RICHMOND — Virginia Attorney General Ken Cuccinelli said he will file a formal response as early as next week to the federal government’s attempt to dismiss Virginia’s legal challenge to Obamacare.

In an exclusive interview with Heritage, Cuccinelli said the federal government’s motion to dismiss, released on Monday, was mostly predictable. He said the attorney general’s office had already anticipated the government’s arguments and will have its response ready on or before June 7.

“What they filed on Monday was very much what we expected,” Cuccinelli said in an interview at his Richmond office. “You never know exactly how they’re going to present it, but we did expect them to move to dismiss the case.”

The legal maneuvering puts Cuccinelli at the center of the Obamacare court battle. In addition to Virginia’s lawsuit, 20 states have joined a legal challenge from Florida. Virginia is pursuing its own strategy because its legislature adopted a law protecting its citizens from the individual mandate.

Cuccinelli said the stakes are high and he expects Virginia’s case — and probably Florida’s — to end up before the Supreme Court within the next two years.

“We are doing what the founders expected states to do,” Cuccinelli said. “We are a check in the checks and balances system that was laid out by James Madison.”

The dual legal strategy has its advantages. Virginia is located in the 4th U.S. Circuit Court of Appeals, while Florida is in the 11th U.S. Circuit. Given the high-profile nature of the court challenge to Obamacare, Cuccinelli believes it’s even more likely for the Supreme Court to be the ultimate arbiter.

For his part, Cuccinelli said he’s prepared for the fight. “We are absolutely in it for the long haul and that’s important,” he said. Cuccinelli has also filed suit against the Environmental Protection Agency for its claim that greenhouse gases jeopardize human health, another major legal fight.

Ultimately, Cuccinelli said his legal challenge to Obamacare is more than a fight over government-run health care. He said America’s first principles are at stake.

“I don’t think in my lifetime we’ve seen one statute that so erodes liberty than this health care bill,” he said. “Certainly, we view our lawsuit as being not merely about health care. That’s actually secondary to the real important aspect of the case, and that is to protect the Constitution as we essentially define the outer limits of federal power. If we lose, it’s very much the end of federalism as we’ve known it for over 220 years.”

At his impromptu press conference yesterday, President Barack Obama again defended his health care plan this time claiming:

“I don’t know if people noted, because during the health care debate everybody was saying the President is trying to take over — a government takeover of health care. I don’t know if anybody noticed that for the first time this year you saw more people getting health care from government than you did from the private sector — not because of anything we did, but because more and more people are losing their health care from their employers. It’s becoming unaffordable. That’s what we’re trying to prevent.”

First of all, we definitely noted the Centers for Medicare and Medicaid Services (CMS) report the President references above. But more importantly, if we are to take the President at his word, and believe him when he says he wants to prevent a government takeover of health care, then he should know that his plan is the exact wrong direction to go.

In a separate report on the Senate health bill issued earlier this year, the CMS projected that over half (18 million) of the 33 million Americans who would gain health insurance because of Obamacare, would do so by enrolling in Medicaid … which is a government run health care program. And another 2 million would enroll in Medicaid for supplemental coverage.

The President also said yesterday:

We’ve got to control costs, both for families and businesses, but also for our government. Everybody out there who talks about deficits has to acknowledge that the single biggest driver of our deficits is health care spending. We cannot deal with our deficits and debt long term unless we get a handle on that. So that has to be part of a package.

But guess what? According to that same CMS report, Obamacare would increase, not decrease, U.S. health expenditures by $234 billion by 2019.

President Obama said of his February 25th health care infomercial:

Let’s establish some common facts. Let’s establish what the issues are, what the problems are, and let’s test out in front of the American people what ideas work and what ideas don’t. And if we can establish that factual accuracy about how different approaches would work, then I think we can make some progress.

As the facts above clearly show, if reducing health care spending and stopping the government takeover of health care are your priorities, then Obamacare needs to be scrapped and Congress needs to start over.

