The Volokh Conspiracy

That’s the title of a new article by Gary Lawson and me, forthcoming in a symposium issue of Boston University’s American Journal of Law & Medicine. The Journal has a large readership among medical professionals who are interested in legal issues relating to medicine. Accordingly, if you have been following the VC’s debate on the ACA over the past couple years, most of what is in the article will already be familiar to you. Here is the abstract:

The question whether the Patient Protection and Affordable Care Act (“PPACA”) is “unconstitutional” is thorny, not simply because it presents intriguing issues of interpretation but also because it starkly illustrates the ambiguity that often accompanies the word “unconstitutional.” The term can be, and often is, used to mean a wide range of things, from inconsistency with the Constitution’s text to inconsistency with a set of policy preferences. In this article, we briefly explore the range of meanings that attach to the term “unconstitutional,” as well as the problem of determining the “constitutionality” of a lengthy statute when only some portions of the statute are challenged. We then, using “unconstitutional” to mean” inconsistent with an original social understanding of the Constitution’s text (with a bit of a nod to judicial precedents),” show that the individual mandate in the PPACA is not authorized by the federal taxing power, the federal commerce power, or the Necessary and Proper Clause and is therefore unconstitutional.

The Kaiser Family Foundation’s latest poll (toplines here) finds that two-thirds of Americans oppose the individual mandate and a clear majority — 54 percent — want the Supreme Court to invalidate the provision.  Based on the poll of 1,206 adults, only 17 percent of Americans would like to see the individual mandate upheld.

Another interesting finding from the survey is that a majority of Americans also believe that the Supreme Court will strike down the mandate.  In other words, according to this poll, a majority of Americans will be surprised and disappointed if the individual mandate is upheld.

(LvWSJ)

On behalf of the Independence Institute, Rob Natelson and I wrote an amicus brief on the Medicaid mandate currently before the Supreme Court. (The ACA requirement that states must drastically expand Medicaid eligibility, or lose all their federal matching funds for Medicaid.) Here’s the Summary of Argument:

By imposing the Medicaid mandates in the Affordable Care Act (“ACA”), Congress exceeded the scope of its enumerated powers. If allowed to stand, those mandates could be the death-knell for the Constitution’s finely calibrated system of federalism. The states truly would be little more than agencies for Congress to “commandeer” at will.

The Founders created and the People ratified a Constitution protecting the States’ role as limited “sovereigns.” As this Court has ruled repeatedly, the states’ sovereign “independence” entitles them to make decisions within their sphere based on their own policy judgments, free of federal coercion. As explained below, this rule and the closely-related principle of federal non-coercion is of particular constitutional importance in financing health and social services.

In sustaining the Medicaid mandates, the United States Court of Appeals for the Eleventh Circuit overlooked both Founding-Era constitutional principle and modern Supreme Court doctrine. It also overlooked aspects of the Medicaid mandates that particularly aggravate their coercive qualities. Insofar as the ACA authorizes withdrawal of all Medicaid funds from States that choose not to submit to the Medicaid mandates, that statute slashes at the heart of American federalism. It is unconstitutional and void.

Intelligent comments are welcome, although experience suggests that there will also be plenty of comments from twits who have not read the brief, yet proclaim their absolute certainty about supposedly fatal errors in its legal reasoning. Rob’s summary of brief is available on his blog.

Some defenders of the Obama health insurance mandate try to scare off opponents by claiming that if the mandate were repealed, the result will be a system of socialized medicine. Presumably, conservatives and libertarians oppose the latter even more than former. Such claims may have led conservative commentator Paul Rahe to argue recently that the individual mandate is even worse than socialized medicine, or at least worse than government-provided health insurance. I think Rahe is wrong. But the more important point is that this is actually a false dichotomy: there are many alternative health care reforms that are more market-friendly than either the mandate or socialized medicine, whether the latter takes the form of government-provided health care (as in Britain) or “single payer” health insurance (as in Canada).

Even before Obama, health care was the most heavily regulated and subsidized industry in the United States, and there is plenty of room for free market reforms that can drive down costs by increasing competition. Some of the possible options are described in an important book by Cato Institute health care scholars Michael Tanner and Michael Cannon. They include breaking the connection between health insurance and employment created by government favoritism for employer-linked plans, and allowing individuals to purchase insurance across state lines, which would make insurance more portable and increase competition between insurance providers. As University of Chicago economist John Cochrane points out, there are also free market reforms that could alleviate the problem of coverage for preexisting conditions – the issue that is often cited as a justification for the mandate. And that’s just a small sample of the many available options. Many additional proposals are covered at John Goodman’s blog, among other places (Goodman is one of the best-known free market-oriented health care economists).

Obviously, the range of policies that are politically feasible in the near future is a lot narrower than the range of theoretically possible options. Even so, at least some pro-market reforms are likely to be as much or more politically viable as socialized medicine. If liberals could not push the latter through when the left was riding high in 2009 and Democrats had overwhelming majorities in both houses of Congress, it is highly unlikely that they will enact it at any time in the foreseeable future.

To the extent that socialized medicine is politically feasible, it may well become more rather than less so as a result of the individual mandate. Under the mandate, government must define the level of coverage that everyone is required to buy, including defining which medical conditions and treatments are included. This opens the door for constant lobbying by health care providers and other interest groups to ensure that their particular treatments are covered by the mandate. As more and more is mandated, the price of insurance goes up, and so too will political pressure for increasing government subsidies and government-provided insurance. Insurance costs have in fact gone up as a result of the Massachusetts “Romneycare” mandate that is the model for the federal reform.

Predicting the political future is a difficult business, so it’s possible that my expectations are wrong. At this point, however, it seems at least as likely that the continuation of the mandate will make socialized medicine more probable than that the opposite will happen.

Finally, if getting rid of the individual mandate really will bring on the advent of socialized medicine, why don’t any liberal activists and health care experts support it? There are plenty of left-wingers who would prefer socialized medicine to the Obama plan. If they think that the repeal of the latter would lead to the former, then they should form a coalition with Obamacare opponents on the right and work to get it repealed. A small number of liberals are in fact willing to get rid of the mandate, most notably Howard Dean. But even Dean doesn’t claim that abolition of the mandate would lead to socialized medicine. He merely thinks that the mandate is a political liability for Democrats and that the Obama plan can work just as well without it. The extreme rarity of left-wing support for repeal of the mandate suggests that few liberals genuinely believe that getting rid of it is likely to lead to socialized medicine.

Obviously, none of this is directly relevant to the constitutional arguments against the mandate. It is logically possible that the mandate is both unconstitutional and the only politically feasible alternative to socialized medicine. But that scenario seems highly unlikely. The spectre of socialized medicine should not deter free market advocates from either pursuing the constitutional case against the mandate or trying to repeal it politically.

