THE INDIVIDUAL MANDATE: WILL IT STAND?
By Stephen DeGenaro
The PPACA case that the Supreme Court is hearing oral arguments for this week is one of historical proportions. Beyond the substantial importance of the subject matter (health care), the case is noteworthy for the amount of time the Court is dedicating to it. The four separate parts of the case have been granted a total of six hours for oral arguments over the course of four days, a length of time this country has not seen since Brown v. Board of Education.Out of the four issues, the most polarizing one is the constitutionality of the individual mandate because the Commerce Clause is the single most utilized power under Article I of the Constitution. Additionally, it is the one most discussed because of the political implications of an individual mandate. A lot of media attention is given to the individual mandate by both sides of the issue. But sadly, the majority of arguments out there concerning the individual mandate are more often than not political arguments and not legal ones. Matt has graciously invited me to elaborate on what the legal issues behind the mandate are, and I will try to provide some insight into this case, while highlighting an important theme: politically unfavorable does not necessarily equate to illegal.
THE COMMERCE CLAUSE
The Commerce Clause is one of the most debated clauses of the Constitution because of its effect on the federal system of government. The Supreme Court’s cases involving challenges to the Commerce Clause arise out of a roughly similar fact pattern: a federal statutory scheme is challenged on the grounds that it does not fall under the limited grant of federal powers, and has the effect of regulating intrastate (confined within a single state) activity.
In a trio of cases, (United States v. Lopez, United States v. Morrison, and Gonzales v. Raich), the Court had adopted the following structure for analyzing whether Congress has the ability to regulate under the Commerce Clause:
1. Congress’s power to regulate commerce is no longer plenary. Since 1995, when Lopez was decided, Congress used to have no limitation on its Commerce Clause power. Now, there are limits on what Congress can. This is an important principle because the retreat during Lopez was a “conservative” retreat, and the government’s ability to articulate a limiting principle on Congress’s power will be important to the more conservative Justices if the mandate is to be upheld.
2. For Congress to be able to regulate, the thing being regulated must fall into one of three
categories. First, the channels of interstate commerce can be regulated (such as transportation or delivery). Second, the persons, things, or instrumentalities in interstate commerce can be regulated (goods sold in interstate commerce). Third, activities that are intrastate but have a substantial effect on interstate commerce are regulable. Put in layman’s terms, if the thing being regulated is confined to a single state, the federal government may still regulate it if the thing has an effect on interstate commerce. For instance, Congress could regulate a bus fare system that charges significantly less to travel between cities within the same state than it would cost to go a smaller distance between two cities in different states because the effect of charging less to stay within the state interfered with interstate commerce (for historical comparison, see the Shreveport Rate Case).
3. An additional limitation on whether Congress can regulate a thing is that it must be economic
in nature. Something noneconomic, no matter the effect it has upon interstate commerce, cannot be regulated under the Commerce Clause. In Morrison, the Court said that a statute that gave a federal remedy for gender related violence was unconstitutional. Even if it was conceded that gender related violence does have a substantial effect on interstate commerce, it could not be regulated under the Commerce Clause because gender violence is a non-economic activity. Classifying it as interstate commerce had the effect of depriving the states of their ability to regulate towards the health and safety of their citizens under their police powers.
4. The power to regulate includes the power to destroy. The Court held in Gonzales v. Raich
that even though California’s medical marijuana statute permitted the petitioner to grow his own
medical marijuana, Congress’s controlled substance act nonetheless was constitutional on the
grounds that Congress constitutionally can regulate the marijuana “market” and included in this
power is the ability to regulate the market to the point that the market is destroyed.
5. Cumulative effects doctrine. This area of Court precedent originates with its many New Deal-era expansion of Commerce Clause interpretation. Essentially, cumulative effects states that even though an act on its own may not substantially affect interstate commerce, when it is aggregated with acts that are similarly situated it does have a substantial effect on interstate commerce, and Congress can then regulate it. To use a nostalgic metaphor: even if I flip over only one trash can in Burleith, Congress still can regulate flipping trash cans because the cumulative effects of all members of the Power Base flipping over trash cans will have a substantial effect on interstate commerce.
