical question. i take is a given year has to the justice kennedy. let's look at it objectively and say congress has intended this. this is the mandate and the community. this is tattles one and two, mandate, pre-existing condition. here's the rest of it. and another to the rest of it, all kinds of stuff in there. i haven't read every word of that.

by similarity, breast feeding, promoting nurses and doctors to serve. a class act. soon we appoint a special master , go back to the district court? you have not argued most of these. as i hear you that you're pretty close to the st. you would like it all starts down, but if we are supposed to apply the objective test, i don't know if you differ very much. what do you propose that we do? other then spend a year reading all this and have you argue. >> well, what i would propose the following. follow the argument this far and then you ask yourself whether what you have left is a hollow-shell. >> i would say the breast feeding act, the getting doctors to serve underserved areas, the bias similar thing, drug regulation, the class act, those have nothing to do with the stuff that we have been talking

about yesterday and the day before. >> okay. >> at that level, they have nothing to do with that pakistan and iran. the indian thing about helping the underserved native americans , all that stuff has nothing to do with it. nothing to do with it. so, you know, what you have there, a total of the compression. so that is why i'm asking you what should i do? >> what you should do, let me say the following. follow me this far. individual mandate, and tied to the government guaranteed issue and community rating, but the guarantee issue and community rating together are the heart of this act. what makes the exchange's work? justice thomas 60 of the exchanges are critical to the tax credit because the amount of the tax credit is key to the amount of the policy price on the exchange. the exchanges are also key to the employer mandate. the import -- the employer mandate imposes that the employees' concerns, but it does

not stop there. the medicaid provision for does hospitals. hospitals that serve a disproportionate share of the needy. this is not entitle one, the other part you have in your other hand, but it does not work without the mandate committee rating guarantee issue. >> and ask you this, mr. clement f.? what would your fallback position be if we don't accept the proposition that if the mandate is declared unconstitutional the rest of the expiry single provision has to fall. propose of the dispositions have been proposed. the solicitor general's this position, the recommended disposition district and the guaranteed a strong community rating. provisions one hell must write to all of avalon, another sister right down all of tell one and two. what would you suggest? >> well, i think what i would suggest, justice alito, i don't to be unresponsive, follow the argument through and figure out where false.

my fullback would be afoot as of today it -- is a holiday show you can leave them standing. if you want a practical standard, i think you could use justice breyer off the cuff as a starting point and six fadel one and a handful of related provisions that are very closely related to that are really the heart of the act. >> bigger volume. >> you could strike one and leave the other, but at a certain point @booktv sorry. >> finish. >> at a certain point adjusting that, you know, the better answer might be to say we have struck the heart of this act. let's just give congress a clean slate. if it's so easy to have that other big volume get reenacted they can do it in a couple of days and it will be a big deal. if it's not a big, you can laugh at me if you want, but the point is i would rather suspect it won't be easy because i suspect if you dug into that there'll be something that was card controversial and it could not be passed. that is the point.

>> this was a piece of legislation which there had to be a concerted effort to gather enough votes so that it could be passed. i suspect with a lot of these miscellaneous provisions that justice briar was talking about, that was the price of the vote. but in the indian health care provision and i will vote for the other 2700 pages. put in the black line position and i will go along with it. that is why many of these provisions, i think, were put in, not because there were unobjectionable. presumably what congress would have done is that would not have been able to put together the votes to get through. >> maybe that's right to mr. chief justice, and i don't want to spend all my time fighting over the periphery because i do think there are some provisions that i think he would make as an exercise of your own judgment that once you have gotten rid of the core provisions of this tax you would then decide to let the periphery fall with it. if you want to keep the periphery that's fine. what i think is important, as to the core provisions of the act which are not just the mandates committee meeting rating, and

guarantee issue but include the exchanges, a tax credit, medicare, medicaid, i think you do want to strike it all down to of will -- avoid a reducted buckley. >> thank you. mr. edwin kneedler. >> thank you, mr. chief justice. no occasion for the court in this case to consider issues of several ability because, as we argue, that minimum coverage provision is fully consistent with article one of the constitution. but if the court would conclude otherwise, it should reject petitioner's sweeping proposition that the entire act thus fox, this one provision is held unconstitutional. as an initial matter we believe the courts should not even consider that question. the vast majority of the provisions of this act to not even apply to the petitioners, but, instead, apply to millions of citizens and businesses who are not before the court.

>> how does your proposal actually work? your idea is that where they can take care of it themselves letter. contemplate them bringing litigation and saying the answers to be the most obvious ones without the mandate of everything falling apart. the rest of the law should be stored data that is all other line of mitigation. >> the continuing validity of any provision would arise in litigation that would otherwise arise under the provision by parties -- >> would cause of action is it? i have never heard of us ever ability cause of action. >> in the first place the point isn't that there has to be an affirmative cause of action to decide this. for example, you could use the medicare reimbursement issues, one of the things this act does is change medicare reimbursement rates. the place where someone adjudicates the validity of medicare reimbursement rates is

through the specials tessitura review procedure for that. the same thing is true with the anti injunction act. >> there are some provisions which nobody would have standing to challenge if the provision is simply an expenditure of federal money. it doesn't hurt anybody except the tax bear, but the tax bear that's is continuous even though it is so closely aligned to what has been struck down that it ought to go as well. nonetheless, that has to continue because there is no one in the world can challenge it. can that possibly be the law? >> that proves our point. this court has repeatedly said this is because there is no one that may be standing to challenge a particularly like tax credits for taxes which are challahs only after going through the entire inspection act, just because no one has been sending doesn't mean someone must.

>> those are positions that have been originally enacted. the whole thing is whether these relate positions have been enacted or whether they are so closely allied to one that has been held to up the unconstitutional that they also have not been legitimately enacted. you can't compare that to cases dealing with a statute that nobody denies it is constitutional. ..

that second half is unconstitutional. purpose x cannot be possibly carried out with only half the money. does the government just that they're collecting half the money forever because nobody can ever challenge it? if it were an extra the way -- inextricably connected, is it enough to say we won't consider that because maybe somebody else could bring that case and then there is no one else? >> we pic that is the proper way to proceed. >> it's not a choice between someone else bringing the case. what we are really talking about judge this sotomayor in this discussion is who is the proper party to take out what is --

with all these provisions where there may be no standing, one institution clearly does have standing and that is congress and if congress doesn't want the provisions that are not affected to stand, congress can take care of it. is a question of, should the courts say we are going to wreck the whole thing or should the court leave it to congress? >> we think the congress should leave it to congress for two reasons. one is what is the point i'm making now about justice ability or whether the court can properly consider it at all in the second we think only a few provisions are severable. >> before you -- mr. kneedler i would like your answer to justice breyer's question. i think you are interested. >> we believe in that case the tax provision should not be struck down. in the first place the

anti-injunction act would be strange to allow a tax to be struck down on the basis of severability analysis. severability arises in a case only when it's necessary to consider what relief the party before the court should get. >> because there was a non-severability provision in this act, if one provision were to be held unconstitutional than every single, someone would have to bring a separate lawsuit challenging every single other provision in the act and say well, one style and the congress said it's all, it's a package that cannot be separated. that is your position? >> the fact that is such a cause might make it easy doesn't change the point. article iii jurisdictional problems apply easy questions as well as hard questions. >> article iii jurisdictional problem and justice alito's hypothetical the business of

exercise over the courts power to explain the consequences of the judgment in this case. >> but, this court had said that one has to have standing for every degree of relief that is sought. that was in davis and that was los angeles versus lions. >> don't you think it's unrealistic to say leave it to congress as though you are sending a get back to congress for congress to consider it dispassionately on balance, should we have this provision or should we not have this provision? that is not what it's going to be. it's going to be these provisions are in a fact, even though a lot of you never wanted them to be in effect ineffective and you only voted for them because you wanted to get to the heart of the act which is now been cut out. but nonetheless, these provisions are the law and you have to give the votes to overturn them. that's an enormously different question from whether you get

the votes initially, to put them into the law. there is no way that this court's decision is not going to distort the congressional process, whether we strike it all down or leave some of it in place. the congressional process i'll never be the same. one way or another, congress is going to have to reconsider this and why is that debtor to have them reconsider it, what should i say, in total rather than having some things already in the law which you have to eliminate before you can move on to consider everything on balance. >> we think as a matter of judicial restraint limits on equitable remedial power limit for this court to addressing the provision that has been challenged as unconstitutional and anything else that the plaintiff seeks as relief.

>> but when you say judicial restraint -- you are echoing the earlier premise that it increases the judicial power if the judiciary strikes down other provisions of the act. i suggest to you it might be quite the opposite. we would be exercising the judicial power if one act was -- one provision was stricken and the others remained to impose a risk on insurance companies that congress had never intended. by reason of this court, we would have a new regime that the congress did not provide for, did not consider. that it seems to me can be argued at least to be a more extreme exercise in judicial power than striking the whole. >> i don't accept the premise. >> i think not, justice kennedy and then i move on but this is exactly the situation in friends. the court identified the severability questions that were

briefed before the court as important ones but said they affect people, rights and obligations of people who are not before the court. >> mr. kneedler, move away from the issue of whether it's a standing question are not. make the assumption that this is an issue of the courts exercise of discretion, because the last two questions had to do with what is wise for the court to do, not whether it has power to do it or not. so let's move beyond the power issue which your answers have centered on, and give me sort of a policy. and i know that is a bugaboo words sometimes but what should guide the court's discretion? >> well, we think that matters of justice ability to blend into -- >> would you please? >> no, i understand. >> i've asked you three times to

move around that. >> blend into discretion and in turn blend into the merits of the severability question and to that just to answer question that several justices have asked, we think of severability is a matter of statutory interpretation. should be resolved by looking at the structure in and the text of the act and the court may look at the legislative history to figure out the text and structure mean with respect to severability. >> do you really want is to go through these 2700 pages? [laughter] and do you really expect the court to do that? or do you expect us to give this function to our law clerks? is this not totally unrealistic, that we are going to go through this enormous bill, item by item and decide each one? >> well -- >> i thought the simple answer was, you don't have to because -- >> that is correct and i'd also like to, i just want to finish

the thought i had about this being a matter statutory interpretation. the court's task we submit is not to look at the legislative process to see whether the bill would have passed or not least on the political situation at the time which would basically convert the court into a function such as a whip count. >> that would be a revolution in our severability law, wouldn't it? we have never suggested that were going to say look, this legislation was a brokered compromise and we are going to try to figure out exactly what would have happened in the complex parliamentary shenanigans that go on across the street and figure out whether they would have made a difference. instead, we look at the tax that's actually given us. for some people the look only at the text. it should be easy for justice scalia's clerks. [laughter] >> i think, i think that -- >> i don't care whether it's easy for my clerks.