According to aides, the President envisions a half-day meeting on February 25th held in Blair House (a building across the street from the White House) presumably televised by C-SPAN. President Obama’s conciliatory rhetoric aside, everyone knows this publicity stunt has nothing to do with actually considering conservative health care reform ideas and everything to do with the appearance of transparency and bipartisanship. The New York Times reports: “In making the gesture on Sunday, Mr. Obama is in effect calling the hand of Republicans who had chastised him for not honoring a campaign pledge to hold health care deliberations in the open, broadcast by C-Span, and for not allowing Republicans at the bargaining table.”

And the reality is that Democrats have no intention of including conservative ideas this late in the game. The Washington Post reports that White House officials “said the president will come to the health-care summit armed with a merged version of the two bills that Democrats strong-armed through the two chambers with almost no GOP backing.” And The Post adds that Congressional Democrats show no signs of intending to listen to new ideas either: “In separate statements Sunday, Democratic leaders praised the president for calling the bipartisan summit but made clear they are not prepared to give up on the progress they made last year.”

The White House continues to operate on the assumption that the American people would support their plan, but that President Obama just has not explained it well enough to the American people. The exact opposite is true. The American people have a very good idea of what is in President Obama’s health care plan, and they do not like it. The President’s plan takes the worst part of the status quo – a slow-motion federal government takeover of health care – and makes the problem much, much worse. Tacking-on one or two conservative ideas will not change the fundamental direction Obamacare would take our country.

Take for example the President’s insistence that his plan includes the conservative idea to allow individuals to purchase health insurance cross state lines. The problem is the President’s plan also gives czar-like powers to unaccountable federal bureaucrats to decide what does and does not qualify as health insurance for the entire country. These regulations would squeeze-out any real competition among private health plans anywhere, making competition across state lines useless.

If the President were really interested in bipartisan reform, he should have reached-out to conservatives months ago. Even before the President was sworn into office, our conservative health care analysts here at The Heritage Foundation have been reaching-out with common sense, free-market-friendly ideas that can ensure access to affordable health insurance. But for more than a year, the President chose not to listen. If the President truly is interested in bipartisan health reform, he needs to step back and start over. His six-hour February 25th Hail Mary pass just isn’t going to cut it.

For the past several months, Washington has exhausted every possible method to pass a health care bill designed to increase government’s control over health care. They haven’t been successful yet, but that may not matter: even without Obamacare, government health spending is set to increase far faster than private health expenditures, surpassing the private sector as soon as 2012.

Today the Centers for Medicare and Medicaid Services released its projections of national health expenditures for the next ten years. The report shows that spending by the public sector grew much faster in 2009 at 8.7 percent, compared to the private sector which only grew at 3.0 percent. Though public spending was heightened by the recession, as unemployment caused more Americans to lose employer-sponsored coverage and enroll in Medicaid, the trend is expected to continue into the next decade.

What is more, the report bases its projections on current law. In the case of Medicare, this underestimates future spending. Under current law, Medicare is set to reduce physician reimbursement rates by 21.3 percent in 2010. This would lead to growth in Medicare spending of just 1.5 percent in 2010. However, the likelihood of these cuts coming to fruition is slim to none, as every year, Congress votes to suspend them. 2010 will likely be no different. A report by Health Affairs cites that, if physician payment rates are held constant, the more likely growth in Medicare will be 5.1 percent in 2010. Whether or not these physician cuts occur is no small matter—with them, overall health spending growth would be 3.9 percent. Under the more likely scenario, health spending growth would be 4.7 percent.

Thus far, the debate on health care reform has focused on increasing government spending to reduce the number of uninsured. But government spending should be moving in the opposite direction. With government spending growing at a fast clip, rather than overhaul the entire system, lawmakers should channel reform towards high-cost (and largely cost-inefficient) government programs, like Medicare and Medicaid.

Medicare, Medicaid, and Social Security, the three entitlements big spenders, are duly in need of attention from Congress. These programs will be responsible for unsustainable growth in government spending in the years to come, and will quickly become insolvent. By reforming entitlement programs, Congress could kill two birds with one stone: achieve long sought-after health care reform and bend the cost curve in health care spending, all the while addressing the fiscal crisis facing the nation due to out-of-control spending.

Rather than increase government’s role in the health care system, Congress should see the current trend for what it is: a cry for reform of existing government health care programs. Getting public health spending under control would have a monumental effect on overall spending, directly and indirectly reducing costs for all Americans.