THE CASE FOR
The government is going to argue that it is a fiction that anybody can go through life without participating into the market of health care, and by being uninsured, they are affecting the market of health insurance by driving the premiums up through the fact that hospitals will often charge 7% more for health procedures to make up lost revenue providing medical coverage for uninsured people who come to emergency rooms with serious conditions. Because it is something that is decidedly economic in nature, and because people are not being compelled to buy something they would not otherwise use, it is something within Congress’s power to regulate.
The biggest argument that the challengers will raise is that the individual mandate is unconstitutional because the mandate is “an unprecedented effort to compel individuals to enter into commerce” as opposed to regulating people who have freely chosen to enter commerce on their own, and therefore is beyond any power Congress has under the Commerce Clause. The challengers argue that, if people who do not have health insurance can be made by Congress to purchase health insurance, there is no constitutional limit to what Congress can make private citizens purchase (which, if you accept the initial premise, is technically true: without some sort of distinguishing limitation, Congress could be technically characterized as having the power to compel people to buy things they do not want to).
As demonstrated in the contrast between the two arguments, the constitutionality of the mandate will turn on what the Court determines is being regulated: the market of healthcare which is used by everybody, or the purchase of health insurance, which is not done by every person and would therefore be Congress compelling people to buy something.
COURTWATCH: THE ORAL ARGUMENTS ON MARCH 27
From listening to the oral arguments, it seemed pretty clear that Scalia and Alito signaled
through their questioning that they will not be persuaded by the government’s argument. They
peppered Solicitor General Verilli pretty rigorously with hypothetical scenarios about where Congress could regulate in the future, such as mandating people carry cell phones if it is found that access to 911 services were found to be a substantial effect on interstate commerce and that the government is attempting to force people to pay for something that other people will use. (Ginsburg many times came to the aid of the Solicitor General, saying that the line of reasoning is exactly how health insurance functions: compelling people to pay for others’ expenditures). Thomas never spoke during arguments (nor has he since 2006 out of objection to the practice of the Court to badger counsel arguing before the Court), but he can be fairly counted as a vote against the mandate since he adheres to a Commerce Clause jurisprudence that dates back to before the New Deal Era, which is one that is very limited.
The liberal leaning members of the bench (Breyer, Ginsburg, Sotomayor, Kagan) all seemed to
signal as well through their questioning that their mind is mostly made up. Ginsburg frequently
gave easy questions to the Solicitor General, Breyer came up with a hypothetical that suggested
he would draw the Commerce Clause limit even further than what is being advocated here.
Sotomayor and Kagan pressed the challengers’ attorneys in the way that Scalia and Alito pressed
Verilli. It is safe to say that these four will be upholding the constitutionality of the mandate.
Both Roberts and Kennedy asked questions of all three attorneys. It would seem that they are
still trying to test the limits of each attorney’s arguments, if not using the arguments as a way to
decide on the issue.
PROGNOSIS: POSITIVE
A lot of court watchers believe that the individual mandate will be upheld as constitutional under the Commerce Clause, and not even along partisan lines. Most predictions out there say that the Court will uphold the mandate by a vote anywhere from 6-3 all the way up to 8-1, with Thomas being the lone dissent. I do not think it will go as far as 8-1, especially given listening to the arguments and picking up on the signals from the Justices. However I do think the mandate will carry the day. Here’s how I think they will vote:
Majority: Roberts (writing opinion) joined by Breyer, Ginsburg, Sotomayor, Kagan
Concurring: Kennedy (writing)
Dissent: Scalia (writing) joined by Alito
Dissent: Thomas (writing)
What's your take on the prognosis for Obamacare? Do you think the law can survive without the individual mandate? The comments section awaits...
First of all I want to thank my good friend Steve DeGenaro for sharing his perspective on this landmark Supreme Court case. To the details...
ReplyDeleteSteve has given an optimistic outlook regarding the constitutionality of Obamacare, which certainly contrasts with the media hellfire that has erupted since arguments were wrapped up yesterday. From the Washington Post to Fox News, it seems every self-respecting pundit in Washington has shifted from confidently predicting Obamacare will be upheld, as Steve does, to all of a sudden writing the law's death certificate.
Steve has more legal expertise than me, so I'll trust his judgment that the law will ultimately be preserved. But what happens if it isn't?
