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Is the Individual Mandate “Necessary”?

By on October 14, 2010 11:08 pm in Health Care, Individual Mandate

Like my co-conspirators, I believe the Necessary & Proper Clause provides the strongest basis for the constitutionality of the individual mandate.  I”m inclined to agree with Ilya nad Randy, rather than Orin, but I believe it’s a close call.

The constitutional argument, as has been rehearsed in this space before,  is that that mandate is a “necessary and proper” means of facilitating some of the regulations of health insurance markets contained in the recent health care reform legislation that are themselves constitutional exercises of the commerce power.   But is the individual mandate, as enacted, really a  “necessary” part of health care reform?  I am not so sure.

An individual mandate is intended to mitigate the economic effects of other regulatory measures contained in the health care reform legislation, such as the prohibition on insurers excluding coverage for preexisting conditions, and prevent insurance premium increases due to adverse selection.  The fear is that healthy people will rationally decline to purchase coverage until they are sick, and that this will cause health insurance premiums to increase, which will cause more health people to opt out, and so on.  By requiring  all Americans to purchase health coverage, the mandate prevents adverse selection and keeps healthier (and cheaper to ensure) people in the insurance pools.  At least that is how it works in the theory.

A sufficiently stringent individual mandate could well eliminate the adverse selection problem, but that is not what Congress enacted.  Instead, Congress enacted a mandate that does not solve the adverse selection problem.  For many Americans, the penalty for failing to purchase health insurance will remain substantially below the cost of purchasing a federally approved health insurance policy.  This is one of the reasons no one expects health care reform to achieve universal coverage.  This is also why the [...]

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The Florida District Court Decision Rejecting the Federal Government’s Motion to Dismiss the Case Against the Individual Mandate

By on October 14, 2010 5:42 pm in Commerce Clause, Federalism, Health Care, Individual Mandate, Necessary and Proper, Spending Clause, Taxes, Taxing and Spending Clause

There are several interesting aspects of today’s Florida federal district court ruling rejecting the government’s motion to dismiss a challenge to the Obama health care plan’s individual mandate brought by 20 states and the National Federation of Independent Business. First, as Randy Barnett emphasizes, this ruling, like the similar Virginia decision before it, further undercuts claims that the lawsuits against the mandate are either frivolous or clearly precluded by existing precedent. Even the recent Michigan district court ruling upholding the mandate conceded that it was a case of “first impression” (although the judge also tried to argue that the mandate ultimately does fit under current doctrine).

I. Judge Vinson Rules that the Mandate is Not a Tax.

Second, Judge Roger Vinson rejected outright the federal government’s claim that the mandate is a “tax” that is authorized by Congress’ authority under the Tax Clause. Instead, he concludes that it is a regulatory penalty, a point that I emphasized in my amicus brief in the Virginia case on behalf of the Washington Legal Foundation and a group of constitutional law professors:

Because it is called a penalty on its face (and because Congress knew how to say “tax” when it intended to….), it would be improper to inquire as to whether Congress really meant to impose a tax. I will not assume that Congress had an unstated design to act pursuant to its taxing authority, nor will I impute a revenue-generating purpose to the penalty when Congress specifically chose not to provide one. It is “beyond the competency” of this court to question and ascertain whether Congress really meant to do and say something other than what it did.

As the Supreme Court held by necessary implication, this court cannot “undertake, by collateral inquiry as to the measure of the [revenue-raising]

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Kopel comment on states’ victory on health control lawsuit.

By on October 14, 2010 5:06 pm in Commerce Clause, Congress, Constitutional Law, Health Care, Individual Mandate, Spending Clause, Standing, Taxes, Taxing and Spending Clause, Tenth Amendment

My comment on today’s decision, granting the motion to dismiss on some counts, and while allowing other counts to proceed. Like Randy’s comment, my comment is posted on the blog of the site Health Care Lawsuits, which is hosted by the Independent Women’s Forum.

The court entirely rejected the administration’s claim that the penalty for disobeying the mandate is justified under the federal tax power. As the court noted, Congress went out of its way to specify that the penalty is not a tax. Second, the court ruled that it is proper for the plaintiffs to be heard in their challenge to the mandate, which goes into effect in 2014. The court cited extensive precedent showing that when a future harm is certain, courts can act in the present to protect citizens from that harm. The court rejected the argument that the various employer mandates violate the constitutional sovereignty of states; as the court noted, the law simply treats states like other large employers, and so making states provide the same health benefits as other large employers must provide is no different from making states pay the same minimum wage as all other employers.