UPDATE: I should acknowledge co-blogger Jonathan Adler’s September post making a similar argument.

John Goodman in the WSJ: ” There is nothing that can be achieved with a mandate that can’t be better achieved by a carefully designed system of tax subsidies.” Goodman’s argument is strengthened by the fact that the mandate, as structured in the PPACA, would increase coverage, but come nowhere close to achieving universal coverage. The mandate will increase coverage and reduce premiums on the margin, but the same could be said of many other policy options as well.

As I’ve noted before, whether a mandate is “necessary” to increase coverage and control costs absent a single-payer system is a separate question from whether it is a “necessary and proper” means of carrying into execution the federal government’s enumerated powers.

USC medical school professor Ken Murray has an interesting article on the lessons we can learn from “How Doctors Die”:

It’s not a frequent topic of discussion, but doctors die, too. And they don’t die like the rest of us. What’s unusual about them is not how much treatment they get compared to most Americans, but how little. For all the time they spend fending off the deaths of others, they tend to be fairly serene when faced with death themselves. They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care they could want. But they go gently.

Of course, doctors don’t want to die; they want to live. But they know enough about modern medicine to know its limits. And they know enough about death to know what all people fear most: dying in pain, and dying alone. They’ve talked about this with their families. They want to be sure, when the time comes, that no heroic measures will happen—that they will never experience, during their last moments on earth, someone breaking their ribs in an attempt to resuscitate them with CPR (that’s what happens if CPR is done right).

Almost all medical professionals have seen what we call “futile care” being performed on people. That’s when doctors bring the cutting edge of technology to bear on a grievously ill person near the end of life. The patient will get cut open, perforated with tubes, hooked up to machines, and assaulted with drugs. All of this occurs in the Intensive Care Unit at a cost of tens of thousands of dollars a day. What it buys is misery we would not inflict on a terrorist. I cannot count the number of times fellow physicians have told me, in words that vary only slightly, “Promise me if you find me like this that you’ll kill me.” They mean it. Some medical personnel wear medallions stamped “NO CODE” to tell physicians not to perform CPR on them. I have even seen it as a tattoo.

This issue is of interest to me in part because of personal experience. When my grandfather was in his terminal illness about a decade ago, we found it difficult to ensure that he would not be given the kind of excessive and unnecessary treatment Murray describes above. At one point, I went so far as to request to see the doctor on duty, explain that I am a lawyer, and emphasize that my father had the legal right to make decisions to refuse care on behalf of my grandfather, who was then unable to make choices for himself. After that, things went smoothly, and my father’s instructions (based on my grandfather’s own oft-expressed wishes) were followed. But it took some doing.

A key lesson of this experience is that it’s important for the rest of us to do what Murray explains doctors do: think about what sort of care you want and don’t want during your terminal illness, and try to plan ahead. Most if not all states have “living wills” and/or other laws that allow you to leave advance instructions for situations when you are hospitalized and lack the capacity to make decisions at the time. It’s also useful to have a friend or family member available to make sure that your instructions for refusing certain types of care are actually being followed.

Before concluding, I should emphasize that this post is an exception to my usual rules for choosing blogging topics. I am not expert on this topic, and the point I’m making isn’t an original one. I may violate my blogging principles, but at least I disclose it when I do! If readers want to discount what I say here, I can’t very well complain. Nonetheless, Murray is an expert and his article is a good opportunity for laypeople to learn from the decisions other experts make in a situation that many of us are likely to face at some point in our lives – either for ourselves or in helping friends and family members.

So said the unanimous Supreme Court in United States v. Linder, 268 U.S. 5 (1925). The opinion was written by McReynolds, and joined by the progressive Justices Brandeis and Holmes, along with the rest of the Court.

At issue was the federal Harrison Anti-Narcotic Law, which taxed opium and coca leaves, and their derivatives. Ostensibly as part of the tax scheme, the Act also required registration of those drugs. A physician lawfully dispensed one tablet of morphine and three tablets of cocaine to a female patient who was an addict. The trial court instructed the jury that Dr. Linder’s actions would be lawful if the drugs were dispensed as painkillers for stomach cancer or an ulcer, but not simply because the patient was an addict. As the Supreme Court observed, the indictment “does not question the doctor’s good faith nor the wisdom or propriety of his action according to medical standards. It does not allege that he dispensed the drugs otherwise than to a patient in the course of his professional practice or for other than medical purposes. The facts disclosed indicate no conscious design to violate the law, no cause to suspect that the recipient intended to sell or otherwise dispose of the drugs, and no real probability that she would not consume them.”

The Court pointed out that “Congress cannot, under the pretext of executing delegated power [here, the Tax Power], pass laws for the accomplishment of objects not intrusted to the federal government. And we accept as established doctrine that any provision of an act of Congress ostensibly enacted under power granted by the Constitution, not naturally and reasonably adapted to the effective exercise of such power, but solely to the achievement of something plainly within power reserved to the states, is invalid and cannot be enforced.” This was supported by a string cite starting with McCulloch v. Maryland.

In the instant case, the power to tax cocaine and morphine carried with it incidental powers to effectuate that tax, and the effectuation of the tax was the sole legitimate use of incidental powers. Incidental powers could not be construed to control a physician’s decision about properly taxed and registered products:

“Obviously, direct control of medical practice in the states is beyond the power of the federal government. Incidental regulation of such practice by Congress through a taxing act cannot extend to matters plainly inappropriate and unnecessary to reasonable enforcement of a revenue measure. The enactment under consideration levies a tax, upheld by this court, upon every person who imports, manufactures, produces, compounds, sells, deals in, dispenses or gives away opium or coca leaves or derivatives therefrom, and may regulate medical practice in the states only so far as reasonably appropriate for or merely incidental to its enforcement. It says nothing of ‘addicts’ and does not undertake to prescribe methods for their medical treatment. They are diseased and proper subjects for such treatment, and we cannot possibly conclude that a physician acted improperly or unwisely or for other than medical purposes solely because he has dispensed to one of them in the ordinary course and in good faith, four small tablets of morphine or cocaine for relief of conditions incident to addiction. What constitutes bona fide medical practice must be determined upon consideration of evidence and attending circumstances. Mere pretense of such practice, of course, cannot legalize forbidden sales, or otherwise nullify valid provisions of the statute, or defeat such regulations as may be fairly appropriate to its enforcement within the proper limitations of a revenue measure.”

Thus, said the Court, Linder was different from previous cases in which the Court had upheld the prosecution of physicians whose prescription of large quantities of drugs was obviously a sham, for no medical purpose, and simply to serve as a conduit for drugs to the general public.

It is not surprising that Linder was relied in several cases finding that Congress had exceeded tax power. U.S. v. Butler (1936); Hopkins Federal Savings & Loan Ass’n v. Cleary (1935); U.S. v. Constantine (1935); Trusler v. Crooks (1926).

