Thoughts on Today’s Ruling Striking Down the Individual Health Insurance Mandate

Here are a few thoughts on today’s federal district court ruling striking down the constitutionality of the Obamacare individual mandate. In my view, the strongest parts of Judge Henry Hudson’s opinion are those where he rejects the federal government’s arguments under the Commerce Clause and the Tax Clause.

On the Commerce Clause, federal government lawyers argued that the mandate is justified because the state of not having health insurance qualifies as economic activity due to the fact that most people will eventually use health care in some form or other. As Judge Hudson points out,“the same reasoning could apply to transportation, housing, or nutritional decisions. This broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by [the Supreme Court’s] Commerce Clause jurisprudence.” The same logic would justify forcing people to purchase cars on the grounds that everyone eventually uses the market for transportation, or forcing them to blog on the grounds that everyone uses the market for information in some way. I addressed this point more fully here.

Judge Hudson also does a very good job of explaining why the government’s claim that the mandate is a tax runs counter to existing Supreme Court precedent distinguishing taxes from regulatory penalties. The mandate is pretty clearly an example of the latter. Here, his reasoning is similar to that which I advocated in the amicus brief in the case that I wrote on behalf of the Washington Legal Foundation and a group of constitutional law scholars (pp. 16-21). As the Supreme Court explained as recently as 1996 in its most recent ruling distinguishing between taxes and penalties, “[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government.” By contrast, it went on to say, “if the concept of penalty means anything, it means punishment for an unlawful act or omission.” It’s hard to think of a much clearer example of a fine used as “punishment for an unlawful act or omission” than the individual mandate. Various earlier Supreme Court decisions cited by Judge Hudson and in my brief take a similar view.

The weakest part of Judge Hudson’s opinion is his analysis of the government’s Necessary and Proper Clause argument, which merely claims that the Necessary and Proper Clause only authorizes legislation that is linked to an enumerated power, but does not really explain why the mandate is not. In my view, a far better answer to the government’s argument is that the mandate isn’t “proper” even if it is “necessary” and that it runs afoul of the five part test recently outlined by the Supreme Court in United States v. Comstock. I discussed both points in some detail in the amicus brief (pp. 25-30), and in a shorter form here. In fairness to the judge, his neglect of this point may have been due to the fact that the federal government gave it short shrift in their brief (allocating less than two pages to it buried in the middle of a fifty page brief). While co-blogger Orin Kerr and I believe that this is the government’s strongest argument, few other commentators seem to agree. In today’s New York Times Room for Debate forum on Hudson’s opinion, none of the contributors (including four prominent scholars who support the individual mandate) even mentioned this issue. Still, the opinion can and should have addressed this point much better.

Judge Hudson ruled that invalidating the mandate does not require invalidation of any other part of the health care bill. I’m not a real expert on the relevant law of “severability.” So it’s hard for me to say whether this part of decision is correct. Still, it is relevant that the bill doesn’t contain any severability clause of the sort normally used to ensure that the other parts of a law stay in place if one part is invalidated as unconstitutional. Moreover, a few other parts of the law are so closely connected to the mandate that it’s hard to imagine that they are truly severable from it. The best example is the regulation forcing insurance companies to accept customers with preexisting conditions. Interestingly, the White House recently issued a statement claiming that these two provisions are not in fact severable (though federal government lawyers apparently argued otherwise in the litigation before Judge Hudson). My tentative view is that the White House is correct on this issue, and Judge Hudson is wrong.

Finally, it goes without saying that today’s ruling is just one phase in a lengthy legal struggle. Ultimately, the issue will be decided by the federal courts of appeals, and very likely the Supreme Court. At the same time, it is significant that we now have a district court decision striking down the mandate, with a second one likely in the case filed by twenty state governments and the National Federation of Independent Business. The judge presiding over that case has already indicated considerable skepticism about the government’s arguments, and rejected the Tax Clause claim outright. If the district courts had all uniformly upheld the mandate, appellate judges might have hesitated to challenge such a broad emerging judicial consensus. As things actually stand, the issue remains up for grabs. That in itself is a major change from just a few months ago, when conventional wisdom dismissed the anti-mandate lawsuits as frivolous grandstanding with virtually no chance of success.