While federal spending programs may set conditions on grants to states, Supreme Court precedent states that the grants must not be coercive. Here, the court agreed that the states had raised a plausible legal argument which should be allowed to go forward:  the health control presents states with the unacceptable choice of massively increasing their own Medicaid spending on millions of more people, or of losing all funding for the traditional Medicaid program. Finally, the court agreed that the challenge to the individual mandate could go forward, because the mandate was “unprecedented.” Never before has Congress attempted to use its power of regulating interstate

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Michigan District Court Upholds Individual Mandate Against Challenge by the Thomas More Law Center

By on October 7, 2010 6:19 pm in Commerce Clause, Federalism, Health Care, Individual Mandate

Michigan federal district Judge George Caram Steeh just issued an opinion upholding the Obama health care plan’s individual mandate against a challenge by the conservative Thomas More Law Center and several individual plaintiffs who refuse to purchase health insurance by 2014 as the mandate requires.

This is the first opinion issued on the merits in any of the health care lawsuits, though the court hearing the case brought by the state of Virginia earlier issued a decision denying the government’s motion to dismiss.

I don’t have time to comment in detail right now. But I will note a few key points.

First, the decision upholds the mandate under the Commerce Clause alone. It does not address the government’s arguments claiming that the mandate is authorized by the Tax Clause and the Necessary and Proper Clause, except to say that Congress may use a monetary penalty to enforce a legitimate Commerce Clause regulation (which I think is correct).

Second, the main point of the court’s Commerce Clause argument is that not having health insurance counts as an “activity” rather than inactivity:

Far from “inactivity,” by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants

Because not being insured therefore turns out to be an activity rather than inactivity, it is covered by Supreme Court Commerce Clause cases such as Gonzales v. Raich, whose implications for the mandate case I discussed at length in this post.

The problem with this reasoning is that those who choose not to buy health insurance aren’t necessarily therefore going to buy the same services in other ways later. Some [...]

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That Which is “Necessary” Isn’t Necessarily Proper

By on October 6, 2010 7:41 pm in Federalism, Health Care, Individual Mandate, Necessary and Proper

In his most recent post in our debate over the Necessary and Proper Clause, Orin argues that Supreme Court precedent has resolved the issue of what counts as “proper” as well as what is “necessary.” That, however, simply is not so. None of the cases Orin cites say anything about the meaning of “proper.” They all focus on whether the measure in question was “necessary” or not.

In the rare instances where the Court has given separate consideration to the meaning of “proper,” the Court has made clear that it is a separate and distinct issue from what is necessary, and that it is not subject to broad judicial deference. For example in Printz v. United States, the Court concluded that a federal law requiring state officials to perform background checks on gun purchasers was “improper” because it invaded state sovereignty even though it was clearly “necessary” for implementing the government’s regulatory purposes (in the broad sense of “useful” or “convenient” adopted by the Court). As Justice Scalia’s majority opinion in that case put it:

What destroys the dissent’s Necessary and Proper Clause argument . . .. is … the Necessary and Proper Clause itself. When a “La[w] . . . for carrying into Execution” the Commerce Clause violates the principle of state sovereignty reflected in the various constitutional provisions we mentioned earlier…. proper for carrying into Execution the Commerce Clause,” and is thus, in the words of The Federalist, “merely [an] ac[t] of usurpation” which “deserve[s] to be treated as such.” The Federalist No. 33

The Court did not apply broad deference to the government’s position and did not conflate necessity with propriety. Notice also that Scalia doesn’t deny that the background check provision is “necessary” for implementing the goverment’s Commerce Clause-based purposes. Unfortunately, neither Printz nor any [...]

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If It’s Necessary and Proper, Then It’s Proper: A Reply to Ilya

By on October 6, 2010 6:45 pm in Individual Mandate

I’ve enjoyed my exchange with Ilya on the health care mandate, although I find myself in the exchange becoming increasingly of the view that this isn’t a difficult issue under current Supreme Court caselaw. Here’s one more round to try to sharpen the debate between us.

The crux of the disagreement between Ilya and I boils down to the Necessary and Proper clause. The Supreme Court has often entered decisions on the scope of the Necessary and Proper clause, construing the clause quite broadly and upholding statutes on the ground that it did not violate the clause. In my view, those cases pretty much end the matter: For better or worse, those cases are so deferential that they point pretty clearly to the view that the individual mandate satisfies the standard.