Significantly, after 1937, the Court continued to rely on Linder, and in upholding other statutes, to distinguish them from the mis-application of the statute in Linder. “While there has long been recognition of the authority of Congress to obtain incidental social, health or economic advantages from the exercise of constitutional powers, it has been said that such collateral results must be obtained from statutory provisions reasonably adapted to the constitutional objects of the legislation. Linder v. United States.” Cloverleaf Butter v. Patterson (1942).

Linder appears the very first paragraph of a case familiar to many VC readers, United States v. Miller (1939). Citing, inter alia, Linder, the Miller opinion says that the federal tax and tax registration system for certain firearms does not “usurp[] police power reserved to the States.”

In U.S. v. Kahriger (1953), Linder is a “But see” footnote for this sentence: “Unless there are provisions, extraneous to any tax need, courts are without authority to limit the exercise of the taxing power.” I think that’s a misreading of Linder. The Court’s point in Linder was that micro-managing a physician’s decision about when to write a prescription was in fact “extraneous to any tax need.” So Linder and Kahriger are not inconsistent.

In a case decided after Kahriger, the Court upheld a gambling device tax, expressly distinguishing it from Linder, because the gambling tax is “certainly not a mere ruse designed to invade areas of control reserved to the states.” U.S. v. Five Gambling Devices (1953).

The most important case which relies on Linder is Ashwander v. Tennessee Valley Authority (1936) (upholding the TVA). There, the majority opinion by Chief Justice Hughes affirms that “The Congress may not, ‘under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted to the government.’ Chief Justice Marshall, in McCulloch v. Maryland, 4 Wheat. 316, 423; Linder v. United States, 268 U.S. 5, 15, 17.”

Justice Brandeis’s concurrence in Ashwander is, to this day, regarded as the most important guidance for the judicial principles of abstention. Number 7 of the “Ashwander principles” is that a court should attempt to construe a statute so as to avoid a constitutional problem, and for this proposition, Justice Brandeis cited Linder, among other cases.

In short, even if one takes the view that cases upholding certain aspects of the New Deal and the Fair Deal enjoy some sort of supra-precedential status that earlier cases do not, Linder is part of the fabric of those privileged cases.

Gary Lawson and I explain why, in an article published last week by Yale Law Journal Online.

In short, the Necessary and Proper Clause expressed the well-known agency law doctrine of principals and incidents. That is, the grant of power to an agent (and the federal government was an agent of the people, to exercise certain delegated powers) was considered to include incidental powers. (Unless the parties specified to the contrary.) To be an incidental power, a power had to be subsidiary to, inferior to, and “less worthy” (in the language of the time) than the principal power. So if A delegates to B the power to manage A’s farm for five years, B could lease part of the farm to C for a few years, but B could not sell the farm. The power to sell the farm is not an “incident” of the power to manage a farm. It is a power that is as great as the power to manage the farm.

Thus, the first half of Chief Justice Marshall’s opinion in McCulloch wrestles with the question of whether the power to establish a corporation (here, the 2d Bank of the United States) can be considered an “incident” of the enumerated congressional powers. This portion of the opinion is often expurgated from constitutional law textbooks. But not from Randy Barnett’s Constitutional Law: Cases in Context.

So is the power to order people to engage in commerce with certain corporations “incidental” to the enumerated power “to regulate Commerce . . .  among the several States”? Lawson and I argue that the power to compel intrastate commerce is of at least equal “dignity” as the power to regulate voluntary interstate commerce. Thus, the individual mandate cannot be justified a “necessary and proper” to the exercise of the power to regulate interstate commerce.

Further, the word “proper” affirms the agency/fiduciary law rule that an agent  must act reasonably, and when he is acting on behalf of several principals must treat the principals equally. So in Rooke’s Case, it was unreasonable that the entire costs of a water control project were imposed on a single landowner, when other landowners also benefited from the project. In Leader v. Moxon (1773) paving commissioners were unreasonable when they ordered a road repair that effectively buried the doors and windows of the plaintiff’s house, making plaintiff bear the entire burden of a project that was supposedly for the benefit of him and others. In the Founding era, government creation of a monopoly was the paradigm example of a government act that was not “proper,” because the monopolist was benefited to the detriment of everyone else.

In 1787, a consumer could at least choose not to buy the monopolist’s product.  ”The conclusion is clear: if a commercial monopoly—which citizens may avoid by not purchasing the product monopolized—is constitutionally void as ‘improper,’ then far more ‘improper’ is a mandate for the benefit of political favorites, which none but other political favorites may avoid. . . . [C]oerced commerce with congressionally favored oligopolists is constitutionally improper and void.”

Thus, if the Supreme Court follows the original meaning of the Necessary and Proper clause, and McCulloch v. Maryland‘s accurate exposition of that meaning, the Court will not rule in favor of the individual mandate as a necessary and proper exercise of the power to regulate interstate commerce.

As I discussed in this post, the IRS is proposing to give tax credits as premium assistance more broadly than is authorized by the text of the Patient Protection and Affordable Care Act (PPACA).  Specifically, the law only authorizes such premium assistance for health insurance purchased in state health care exchanges, but the IRS is proposing to provide such assistance for insurance plans purchased on federally run exchanges as well.  In today’s WSJ, the Cato Institute’s Michael Cannon and I argue the IRS lacks the authority to make this fix and expand on the implications of this glitch in the law.  Not only will it hamper the law’s ability to hold down health insurance costs borne by individuals, it could also frustrate enforcement of the employer mandate.

What happens if the IRS goes ahead with its proposed fix?  Would anyone have standing to challenge this violation of the law?  Normally the answer would be no, as no taxpayer would have standing to challenge an IRS decision to give preferential tax treatment to someone else.  But in this case standing is likely because, as discussed here, premium assistance is tied to the enforcement of the employer mandate in a way that would give a penalized employer standing to sue.  So if the IRA goes ahead, this is another PPACA issue that will end up in court.

The Supreme Court has granted certiorari in several of the health care cases, granting the Florida’s, NFIB’s and the federal government’s petitions, including consideration of the Tax Injunction Act issue, and granting extended argument time.  I suspect SCOTUSBlog will have a full report shortly.

NOTE: Here is SCOTUSBlog’s health care litigation page, and here is the ACA Litigation blog which is also a useful resource on the litigation.

Brooklyn resident Levy Itzhak Rosenbaum recently became the first person convicted of brokering the sale of kidneys in the United States [HT: George Mason law student Michael Mortorano]. The real tragedy here is not what Rosenbaum did, but the fact that organ sales are illegal to begin with. Legalizing them would save thousands of lives every year by increasing the supply of kidneys available to those suffering from organ failure.