i care whether it's easy for me. [laughter] >> i think that's exactly right. as i said is a question of statutory interpretation. >> what's exactly right? is a question of statutory interpretation and that means you have to go through every line of the statute. ivan her to answer justice scalia's question yet. >> is justice kagan pointed out, that act itself creates a sharp dividing line between the minimum coverage provision, package of reforms, the minimum coverage provision along with a guaranteed kit issue and community rating. that as one package that congress deemed essential. >> essential. >> how do you know that? where is the line? where is the sharp line? >> it is in congresses findings, that the minimum coverage provision, without it, the congress said in finding ida, without that provision people would wait to get insurance and therefore, and cause all the

adverse selection problems that arise. >> no, no. that make sir case that the one provision should fall if the other does. it doesn't tell us anything about all the other provisions. >> i think it does because congress said it was essential to those provisions but it conspicuously did not say that it was essential to other provisions. >> may i ask you about the argument that's made in the economist am at this brief? they say that the insurance reforms impose ten-year cost of roughly $700 billion on the insurance industry and that these costs are supposed to be offset by about 350 billion in new revenue from the individual mandate and 350 billion from the medicaid expansion. the 350 billion i may disagree with the numbers, that they are fundamentally wrong but assume they are in the ballpark. 350 million from the individual mandate would be lost. what would happen to the insurance industry which would

now be in the hole were $350 billion over 10 years? >> i mean first of all for the court to go beyond text and legislative history to try to figure out how the finances of the bill operate, it's like being the budget committee. but we think the economist had added up the figures wrong. if there's medicaid expansion and the insurance companies are involved in that, they're going to be reimbursed. >> we have talked about the individual mandate that does the government have a position on what would happen if the medicaid expansion is struck down? >> we don't think of that would have any effect. that could be addressed in the next argument. we don't think i would have any effect on the rest of the act. >> so the government's position is that if medicaid expansion is struck down the rest of the art can operate? >> yes and that passed congress has expanded medicaid coverage without their -- done it many

times without there being a minimum coverage provision. >> but i still don't understand where you are with the answer to justice alito's question. assume there is a substantial probability that the 350 billion plus 350 billion equals seven, is going to be cut in half if the individual mandate is stricken. assume there is a significant possibility of that. is it within the proper exercise of this court's function to impose that kind of risk? can we say that the congress would have intended that there be that kind of risk? >> well, we don't think it's in the courts place to look at the budgetary implications. >> but isn't that the point then, why we should just assume that it is not severable? if we lack the competence to even assess whether there is a

risk, then isn't this an awesome exercise of judicial power? we are doing something and we are not telling them what the consequences might be. >> i don't think so because when you're talking about monetary consequences you are looking through the act, you are looking behind act. the courts function is to look at the text and structure of the act and what the substantive provisions of the act themselves mean. >> you mean, can you give us -- a prior case that resembles this one, in which we were asked to strike down what the other side says is the heart of the act, and yet leave and -- as you request, leave and affect the rest of it? most of our severability cases involve one little aspect of the act. the question is whether the arrests -- when have we really ever struck down what was the main purpose

of the act and left the rest in effect? >> i think lugar is the best example of that. in book or the mandatory sentencing provisions were central to the act but the court said, congress would have preferred a statute without the mandatory provision in the act and the court struck that but the rest of the sentencing guidelines remained. >> i think the reason, the reason the majority said that was that they didn't think that what was essential to the act was what had been stricken down, and that is the ability of the judge to say on its own what the punishment would be. i don't think that's a case where we excised the heart of the statute. do you have another one? >> there is no example. >> there is no example. >> that we have found that suggests the contrary. >> this is really the case of our first impression. i don't know if another case where we have been confronted

with his decision. take out the heart of the act and leave everything else in place. >> i would like to go to the heart of the act point in a moment that what i'd like to say is this is a huge act with many provisions that are completely unrelated to market reforms and operate in different ways. and we think it would be an extraordinary act to strike-all that down because of the many provisions and it would be too hard to do it. >> it's not uncommon that congress passes an act and then there are many titles and some of the titles have nothing to do with the other titles. that's a common thing. you are saying you have never found an instance where they are all struck out when they have nothing to do with each other. my question is, because i hear mr. clement saying something not too different from what you say as you talk about the periphery. we can't reject or accept an argument on severability exposes a lot of work for us. that's beside the point.

that do you think that is possible for you and mr. clement on exploring this, to get together and agree? [laughter] >> i'd mean, on a list of things that are in both your opinions peripheral. then you would focus on those areas where one of you thinks it's peripheral and one of you thinks it's not peripheral. at that point it might turn out to be far fewer than we we are currently imagining at which point we could hold an argument or figure out some way or somebody hold an argument and try to get those done. is that a pipe dream? >> i just don't think that is realistic. the court would be doing it without the parties, the millions of parties. >> you can have a conference committee report afterwards maybe. [laughter] >> it's just not something the core would ordinarily do. >> could you get back to the argument, of the heart? striking down the heart, do we want half a loaf or a shelf?

those are the two analogies. >> right and i would like to discuss it again in terms of the text and structure of the act. we have very important invitation -- indications from the structure of this act that whole thing is not supposed to fall. the most basic one is notion that congress would have intended the whole act to fall preceded by the fact that there are many provisions in this act already in effect without a minimum coverage provision. 2.5 million people under 26 have gotten insurance by one of the insurance requirements. $3.2 billion -- >> in anticipation of minutemen coverage. that's going to bankrupt the insurance companies if not the states unless this minimum coverage provision comes into effect. >> there is no reason to think it's going going to bankrupt anything. the cost will be set to cover those amounts. >> we are saying that they are

healthy and did not need insurance. >> 2.5 million people would be thrown off the insurance rolls at at that the court were to say that. congress made many changes to medicare rates that have gone into effect. for the courts have to unwind millions in medicare reimbursement rates, medicare has covered 32 million preventive care visits by patients as a result of this act. >> all of that was based on the assumption that the mandate was constitutional and that certainly doesn't stop us from reaching our own determination on that. >> no but what i'm saying is it's a question of legislative intent and we have very fundamental indication of legislative intent. that is congress did not mean the whole act to fall without the minimum coverage provision because we have many provisions that are operating now without that. but there's a further indication about why the line should be

drawn where i have suggested which is the package of these particular provisions. all of the other provisions of the act which continue to advance congress is cool, the test that was articulated in booker and it's been said in reagan in other cases, you look to whether the other provisions can continue to advance the purpose of the act. the broad public health purposes of the act that are unrelated to the minimum coverage for vision but also the other provisions designed to enhance affordable access to affordable care. the employer responsibility provision, the credit for small businesses, which is already in effect by the way and affecting many small businesses. >> let many people in congress might not have voted for those provisions if the central part of the statute was not adopted. i mean you know to say that we are if actuating the intent of

congress is just unrealistic. once you cut the guts out of it, who knows, who knows which of them are really desired by congress on their own and which ones weren't? >> the question for the court is congress having passed the law by whatever majority there might be in one house or the other, congress having passed the law, what if that point is the legislative intent embodied in the law congress has actually passed? >> the problem is straight from the title we have two complementary purposes. patient protection and affordable care. and you can't look at something and say this promotes affordable care, therefore it's consistent with congress's intent. congress had a balance in 10. you can't look at another provision that promotes patient protection without asking if it's affordable. it seems to me if you ask what is going to promote congress is purpose that's just an angry that you can't carry out.

>> with respect i disagree because i think it's evident that congress is purpose was to expand access to affordable care. it did it in discrete ways. data by the penalty on employers that don't offer suitable care. at data by offering tax credits to small employers and it did it by offering tax credits to purchasers. all of those are afraid of way to continue to further congresses goal. most of all medicaid, which is unrelated to the private insurance market altogether. and in adopting those other provisions governing employers and whatnot, congress build on its prior experience of using the tax code which for a long period of time congress has subsidized. >> you are saying congress mandated employers to buy something that congress itself had not contemplated? i don't understand that. >> no. employer coverage, 150 million people in this country are to

get their insurance through their employers. what congress did in seeking to augment that was to add a provision requiring employers to purchase insurance. >> based on the assumption that the cost of those policies would be lowered by certain provisions which are by hypothesis, we are not sure why hypothesis, are in doubt. >> no, i think any cost assumptions, there is no indication that congress may made any cost assumptions that there is no reason to think that the individual market, which is where the minimum coverage provision is directed, what effect that. i would like to say, i would point out the other things would advance congresses goal. the point here is the package of three things would be contrary, would run contrary to congresses goal if you take out the maintenance coverage provision and here is why. this is reflected in the

findings. if you take out minima coverage belief in the guaranteed issue and community rating, you will make matters worse. rates will go up in people -- fewer people are covered in the individual market. >> if that is true what is the difference between the guaranteed issue and community rating provisions on the one hand and other provisions that increase costs substantially cost substantially for insurance companies? for example the tax on high cost health plans, which the economists in the amicus brief said will cost $270 million over 10 years? >> congress did not think of those things as balancing insurance companies. insurance companies are participants in the market for medicaid and other things. >> but you are saying we have the expertise to make the inquiry you want us to make, i.e. the guaranteed issue, but not the expertise that justice

alito's question suggests we must make. >> that's because i think this court's function is to look at the text and structure in the legislative history of the law that congress enacted, not the financial balance sheet which doesn't appear anywhere in the law. >> you are relying on congress is quite explicitly tying these things together. >> we do and not just the text of the act of the background of the act, the experience of the state, the testimony of the national association of insurance commissions. that is the problem congress was addressing. there was a shifting of present actuarial risks in that market that congress wanted to correct and if he took the minimum coverage provision out and left the other two provisions and, there would be laid on top of the existing shifting of present actuarial risks and additional one because the uninsured would know that they would have guaranteed access to insurance

whenever they became sick. it would make the adverse selection in that market problem even worse. and so congress tried to come up with a market-based solution to control rates in that market and has adopted something that would work to control costs by guaranteed issue of community ratings but if you take out the minimum coverage, that won't work. that was congresses assumption again shown by the legislative history of this provision. that's why we think those things rise or fall in a package because they cut against what congress is trying to do. all of the other provisions would actually increase access to affordable care and would have advantageous effects on price. again, congress was invoking its traditional use of the tax code which is long subsidized insurance through employers, has used that to impose a tax penalty on employers, to give

tax credits. this is traditional stuff that congress has done and the other thing congress has done, those preexisting laws have their own protections for community rating. effectively within a large employer plans they can't discriminate among people. they can charge different rates. what congress was doing in the other market, if they can't that's all that would be struck from the act. >> thank you mr. kneedler. mr. farr? >> thank you justice -- chief justice and may it please the court. at the outset i just would like to say i think the government's position in this case that the community rating and guaranteed issue provision ought to be struck down is an example of the bad driving out the good. even without the minimum

coverage provision, those two provisions, guaranteed issue and community rating, will still open insurance markets to millions of people that were excluded under the prior system and for millions of people will lower prices, which were raised high under the old system because of their poor health. even though the system is not going to work as precisely as congress wants, it would certainly serve central goals that congress has of expanding coverage for people who are unable to get coverage or unable to get it at an affordable price. >> one of the points that mr. kneedler made is that the price won't be affordable because -- he spoke of the adverse selection problem, that there would be so fewer people in there, the insurance companies are going to have to raise the premiums. so it's nice that congress made it possible for more people to

be covered, but the reality is they won't exist they won't be able to afford the premium. >> justice ginsburg let me say two things about that. first of all when we talk about premiums becoming less affordable, it's very important to keep in mind different groups of people because it is not something that applies accurately to everybody. for people who were not able to get insurance before, obviously their insurance beforehand, the price was essentially infinite. they were not able to get it at any price. they will now be able to get it at a price that they can afford. ..