In contrast, Ilya sees the Supreme Court cases on the Necessary and Proper clause as answering when legislation is “necessary” but not reaching what is “proper.” Thus, as I understand Ilya’s view, the cases on what satisfies the Necessary and Proper Clause are not particularly helpful because they do not expressly reach a conclusion — apparently because challengers forgot to raise the issue — on what is proper. Ilya thus concludes that there is no significant caselaw on what is “proper” and lower courts must construe the meaning of “proper” using text and original meaning unburdened by precedent.

I disagree with Ilya because the cases themselves — and the briefs for that matter — expressly and consistently articulate the question they decide as being whether the challenged laws are permitted under requirements of the the Necessary and Proper Clause as a whole. The doctrine generally treats “necessary” and “proper” together, and litigants either brief them together or in some cases argue the “proper” issue separately. Just to pick one [...]

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More on the Necessary and Proper Clause and the Health Care Mandate

By on October 6, 2010 2:22 pm in Federalism, Health Care, Individual Mandate, Necessary and Proper

Orin has replied to my post explaining why current Supreme Court doctrine doesn’t support the constitutionality of the Obamacare individual mandate under the Necessary and Proper Clause.

He makes three points that I will briefly answer. First, Orin suggests that current Supreme Court doctrine gives a broad interpretation of the word “proper” in the Clause. However, all the cases he cites are in fact interpretations of the word “necessary,” not “proper.” As I said in my original post, the Court has interpreted “necessary” very broadly. But it has not done the same with “proper.” The main textual argument against the mandate focuses on the latter.

Second, Orin suggests that the five part test outlined in United States v. Comstock does not apply going forward, and only applies to the unusual circumstances of Comstock itself. However, the Court spent a great deal of time and space outlining and applying the five factor test. Nothing in the opinion suggests that it applies only to Comstock itself or some narrow range of similar cases. If that were the Court’s intention, surely they would not have omitted this extremely important qualification to their reasoning. After all, a big part of the justices’ job is to provide guidance for lower courts on how to decide future cases, and they are well aware of that responsibility.

Moreover, Orin’s interpretation of current doctrine is that anything flies so long as it is “rationally related” to the enforcement of an enumerated power. If that were so, the Court need not have applied the five factor test even in Comstock itself. After all, as I explained in one of my earliest posts on Comstock, the statute upheld in that case was “rationally related” to the regulation of interstate commerce as that power was defined by the Court in [...]

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More on the Constitutionality of the Individual Mandate

By on October 6, 2010 1:08 pm in Individual Mandate

I appreciate Ilya’s reply to my post on the constitutionality of the individual mandate. Three points in response:

1) Ilya suggests that the Supreme Court has never answered what makes legislation “proper,” and he suggests a first-principles argument for why there may be limits on what is “proper” that would permit the Supreme Court to say that the individual mandate is unconstitutional because the Justices do not see it as “proper.” He writes:

[The Supreme Court] has said very little about what “proper” actually means. Under the text and original meaning of the Constitution (which the Court is more likely to resort to in cases where there is little or no relevant precedent), “proper” at the very least means that the federal government cannot claim virtually unlimited power (we cite to works discussing some of the relevant evidence in the amicus brief). Otherwise, it would render all or most of Congress’ other enumerated powers completely superfluous, making a hash of the text. And the logic of the government’s position does indeed lead to virtually unlimited federal power.

But of course the Supreme Court has said a lot about what kind of power is permitted under the Necessary and Proper Clause — that’s the point of McCulloch, Sabri, Comstock, and the like. And those cases seem to reject Ilya’s approach. Just a few months ago in Comstock, the Supreme Court quoted this passage from Burroughs v. United States , 290 U. S. 534, 547–548 (1934), as the correct statement of the law:

If it can be seen that the means adopted are really calculated to attain the end, the degree of their necessity, the extent to which they conduce to the end, the closeness of the relationship between the means adopted and the end to be attained,

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Necessary and Proper Clause Doctrine and the Individual Mandate

By on October 6, 2010 4:25 am in Federalism, Health Care, Individual Mandate, Necessary and Proper

In a recent post, co-blogger Orin Kerr outlines what has become the standard argument that the Obama health care plan’s individual mandate is authorized by the Necessary and Proper Clause. The claim is that the goal of the legislation is to regulate commerce in health insurance (which, under current doctrine, is a permissible end under the Commerce Clause) and the individual mandate is a “necessary and proper” means even if it isn’t one that comes under one of Congress’ enumerated powers by itself.

I think this is probably the government’s best argument. But it’s not nearly as much of a slam dunk – even under current doctrine – as Orin and others imagine. I explain why in greater detail in my recent amicus brief on behalf of the Washington Legal Foundation and a group of constitutional law scholars (pp. 23-30). To summarize, there are two major problems with the argument: the mandate flunks the five part test outlined in the Supreme Court’s recent decision in United States v. Comstock, and it is not “proper.” The Court has (wrongly in my view) adopted a highly permissive definition of what counts as “necessary.” But proving “necessity” is not enough for the government to win its case.