When the Rosenbaum case began in 2009, I wrote this post countering one of the most common arguments against legalized organ sales: the claim that it would “exploit” the poor. Here’s a summary (details of each point are in the original post):

The arrest of Brooklyn Rabbi Levy Izhak Rosenbaum for trying to broker the sale of a kidney has rekindled public debate over the possibility of legalizing organ markets. This is an issue I teach every year in my Property class. Each time, one of the most common objections raised is the claim that organ markets must be banned because they will lead to “exploitation” of the poor…..

There are several major problems with the argument: it is inconsistent with allowing poor people to engage in far riskier activities for pay; it doesn’t even begin to prove that preventing the “exploitation” is an important enough value to justify the deaths of thousands of people for lack of organs; and it overlooks the fact that poor organ donors are likely to benefit from organ markets. Finally, even if all these points are unpersuasive, the exploitation argument still can’t justify banning organ sales by the nonpoor as well.

I realize, of course, that for many people, the most important objection to organ markets is not exploitation of the poor but rather a visceral emotional hostility. It is difficult to argue against gut feelings of disgust. Almost by definition, they are hard to influence by rational argument. Still, I would ask those who feel this way to keep in mind two points:

First, many social and technological changes that are widely accepted today were once greeted with similar visceral hostility. Consider cases like equality for women and interracial marriage. Some leading critics of organ markets, such as medical ethicist Leon Kass, also once argued that in vitro fertilization should be banned, because they found it disgusting as well. Today, IVF is an almost universally accepted method for enabling therwise infertile people to have children. Even Kass has made his peace with it. That doesn’t prove that all negative visceral reactions are necessarily wrong. But it does suggest that we should be very careful about basing policy on them.

Second, even if you think that your visceral hostility to organ sales is well-founded, it is still necessary to ask whether satisfying it is worth the sacrifice of thousands of lives every year. Many otherwise distasteful practices may be defensible if they save innocent lives. To justify a ban on organ sales, it’s not enough to prove that such sales are somehow flawed or even immoral. Whatever values are promoted by a ban have to be weighty enough to justify condemning thousands to an early death.

At Balkinization, Gerard Magliocca raises a possible slippery slope argument against striking down the individual health insurance mandate (this argument was, I think, first raised in an article by Mark Hall):

The most powerful argument against upholding the constitutionality of the individual mandate may be that this will open the door to compulsory broccoli purchases. Many people are unfamiliar with the relevant Commerce Clause cases, but everyone seems to know about the broccoli hypothetical.

The hypothetical on the other side of this litigation, though, is just as powerful. Suppose that a dangerous epidemic breaks out that reduces interstate commerce by curtailing travel and other interactions for fear of contagion. A private company develops an effective vaccine that many people refuse to buy. Is Congress prohibited from ordering everyone in the country to buy the vaccine under the proposed activity/inactivity distinction?

It so happens that I address the very issue Gerard raises in a forthcoming article on slippery slopes and the individual mandate. I have two answers to his question. First, Congress can still pass a vaccination requirement that applies to everyone who crosses state lines. Crossing state lines is clearly an “activity” and an interstate activity to boot. Second, as a practical matter, state governments would have very strong political incentives to enact vaccination laws in the face of a “dangerous epidemic.”

Gerard anticipates my second point, and finds it unsatisfying because it “sounds a lot like ‘This is a non-issue because Congress will never order you to buy broccoli.’ Either both responses are valid or neither is. One can’t be adequate and the other not.” Not so. The claim that a slippery slope is politically infeasible may be right in one scenario and wrong in the other because some policies are more politically viable than others. As I explain in this post, Congress has strong incentives to enact purchase mandates that benefit influential interest groups. The insurance mandate was itself adopted in part because of backing by the health insurance industry. By contrast, state governments are unlikely to sit on their heels in the face of a raging epidemic. Any state that does so is likely to lose business, and its politicians are likely to suffer retribution at the polls. Even the most ignorant voters tend to notice a rampaging epidemic that the government has failed to control.

Obviously, state governments could do a poor job of addressing an epidemic even in spite of good incentives. But the same is true of Congress.

UPDATE: I have made a few, mostly stylistic, changes in this post.

UPDATE #2: It’s a fair point to suggest, as some commenters do, that under my logic, Congress could enact the individual insurance mandate by restricting it to people who cross state lines. I think that would be permissible under current Commerce Clause doctrine, even if it might not be under the text and original meaning. However, many people could still evade the mandate by avoiding interstate travel. Not everyone crosses state lines regularly. Moreover, a health insurance mandate tied to travel would seem weird to many people, which in turn would reduce its political feasibility (not so with a vaccination mandate tied to travel, since it’s easy to see that part of the purpose of such a mandate is to stop the spread of an epidemic across state lines). More generally, requiring mandates to be tied to “economic activity” of some sort reduces the risk of harmful mandates because mandates with “tie-ins” tend to disincentivize whatever activity they are tied to. The more onerous the mandate, the greater the disincentive. For example, a mandate tied to employment will tend to increase unemployment. Congress will not always be willing to pay that price.

That’s the question posed today over at Scotusblog. It’s the premiere of the Scotusblog Community, which aims to encourage discussions by Scotusblog readers. To start the ball rolling, Scotusblog solicited short comments (up to 2 paragraphs) from Erwin Chemerinsky, Dawn Johnsen, Ilya Shapiro, Stephen Presser, Adam Winkler, and me, among others.

My answer to what the Supreme Court should do is:

The Court should re-affirm Gibbons v. Ogden, which followed the original understanding of the interstate commerce clause: “commerce” means mercantile exchange, plus some closely-related subjects, such as navigation. Among the subjects which are not interstate commerce, according to Gibbons, are “health laws of every description.” The Court should then over-rule South-Eastern Underwriters (1944), which broke from long-established precedent, and declared that even purely intrastate insurance was interstate commerce. Because South-Eastern claimed to be following original meaning, the modern Court should simply point out that none of the original sources cited by the South-Eastern opinion remotely support the contention that all forms of insurance are “commerce.”
 
Finally, Congress should explain that the Necessary and Proper clause underscores the unconstitutionality of the mandate. As McCulloch v. Maryland demonstrated, the original meaning of the clause affirms the Congress may exercise powers which are incidental to an enumerated power. The power to compel a private person to engage in commerce with a private company is not an incident of, or lesser than, the power to regulate voluntary interstate commerce. Further, government-created monopolies were, in the Founding Era, a paradigmatic example of improper government action. Therefore, it is not constitutionally “proper” to force citizens to spend their money on a government-favored Big Insurance oligopoly.

