Initial Thoughts on the Virginia Health Care Ruling

The federal district court’s decision declaring portions of federal health care reform unconstitutional reaffirms that the federal government has limited and enumerated powers. The theories advanced by the federal government in support of the mandate were without bounds and could have justified virtually unlimited federal control of private activity. Reforming America’s health care system is important, but just like everything else, from national security to environmental protection, it must be done in a way that’s consistent with constitutional principles.

The district court properly recognized that the individual mandate represents the most far-reaching exercise of federal regulatory authority under the Interstate Commerce and Necessary and Proper Clauses in the nation’s history. Certainly the argument can be made that the logic of prior decisions could support such an exercise of federal power (and Orin has made it), but it is also the case that no prior case upheld a mandate of this sort.

As I’ve suggested before, the question before the Court is in a similar posture to that in U.S. v. Lopez. The Court’s expansive precedents have been given even more expansive interpretations by the majority of academic commentators, but the Court has also consistently maintained that federal regulatory authority have judicially enforceable limits, and that upholding the individual mandate (much like upholding the Gun-Free School Zones Act) would make any such limits difficult, if not impossible, to discern.

The Court distinguished Wickard and Raich on the grounds that the individuals in those cases became subject to federal regulation due to affirmative actions each had taken. As the court noted, “In both cases, the activity under review was the product of a self-directed affirmative move . . . This self-initiated change of position voluntarily placed the subject within the stream of commerce. Absent that step, governmental regulation could have been avoided.” I think this is correct, and this is precisely the sort of distinction that courts must draw if there are to be judicially enforceable limits on the federal government’s enumerated powers.

The federal government’s strongest argument is that the individual mandate is necessary to facilitate other aspects of health care reform, and thus must be valid as “necessary and proper” to the regulation of health insurance markets. But this argument proves too much. As I’ve noted before, the individual mandate does not, as written, truly solve the adverse selection problem created by other aspects of heath care reform. It only helps on the margin. If this is enough to satisfy the Necessary and Proper Clause then Congress could mandate that all individuals engage in any behavior which helps keep down health insurance costs by increasing the participation of healthy people in insurance pools or improving the health of those already in the pool. So, for instance, Congress could mandate all Americans join health clubs or purchase fruits and vegetables, for these too would help lower health care costs and facilitate achievement of health care reform’s goals.

Some may argue that Congress may have the power to mandate health care memberships or some such thing, but that it would never do so because such an extreme step would be so politically unpopular (even more so than the individual mandate is). In this way, one could argue, individuals are protected from federal overreach. This is the argument Justice Blackmun made for the Court in Garcia v. SAMTA. Yet this rationale (if not Garcia’s precise holding) was soundly repudiated by the Supreme Court in its more recent federalism decisions.  As the Court reaffirmed in Lopez and Morrison, federal power is proscribed by judicially enforceable limits, and it is the obligation of the Court to reject any theory of federal regulatory authority that is without limit.

The could also found the federal government’s more recent claim that the mandate is really a tax unpersuasive. Based upon its review of the law, it concluded that the mandate is “in form and substance, a penalty as opposed to a tax” and therefore could not be justified under the General Welfare Clause. [For what it’s worth, my colleague Erik Jensen likewise concludes the mandate is best viewed as a penalty not a tax.]

Finally, I found interesting. the court’s discussion of how to handle this lawsuit as a “facial” challenge to the law. Virginia’s lawsuit presents a facial challenge to the mandate, not a challenge to the constitutionality of its application in any given circumstance. The federal government argued this created an extremely high bar because Virginia would have to demonstrate that there is no instance in which the federal government could impose a mandate to purchase health insurance or regulate the health care choices made by the uninsured. The district court rejected this framing, and properly so. In a facial commerce clause challenge, the question is whether Congress had constitutional authority to enact the law that was enacted, not whether there is any conduct covered by the law in question that could, conceivably, be regulated. U.S. v. Lopez is instructive on this point. Alfonso Lopez was involved in a commercial gun sale; he was the mule. His specific conduct could have been subject to federal regulation as part of a broader regulatory scheme governing gun sales. Yet that is not what Congress enacted. Instead Congress enacted a prohibition of possession in or near schools, and that measure was unconstitutional even though Lopez’ specific conduct could have been reached under a different law. So too here. That some private decisions concerning whether to purchase health care could be subject to federal regulation does not establish that the individual mandate is, as a facial matter, constitutional.