Because the case largely rests on the constitutionality of the individual mandate, the Court's judgment over whether the government can force people to buy insurance is first and foremost. If the mandate stays, the law is good to go. If the mandate is struck down, however, things start to get a bit more complicated.
One thing Steve didn't address in too much detail is the purpose of the mandate. For starters, the Affordable Care Act requires insurers to cover people with pre-existing conditions, who previously would have had a hard time getting health coverage. Since these people cost more to insure, insurers argue that the only way they can possibly adhere to this requirement is by enhancing their overall revenues by expanding the pool of people who buy healthcare. Makes sense.
Secondly, however, the individual mandate responds to what is known in health care as the "free rider" problem. Think of it this way: health care is really expensive, and someone has to pay for it. Yet by law, hospitals and emergency rooms are required to treat anyone who comes in their doors. When an individual does not hold insurance and cannot pay for their care, hospitals have to charge more for their services, which makes insurance more expensive for everyone else. The individual mandate says that we can fix the problem and lower costs by making sure everyone is insured. Obamacare then contains a range of subsidies and other provisions for helping people afford the cost of the health insurance they are required to carry.
Of course, the ironic thing about the individual mandate is that despite being derided as an example of government overreach, it would never need to exist if there weren't such existing demagoguery surrounding services run by the government. The individual mandate is basically nothing more than a life preserver to the private insurance industry, which despite touting its efficiency has administrative costs (i.e. money NOT spent on caring for people) of 30-40 percent, compared to just 3-5 percent for Medicare. If the United States had real universal health care, like most of the rest of the world, or decided to extend Medicare coverage to all, we wouldn't need to force everyone to buy private insurance in order to make sure people can access the care they need.
The plain truth is that if we really believe everyone ought to have health care (and if you're tired of rising premiums, you should, because everyone uses it and the costs of providing care to the uninsured ultimately ends up being borne by consumers), then the most efficient way to do it is by extending government coverage to everyone. The sad tragedy of Obamacare is that if the law is in fact struck down, it will be because of its dogged determination to preserve the private insurance system, which is more of a bloated, inefficient bureaucracy than any government program.
No one is in front of the Supreme Court debating the constitutionality of Medicare. On the contrary, if Obamacare is struck down, Democrats might want to consider whether a different way to extend guaranteed health care to the masses might make more sense.
I appreciated Stephen DeGanero’s assessment of the Obamacare trial. It seems right on from what little I know about the Commerce Clause. The crux of the case will certainly come down to the individual mandate, forcing those who choose -- in the abstract -- not to enter the healthcare market to purchase health insurance.
ReplyDeleteIf the Court finds that Congress is simply regulating the health-insurance market because everyone inevitably enters into that market one way or another, it seems very unlikely that it would strike down the law. It goes without saying that health car is an interstate industry.
When evaluating the Commerce Clause, the Courts will be very cautious of overturning a Congressional Law relating to commerce since the Art. I, § 8, cl. 3, enumerates the power to regulate commerce between the states. This would be a very different case if a state, like say, California, tried to implement an individual mandate requiring all its citizens to purchase healthcare from companies whose headquarters are in California. Even if California tried to justify this law by showing that healthcare companies whose headquarters are in California provide more comprehensive coverage than those in other states, it would surely be seen as too burdensome on interstate commerce.
Perhaps this is something that Mr. DeGanero can help me with and perhaps it's something I could learn on my own if I did just a little research: If the Court finds that the individual mandate is unconstitutional because it falls outside of Congress’ Commerce Clause authority, on what legal ground would it strike down the statute? Would it be an Equal Protection case, on a theory that the individual mandate singles out people of a certain economic class to have to pay for insurance when they otherwise would not have to?
Nevertheless, I hope that as the Court considers its judgement, it remembers Justice Cardozo’s oft-quoted passage from Baldwin v. Seelig, “The Constitution was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several States must sink or swim together, and that in the long run prosperity and salvation are in union and not division.” 294 U.S. 511, 523 (1935).
Healthcare seems to illustrate this maxim -- we’re a Nation of peoples reliant on each other, not merely individuals who should only look out for themselves -- as well as any commercial issue of our day.