The rationale for the above can be found in my articles Bad News for Professor Koppelman: The Incidental Unconstitutionality of the Individual Mandate, 121 Yale Law Journal Online (forthcoming 2011)(with Gary Lawson); “Health Laws of Every Description”: John Marshall’s Ruling on a Federal Health Care Law, 12 Engage 49 (June 2011) (with Robert G. Natelson); Commerce in the Commerce Clause: A Response to Jack Balkin, 109 Michigan Law Review First Impressions 55 (2010) (with Natelson); and Health insurance is not ‘commerce’: A single erroneous Supreme Court precedent from 1944, South-Eastern Underwriters, should be overturned, National Law Journal, March 28, 2011 (with Natelson) (available on Lexix/Nexis).

Since Scotusblog is trying to get people to comment on its own website, I’m not opening comments on this post, and I encourage you to share you thoughts over at Scotusblug.

Federal district Judge Christopher Connor of the Middle District of Pennsylvania just issued an opinion striking down Obama health care plan individual mandate. It is available here. Timothy Sandefur has some helpful commentary on the decision here. As Sandefur mentions, Connor’s opinion is unusual for striking down the mandate despite rejecting the view that upholding it would give Congress unlimited authority to enact other mandates. My own view is that upholding the mandate would indeed lead to an unconstrained slippery slope of this kind, as I explained here. On the important severability question, Connor argues that the preexisting conditions coverage requirement cannot be severed from the mandate, but that the rest of the bill can be.

We now have three district courts and one court of appeals that have voted to strike down the mandate, and three district courts and one court of appeals that have voted to uphold it. Of the twelve federal judges who have considered the question, six have gone one way and six the other, with ten of the twelve (including Judge Connor) splitting along partisan and ideological lines.

It is now more clear than ever that there is no expert consensus on this subject, and that this is not a frivolous case that only ignorant or misguided extremists could possibly support.

UPDATE: The court in question is actually the Middle District of Pennsylvania, not the Eastern District, as I originally stated in the post. I apologize for the error, which has now been corrected.

Rob Natelson explains it all in his latest blog post. Short answer: if the purpose of the tax is raising revenue (e.g., the Stamp Act), it’s a tax. If the purpose is the regulation of commerce (e.g., a prohibitive tariff on imported French clothing; a shipping tax dedicated to paying for harbor improvements), then it’s not a “tax” in the the constitutional sense. Rather, it is a regulation of commerce.

The American colonists believed that Parliament had full authority to regulate external commerce, such as by imposing protectionist tariffs. The colonists also believed that Parliament had no authority to impose domestic taxes in the colonies (such as the Stamp Act). The colonists had a very firm sense of the distinction, and ended up going to war over Parliament’s refusal to respect that distinction. Because the Obamacare mandate is designed purely to control behavior, and not to raise revenue (even if it, like a protectionist tariff on French clothing does ultimately raise a little revenue), the Obamacare mandate is a type of commerce regulation, and not a tax in the constitutional sense. That, at least, is what the original meaning tells us.

Of course whether the individual mandate actually qualifies as a regulation of “commerce…among the several States” is a separate issue. The original meaning question for the mandate’s penalty is a commerce issue, not a tax issue.

The Internal Revenue Service is beginning to promulgate regulations to implement the tax-related provisions of the Affordable Care Act (aka “ObamaCare”). A proposed rule issued last month provides that eligible taxpayers may receive tax credits for the purchase of qualifying health insurance plans established by states under Section 1311 or by the federal government under Section 1321. The only problem is that this is not consistent with the actual text of the statute passed by Congress.

ACA Section 1401 provides that eligible taxpayers may receive income tax credits for purchase of insurance “through an Exchange established by the State under Section 1311.” Section 1311 calls upon states to establish health insurance exchanges. It does not provide for the federal government to create health care exchanges. Rather, a separate provision of the act, Section 1321, provides that if a state does not “elect” to create an exchange that meets federal requirements, the federal government shall then “establish and operate” an exchange. Thus, under a plain reading of the text, the ACA only provides for tax credits for state-run exchanges, and if states fail to create exchanges, there are no tax credits for insurance bought on a federally run exchange.

This is potentially significant for several reasons. The individual mandate requires all Americans to purchase health insurance. Even if the mandate is successful at reducing adverse selection, health insurance premiums are still expected to rise due to other provisions in the law.   Higher premiums could make it difficult for many Americans to comply with the mandate. For this reason, Congress not only called upon states to create exchanges, it also authorized tax credits to offset the cost of health insurance premiums for those with incomes between 100 and 400 percent of the poverty level.   But if these tax credits are only available for insurance purchased through state-based exchanges, many will be left high-and-dry in states that don’t create their own exchanges — and this could be a big problem. According to one recent report, only ten states had passed legislation to create qualifying exchanges through August 2011. (See also here.)

As David Hogberg reports in IBD, this has led some to believe the limitation of tax credits to state-based exchanges is a mistake. Under this theory, Congress meant to provide tax credits for any exchange-purchased insurance, because Congress wanted lower-income individuals to be able to purchase health insurance (and comply with the mandate). This may be true. As Vanderbilt’s James Blumstein tells IBD (and I discussed in this paper), the exchange-related provisions of the law were not written all-that-carefully. Nonetheless, federal agencies lack the authority to unilaterally revise statutory mistakes. (A point Cato’s Michael Cannon also makes here.)  Congress may have wanted to make tax credits more widely available — just as it may have wanted those making less than poverty-level income to be eligible for exchanges as well — but that is not what Congress did.

The IRS may be inclined to argue that the failure to include a reference to federally run exchanges or Section 1321 in Section 1401 was a “scrivener’s error” that should be disregarded. But this is a difficult argument to make in this case for several reasons. First, a “scrivener’s error” is supposed to be that – a purely clerical error that could be attributed to a failed transcription or something of that sort. An example would be mistaking the relevant subsection in a statutory cross-reference – say mistaking “(i)” for “(ii)” or “Section 36B(B)(I)(b)” for “Section 36(B)(I)(b),” or screwing up punctuation. The alleged error here is more significant, however. Not only did Congress forget to include any reference to Section 1321, it also expressly stated that the tax credits were for insurance purchased through “an Exchange established by the State.” So a legislator reviewing the relevant language could not claim that they did not realize the statutory cross-reference excluded federal exchanges because the clear text of the statute does as well. In other words, any legislator who actually bothered to read the bill before voting would have seen the limitation.