>> but the problem isn't that they are going to a pool of people that will who gradually get on health year. that's the way it works. once you say the insurance company has to cover all the people, the rates climbed more and more people, healthy people say they want to participate and get it later when we get sick so the rates go up further, more people leave the market and the whole system crashes and burns and becomes unsustainable. this is not what i think.

it's what is reflected in the congress findings that it looks at some states and assess the court believed the system crashed and burned and another state with a minimum coverage provision said this one seems to work so we will package the minimum coverage provision with of the nondiscrimination provisions. >> in a moment i would like to talk about the findings, but if i could postpone that for a second and talk about adverse selection itself i think one of the misconceptions here is that congress, having seen the experience of the state in the 90's with community rating and a guaranteed issue simply imposed of the minimum coverage provision as a possible way of dealing with that and if you don't have the minimum coverage provision than a essentially and first selection runs rampant but that isn't what happens. congress included at least half a dozen other provisions to deal with adverse selection caused by

bringing in people who were less healthy into the act. there are to begin with the act authorizes annual enrollment periods so people can't just show up at the hospital. if they don't sign up at the right time the at least have to wait for the time next year. that's often voiced by the fact. with respect to the subsidy, there are three different things that make this important. first of all the subsidies are generous for people below to wondered% of the federal poverty line, and the subsidy will cover 80% on average of the premium, which makes it attractive to them to join an. the structure of the subsidies, because the income they create a floor based on the income of the person getting the insurance, and then the government covers everything over that and this is

important in adverse selection because if you have a change in the midst of people and average premiums start to rise the government picks up the increase in the premium. the amount the person who's getting injured contributes remains constant at a percentage of his or her income. there's nothing about federal support is unsustainable, right? >> that is a fair point although one of the things that happens if you take the mandate out, it is true that the subsidies the government provides to any individual will increase and they will be less sufficient. i'm not disputing that point. the overall amount of the subsidy the government will provide will decline as the government notes itself in its brief because there will be fewer people getting it. some people will opt out of the system even though they are getting subsidies.

i would like to go back for one more second to the point about how the subsidies are part of what congress was using because the other thing is for people below 250% of the federal poverty line, converse also picks up and subsidizes the out of pocket cost raising the actuarial value. so you have all of that and then you have the congress also on like the state establishing and age differential of 3-1 commesso in insurance company for example selling a 25 year old a policy for $4,000 can charge a 60-year-old $12,000 for the same coverage. the states to pick the 90's when they were instituting these programs they either had pure community rating where everybody is charged the same -- everybody, regardless of their

age is charged the same premium. some states had variants of 1.5 to 1.1. massachusetts, for example which didn't have the subsidies that this ban is 2-1, so when congress is enacting this act it's not simply looking at the states and thinking that didn't go very well. why did we put in a minimum coverage provision will solve the problem? conagra's did a lot of different things to try to combat the adverse selection. if i could turn to the findings, because i think this is the government's position and then the plaintiffs pick up on that and move from that. >> that this context will what we are trying to figure out finding the court can rely on and say here's something that

congress has actually talked but i think the problem with the finding is that the congress it's quite clear of the court wants to look at the findings of 43 of the solicitor general brief in the appendix, but the finding is made specifically in the context of the interstate commerce. that is why the findings are in the act at all. congress wanted to indicate to the court knowing the minimum coverage provision was going to be challenged and wanted to indicate the report the basis of which it believes it has the power under the commerce clause to enact the law. why does that make a difference with respect to the finding which is the one the government is relying on and in particular the last sense that says it is essential to creating effective health insurance markets in

which guaranteed issue and pre-existing illness can be covered. the reason is because the central in the commerce clause doesn't have the colloquial meaning. in the commerce clause context effectively means useful so that when one says in lopez when the court says section 129, it is not an essentials part of the larger regulatory scheme of economic activity because it goes on to say in which the regulatory scheme would be undercut if we didn't have this provision. if that's all for congress means come on a agree with that. this is a system will be undercut if we don't have the minimum coverage provisions. it's like the word necessary, the necessary place it doesn't mean the court said on the numerous occasions absolutely necessary.

it means conducive to come in useful come at financing the objectives, and it's easy to see i think that -- >> is there a dictionary that gives that definition of essentials? it's very imaginative. just give me one dictionary. >> i think my point is they are not using it in the true dictionary sense. >> we know that. when people speak i assume they are speaking english. [laughter] i think there are several reasons i would suggest that we would know that from. the first is the findings themselves congress says at the beginning the head of it is the congress makes the following findings and they are talking about the interstate has headed the effects of the national commerce, so we know the context the converse is talking about. it is more or less quote than

from the commerce clause statement that they are finding this on a 42, congress at that point also uses the word essentials in the second sense that says this requirement -- and again the minimum coverage provision is in a central part of this larger regulation of economic activity which is by the way in exact quote from lopez in which the requirement under cuts federal relations also exact quote from lopez but it is referring to and the essential part of irisa and the affordable care act. it can't possibly be even the plaintiffs have an argument that those acts would fall in their entirety if you took out the

minimum coverage provision. as a second example of the usage by congress the statute that was before the court the court said the regulation of the intrastate and drug trafficking was essential to the regulation of the interstate drug activity. again, it is simply not conceivable congress was saying one is so indispensable to the other the way the united states uses the term here. it's indispensable if we can't regulate the track but we don't want to regulate the state traffic the whole wally, criminalizing drug traffic would fall. so i think once you look at the findings which says we believe this is a useful part of our

regulatory scheme which the congress would think in its own approach would be sufficient. >> council, the problem i have is that you are ignoring the congressional findings of the evidence the congress had before it the the community ratings and a guarantee issues would be a spiral. i think that is the word the was used without minimum coverage. those are all of the materials that are part of the legislative record. so even if it might not be the structure of the act that is why should we be looking at that as opposed to what congress had before it and used essentials and it's plain meaning? we can't have minimum coverage without with the sg is arguing the community ratings and guaranteed issuing.

you can't have those without minimum coverage. >> i think that is a fair question. but the idea that all the information before congress only lead to the idea that it's you would have death spiral's it seems to me to be contradicted a little bit this eda your report in november of 2009, which is about four months before the act passed where the cbo talks about adverse selection. now we want to be clear this is at a time when the provision was in the statute, so i'm not suggesting that this is a discussion without that, but nonetheless, ceo goes through and talks about adverse selection and points out the different provisions in the act plus the one other in the first three years of the operation at the exchanges of those insurance companies that get a sort of a worse selection of consumers

will be given the essentially credit from insurance companies. >> you want us to write an opinion saying we have completed that there is an insignificant risks of a substantial adverse effect on the insurance company, that is our economic conclusion and therefore that is where you want me to think? >> it doesn't sound right the way you see it. [laughter] >> you don't want them to say either that there is a death spiral. you don't want us to make those two findings. >> that's correct. i agree there is a risk and the significance of it people can debate, but what i think is lost in that question, what is lost a little bit is what is on the diversified, which is the fact that it to follow the government

suggestion, if the court follows the government suggestion, what is going to be lost something we know is and the essential part of the act, and indeed if one looks at the legislative history more broadly, i think much of it is directed toward the idea that guaranteed issue and community rating for the crown jewel of the act. the minimum coverage provision wasn't something everybody was bragging about. it was something that was meant to be part of the package, and all i agree with that. but the point of it was to have guaranteed issue and then among governments and community ratings and that is under the government proposal those would disappear. we would go back to the old system and under what i think is the proper analysis, the question the court is asking and should be asking is what the congress rather go back to the old system rather than to take the risk that you are talking

about. >> you are referring to the government's second position? the first is that we shouldn't address this issue at all. i asked about procedure or process would be anticipated for people that are affected by the change into law and the economic consequences. do you have a view on how that could be played out? it seems to me if we accept your position there has to be a broad range of consequences whether it is additional legislation, additional litigation. any thoughts on how that is going to play out? >> if the court adopt the position the i'm advocating, mr. chief justice, what would happen is the court would say the minimum coverage provision in one hypothesis of course is unconstitutional, and the fact that being unconstitutional does not mean the and validation of any other provision, so under

the position i'm advocating, there would no longer be challenges to the remaining part of the act. >> if the challenge is what we are questioning today, whether if you are an insurance company and you don't believe that you can give the coverage in the way congress mandated it without the individual mandate what type of action do you bring to the court? >> if the court follows the court i'm advocating you do not bring an action in court. you go to congress and seek a change to say the minimum coverage provision has been struck down by the court. here's the information we have to show you what the risks are going to be to reassure the adjustments you need to make. one of the questions earlier pointed out that states have adjusted their systems as the bomb on long as they have seen things work or not work. i was talking earlier about the

different ratio for ages and insurance and the states have tended to change that because the find having a narrow band work against the effectiveness of their program, but it is except massachusetts they didn't enact mandates. so i think to answer the question treacly mr. chief justice, the position i'm advocating would simply have the please go to congress, not in court. now, just to discuss the issue more generally if that is helpful, i think if there were situations where the court deferred let's say for discretionary reasons the court said we are not going to take up the question of disability and therefore not resolve it and other situations, it certainly seems to me that the enforcement actions, for example, if the time comes in 2014 and somebody applies to an insurance company

for policy and the insurance company says we are not going to issue a policy, we don't think that your risks are ones we are willing to cover, it seems to me that they could sue the insurance company and the insurance company could raise its defense that this provision, the guaranteed issue provision in the statute is not enforceable because it was inseparable from the decision from the provision that the court held unconstitutional. >> let's consider how your approach severing as little as possible, thereby increases the difference that we are showing to congress it seems to me it puts congress in this position. this act is still in full effect. there is going to be a deficit that used to be made up by the