I. The Comstock Five Part Test.

Comstock outlines a five part test that applies to assertions of power under the Necessary and Proper Clause. As I explained here, in my recent article on Comstock (pp. 260-67), and in the brief (pp. 25-28), the mandate flunks at least 3 of the five prongs and is questionable under a fourth:

[The Court] lists five factors that determined the outcome [in Comstock]:

We take these five considerations together. They include: (1) the breadth of the Necessary and Proper Clause, (2) the long history of federal

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Gonzales v. Raich and the Individual Mandate

By on October 5, 2010 1:10 am in Commerce Clause, Federalism, Health Care, Individual Mandate

The Supreme Court’s 2005 decision in Gonzales v. Raich ruled that Congress’ power to regulate interstate commerce gives it the power to ban possession of medical marijuana that had never crossed state lines or been sold in any market anywhere. It was easily the broadest-ever Supreme Court interpretation of the Commerce Clause. When I first considered the question, I thought that Raich’s reasoning was expansive enough to justify the individual mandate. I still believed that the mandate was unconstitutional (primarily because I have always argued that Raich was a horrible decision). But I thought that it could probably go through under Raich. And the government has in fact relied heavily on Raich in its brief in the Virginia case challenging the mandate.

A closer look at Raich, however, led me to reconsider my initial view. I presented my revised position in the amicus brief (pp. 6-10) I recently wrote on behalf of the Washington Legal Foundation and a group of constitutional law scholars. As I explain in my 2006 article on Raich and my September 2009 post on the individual mandate, Raich gives Congress extremely broad power in three separate ways:

1. Raich holds that Congress can regulate virtually any “economic activity,” and adopts an extraordinarily broad definition of “economic,” which according to the Court of encompasses anything that involves the “production, distribution, and consumption of commodities.”

2. Raich makes it easy for Congress to impose controls on even “non-economic” activity by claiming that it is part of a broader regulatory scheme aimed at something economic.

3. Raich adopts so-called “rational basis” test as the standard for Commerce Clause cases, holding that “[w]e need not determine whether [the] activities [being regulated], taken in the aggregate, substantially affect interstate commerce in fact, but only whether a

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The ACA Litigation Blog

By on October 5, 2010 12:32 am in Federalism, Health Care, Individual Mandate

Those of our readers interested in the litigation over the Obama health care plan should check out University of Santa Clara lawprof Brad Joondeph’s extremely helpful ACA Litigation blog. Joondeph has performed a valuable public service by making all the many briefs, documents, and motions in the Florida and Virginia health care cases available in one place – including to people who don’t have free access to Westlaw and Lexis. [...]

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Our Amicus Brief in the Virginia Case Challenging the Constitutionality of the Obama Health Care Plan

By on October 4, 2010 4:07 pm in Commerce Clause, Federalism, Health Care, Individual Mandate, Necessary and Proper, Spending Clause

Today, we filed an amicus brief in Virginia v. Sebelius, one of the cases challenging the constitutionality of the Obama health care plan’s individual mandate, which requires nearly all Americans to purchase health insurance by 2014 or pay a fine. I wrote the brief on behalf of the Washington Legal Foundation, a leading pro-free market public interest law firm, and fourteen prominent constitutional law scholars (this was the pro bono project that I finished right before my wedding).

The brief signers include VC co-conspirators Jonathan Adler, David Kopel, and Todd Zywicki, along with other well-known constitutional law scholars such as James Ely (Vanderbilt), Kurt Lash (University of Illinois), Gary Lawson (BU), Steven Presser (Northwestern), and others. Also among the signers is Professor Steven Willis of the University of Florida, coauthor of an important article explaining why, even if the mandate is a tax, it is not a tax authorized by the Constitution. Co-blogger Randy Barnett is filing his own amicus brief along with the Cato Institute and Competitive Enterprise Institute.

If nothing else, I hope the brief will help dispel the myth that there is an expert consensus to the effect that the mandate is constitutional (see also here). It should by now be obvious that many well-known and highly respected scholars believe otherwise.

The brief covers all three provisions of the Constitution that the government claims authorize the mandate: The Commerce Clause, the Tax Clause, and the Necessary and Proper Clause. Part I addresses the Commerce Clause and includes what I think is the most thorough discussion so far of why the mandate is not authorized by the Supreme Court’s broadest-ever Commerce Clause decision, Gonzales v. Raich (pp. 6-10). Part I also addresses many other relevant Commerce Clause decisions, including lower court cases. Part II [...]