Another problem for the “scrivener’s error” argument is that it is usually dependent on showing that it is implausible, and not merely unlikely, that the statutory provisions were a mistake. As the Supreme Court explained in U.S. Nat. Bank of Oregon v. Independent Ins. Agents of America, Inc., 508 U.S. 439 (1993), this will be shown in the “unusual” case in which there is “overwhelming evidence from the structure, language, and subject matter of the law” that Congress could not have consciously adopted the language in the statute. Similarly, in Appalachian Power Co. v. EPA, 249 F.3d 1032 (D.C. Cir. 2001), the D.C. Circuit explained that:

We will not . . . invoke this rule to ratify an interpretation that abrogates the enacted statutory text absent an extraordinarily convincing justification because . . . the court’s role is not to correct the text so that it better serves the statute’s purposes, for it is the function of the political branches not only to define the goals but also to choose the means for reaching them. . . . Therefore, for the [agency] to avoid a literal interpretation . . ., it must show either that, as a matter of historical fact, Congress did not mean what it appears to have said, or that, as a matter of logic and statutory structure, it almost surely could not have meant it. [internal quotations and citations omitted]

Given what’s in the ACA, this is a showing that the IRS and HHS would have a hard time making. While it is certainly plausible – perhaps even likely – that many in Congress wanted tax credits for the purchase of health insurance to be broadly available, there is also ample evidence that the ACA was designed to induce states to create exchanges of their own. For example, Section 1311 directs states to create exchanges. Further, as Blumstein notes, under the ACA the federal government could sue to force a state to create an exchange. As in other policy areas, the federal government can’t force states to comply, so it uses a combination of positive and negative incentives – in this case, subsidies for creating exchanges and the threat of a federally run exchange if a state does not create one on its own. In this context, limiting the availability of tax credits to insurance purchased in state-run exchanges can be seen as just an added inducement. Much like the Clean Air Act threatens states with the loss of highway funds if they fail to adopt sufficiently stringent pollution control programs, the ACA as written threatens states with the loss of tax credits for state residents if they do not create an exchange. Such a policy may not be wise or fair – and may undermine the goal of getting more people insured – but it takes far more than that to justify ignoring a statute’s plain text.

Neither the IRS nor HHS has addressed these concerns as far as I’m aware, nor has anyone else. I’ll certainly do a follow-up post if such arguments are out there. I noted that the ACA’s text limits subsidies to state exchanges at a conference on health care reform and the states last fall, and no one suggested I was in error, but that does not mean I am right. It’s also possible there’s some other overlooked provision of the ACA that could be used to solve this problem. If so, I couldn’t find it, but I’ll also post an update if such a provision is found. In the meantime, the limitation of tax credits to those who purchase their insurance in state-run exchanges could be unwelcome news to those in the majority of states yet to create exchanges of their own.

I should also note that I have not addressed what would happen if the IRS were to just go ahead and finalize regulations providing for tax credits beyond those authorized by the ACA’s text. Under such a scenario, standing to challenge the IRS’ action in court would certainly be a big issue. As a general matter, there is no standing for a taxpayer to challenge a tax benefit conferred upon someone else. But the IRS, like all federal agencies, has an independent obligation to comply with the law, and I do not know of anyone who has argued that the IRS may create tax credits at will just because it thinks that’s what Congress meant to do and such actions are not easily challengable in court. Just imagine the sorts of mischief such a doctrine could unleash.

On Thursday, the Fourth Circuit Court of Appeals issued two decisions dismissing challenges to the Obama health care plan’s individual mandate on jurisdictional grounds. All three judges on the panel were Democratic appointees, including two chosen by President ObamaNeither ruling reached the merits of the question of whether the individual mandate is constitutional. Virginia v. Sibelius is by far the better known case, because it was brought by the Virginia state government. But Liberty University v. Geithner is perhaps more interesting.

In the Virginia case, the Fourth Circuit dismissed Virginia’s challenge to the mandate because they ruled that the state lacked standing to challenge it. Virginia had based its standing on argument on the grounds that it had passed a state law exempting Virginians from being forced to buy health insurance. Normally, states automatically have standing to challenge federal laws that supersede their own legislation. But the Fourth Circuit ruled that the Virginia law was not a genuine exercise of state sovereignty, but merely a symbolic protest against the federal individual mandate. In my view, Virginia’s motives for passing the law should have been irrelevant to the question of how it affected standing. Moreover, a decision not to regulate is just as much an exercise of sovereign authority as a decision to impose a regulation. In addition, I think Virginia should also have gotten standing on entirely unrelated grounds. It could have taken advantage of the “special solicitude” for state governments that the Supreme Court established in Massachusetts v. EPA. Virginia probably erred in putting all of its standing eggs in one basket. It should have emphasized Massachusetts v. EPA as well as its anti-mandate law.

Be that as it may, this decision is unlikely to matter much in the long run. Even if the Supreme Court also rejects Virginia’s suit for lack of standing, there are lots of other anti-mandate plaintiffs – both state governments and individuals – who clearly do have standing, as the Fourth Circuit admits (at least in the case of the individuals). So the issue will get to the Supreme Court one way or another.

Liberty University v. Geithner is more interesting because it is the first court decision to endorse the federal government’s argument that the individual mandate is a tax. Up till now, that argument has been consistently rejected by every judge who has ruled on it, including several who concluded that the mandate is constitutional on other grounds. The majority opinion only ruled that the mandate qualifies as a “tax” as defined by the Anti-Injunction Act, which forbids court challenges to “taxes” prior to the time when the IRS tries to actually collect the money. According to the majority, the AIA defines taxes more broadly than the Constitution, and encompasses all fines that are collected by the IRS through the normal tax enforcement system. I think Judge Andre Davis’ dissenting opinion does a good job of rebutting this extremely broad interpretation of the AIA. And I think it likely that the Supreme Court will side with him and the other nine judges who have ruled the same way rather than with the Fourth Circuit majority. However, if the latter prevails, it could make it impossible for individuals to challenge the mandate until it takes official effect in 2014.

In a concurring opinion, Judge James Wynn goes further than the majority (which he also joined), and argues that the mandate is a tax not just under the AIA, but under the Constitution. He has thereby become the first of the eleven federal judges who have considered this question who endorsed the constitutional tax argument. The other ten judges (including Judge Davis) all concluded that the mandate is a regulatory penalty, not a tax. Obviously, if the federal government wins on this point, the mandate would be constitutional even if it is not authorized by the Commerce Clause or the Necessary and Proper Clause.

On balance, I think Wynn’s argument is wrong. For reasons I explain here, the federal government’s Tax Clause argument (which Wynn echoes) is unpersuasive:

As recently as 1996, the Supreme Court reiterated the crucial distinction between a penalty and a tax. It ruled that “[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government,” while a penalty is “an exaction imposed by statute as punishment for an unlawful act” or – as in the case of the individual mandate – an unlawful omission. The individual mandate is a clear example of a penalty, where Congress requires people to purchase health insurance, and then punishes them with a fine if they fail to comply.

In September 2009, President Obama himself noted that “for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.” He was right. If the mandate qualifies as a tax merely because it punishes violators with a fine, then Congress could require Americans to do almost anything on pain of having to pay a fine if they refuse. It could use this power to force citizens to buy virtually any product, including broccoli, General Motors cars, or anything else.

Even if the individual mandate does somehow qualify as a tax, it is not one of the types of taxes that Congress is authorized to impose. The Constitution gives Congress the power to enact several types of taxes: Excise taxes, duties and imposts, income taxes, and “direct taxes” that must be apportioned among the states in proportion to population.