Speaker Pelosi goes on to claim that President Barack Obama’s failed stimulus has “created or saved” 1.6 million jobs so far, but even the White House has abandoned its controversial “saved or created” jobs accounting scheme after more than 90,000 of the 640,000 jobs it claimed to create were found to be completely fraudulent. Pelosi then touts the Cash for Clunkers program as another success despite the fact the program did nothing to create auto sector jobs, led to a crash in auto sales, and did nothing to help the environment. Pelosi also celebrated the expansion of the State Children’s Health Insurance Program (SCHIP), which only further bankrupts our states and inched us ever closer to government-run health care.

Even worse than her past “accomplishments” is Speaker Pelosi’s future agenda, which basically calls for super-sizing the policy failures mentioned above. First on the agenda is President Obama’s health care plan which, like SCHIP, expands health insurance coverage through the welfare state. Both the House and Senate bills achieve over half of their health insurance expansion through Medicaid, which is a welfare program. The taxes and employer mandates used to pay for the expanded coverage are going to hit small businesses hard at a time when we desperately need them to be creating new jobs to move us out of recession.

After health care, Speaker Pelosi is promising continued action on the Waxman-Markey cap-and-trade legislation, which is built on the same failed policy ideas behind Cash for Clunkers. A Heritage Foundation analysis of the Waxman-Markey energy legislation found that for a household of four, energy costs (electric, natural gas, gasoline expenses) would rise by $436 in 2012 and by $1,241 by 2035, averaging $829 over that period. Higher energy costs would also increase the cost of many other products and services. Overall, Waxman-Markey would reduce gross domestic product by $393 billion annually and by a total of $9.4 trillion by 2035.

Finally, Pelosi promises “the most sweeping reform of the financial industry since the Great Depression.” But as Heritage fellow James Gattuso has previously demonstrated, the House financial overhaul bill would give financial regulators sweeping powers to control firms deemed “too big to fail” and establish a fund for FDIC to use to resolve the affairs of firms it takes over. The real-life effect of the new powers would be to signal to markets that firms are supported by the federal government and guaranteed against failure — thus leading them to take more undue risks, not less. Pelosi will have essentially created a permanent TARP.

We share Speaker Pelosi’s vision for “swift action to restore accountability to Washington and opportunity for the middle class, to create good-paying jobs for our workers, to use innovation to power America in a global economy and build a strong and smart national defense.” But as business owners, small and large, across the country are saying, Speaker Pelosi’s big government solutions are not the answer.

As Kay Cole James, a former director of OPM, points out the FEHBP works because OPM plays the neutral role of an umpire: federal employees choose the private plan they like from a wide variety of different plans, all of which compete against each other to attract the most enrollees. The federal government provides its employees with a defined contribution towards their health costs, and it doesn’t micromanage their choices. OPM allows variety and flexibility in the program, and limits its regulatory role to ensuring consumer protections. Majority Leader Harry Reid’s (D-NV) proposal would have OPM sponsor new multi-state plans. OPM would set the premiums for plans it sponsors.

This new role for OPM is the Senate alternative to the House passed “public option”. But ordinary Americans should be leery of the difference. According to James, “this arrangement seems to be a “public option” in “private” option disguise… Because OPM would not merely serve as the umpire overseeing competition among private health plans. It would also become a health-plan sponsor, fielding its own team of players to compete against the existing private plans in every state.”

Given this new role, OPM could engineer a crowd out other private insurers in the market. Furthermore, Section 1334 of the Senate health care bill allocates “such sums as may be necessary to carry out this section”. If the OPM-sponsored health plans were not profitable, it is thus conceivable that the taxpayer could end up footing the bill. This, along with the federal power to set rates and benefits, could easily end up as the public option that Senate liberals envisioned all along.

Says James, “OPM’s job is to serve the federal civilian work force and its retirees, while enforcing merit principles in hiring and stopping prohibited personnel practices. It’s not OPM’s job to compete against private health plans.” The best features of the FEHBP- broad consumer choice and intense Multi-plan competition, free of heavy regulation and massive bureaucracy, and governed by approximately 80 pages of statutory text- are worthy of replication. Giving OPM the power to sponsor “multi-state” health plans in competition against the private sector is not the same thing.