(BN) Obama’s Legacy at Risk After Winning 100-Year Health-Care Fight

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The outcome of a 100-year fight for U.S. national health care rests on the verdict tomorrow of nine justices, who will emerge from behind a red velvet curtain.

Just four months before the presidential election, the Supreme Court is poised to rule on the constitutionality of President Barack Obama's biggest legislative achievement, which would extend coverage to at least 30 million uninsured Americans in the biggest overhaul of the nation's health-care system since Medicare and Medicaid were enacted in 1965.

"When we talk about Obama 20 or 30 years from now, this is likely to be the bill we talk about," said Julian Zelizer, a presidential historian at Princeton University. "If the Supreme Court takes away from Obama his biggest accomplishment, this is exactly what a president really fears. In some ways, it's worse than not getting re-elected."

The last time the court invalidated legislation so central to the presidency was when it struck down parts of Franklin Roosevelt's New Deal program in 1935 and 1936, said Zelizer. Even those decisions only addressed pieces of a larger package of economic and social initiatives that Roosevelt adopted in response to the Great Depression, he said.

The political stakes for Obama are high: The presumptive Republican presidential challenger, Mitt Romney, moved yesterday to frame a loss in the Supreme Court as a blow to his presidency. A ruling that invalidates the statute would make Obama's term in office "a waste," he said.

High Price

The court, which heard arguments in the case in March, meets at 10 a.m. Washington time and may keep the candidates and everyone else in suspense for a few more minutes.

Rulings on two other cases will probably come first. One is on a challenge to a law that makes it a crime to falsely claim to have been awarded a military medal. The other is a dispute over homebuyers' lawsuits against title insurers.

Obama has paid a high political price for passage of the 2010 Patient Protection and Affordable Care Act, the culmination of efforts on behalf of a national health plan that stretch back to President Theodore Roosevelt's 1912 "Bull Moose" third- party candidacy. The cause has frustrated Democratic and Republican presidents, including Harry Truman, Richard Nixon and Bill Clinton, all of whom failed to win enactment of such legislation.

The perception of political weakness that enveloped Clinton after his universal health-care plan failed in Congress, costing Democrats' subsequent loss of control of the House and Senate, stalled efforts to pass a similar bill until Obama was elected.

It's the Economy

Obama rejected advice from aides, including then-chief of staff Rahm Emanuel, to settle for a more modest version of the health care overhaul to reduce the political risk. He confronted Republicans and even some Democratic critics as he prevailed in a yearlong legislative battle.

The push for the bill detracted from his capacity to make a public case for his economic agenda -- at a time the recession was voters' highest priority, said Tad Devine, a Democratic strategist.

The controversy also helped fuel the Tea Party movement and "was a factor, without a doubt" in Democrats' loss of the House in the 2010 midterm congressional elections, said Devine, who worked on the Al Gore and John Kerry presidential campaigns.

"Much, if not most, of the advertising Republicans did in 2010 focused on health care," he said. "People were frustrated by anything they saw that led them to believe the president and other leaders were not focusing almost exclusively on the economy."

Pre-Existing Conditions

The health law bars insurers from denying coverage to people or discriminating in price based on pre-existing medical conditions. To maintain the insurance system's financial viability, people must obtain coverage beginning in 2014 or face a fine, a provision that's at the center of the constitutional challenge by 26 Republican-controlled states.

An individual insurance mandate was proposed more than 20 years ago by the Republican-aligned Heritage Foundation, and before Obama embraced it as part of his health-care legislation the provision had the support of many Republicans.

Provisions that already have taken effect allow young adults under 26 to remain on their parents' insurance plans, ban lifetime payment limits on policies and require insurers to cover children under 19 regardless of pre-existing conditions.

Rebate Payments

Insurers also will have to make rebate payments beginning this year by Aug. 1 to policyholders for plans that didn't spend a minimum portion of premiums the previous year on patient care. The Department of Health and Human Services said on June 21 that insurers will pay $1.1 billion in rebates to 12.8 million policyholders this year.

Low- and moderate-income families will receive assistance obtaining insurance through subsidies and an expansion of eligibility for the Medicaid program for the poor, financed in part by an excise tax on medical device makers and higher taxes on individuals earning more than $200,000.

The Supreme Court has several options for dealing with the law.

The court may uphold the entire statute. It could strike down part of the law, including the insurance mandate and the related provisions, which require insurers to cover people with pre-existing conditions and charge them the same rates as other policyholders. The justices also might invalidate the expansion of the Medicaid program, which is intended to provide coverage to about 16 million uninsured. Or they could strike down the law.

Based on the arguments in March, the pivotal votes belong to Chief Justice John Roberts and Justice Anthony Kennedy, two of the five Republican appointees on the nine-member court.

During the arguments on the insurance mandate, both aimed the bulk of their questions at the lawyer representing the Obama administration. At the same time, they left their likely votes in doubt by similarly directing questions toward the challengers to the law.

To contact the reporter on this story: Mike Dorning in Washington D.C. at mdorning@bloomberg.net.

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net.

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