mandatory coverage provision to meet all of that money has to come from somewhere. you can't repeal the rest of the act because you are not going to get 60 votes to repeal the best. it's not a matter of enacting treat you have to get 60 votes to repeal so it is going to be the law. you put to the choice of i guess bankrupting insurance companies and the whole system comes down or else enacting the federal subsidy program to the insurance companies, which is what the insurance companies would like i'm sure. you really think that that is somehow show in deference to congress and respecting the space process? it seems to me it is a gross distortion of eight. >> the difficulty is it seems to me the other possibility is for the court to make choices

particularly based on what it expects the difficulty of congress offering the legislation after a court ruling would be i'm not aware of any decision -- >> that wouldn't be my approach. my approach would be to say if you take the heart of the statute, the statute is gone. it enables congress to do what it once and the usual fashion and it doesn't inject us into the process of saying this is good, this is bad. it seems it reduces our options the most and increases congress the most. >> i guess to some extent i have to quarrel with the premise, justice scalia because the position i'm advocating today under which the court would only take out the minimum coverage provision i don't think would fit the description that you have given of taking out the heart of the statute. i do think once you take out a

guaranteed issue and community rating, you are getting closer to the heart of the statute and one of the difficulties with the government's decision is that i think it's harder to cavan that in the draw but a bright line and around it. it's harder than the government thinks it is. to begin with, even the government seems to acknowledge the exchanges are going to be relatively pale of the exchanges as they are in tended to be. we are going to have standardized products. everybody can come in and make comparisons based on products that look more or less the same. but the other thing that is going to happen is with the subsidy program, the way that the subsidy program is set up, the subsidy is calculated according to the essentially benchmark plan. the court wants to look at the provisions they began page 64 of the private plaintiffs brief in

the appendix. the particular position of the act. there's a question you are looking he essentially to calculate the premium by looking at a standardized silver plan. first question is there going to be any such plan if you don't have the guaranteed issue and community rating if they can basically be individualized. but the second problem is the provision on 68 a, the provision is used for calculating the subsidy. what is anticipated in the provision under the act as it is now is you have the floor of the income, you would take the benchmark plan and the government would pay the difference as we talked about earlier the benchmark plan can change for age and the provision says it can be adjusted only for eight. if you have such a thing as a

benchmark plan any more, if the rates of people in poor health go up because of individual insurance underwriting, the government subsidy isn't going to pay for that. estimate - understood the answer that you gave to justice scalia was the minimum coverage provision was not the heart of the act instead minimum coverage provision was a toll to the nondiscrimination command in the reading guaranteed issue. so if you assume all the minimum coverage is a tool to make those provisions work, then i guess i would refocus justice scalia's question and say if we know that something is just a tool to make other provisions work, shouldn't that be the case in which the other provisions are severed along with the tool? >> i don't think so because

there are many other tools to make the same things work. that is the case of the point the case that comes to mind is a york versus the united states the court struck down the provisions of the other incentives essentially were in place even without the minimum coverage provision there will be a lot of other incentives still to bring younger people into the markets and to keep them in the market, and if my reading of the finding is correct and that's all that congress is saying it doesn't mean that it is impossible to have -- >> i would like to hear your argument if you would like against what justice scalia just said. but assume contrary to what you want that the government's position is accepted by the majority of the court, so we now or read of the two parts of the bill. still there are a lot of other provisions here like the act,

the black lung disease, the wellness program the restaurants have to have a calorie count of major minn u.s etc. some of them cost money and some of them don't and there are loads of them. what is your argument that just because the heart of the bill was gone it has nothing to do with the validity of these other provisions both those that cost money or at least those that cost money you want to make an argument in that perspective destroying the heart of the bill does not blow up the entire bill the blows up the heart of the bill. i would like to hear what you have to say. >> to think what i would say is if one goes back to what i think is a proper several the standard when congress rather have nobel hoke with whatever is severed from it it seems to me when you're talking about provisions

that with the provision there is no answer to answer any other way. >> the real congress with a hypothetical congress? laughter comes to mcginn objective congress. >> why put congress to that choice? you only have two choices, congress, either the whole bill and to get parts of the bill or no bill at all. >> i think the reason is the severed above the is the necessity the court doesn't even if it had the inclination it doesn't have essentially the authority to retool the statute. >> i would say scale of politics, that's for us. the question as you have read all these cases. have you ever found a silver ability case where the court

ever said of the heart of the thing is gone and therefore we start on the other provisions that have nothing to do with it which could stand on their feet independently and can be funded separately or don't require money at all. estimate that an accurate answer would be i'm not aware of a modern case that says that to really think there are cases in the 20s and 40's that would be more like that. if i can take a second to address the economist brief because justice alito raised it earlier on what to make one simple point. leaving aside the balancing if one looks at the brief is very important to note that when they are talking about one side -- when you're talking about the balance they are not just looking at the minimum coverage provision. the word to say the minimum coverage provision and the subsidy programs so when you are doing the mathematical balancing, the programs are

extremely large. in the year 2020 there are expected to be over $100 billion not one year alone so if you are looking at the numbers please consider that. >> mr. clement, you have four minutes remaining. >> he says congress can go into this act to impose minimum coverage. they went into the act to have a different purpose to give people coverage when they needed it to increase coverage for people opposite is only a tool but other states going back to my original plant there are other tools besides minimum coverage the congress could achieve the same goals. so if we strike which will one should we strike the whole act. when congress has other tools

available. >> four points of rebuttal and then with justices question which is to say if this isn't just a tool that's the principal toole, con chris identified as an essential tool it's not just the tool to make it work it is the tool to pay for it and make it affordable and that isn't my characterization that this congress in finding on page 43 of the government brief. he tells this court don't look of the budgetary implications. it's the statute in part to make the community rating guarantees to affordable. it's there to pay for it. you don't have to figure it out exactly how much that is and which it is the substantial part because what they are trying to do is take of the individuals and put them into the risk pool

and this is quoting their finding which is to put people into the market which will lower premiums. so that's what their intent was. you know that is what was going on here. the government also said there is an easy dividing line between what they want to keep and what they want to dish out three of the problem with that is you read the briefing and might think there's a subtitle in the bill. there's not to be yet to figure out what they're talking about you have to go to page six of the opening set for the devotee brief they tell you what's in and what's out. the dividing line they suggest is between 300ga1 and 300 g a to because of the community ratings they say that it goes but then they say it has to stay because that's the way we have some sort of kind of community rating for the exchanges. but if you look at the provisions, it makes all these references.

it just doesn't work. getting back to the inquiry that i think the court can approach is to look at what the congress was trying to do uniques no look for the statute in the affordable care. i agree that the community rating and guaranteed issue were the crown jewels of the act. they were what was trying to provide patient protection. what made it affordable? the individual mandate. if you start on the community ratings and individual rating there is nothing left for the act and that takes me to the last point which is simply this court created a halfway house and it took the congress 40 years to try to deal with the situation when contrary to any intent to have to figure out what are we going to do when you're stuck with the ban on contributions but we can't get the expenditures because the court told us we couldn't and for 40 years the work on the halfway house? why make them do that in health care? the choice is to give congress the task of assessing the statute after some of it struck

down or giving them the task of simply fixing the problem on a clean slate. i don't think it is a close choice. if the mandate is unconstitutional the rest of the act should fall. 64. you were invited by the court to brief and argue in the case is in support of the decision below on the server devotee to get you have to read out their responsibility for which we are grateful. case number 11393 is submitted and we will continue argument in case number 11400 this afternoon the joint state and federal health insurance program for the poor they don't want to expand the medicaid program that would have to opt out of the medicaid entirely. 26 states sued saying the expansion is coercion.

this oral argument is an hour and a half to rid >> we will continue argument this afternoon in case 11 to 400 florida versus the department of human services. mr. clement? >> mr. chief justice and may i please the court the constitutionality of the massive expansion of medicaid to answer the related questions first is the expansion coercive and second, does that matter? >> can i ask you as a matter of clarification, would you be making this an argument if instead of the federal government putting up 90% of the cost, the federal government picked up 100% of the cost? >> if everything else in the statute remains the same i would be making the same argument. as the mixup, that really reduces to the question of why is a big gift from the federal government a matter of coercion,

we're giving you a boatload of money there are no matching funds requirement, there are no extraneous conditions attached to that, it is just a boatload of federal money for you to take and spend on poor people's health care. it doesn't sound dhaka worse if i tell you. if you have a stand-alone program that gave 100%. you make that argument in the race to stand alone program a boatload of money no conditions, no matching funds is coercive. the idea there are no conditions and of course the 100% matching of the newly eligible mandatory individuals, and that would have

a very big condition. the condition is the states in order to get that money they would have to agree not only to the new conditions, the government here is the congress is leveraging the participation. >> let me give you a hypothetical. suppose i'm an employer and i see somebody i really like and i want to hire that person and i say am going to give you $10 million a year to come work for me. the persons as well, you know, i've never been offered anywhere approaching a million dollars a year. of course i'm going to say yes to that. we would both agree that is not coercive. >> i would want to know where the money came from and is the money came from -- >> wow. i'm offering you $10 million a year to come and work for me and you are saying this is anything but a great choice? >> if i told you it came from my own bank account, and that is what is going on here in part. it's not simply a matter of

saying -- >> can that possibly be when a taxpayer to pays to the federal government the person is asking as a citizen of the united states when a taxpayer pays taxes to new york papers and is asking as a citizen of new york, and new york can no more trouble for dhaka government what to do with their money than the federal government can tell new york what to do with of the money that new york has collected to risk it if new york and would united states figure out a way to tax individuals greater than 100% of their income may be you could say this to separate taxes but we all know that in the real will to the extent the federal government continues to increase taxes that decrease is the ability of the states to tax their citizenry and it is a trade-off to disconnect on the power to tax are you suggesting that a certain point the states would have a claim against the federal government raising their taxes because somehow the states

will feel coerced to lower their tax rate? >> no, i'm not. what i'm suggesting is it's not simply the case that you can say it's free money so we don't have to ask. >> what percentage does it become coercive meaning as i look at the figures that i've seen, there are some states for whom the percentage of medicaid funding to their budget is close to 40% but there are others that are less than 10% and you say across the board this is courses because no state can give it up. what is the percentage of the big gift the federal government can give? when you are saying to me is for a bankrupt state there is no gift the federal government could give them ever because it can only give them money without conditions how poorly the state is run, no matter how much the