No one, including the federal government, claims that the individual mandate is a duty or an impost. The individual mandate is not an income tax because an income tax must target some “accession to wealth,” in the words of Commissioner of Internal Revenue v. Glenshaw Glass Co., the leading Supreme Court case on the subject. The fine imposed by the mandate does not target any accession to wealth or flow of income. It simply forces individuals to pay a penalty if they disobey the federal government’s regulatory requirement. The fact that low-income individuals are exempted does not change this analysis. A fine for jaywalking would not become an income tax if low-income individuals were exempted from it…..

It is even more implausible to suggest that the mandate is an excise tax. Excise taxes apply to economic transactions or the use of property of some kind. For example, a tax on the sale of alcoholic beverages qualifies as an excise. The individual mandate does not tax any kind of activity, use of property or economic transaction….

If the mandate is not a tariff, impost, income tax, or excise tax, it is either a direct tax or no tax at all. And if it is a direct tax, it would be an unconstitutional one, because it is not apportioned among the states in proportion to population as the Constitution requires.

The Supreme Court may well end up endorsing the individual mandate, though the anti-mandate plaintiffs also have a real chance to win. If the pro-mandate side does prevail, it probably won’t be on the tax argument.

My RegBlog post on the 11th Circuit’s recent decision striking down the individual mandate is now available here. The post considers the the ruling in more detail than my previous commentary on the subject.

RegBlog is a relatively new website established by the University of Pennsylvania Program on Regulation. For VC readers who may be interested, it has lots of good commentary by scholars and public officials on a variety of regulatory issues.

I recognize that I have been somewhat derelict in failing to post additional commentary on the Eleventh Circuit’s important decision striking down the individual mandate. Unfortunately, I was away at a friend’s wedding this weekend, and testifying before the US Commission on Civil Rights on Friday. Plus, it took some time to read the court’s 300 pages of opinions.

However, if all goes according to plan (which doesn’t always happen when it comes to the media), I should have an op ed out on the case tomorrow and a longer post at RegBlog, an excellent new site focusing on regulatory issues sponsored by the University of Pennsylvania’s program on regulation. I have also made some brief comments in the media here and here. The former story also contains comments by co-blogger Orin Kerr.

For what it’s worth, my overall impression is that the opinion does a great job of explaining why the mandate can’t be justified by the Commerce Clause or the Tax Clause. I especially like the court’s explanation as to why the highly deferential “rational basis” test does not apply to this case:

Rational basis review is not triggered by the mere fact of Congress’s invocation of Article I power; rather, the Supreme Court has applied rational basis review to a more specific question under the Commerce Clause: whether Congress has a “rational basis” for concluding that the regulated “activities, when taken in the aggregate, substantially affect interstate commerce.” [quoting Gonzales v. Raich]. ….[C]ourts must initially assess whether the subject matter targeted by the regulation is suitable for aggregation in the first place….[citing relevant language from United States v. Lopez and United States v. Morrison]….

The wholesale deference the government would have us apply here cannot be squared with the Supreme Court’s decisions in Morrison and Lopez. Here, “Congress’ findings are substantially weakened by the fact that they rely so heavily on a method of reasoning that [courts] have already rejected as unworkable if we are to maintain the Constitution’s enumeration of powers.” Morrison…. It is highly instructive that the Lopez and Morrison Courts rejected a similar cost-shifting theory now propounded by the government. In examining the actual relationship between gun possession and interstate commerce, the Lopez Court refused to accept what it referred to as the government’s “cost of crime” theory…. It did so despite the government’s argument that the “costs of violent crime are substantial, and, through the mechanism of insurance, those costs are spread throughout the population….” Similarly, in Morrison the Supreme Court considered a stockpile of congressional findings attesting to the link between domestic violence and medical costs frequently borne by third parties.

I discussed this issue in more detail in the amicus brief (pp. 10-13) I wrote in the case on behalf of the Washington Legal Foundation and a group of constitutional law scholars (including co-bloggers Jonathan Adler and Todd Zywicki, and recent guest blogger Kurt Lash). I’m happy to see this issue get such a thorough and thoughtful treatment, since I think it hasn’t gotten the attention it deserves previously.

I think the Court’s analysis of the government’s Necessary and Proper Clause argument is not as good. Unfortunately, they largely ignored the biggest weakness in the federal government’s position, that the mandate is not “Proper” even if it is “necessary.” The court’s Necessary and Proper Clause analysis is also somewhat confusing and not well organized. Nontheless, the opinion does make some good points on the Clause that I will discuss in my RegBlog post.

Hopefully, I will also find time to do some posts here on issues that could not be included in the Regblog post and the op ed, both of which are subject to tight word limits.

Another interesting portion of the Eleventh Circuit’s decision striking down the individual mandate is its discussion of Wickard v. Filburn. As the court’s opinion notes, the Supreme Court (in Lopez) characterized Wickard as “perhaps the most far reaching example of Commerce Clause authority over intrastate activity.” As a consequence, the Eleventh Circuit concluded, Wickard “provides perhaps the best perspective on an economic mandate” and would need to be distinguished were the mandate to be struck down. With this in mind, below the jump are portions of the Eleventh Circuit’s discussion of Wickard.

Continue reading ‘Distinguishing Wickard’ »

One of the more interesting passages of the Eleventh Circuit’ decision striking down the individual mandate concerns the “unprecedented” nature of the mandate – a subject that has been much discussed on this blog (see, e.g., here). After cataloging some of the uses to which Congress has put the commerce power, the court observes the conspicuous lack of any analog to the individual mandate in the nation’s history, and notes that both the CBO and CRS commented on the “unprecedented” and potentially problematic nature of a health insurance mandate as early as 1994. The court continues (below the jump):

Continue reading ‘The Eleventh Circuit on the “Unprecedented” Mandate’ »

Some prominent academics have argued that the individual mandate is a clearly constitutional exercise of the federal government’s taxing power. Some of these same academics have argued that opponents of the individual mandate’s constitutionality are well outside the legal mainstream. Yet as of today, there has not been a single federal court — indeed, perhaps not even a single federal judge — who has accepted the taxing power argument. Not a one. And yet a half-dozen federal judges have found the mandate to be unconstitutional. So which arguments are outside of the mainstream again? Cf. Rumsfeld v. FAIR

The 11th Circuit Court of Appeals has just issued a 2-1 ruling striking down the individual mandate in a suit brought by 26 state governments, the National Federation of Independent Business, and others. This is the first court of appeals decision striking down the mandate, and creates a circuit split with the recent Sixth Circuit decision going the other way. The opinion is available here. It’s easily the most important victory for the anti-mandate side so far.