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Taking Stock of Comstock

By on October 1, 2010 2:56 pm in Federalism, Health Care, Individual Mandate, Necessary and Proper

My recent Cato Supreme Court Review symposium article on United States v. Comstock is now available on SSRN. The case has important potential implications for the litigation over the constitutionality of the Obama health care plan. Here’s the abstract:

Those who argue that the federal government has nearly unlimited authority often cite the Necessary and Proper Clause. That clause gives Congress the power to “make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” The Supreme Court’s recent decision in United States v. Comstock is a step in the direction of interpreting the clause as a virtual blank check for Congress to regulate almost any activity it wants. But the decision is vague on several key points, and its long-term effects are difficult to predict.

Part I of this article discusses Section 4248 of the Adam Walsh Act, the provision the Court upheld in Comstock. It also summarizes the majority, concurring, and dissenting opinions. Part II criticizes the Court’s reasoning. The majority’s extremely broad interpretation of the Necessary and Proper Clause may render much of the careful enumeration of congressional power in Article I of the Constitution superfluous. In addition, it tries to link the statute to a nebulous congressional authority to act as a “custodian” for federal prisoners that is itself not enumerated anywhere in the Constitution.

Part III considers the implications of Comstock for the future. The decision could strengthen the government’s case in the ongoing litigation over the massive health care bill passed by Congress in March 2010. Comstock’s broad interpretation of the Necessary and Proper Clause could be used to buttress the government’s constitutional justifications for the

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My Washington Examiner Op Ed on The Recent Ruling in the Virginia Health Care Lawsuit

By on August 5, 2010 5:16 pm in Commerce Clause, Federalism, Health Care, Individual Mandate, Necessary and Proper, Spending Clause

The Washington Examiner recently posted my op ed on Monday’s ruling in the Virginia health care lawsuit, which I previously discussed in this post:

Monday’s federal district court decision refusing to dismiss a lawsuit challenging the constitutionality of the Obama health care plan is an important step forward for opponents of the plan.

The suit by the state of Virginia focuses primarily on a challenge to the “individual mandate” element of the plan, which requires most American citizens and legal residents to purchase a government-approved health insurance plan by 2014 or pay a fine for noncompliance……

Judge Henry Hudson wrote that the individual mandate “literally forges new ground and extends Commerce Clause powers beyond its current high watermark.” As he put it, “No reported case from any federal appellate court has” ruled that Congress has the power to “regulate a person’s decision not to purchase a product….”

The legal battle over the Obama health care plan is far from over.

Nonetheless, Hudson’s ruling is a victory for those who believe that the individual mandate is unconstitutional. It makes it difficult to argue that the lawsuits against the mandate are mere political grandstanding with no basis in serious legal argument.

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Thoughts on the Federal District Court Ruling Refusing to Dismiss the Virginia Health Care Lawsuit

By on August 2, 2010 1:09 pm in Commerce Clause, Federalism, Health Care, Individual Mandate, Spending Clause

Federal District Judge Henry Hudson’s opinion refusing to dismiss Virginia’s lawsuit challenging the constitutionality of the Obama health care plan has several interesting aspects. The suit focuses primarily on a challenge to the “individual mandate” element of the plan, which requires most American citizens and legal residents to purchase a government-approved health insurance plan by 2014 or pay a fine for nocompliance. Here are a few of the most important points covered in the opinion.

First, Hudson rejected the federal government’s claim that Virginia did not have standing to challenge the mandate. Although states are generally not allowed standing to litigate the interests of their citizens, Hudson argues that Virginia has standing because the federal health care bill conflicts with a recently enacted Virginia state law, the Health Care Freedom Act. This, he argues, is enough to give Virginia standing, overcoming the sorts of federal government standing arguments that I discussed in this post. This argument may have negative implications for the other major lawsuit against Obamacare, filed by 20 states and the National Federation of Independent Business. Most of those states do not have state laws comparable to the Health Care Freedom Act. NFIB, however, has individual members who are subject to it, such as self-employed businessmen. In addition, the other states could try to establish standing by relying on the broad theories of state standing endorsed by the Supreme Court in Massachusetts v. EPA. Hudson also rejects the federal government’s argument that the lawsuit isn’t “ripe” for adjudication because the individual mandate will not come into effect until 2014. He points out that the new federal law will force both individuals and the state government to make adjustments to their health insurance plans even before that.

Second, Hudson agrees with co-blogger Randy Barnett that the [...]

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