federal government doesn't want to subsidize abortion or some other state obligation, the federal government can't give them 100% of their needs. >> i'm really saying the opposite which is that not every gift is coercive the matter with the amount, no matter how small. i'm saying the opposite which is there has to be a limit. there has to be a limit on conversion and the reason is quite simple because the courts and higher spending jurisprudence is on the notion that the spending power is different and congress can do things pursuant to the spending power that it can do% to its other powers precisely because the programs are voluntary. and if you relax the assumption that the programs are voluntary and you say that they are conversion then you can't have -- >> the state doesn't want to face its voters and say instead

of taking ten, 20, 3240% of the offer of our budget and paying for it ourselves and giving up money for some other functions that's what makes the course of the are unwilling to say that? >> i can talk about what makes it worse of by the statute issue and focusing on what i think are the hallmarks of the statute that made it uniquely coercive one of them is the fact that the statute is tied to the decidedly non-voluntary individual mandate and that makes this unique but it makes it significant i think. i will continue. i thought you had a second question. the factor is congress made a distinct and conscious decision to tie the willingness to accept the funds not just to the new funds but the antiyour participation in the statute even though the coverage for these newly eligible individual

was separated from the rest program and this is section 2001 to page 23 of the appendix to the blueprint. >> isn't that true of every increase each time decided years ago its added more people and given more benefits and every time the condition. >> no, justice ginsburg this is two different directions. one is in some of the expansions the congress has made the newly eligible individuals that cover the individuals to get additional money but if they don't they don't risk their existing purchase a pension programs. the 72 program as a paradigm of that that created the option for the states to participate and the core talked about it in the great panther case. there were other expansions such as the 1984 expansion where they didn't give states the option but here's the second dimension

which is here congress has created a separate part of the program for the newly eligible mandatory individuals. that's what they call them and the individuals are treated separately from the rest of the program going forward forever. they are going to be reimbursed at a different rate from everybody who's covered under the preexisting program. in light of the separation by congress itself of the newly eligible the individuals from the rest of the program it's very hard to understand the decision to say if you don't cover these individuals you don't just not get the new money coming you don't get any of the money under the -- >> where does it say that? >> where does it say what? >> you said conagra said if you don't take the new money to cover the new individuals you don't get any of the old money that covers the older individuals. that's what i heard you say. where does it say that?

>> there's to places it says it. it is 23 a in the brief. >> the funding cut off this is the newly eligible individuals are treated separately. >> i want the part about the funding. >> what i have in front of you is it's been in the statute since 1965. the sight i have this 42 usc section 1396. so are we talking about the same thing? if that is the provision that gives the secretary -- degette says the secretary shall notify the state agency if they don't comply and further payments will not be made to the state or in

his discretion that payments will be limited to the categories under the same plan, not affected by such failure which it repeats until the secretary is satisfied that he shall limit payments to categories under the plan, not affected by such. so in your favor of i read that to say it's up to the secretary whether a state should refuse to fund people, the secretary will cut off funding it's obvious the state doesn't want it, and whether the secretary can go first. i also should think -- i couldn't find one case for the secretary of it didn't go further, but i also would think that the secretary could not go further when going further since

government action is governed by the administrative procedure act and governed by the general principle it must always be reasonable. so i want to know where this idea came from. should the state say i don't want the new money but the secretary would or could cut out the old money. estimate here's where it comes from the beginning of the litigation we've pointed out that what is worse is not the absolute guarantee the secretary could cut off any penny. >> let me review of that concern and tell you whether i have. a basic principal of administrative law, indeed all is the government must act reasonably, and showed a secretary cut off more money than the secretary could show was justified by being related to the state's refusal to take

the new money you'd march into court with your clients and say the secretary here is acting and reasonably, and i believe there is implicit in the statute as there is explicit that any such decision must be reasonable. that's that really do? >> it wasn't for this reason -- >> i would think it would. so here's the reason it doesn't. i don't know the opinion to site for that proposition. second is we've been making in the litigation since the beginning the basic point the government has had opportunities at every level of this system and i suppose they will have an opportunity today to say here fear not states if you don't want to take the new conditions all you will lose is the new money. >> i said because it could become an you know, given the complexity of the act that there is some money that would be saved in the program at the

state takes the new money and if they don't take the new money there is money that is being spent that wouldn't otherwise be spent there could be some place like that. it might be the secretary could show it was reasonable to take that money away from the states, too. >> do you agree the government has to act reasonably? do we strike down on the reasonable statute? my god. the executive tax to act reasonably, that certain in implementing the statute, but if the statute says in so many words the secretary can strike the whole program, that's a lot, unreasonable or not. >> if i could add one thing that could to the discussion, this is not all hypothetical. there was a record in the district court and an exhibit 73 to the motion judgment not in

the joint appendix week it logic if you would like but it's a letter from the secretary to arizona where arizona flooded the idea that it would like to withdraw from the program which is a relatively small part of the program, and what arizona was told by the secretary is that if you withdraw from the program, you risk losing $7.8 billion in the entirety of your medicaid participation so this is not something that -- >> i want to pursue this for one more minute. there are cases, and many of which justice scalia knows holly hill uses the same words as the statute and the secretary discretion. and in those cases, the court has said that doesn't mean the psychiatry can do anything he or she wants but rather they are limited to what is not artur come capricious and abuse of discretion in interpreting

statutes and applying the statutes. in the of my argument, and of my question. respond else you wish. islamic i'm sure they shouldn't force states to depend on how a lower court reads holly hill. i think every we've right here what we know to an absolute certainty is that this statute gives the secretary the right to move all of the state funding under these programs. and if you think about what that is -- >> do you think that the federal government couldn't if it chose accomplish, the system doesn't work we are just simply going to recall what it's not consistent with what we want to accomplish. we are just going to do away with the system and start the new health care plan of some sort. and states, you can take the new plan, you can leave them, we are

going to give out 20% less, maybe 20% more depending on what congress chooses. can congress do that? does it have to continue the old system because that is what the states are relying upon and it is coercive to give them a new system? >> we don't a vested right to participate in the programs that exist now, so if congress wanted to scrap the current system and have a new one i'm not going to tell you there is no possibility of the challenge to it. >> i want to know how i draw the line meaning the usual definition of coercion i don't have a choice. whether it's not a choice for the states they may not pay for something else. if they don't take medicaid and they want to keep the same level of coverage they have to make cuts in their budget to other services they provide.

when have we did find the right or limited the right of government not to spend money in the ways it thinks appropriate. >> i will try to answer that question to the first part of the question was what the congress tried to scrap this and start over again with a new program. here's why it is fundamentally different and fundamentally more coercive because congress doesn't say we want to scrap this program. they don't have a single complaint with the way states are providing services to the visually impaired into the disabled under preexisting medicaid. that's why it is questionable why they are saying if you don't take the money subject to the new conditions we are going to take all of the money that you have previously gotten that you've been dependent on for 45 years and you are using to serve the visually impaired and the

disabled. islamic you are representing 26 states and we are also told that there are other states that like this expansion but they are very glad to have it. the believe that you are seeking is to say the expansion is no good. never mind there are states that say we don't feel the worst. we think this is good. you are saying that because he represented a number of states you can do streusel program there may be many states that want it that don't feel coerced. >> that's right but that shouldn't be a terrible concern because when the congress wants to do what it did in 1972 and passed a statute that makes the

expansion voluntary, every state that thinks that this is a great deal can sign up. what it's telling is that 26 states who think this is a bad deal for them actually are also saying if they have no choice but to take this because they can't afford to have their entire purchase a patient in this 45-year-old program wiped out and they have to go back to square one and figure out how they are going to deal with the visually impaired, the disabled in their state to reduce the nec didn't take the time to figure this out but maybe you did. is there any chance of the 26 states opposing it have republican governors and all of the state's supporting get, is that possible? >> is a correlation. [laughter] stomach let me ask you another thing. most colleges and universities are heavily dependent on the government to fund research

programs and other things. that's been going on for a long time. then title ix passes and the government official says if you want money and all the other things you get it for, then you have to create an athletic program and the recipient says i am being forced there is no way to run all these labs that we have, so i am being coerced to accept this program that i don't want. what is your theory, why doesn't it work in someone something receive something to do to give up? but there's two reasons it might be different. the line of coercion applies as on the relevant when congress tries to do something to the

spending cuts or it couldn't do directly. so if the contras tried to impose tight longline directly the question for the court would be whether or not section 5 of the 14th amendment allowed congress to do that. i imagined you might think it did and some of your colleagues might take issue with that but that is the nature of the question so one way around that if congress could do what treacly you don't have to act if there was something special that's how the court resolved the case about the funding. >> i'm trying to understand the theory. i know there are cases of hours with the line between pressure and conversion of but we have never had in the history any federal program struck down because it was so good that it becomes coercive. >> i also think that it may be that spending on certain private

universities is something again congress can do in the josette matter whether it's coercion but when they are trying to get the states to expand the medicaid programs -- there may be some limits on that, but again, i'm not sure even in that context there may not be some things converse can do. a separate question but once we take the premise which we don't think there's a disagreement here that congress could not simply as a matter of direct legislation under the commerce tower say you must extend your medicaid program. if we take that as a given i think we have to ask the question of whether or not it is coercive. in the second question, you asked where is the case that says that we've crossed that line? this is that case i would respectfully -- >> and it doesn't apply to the 1980 extension to the children from zero to 6-years-old, requiring the extension for children up to 18. all the prior extensions to just as big an amount and as big of

the number coming in on the rolls, and they are governed by precisely the same statute that you are complaining of here which has been in the law since 65. stomach justice breyer, i don't think the position of extend to see the 1984 amendment, and let me tell you why to refine not saying that absolutely that's guaranteed, but here's reasons why they are different. the major difference is the size of the program. the expansion of medicaid since 1984 is breathtaking. medicaid since 1984 the federal spending to the states is a shade over $21 billion. right now it is $250 billion, and that's before the expansion under the statute. stack doesn't that mean that medicaid is unconstitutional now? >> not necessarily come justice, and again, it's because we are not here with a one trick pony, and one of the factors which point you to the three factors that make this uniquely coercive. one of them is the sheer size of

the program. if you want to gauge on the size of the program the best place to look as the program. footnote six -- >> when did the program become too big? i want you to give me a dollar number. >> $3.3 trillion the next ten years. spec this number which i did look up, the amount, approximately, if you look into it as a percentage of gdp, it's big. but it was before this about two-point something present fairly low of gdp. will go up to something a little over 3% of gdp. now look at the comparable numbers, which i did look with the expansion that we are talking about before, the expansion from zero to 18 or even from zero to six. weigel you can argue those numbers it's pretty hard to argue they are not roughly comparable as a percentage of the prior program or as a percentage of gdp.

if i am right on those numbers or even roughly right, i don't guarantee them. then what you have to say indeed medicaid has been unconstitutional since 1964. and if not, why not? >> there are three things here. >> i want pens and needles to your -- [laughter] one is the sheer size and thus affect the statute is played to an individual mandate which is long voluntary, and three is the fact that they've leveraged player per dissipation and the program, notwithstanding that they've broken the south as a separately segregated fund going forward. >> suppose you have the current program and the congress weeks of tomorrow and says we think that there is too much fraud and abuse in the program and we are going to put the new conditions on how the state used the money so we can prevent fraud and

abuse and we are going to tie it to everything that's been there initially on constitutional? >> it is constitutional because we wouldn't have to let that in the spending program and it's in the criminal code may be tied to spending the better as a profession i don't think it's constitutional. >> i guess i don't get the idea. they can legislate for it in medicaid, and congress can legislate some expansions and medicaid? >> i think there's a difference, but if i am wrong about that and the consequence is that congress has to break medicaid down into the remotely manageable pieces as opposed to $3.3 trillion over ten years before the expansion, i don't think there would be the end of the world but i would ask you to focus on specifically what is going on which is they take these newly eligible people and it's a massive change in the way the program works, these are

people that are healthy adults who are not covered in many states they say okay we are going to need to cover those and have a separate program for how you get reimbursed. you get reimbursed differently from the other eligible individuals but if you want to get our money we are going to take away your participation of the program for the visually impaired and the disabled.