Significantly, Judge Frank Hull, a Clinton appointee has now become the first Democratic-appointed judge to vote to strike down the mandate, balancing Republican Sixth Circuit Judge Jeffrey Sutton who voted to uphold it. The decision further undermines claims that the individual mandate suit is a sure loser that goes against a supposed expert consensus that the mandate is clearly constitutional.

It is now extremely likely that the Supreme Court will end up hearing the case, as the Court cannot allow a situation where the mandate is valid in some parts of the country but not in others. I recently opined on the case’s prospects in the Supreme Court here.

I will try to post additional commentary on the decision as soon as possible. Unfortunately, this is a very busy day, and it may take a while to fully study the 300 pages of the majority and dissenting opinions.

The Reuters story is here.  Opinion should be available soon on the Eleventh Circuit’s website.

UPDATE: The very lengthy opinion is here.  The court split 2-1.  Judges Hull and Dubina jointly issued the opinion of the court.  Judge Marcus dissented.  The court concludes the mandate cannot be justified under either the taxing power or commerce power, but that the mandate is severable from the rest of the health care reform law.  The court also rejects the argument that the law’s expansion of Medicaid is unconstitutionally coercive to the states.  Of note, the court did not split completely along partisan lines.  Judge Dubina was nominated by President George H.W. Bush.  Judges Hall and Marcus were nominated by President Bill Clinton.

UPDATE: The opinion concludes:

We first conclude that the Act’s Medicaid expansion is constitutional. Existing Supreme Court precedent does not establish that Congress’s inducements are unconstitutionally coercive, especially when the federal government will bear nearly all the costs of the program’s amplified enrollments.

Next, the individual mandate was enacted as a regulatory penalty, not a revenue-raising tax, and cannot be sustained as an exercise of Congress’s power under the Taxing and Spending Clause. The mandate is denominated as a penalty in the Act itself, and the legislative history and relevant case law confirm this reading of its function.

Further, the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional. This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives. We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers. “Uniqueness” is not a constitutional principle in any antecedent Supreme Court decision. The individual mandate also finds no refuge in the aggregation doctrine, for decisions to abstain from the purchase of a product or service, whatever their cumulative effect, lack a sufficient nexus to commerce.

The individual mandate, however, can be severed from the remainder of the Act’s myriad reforms. The presumption of severability is rooted in notions of judicial restraint and respect for the separation of powers in our constitutional system. The Act’s other provisions remain legally operative after the mandate’s excision, and the high burden needed under Supreme Court precedent to rebut the presumption of severability has not been met.

Accordingly, we affirm in part and reverse in part the judgment of the district court.

SECOND UPDATE: Judge Marcus’ dissent begins:

Today this Court strikes down as unconstitutional a central piece of a comprehensive economic regulatory scheme enacted by Congress. The majority concludes that Congress does not have the commerce power to require uninsured Americans to obtain health insurance or otherwise pay a financial penalty. The majority does so even though the individual mandate was designed and intended to regulate quintessentially economic conduct in order to ameliorate two large, national problems: first, the substantial cost shifting that occurs when uninsured individuals consume health care services — as virtually all of them will, and many do each year — for which they cannot pay; and, second, the unavailability of health insurance for those who need it most — those with pre-existing conditions and lengthy medical histories.

In the process of striking down the mandate, the majority has ignored many years of Commerce Clause doctrine developed by the Supreme Court. It has ignored the broad power of Congress, in the words of Chief Justice Marshall, “to prescribe the rule by which commerce is to be governed.” Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 196 (1824). It has ignored the undeniable fact that Congress’ commerce power has grown exponentially over the past two centuries, and is now generally accepted as having afforded Congress the authority to create rules regulating large areas of our national economy. It has ignored the Supreme Court’s expansive reading of the Commerce Clause that has provided the very foundation on which Congress already extensively regulates both health insurance and health care services. And it has ignored the long-accepted instruction that we review the constitutionality of an exercise of commerce power not through the lens of formal, categorical distinctions, but rather through a pragmatic one, recognizing, as Justice Holmes put it over one hundred years ago, that “commerce among the states is not a technical legal conception, but a practical one, drawn from the course of
business.” Swift & Co. v. United States, 196 U.S. 375, 398 (1905).

The approach taken by the majority has also disregarded the powerful admonitions that acts of Congress are to be examined with a heavy presumption of constitutionality, that the task at hand must be approached with caution, restraint, and great humility, and that we may not lightly conclude that an act of Congress exceeds its enumerated powers. The circumspection this task requires is underscored by recognizing, in the words of Justice Kennedy, the long and difficult “history of the judicial struggle to interpret the Commerce Clause during the transition from the economic system the Founders knew to the single, national market still emergent in our own era.” United States v. Lopez, 514 U.S. 549, 568 (1995) (Kennedy, J., concurring).

The plaintiffs and, indeed, the majority have conceded, as they must, that Congress has the commerce power to impose precisely the same mandate compelling the same class of uninsured individuals to obtain the same kind of insurance, or otherwise pay a penalty, as a necessary condition to receiving health care services, at the time the uninsured seek these services. Nevertheless, the plaintiffs argue that Congress cannot do now what it plainly can do later. In other words, Congress must wait until each component transaction underlying the costshifting problem occurs, causing huge increases in costs both for those who have health care insurance and for health care providers, before it may constitutionally act. I can find nothing in logic or law that so circumscribes Congress’ commerce power and yields so anomalous a result.

Although it is surely true that there is no Supreme Court decision squarely on point dictating the result that the individual mandate is within the commerce power of Congress, the rationale embodied in the Court’s Commerce Clause decisions over more than 75 years makes clear that this legislation falls within Congress’ interstate commerce power. These decisions instruct us to ask whether the target of the regulation is economic in nature and whether Congress had a rational basis to conclude that the regulated conduct has a substantial effect on interstate commerce.

It cannot be denied that Congress has promulgated a rule by which to comprehensively regulate the timing and means of payment for the virtually inevitable consumption of health care services. Nor can it be denied that the consumption of health care services by the uninsured has a very substantial impact on interstate commerce — the shifting of substantial costs from those who do not pay to those who do and to the providers who offer care. I therefore respectfully dissent from the majority’s opinion insofar as it strikes down the individual mandate.

Today SCOTUSBlog has posted my contribution to its symposium on “The Constitutionality of the Affordable Care Act.” It begins:

The public debate over the constitutionality of the individual mandate tends to focus on whether it is a permissible exercise of the power to “regulate commerce . . . among the several states.” This is no surprise. The commerce power is the most used and most expansive federal power. Fights over the scope of the Commerce Clause take place on familiar terrain. In the end, however, the constitutionality of the mandate is likely to turn on the scope of a less explored provision, the Necessary and Proper Clause.

The symposium also features contributions from co-conspirators Ilya Somin and David Kopel. Rumor has it Orin Kerr might be contributing something as well.