Why Discuss Cost Shifting and the Individual Mandate? The Need For a Limiting Principle

Some may wonder why I am posting here and here on how the mandate was not actually designed to address cost shifting by the young and uninsured people , but was instead designed to make them pay — over and above any actuarial risk they pose to the insured — to lower the “insurance” premiums for the baby-boomers.  The reason is simple:  The government had to come up with a limiting principle to the power to impose economic mandates on the people, and this “cost-shifting” rationale has been its principal limiting principle that allegedly distinguishes this mandate from all others.   But as a limiting principle, it has serious deficiencies.

    1. First, as my two posts and the responses to them show, this factual claim is highly contestable.  Indeed, I think the government’s claim is simply false, but that is not my point.  The point is that the truth of the government’s claim about the actual operation of the statute being challenged is far from obvious or indisputable.
    2. This is why the Court has for a very long time has eschewed such fact-based evaluations of acts of Congress, in favor of deferring to Congress.   But if this is a question to which the Court will defer, then it cannot provide a judicially enforceable limiting principle, which is what the Court has demanded  since at least Lopez (which is now asserted by the ACA’s defenders as a hallowed precedent).  It is for this reason, I have long argued that the “health care is different (because of cost-shifting or whatever)” is not a genuine limiting principle of the sort that will satisfy the Court.  Indeed, as the Solicitor General claimed, when it comes to a choice of means — e.g. catastrophic coverage vs. bronze plan — the Court normally defers to Congress.  Yet this very assertion by him undercut his position that the need to address “cost-shifting” provided a limiting principle on the power to impose economic mandates.

However, since it was Justice Kennedy’s questions about the actuarial risks posed by young people that have kept this argument alive, it is worth remembering what he wrote in his concurring opinion in Comstock:

The Court concludes that, when determining whether Congress has the authority to enact a specific law under the Necessary and Proper Clause, we look “to see whether the statute constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.” Ante, at 6 (suggesting that Sabri v. United States,541 U. S. 600, 605 (2004), adopts a “means-ends rationality” test).

   The terms “rationally related” and “rational basis” must be employed with care, particularly if either is to be used as a stand-alone test. The phrase “rational basis” most often is employed to describe the standard for determining whether legislation that does not proscribe fundamental liberties nonetheless violates the Due Process Clause. Referring to this due process inquiry, and in what must be one of the most deferential formulations of the standard for reviewing legislation in all the Court’s precedents, the Court has said: “But the law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.” Williamson v. Lee Optical of Okla., Inc.348 U. S. 483, 487–488 (1955). This formulation was in a case presenting a due process challenge and a challenge to a State’s exercise of its own powers, powers not confined by the principles that control the limited nature of our National Government. The phrase, then, should not be extended uncritically to the issue before us.

   The operative constitutional provision in this case is the Necessary and Proper Clause. This Court has not held that the Lee Optical test, asking if “it might be thought that the particular legislative measure was a rational way to correct” an evil, is the proper test in this context. Rather, under the Necessary and Proper Clause, application of a “rational basis” test should be at least as exacting as it has been in the Commerce Clause cases, if not more so. Indeed, the cases the Court cites in the portion of its opinion referring to “rational basis” are predominantly Commerce Clause cases, and none are due process cases. See ante, at 6 (citing Gonzales v. Raich545 U. S. 1(2005); Lopez, supra;Hodel v. Virginia Surface Mining & Reclamation Assn., Inc.452 U. S. 264, 276 (1981)).

There is an important difference between the two questions, but the Court does not make this distinction clear. RaichLopez, and Hodel were all Commerce Clause cases. Those precedents require a tangible link to commerce, not a mere conceivable rational relation, as in Lee Optical. “ ‘[S]imply because Congress may conclude that a particular activity substantially affects interstate commerce does not necessarily make it so.’ ”Lopezsupra, at 557, n. 2 (quoting Hodelsupra, at 311 (Rehnquist, J., concurring in judgment)). The rational basis referred to in the Commerce Clause context is a demonstrated link in fact, based on empirical demonstration. While undoubtedly deferential, this may well be different from the rational-basis test as Lee Opticaldescribed it.

To the extent the Court is going to examine the actual statute enacted to see if it fits the justification being offered on its behalf, it becomes necessary to see if the statute was truly addressing the “cost shifting” that is said to be its constitutional rationale or whether, instead, it was aimed at another purpose entirely:  lowering the insurance costs of older persons at the expense of young persons over and above any cost shifting that may be taking place.  In other words, is there a means-ends fit here of the sort Justice Kennedy seemed to advocate in Comstock?  If the latter is the real justification, not only does this not fit the limiting principle being offered by the government, but the Court would have to accept that Congress may make some people involuntarily buy any product to lower the price of that product for those who are voluntarily purchasing it.  And this is not a limiting principle at all.

But we will need to see whether, if it decides to invalidate the mandate, the Court engages in such an inquiry, or instead — like the Eleventh Circuit — it simply rejects the proposition that any such fact-based distinction can possibly be a judicially-administrable limiting principle.

[Several wording glitches corrected.]