>> is because they feel comfortable cmac if they don't want to do it the better way. so i just don't understand the logic of saying that you are not entitled to our money. once you start taking it, the more you take, the more power you have. justice, i actually think that

ms. describes what happened with medicaid. providing for the poor and digitally disabled, -- the federal government alderson says we would like to help you with that and we will give you money voluntarily. over time, they decide they're going to expand the program and they say that you have to give up even your prior program where we first offered you cooperation -- they say that we're going to give that up if you don't take our new recommendations. i do think that when you get past a certain level, i think it becomes coercive per se. we are going to take away $3.3 trillion of the next 10 years. at that point, it is okay to insist that congress be a little more careful than to not be so aggressively coercive as it was in the statute. i would simply say that we are not here to tell you that this

is going to be an area where it is going to be very easy to drop a line. we are just telling you that it is an exceptionally important to draw the outline. this is a case where it ought to be easy to establish this and save coercion matters to make it as obviously coercive as any piece of legislation that you have seen. then you will have instructed congress that there are limits and you will lay down some rules. >> as i recall, it is to determine whether something is coercive. you went to only one side. how much you are threatened with losing or opera to receive. the other side of the matter. i don't think that it's realistic. i think the old jack benny

thing. he says, i'm thinking. it is funny because there is no choice. your life against -- it is money. it is an easy choice. no coercion. whereas if the choice were your life or your wife's life, that is a lot to think of. isn't coercive in both situations? well, yes, it is. [laughter] >> it is a tough choice. >> i thought you were going to say they want your money and your life. >> [laughter] when you say you are coerced, it means you have been given an offer you cannot refuse. okay, you can't refuse the money for your life.

for your life or your wife's? i could refuse that one [laughter] >> let's leave the wisecracks out. >> take mine, you know? >> [laughter] >> i won't use that example. forget about it. that is not frivolity for a wild. i want to make sure that i understand where the meaningfulness of the choice is taken away. is it the amount that is being offered -- that it is so much money that you can't turn it down, or is it the amount you're going to take away if you don't agree. >> it is both, your honor. there are really three strings in this boat. money makes it very difficult to refuse. it is not money that comes from china or the export tariffs --

they come from the taxpayers. the fact that they are being asked to give up their continuing participation in a program that they have been participating in for 45 years as a condition to accept the new program, we think that is the second thing. why isn't that a consequence of how willing they have been since the new deal to take the federal government's money? it seems to me that they have compromised their status as independent sovereigns because they are so dependent on the federal government. they should not be surprised -- they tied the strings. they should not be surprised that the federal government will start pulling them. >> with all due respect, mr. chief justice, we cannot say the states have gotten independent. if the consequence of saying that we are not going to police the coercion line here shouldn't be that well, it is too hard, so

we will give the congress unlimited spending power. the consequence should be if you cannot police the line, you should reconsider your case that says congress will spend money on things struck me. we are simply saying you're spending power depends on coercion. >> i do not understand your first answer to justice keating. you don't see there being a difference -- saying we want to take care of the poor. we pay 100% of your administrative cost. you said that is a big coercion. all right? doesn't the amount of burden that the state overtakes to meet the federal qualifications help in this at all? it certainly can, justice sotomayor, i did not mean to imply that my case is no better.

it is in the nature of things. i'd don't think that the amount of money considered alone -- i do think that it does make a difference. it is precisely because it has an ability to raise money from their own citizens. it is not just free money that they are turning down if they want to. >> if we go back to that area of matching what a state pays to what a state debts, florida loses. it's citizens pay out much less than what they get back in federal subsidies of all kinds. you cannot be making the argument that florida cannot ask for more than what it did. it is really getting less from what it receives. >> i want to go back to that point. >> i will make that argument on behalf of texas. it is not what my argument depends on. it is one aspect of what makes this statute uniquely coercive. i really think if you ask the question, what explains the idea

that if you don't take this new money you are going to lose all your money -- what you've been doing for 45 years, helping up visually impaired and disabled? no one wants to stop doing it. they are just doing it and it is purely coercive to condition the money. >> if the inevitable consequence of your position was that the federal government could do this on its own, the federal government could have medicaid or. >> hal are the interests of federalism concern. this bill allows the state bureaucracies -- i know that part. i just want to hear your answer is. >> i would like to say that the one-word answer is accountability.

if a citizen is upset about it, they can bring a federal complaint to a federal agency. what makes this pernicious is that the federal government knows that the citizenry is not what you take rightly that their huge new federal properties popping up across the country. you get the benefit of administering this through state officials. then it makes it confusing for the citizen who doesn't like this. do they complain to the state official at the state building? >> that is very confusing. i see you are behind cooperative stay programs, it was a federalism idea. it was to give the space, the ability to administer those programs. it was to give the states a great deal of flexibility in running those programs, and that is exactly what medicaid is. >> that is what medicaid was. the question is what will be going forward? i absolutely take your point, justice kagan. mandatory federalism has very

little to recommend -- >> that kind of thing does not mean that there are no federal mandates and no federal research and involved in a program that uses 90% here, 100% federal money. it means that there is flexibility built into the program subject to certain rules that the federal government has to about how it wishes its money to be used. it is like giving a gift certificate. if i give you a gift certificate for one store, you cannot use it for other stories. but still you can use it for all kinds of different things. >> i absolutely agree that it is cooperative federalism and the states have choices, then that is perfectly okay. that is why voluntariness coercion is so important. as long as it is voluntary, then state officials should not contain -- complained about the way the state is administering a

program that the state volunteer to participate in. if not, it is not fair to tell the official they have no choice. who will they complain too at the federal level? there is no one there. i am not saying that is the solution, but it actually is better than what you get when you have mandatory federalism and you lose the accountability that is center to the constitution. >> thank you. >> mr. chief justice, members of the court, the medicare provisions will provide millions of americans to have access to health care they cannot now afford. it is an exercisable spending cost power that complies with all of the limits set forth in this court's decision and the states are not contend otherwise. the state is asking disgorge these something unprecedented.

>> what do you think we missed in several prior cases where we have said that the federal government cannot be coercive through the spending. give us a hypothetical. >> first, if i could, i think what the court said is that it is possible that it might envision a situation where there is coercion. i can think of something. one example i can think of that might serve as an example is a fundamental transformation in structures of big government, a situation in which the state didn't have a choice in which to accept it. anything else, so long as -- >> you're talking about situations where they have to locate their statehouse in some other city --

>> the conditions are real. none of those have addressed the coercion crisis. >> do think it is all right for the federal government to say states, you can take this or leave it. if you don't take it, you lose every last dollar for every program. i think that would raise a issue, mr. chief justice. >> i think they are related. i think it really gets at coercion in some circumstances. i would like to -- >> i know we don't have that here. >> because it gets to be harder to see -- >> it is hard to see the connection between getting you to do a.

>> but it would not fail because it was coercive. >> i do think it is quite different here. i would like to, if i could -- >> i notice different here. i'm just trying to understand if you accept the fact regarded as true, if it there is a coercion lament or that once the federal government -- once you're taking federal money, the money can take it back and that does not affect the voluntariness of your choice. it does seem like a serious problem. we assume the federal government cannot do this under the constitution. but, if it gets the state to agree to it, then it can. the concern is if you can say if you don't agree with this, you lose all your money. where that is really saying that the limitation in the constitution is largely meaningless. >> but i don't think that this is a case that presents that question. >> know, i know.

let's assume it's not the case. do you recognize any limitation on that concern? >> the court has said that this is something that needs to be considered inappropriate taste. weak knowledge that. i do think it is so dependent on the circumstances it is hard to say in the abstract of the respect of the particular program -- >> you can't imagine a space in which it is both jermaine and curls >> congress has authority to act. >> i'm not blaming you for not thinking -- >> i do think it is important to look at this. it has to be considering the factual context. let's say congress --

>> let's say expenditures are a huge financial burden. we're going to take that on your -- off your shoulders. we are going to impose a special education tax which is exactly the same amount of money as all the states now spend on education. and we are going to give you a grant is equal to what you spent on education last year. now, this is a great offer until take it, but of course, if you take it, it will have some conditions. we are going to set rules on collective bargaining, on curriculum, textbooks, school calendar, class size, and many other things. take it or leave it. if you take it, you have to follow rules on these things. if you disagree, well, you're going to have to tax your citizens, they will have to pay the education tax. you will have to tax them for all the money you are now spending on education plus all of the federal funds you were previously given.

would that be the point where it turns into coercion? >> no, i don't think so. the states you have a choice there. >> it is not that there is a proposition, their argument is that they are in a position where they don't have a choice because of everything that has happened. >> that is the case then -- there's nothing left -- >> as a pack of cool matter, -- as a practical matter i disagree with that. it is not like the federal government is going to have any kind of raising of the federal taxes that need to be raised. that is real and all political constraints to operate in this area of. >> i would prefer there was a political constraint on the mandate to. what you call political

constraints don't work. >> justice scalia, folks have their education system and they can decide whether they're going to go in or not. here, of course, i think it is important to trace history on medicaid. it is not the case here that the norm is that the federal government has offered to the states the opportunity to stay where they are or avenue peace. we can debate that in one way or another. starting in 1984 with the expansion, whip pregnant women and infants, they were given a choice to stay in the program or not. in 1989 when the program was expanded to children under six years old or lower, 1990, kids

and poverty -- every major expansion. same thing. i just think the history of the program and when you read that in context which reserves the right of the federal government to reserve this going forward. with respect to it -- >> we heard the question about whether the secretary would use this authority to the extent available. other circumstances where you are willing to say that that would not be permissible? take the arizona letter for example. >> if i was in that position, i would use it all the time. guess what, i can take away all your money if you don't make it. there is a time when it seems that would be the case. why shouldn't we be concerned about the extent of authority that the government is exercising simply because they could do something last. we have to analyze the case on

the assumption that that power will be exercised. >> well, mr. chief justice, it would not be responsible of me to stand here in advance and speculate on how it would be resolved. i think for the circumstances -- >> general, what has been that history? >> it has never been used -- >> what about arizona? >> it has never been used to cut out -- never been used to cut off. >> story saying go ahead, make my day, take it away? >> for that situation we have here, mr. chief justice, with respect to medicaid expansion, the states argument is, as i said in the briefs, they

articulate -- i articulated it a little bit differently. it is not what you stand again to gain but what you stand to lose. i think it important thing of evaluating this in the context is c. 6% of medicaid expenditures in this country are based on optional choices, and i don't mean by that the optional choices of the states to stay in the program, but states are given choices to expand the beneficiaries beyond the federal minimum and expand services. >> just a small point. please correct me if i'm wrong. to keep that the present level the existing medicaid expense -- some states may have been more generous than others and medicaid. >> much more than that, justice kennedy. there is something called a

maintenance provision in the last until 2014 until the medicaid expansion takes place. that applies to the population -- with respect to the populace and come you can't take anybody out. that does not apply to the optional benefits which they still have flexibility. they can still reduce optional benefits which they are now providing if they want to be controlling the cost. they can also work on provider rates with respect to demonstration projects, which some states have expanded their populations beyond the eligibility levels. there are also the budgetary crisis and stay crisis. that is a provision that has a significant degree less in terms of its effect beyond that. it is temporary. i think with respect with the first of three arguments of the coercion, it is very difficult to see how that is going to work because if they -- if the

question is about what you'd stand to lose, it seems to me that it doesn't matter whether the medicaid is substantial or if there is any expansion at all. states could decide under the current system that too much money is flowing to nursing home care. that money would be better serving the general where god if it were directed towards women, infants and children. the states could say we don't like that, we want to keep spending money the way with -- the way we want to. in fact, it seems to me that before these expansions take place -- >> what are you demanding of when it comes to coercion?

>> i would appreciate it if you would expand a little bit on tran-sixes question. >> it does refer to the secretary's discretion to keep the funding in so far as the funding has no root relationship to comply with the condition. as i read that, that gives the secretary the authority to cut off all the money but the state's refusal to accept the condition means they shouldn't have it. there is nothing there that says they will cut off under rated money. >> i thought they had to exercise that within reason. you've looked into it, and that is what i want to know. is there -- i could find no instance when they went beyond the funds with the state refused

to give. i would like you to tell me when you look into it that what i thought of in this isolation chamber here is actually true, or were there they have run around threatening people that we will cut off totally unrelated funds. what is the situation? >> i think the situation is, genuinely as you described it, i don't think we need to commit now that the secretary will exercise discretion in one way -- >> that is just aimed at the national analogy that has been used, there is no evidence that anyone has ever been -- they have to give up their wallets. they don't have a choice. you cannot represent that the secretary has never said if you don't do it, we are going to take away all the funds. just like the airs on an

example, i expect that because that is the leverage. not that there is anything wrong with it, it is not coercion. wait a second, it is not coercion to say i'm going to take away all your funds. >> i don't know if that is so, all i ask my question is i did not ask you to commit the secretary to anything. i wanted to know what the facts are. i wanted to know what you found in researching this case. i wanted you to answer the question as the chief justice has, is it a common thing that happens, that this unrelated thread is made. my understanding is that these situations are usually worked out back and forth tween the states and the federal government. i figure -- >> but they couldn't -- >> that is what i think is a

problem. we seem to be operating under a consumption that is right. the reason we titled these medicare expansion -- it seems to me why we are where we are now, 60% of the money has been spent by the states going beyond what federal law requires, because it is the group program in the states generally like what it accomplishes. >> the objective of the affordable care act is provided universal health care and now, suppose that all of the 26 states that are part of this case would say we are not going to abide by the new conditions. then there would be a huge -- a big portion of the population that would not have health care. it is a realistic possibility. the secretary would say, well, what okay. we will cut off your new funds but we will not cut off your old funds.

we will let that sit there. >> as i cannot make a commitment that would be decided, i could not make a command that would be undecided. the second one, it is coercive in its nature to the affordable care act. we think that is a misconception. i would like to take a minute and walk through and explain why that is. >> in response to the chief justice's question, the money has consequence because we have to worry if that person is actually going to shoot. what do we think the secretary is going to do is an important one. as i understand it, and when the secretary responds, but the secretary is doing is withdrawing funds from poor people's health care. the secretary is reluctant to take money away from poor people's health care. if that is why, these things

will -- the secretary doesn't want to use this power and so the secretary sits down with the state and figures out a way not to use the power of. >> that is correct, justice kagan. that is another way of trying to say what i was trying to say earlier to justice scalia. we need to get health care to the needy. the vast majority work together to make that happen and. >> the question is obtusely but the states are interested in the same objective. they have budget realities that they have to deal with. states say it well, we're going to cut by 10% and what we are going to reimburse for end what we will not reimburse for. they have different views about how to implement policy in this area. the concern is that the secretary has the total and complete say because the secretary has the authority

under this provision to loose everything. ..

the federal government would say he is a condition you have to have a certain kind of eyeglasses for people and by the way if you don't do that we $42 billion of funding. i thought such a thing would not happen with. and - but you tried to have it had been discovered by the apa and the people with the glasses would say that it's arbitrary discretion, and that is so even though the statute says it is in the discretion of the secretary. >> that's why hearing now and they do it so i would like a little clarification. >> the situation described in the hypothetical, justice breyer, the secretary of human services would never do it but what i am saying is with respect to the medicaid expansion in your case -- >> we have to satisfy the procedure and that is the

constraint. but i don't feel able to do is to say with respect to this medicaid expansion juliette gordon are you willing to acknowledge the procedure act is eighth limitation on the secretary's ability to cut off all of the funds? she can't do it if that would be unreasonable. are you willing to accept that? i wouldn't if i were you. [laughter] >> what i am trying and to do here is to suggest the secretary does have discretion on the statute, and that -- >> part of the discussion is to cut off all the funds. that is what the statute says. >> and i am not willing to give that away that it doesn't make -- >> you're not going to give away whether they would bar that, but the apa surely has to apply to the discretionary act of the secretary. >> i agree with that, but -- >> but it's making you reluctant. >> i'm not trying to be

reluctant. on a understand how this works. i am trying to be careful about the authority of the secretary of health and human services and how it will apply in the future. >> i don't know of any case where the secretary's discretion of explicitly includes a certain act, but nevertheless it cannot be performed unless it is deemed reasonable. i don't know a case like fast. a general discussion has to be exercised reasonably. maybe justice breyer knows such a case. [laughter] >> if i can go back to the size and idea there is a couple of important points thinking about whether that is a principal that would apply. once you get into that business in addition to the problem identified earlier that its it basically means congress is frozen in place now based on the size of the program. he's got this additional issue having to make a judgment about

what circumstances will the loss of the federal funding be so significant. >> the test could be -- i don't see that it would be very workable. whether or not it is so big that accountability is lost and it is not clear to the citizens that the state or the federal government is administering the program even though it is a state administrator. >> this is going to come from a withdrawal situation. their argument is what you stand to lose and with respect to the winstrol does it depend on -- is it an absolute or relative number with respect to how much of the state does it is in the situation you have to make a calculation about how hard would it be for the state to make of that revenues, the federal revenue they would lose that there is a high tax state or low tax stage seems to me then what is the political climate --

>> in your view this federalism require that they would be a relatively clear line of accountability for political acts? >> yes. of course. is to begin the task or is that it percentage -- >> it has been discussed i think for example justice o'connor's literature does address the concerns in the sense of the federal government using federal funding in one area to try to get the state's to act in the area the federal government may not. but as your honor suggested earlier, this is a situation in which while this troop the federal government couldn't require the states, the chief justice indicated to carry out the program, the federal government could expand medicare -- >> it is inherent and implicit in the idea of federalism necessary for the idea of federalism that there rhode be a clear line of accountability for the citizen knows it is the

federal or the state government that should be held responsible for the programs. islamic certainly the problem -- >> does relate to that? is that a separate -- >> i think it relates to it in the opposite way that my friend would like to in that i think their argument is that would suggest to such a high degree of the state to withdraw from the program that is antalya will trees and that is where the affect comes from. >> the answer would be the state wants to preserve its integrity, its responsibility in the federal system. and of course it may do so. estimate does and the question come down -- maybe you can answer this but isn't conceivable to you evidently not to congress that any state would

turn down this offer that they can't refuse? is it conceivable to you that any state would have said no to this program? congress didn't think that because its other provisions are based on the assumptions that every single state would be in this thing. can you conceive of the state saying no, and if you can't, that sounds like coercion. >> the congress predicted the states would stay in this program but the prediction isn't conversion and the reason they predicted i think is because the federal government is paying 90 plus% of the costs and increasing the state cost. >> 100% of the states will accept it. that sounds like coercion. estimate i disagree and if it proves to be wrong the congress has time to recalibrate and beyond that i want to go back to the other part of the point that

with respect to the relationship between medicaid and the act and the minimum coverage provision, my friend suggested that you can infer because with respect to the population to which the provision applies if there's no medicaid there is no way for them to satisfy the requirement. i want to work through that for a minute if i may because it is incorrect. first of all with respect to anybody at 100% of the poverty line or above there is an alternative in the statute. it is the exchanges with tax credits and subsidies to insurance companies, so with respect to that part of the population 100% of poverty to 133% of poverty the statute actually has an alternative for them for people below the poverty there is no alternative but by the same token there is no penalty that is going to be

imposed on anybody in that group to begin with. right now the level of 100% of poverty is $10,800. requiring for the federal income tax is $9,500 so anybody below no penalty because they wanted to file an income tax return. the people between $9,500.10800 thousand, the question is are they calling to be able to find health insurance that will cost them less than 8% of their income. >> the poorest of poor if there is the medicaid program they are not going to get health care isn't that right? >> so, this obviously assumed, they thought it was inconceivable to any state reject this offer because the object of of the affordable care act is to provide your universal care and medicaid is the way to provide care for at least the poorest of the poor.

so wait didn't occur to them that this was a possibility. when that is the case how can that not be coercion unless it is a gift, just purely a gift and it comes back to the question whether you think it makes a difference that the money come a lot of the money to pay for this is going to come out with the same taxpayers that the states have to tax. >> these are federal dollars that congress has offered to the states we will make this offer to you but here is how the need to be spent. this is the essence of the authority under the clause and the appropriations clause. this isn't remote contingencies in that regard. this is how the congress is going to have the federal government used if they choose to accept it to be it was reasonable for them to predict in the circumstance that the state's were going to take this money because it is an extremely

generous offer, 90 plus% of the funding the states can expand their medicaid coverage to more than 20% of the population for an increasingly 1%. >> if it is such a good deal why do you need the club? if it's a good deal, take it. if you don't to get your just hurting yourself. >> that is a judgment for the congress to make about how the federal funds are going to be used if the states choose to accept them and they've made that judgment. that is the congress's judgment to make, and it doesn't mean that is coercive. you have another 15 minutes. [laughter] -- the point is there is no realistic choice. there is no real choice and congress did not in effect allow for an opt out. we just know that and it is

substantial. >> i would go back to the fact that 60% of the medicaid spending is now optional. it is a result of the choice is the states have made thus expanded. >> they are now frozen for the earlier discussion to read too much more modest extent was my point, justice kennedy. for example, optional services were a huge amount of money spent more than $100 million annually of the largest component of that is the nursing home services. that remains optional. right now once the maintenance remains in place, they have the flexibility to reduce those numbers, states have considerable flexibility now and going forward with respect to the way the money is spent and i do think in terms of evaluating whether this extension should be considered it's got to be evaluated against the backdrop of the fact the states are generally taking advantage of the opportunity of the statute

to expand the amount of money they spent to try to make the lines of the citizens better. >> bye hiring a very substantial number of more employees would be state employees consubstantial expenses that are not reimbursed. >> i would take issue with that, justice kennedy. part of the affordable care act is that it provides a new streamlined eligibility process to get people into the system at a much faster and cheaper rate. but there are going to costs to set that up. under the statute the federal government is 1890% of the costs in the short term set up cost and then all of the projections we have seen suggest that the medium to long term costs once the changes are in place will be dramatically low on the administrative side. spread the federal government isn't bound to that. what if after the 90% they say

from now one we are going to pay 70%? what happens then, where does that extra money come from? >> i think in those states would have a choice at that point whether they are going to stay in the program or not. but that isn't what we have here. they can just bailout whenever the government would do so in the amount of the percentage it's willing to pay the states can say i'm not saying it would be an easy choice, mr. chief justice. but i would be after medicaid if they decided that isn't working for them. i'm not saying this is an uneasy truce. i'm also not saying it would happen because the secretary does have this discussion. >> we are talking about something else. we are talking about fiscal realities and whether or not the federal government is going to say we need to lower our contribution to medicaid and leave it up to the states because we want people to be mad

at the states when the of budget cuts to keep it up. islamic but there would be treated as an indicator expansion occurred or not. >> we've been emphasizing the federal government as redican 90% of this, and it's not something you can take to the bank because the next fiscal year they can decide we are going to pay a lot less and the states are still on the hook because you say it's not an easy choice. we ask whether it is coercion. you're not going to be able to fill out of medicaid. we just have to do more because they will pay less. >> if i agree that would be a difficult choice in some circumstances but it is not to say it is coercion as a legal matter or even as a practical matter, and i think it would depend on what the circumstances were and i think trying to think about how the court would answer the question or whether it is coercive or difficult as a practical matter. >> we are trying to go back to

that because justice kennedy asked you whether there is -- if he said it is coercion if no one can be politically accountable. i'm not sure how that could be politically accountable because almost every guest if the terms are attractive, it would be an unattractive political alternative to turn it down. i think every state raised the drinking age to 21, correct? >> yes, and this was raised and the court rejected it. >> i guess my point is the political accountability has the two components. what can i do if i like something coming and what can i do if i don't like something? and if people really like something like medicaid they are not going to let you drop it, correct? >> the citizens of the state. estimate passing the citizens of

the state and that is why i try to get back to the point it's why i think if this is wrong to think that is as conversion because this is a problem that works effectively for the citizens of the state and the state governments think that and that is why it has expanded the way it's extended because it's providing an essential service for the millions of needy citizens in the states has access to health care. what is the threat in that case the drinking age to 21 or what? the percentage of the highway. >> it's a pretty small amount. that's really an apples and oranges when you're talking about all of your medicaid funds would lose if it was five or 7% of your highway funds. >> i don't think that makes this conversion as a legal matter. i think as i said the situation is in which.

i'm saying it's an easy trip statistics made the choice to read islamic denney to the trees in the stimulus bill, didn't they? some governors rejected the stimulus bill and some of their congressional or legislative process is overturned and others supported it. the percentages were smaller but it's always the preference of the voters as to what they want. estimate of the stimulus, what would the state lose? would then be taken away or would it be the opportunity? was denied don't know the answer to that. >> of finance just say in conclusion did like to take a step back this provision, the medicaid expansion that we are talking about this afternoon and the provisions we talked about

yesterday, we've been talking about them in terms of their affect as measures that solve problems, problems in the economic marketplace that have resulted in the millions of people not having health care because they can't afford insurance. there is an important connection, profound connection between that problem and liberty, and i do think it's important we not lose sight of that. that in this population of medicaid eligible people who will receive a health care that they cannot afford under this medicaid expansion. there will be millions of people with chronic conditions like diabetes and heart disease. as a result the of care that they will get, they will be unshackled from the disability those diseases and on them and have the opportunity to get in

july and the same thing will be true for a husband whose wife is diagnosed with breast cancer and won't face the prospect of being forced into bankruptcy to try to get care for his wife and face the risk of seven to raise children alone and i've been multiplying example after example after example. in a very fundamental way, this ticket expansions luft as well as the provisions we discussed yesterday secure the blessings of liberty and that is important for considering these issues that they be kept in mind. the congress struggled with the issue of how to deal with is profound problem of the 40 million people without health care for many years and in a judgment and its judgment is one that's in conformity with lots of experts father was the best conflict of options to handle

this problem. maybe they were right, maybe they weren't, but this is something about which the people of the united states can deliberate and they invoked and if they think it needs to be changed the can change. and they suggest to the court with profound respect for the court's obligation to ensure that federal different remains the government of enumerated powers that this is not the case in many of its aspects that calls that into question this is a judgment of policy of democratically accountable branches of the government by the artist likes and i would urge the court to respect the judgment and asked that affordable care act in its entirety would be upheld. thank you. >> thank you. you have five minutes. >> thank you mr. chief justice and man please the court in rebuttal. first we talked a lot about the

coercion, and your money or your life. i would suggest it is equally coercive but not on coercive if i see your money or your life and by the way i have discretion as to whether or not i would shoot the gun. i don't think that eliminates the conversion to a i also don't think this is a discretion the secretary would able to exercise and the reason is we disagree on the details but the solicitor general and i agree that over the years the congress has had different approaches to expanding medicare. sometimes 1972 makes the expansion voluntary. that is by the way what happened to the stimulus funds which were fall/winter refunds which is why the casino. sometimes they take the voluntary approach, sometimes as 1984 the tecum mandatory approach. if the secretary exercised that discretion to say it isn't reasonable for you to have to give up your funding for the visually impaired and the disabled to cover people so they make it voluntary and we will make a discretionary there would be creating and comforting the

1984 amendment approach to the 1972 amendment approach and i don't think that is the kind of discussion the secretary has with all due respect. will the offer the next point your hypothetical think captures the affect on this based on the fact that tax dollars are being taken and it's not like the machine the federal government would say by the way if you don't take the option we are giving you we will of the federal substitutes that will go in and take care of the unemployed in the state's will fund the other 49 states and he will get nothing but of course this situation is much more coercive even in your hypothetical because it is tied directly to the mandate and the pre-existing programs of their supposed secondary education they gave them your option and then you also use the secondary funds as well.

it's really hard to understand tidying the participation in the program of anything other than coercive. they make the fact there are optional benefits under the program. but guess what comes after the medicaid expansion there will be a lot less opportunity for the states to exercise the options when of the things the expansion does because the expansion is designed to convert medicaid into a program but said the slide is the requirement of the minimum essential coverage the individual mandate thinks it used to be voluntary will no longer be voluntary. the perfect example is prescription coverage. that is a part of the benefits but not all provide voluntarily now. the federal government has deemed prescription drugs to be part of the minimal essential a devotee in this country must have under the mandate so the option the state has is being removed by the extension of self

>> it sounds to me like everything you said would be to the effect of congress continued to do things in a voluntary basis in the new eligibles say you could have it or not and compare the program as it existed before and you can opt into this. >> we have to say this has to be on a voluntary basis, and instead you are arguing that this whole medicaid addition to malae the entire health tracked. instead of having the ec repair, you say that it accept your position everything falls.

>> justice kennard if we can start with a common ground there's a need for repair because there's a collision doctrine. this is on the question of remedy and we do take the position you need to describe the remedy would be certainly happy if we got something here and a recognition the doctrine insists this is coercive and we get the remedy that is it just in the alternative. with the solicitor general says when you support the policy you think the policies spurred the blessings of liberty. it is the liberty that forces somebody to purchase an insurance policy and it's a strange conception of the federal and shom that says we can simply give the states an offer they can't refuse on the notion that congress can do more because it's voluntary weekend to force the states to do what ever we tell them to. that is a threat to our federal discipline. stomachs before mr. clement and

general, and in particular of course mr. long and mr. farr. the case is submitted. >> paul climate is the lawyer challenging the president's health care law. after today's arguments, he spoke to the reporters of sight of the supreme court. >> we've just gotten out of the argument and we are naturally delighted that the case is now under submission and we've had an opportunity to explain why the state's think the statute is unconstitutional, and why not just the individual mandate is unconstitutional because that is what was argued before the court yesterday but also the medicaid expansion is unconstitutional, and that the in validation of

the mandate would cause the entire statute to be struck down, as the was the nature of the proceedings today. a privilege to be able to present the case to the united states supreme court and was a great privilege to argue and share the podium with the solicitor general of the united states, did a terrific job, so this has all been something we feel like this is a process that started back in florida at the very beginning when the law was passed and challenged. we worked our way through the circuit and the idea all along was to get the opportunity to present the case to the supreme court of the united states and we've now had that opportunity and delighted to have had the opportunity and now the case is under submission and the state court. we have to go all the questions they asked today at the hearing in the morning and the afternoon and yesterday you can tell from those questions that in every other case i've ever argued, the justices are all focused on this case. they are ain