Today the Supreme Court will hear argument (a very long argument) on the central issue in the challenges to the Affordable Care Act: whether the individual mandate—which requires all covered persons (exemptions are allowed for persons unable to afford to purchase insurance) to obtain health insurance, be it through an employer plan, a public insurance program (Medicare, Medicaid or Veterans coverage), or by purchasing insurance individually (on the open market or through an exchange)—is constitutional.
The Obama administration has consistently argued that the the individual mandate is essential to the effectiveness of ACA and indeed, will argue that if the individual mandate is ruled unconstitutional, then the ban on preexisting conditions, minimum expenditures on health care, and other essential regulatory protections for health insurance consumers must fall with it, as they are inextricably intertwined with the individual mandate.
The issue could also raise fundamental questions regarding our modern federal government. If the Court chooses to issue sweeping doctrinal formulations of the Commerce Clause and the Necessary and Proper Clause, or appeals to liberty of contract interests in striking down the individual mandate, the very foundations of our modern government could be at risk. Such a decision could challenge the basis of our modern federal administrative state. Questions regarding the EPA, Medicare, Social Security, and other federal agencies and regulatory regimes would be reopened. It could lead to a reversal of the 1937 transformation of our national government.
At the very least, an adverse ruling on the individual mandate would gut the achievement of the Obama administration, the Affordable Care Act.
It is not exaggeration to say that this could be the most important case in terms of the constitutional doctrine of our system of government since the New Deal cases.
(Continue reading below the fold)
Now, on to the legal question:
(2) Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision, the individual mandate.
The Article 1 power the question is referring to springs from just a few words in the Constitution:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises [... and] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes [...] And 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.Those are the words everyone is arguing about. Of course, the meaning of those words has been discussed in millions of new words. What is the Commerce power? When is Congress exercising the Spending Power (implied from the taxing power)? What is the "Necessary and Proper" power? The long history of argument and interpretation of these words makes it necessary to emphasize some key decisions without providing a full history.
The question of the Commerce power was first substantially elucidated by the Court in the case Gibbons v. Ogden. There are two passages in Gibbons of particular note. The first:
This instrument contains an enumeration of powers expressly granted by the people to their government. It has been said that these powers ought to be construed strictly. But why ought they to be so construed? Is there one sentence in the Constitution which gives countenance to this rule? In the last of the enumerated powers, that which grants expressly the means for carrying all others into execution, Congress is authorized "to make all laws which shall be necessary and proper" for the purpose. But this limitation on the means which may be used is not extended to the powers which are conferred, nor is there one sentence in [p188] the Constitution which has been pointed out by the gentlemen of the bar or which we have been able to discern that prescribes this rule. We do not, therefore, think ourselves justified in adopting it. What do gentlemen mean by a "strict construction?" If they contend only against that enlarged construction, which would extend words beyond their natural and obvious import, we might question the application of the term, but should not controvert the principle. If they contend for that narrow construction which, in support or some theory not to be found in the Constitution, would deny to the government those powers which the words of the grant, as usually understood, import, and which are consistent with the general views and objects of the instrument; for that narrow construction which would cripple the government and render it unequal to the object for which it is declared to be instituted, and to which the powers given, as fairly understood, render it competent; then we cannot perceive the propriety of this strict construction, nor adopt it as the rule by which the Constitution is to be expounded.This formulation of constitutional interpretation formulated by the greatest chief justice, John Marshall, now nearly 200 years old, has never been accepted by conservative legal scholars. But it has been central to the Court's interpretation of the Commerce power. In Gibbons, Chief Justice Marshall stated:
What is this [Commerce] power? It is the power to regulate, that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution.The regulation of the national health insurance market is clearly an exercise within the Commerce power. The states challenging ACA and the individual mandate do not say otherwise. Their arguments are based on viewing the individual mandate and penalty provisions in isolation and in on federalism arguments (the argument is that portions of the law impinge on the rights of states).
The private challengers have a more expansive attack on ACA, arguing that the federal government is not empowered to regulate the national health insurance market. Thus, in their brief (PDF), the private challengers argue:
The Commerce Clause [...] “was intended as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Government.” W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 193 n.9 (1994). Similarly, the Necessary and Proper Clause was “not itself a grant of power, but a caveat that the Congress possesses all the means necessary to carry out [its] specifically granted … powers.” Kinsella v. United States ex rel. Singleton, 361 U.S. 234, 247 (1960); see also McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 406, 420-21 (1819) (the clause “remove[s] all doubts respecting … incidental powers”). [Emphasis supplied.]This is, to put it bluntly, a radical view. If adopted by the Court, it would cause the dismantling of our modern federal government, INCLUDING all federal criminal laws. For it is the Commerce power that underpins the creation of Social Security, Medicare and the EPA. It is the Commerce power that underpins most of federal criminal law.The argument of the private challengers asks for a return to our pre-1937 federal government.
Regarding the Commerce power, the challenging states are not so bold in their brief (PDF):
The Constitution grants Congress the power to regulate commerce, not the power to compel individuals to enter into commerce. That distinction is fundamental. A power to regulate existing commercial intercourse is precisely what the framers sought to confer upon the new federal government. The power to compel individuals to enter commerce, by contrast, smacks of the police power, which the framers reserved to the States.[...] If Congress not only can regulate individuals once they decide to enter into commerce, but can compel them to enter commerce in the first place, then there is nothing left of the principle that Congress’ powers “are defined, and limited,” Marbury v. Madison, 5 U.S. 137, 176 (1803), as Congress could simply force within its regulatory reach all those who would remain outside it.There are no grand pronouncements regarding the limited nature of the Commerce power. Instead, the states forward a less radical argument: The federal government is not regulating commerce with the individual mandate; rather, it is compelling commerce (the purchase of health insurance). (Side note: It is interesting how the "liberty" concern falls by the wayside when it comes to States mandating the purchase of health insurance.)
This is a necessary concession in practical terms as well as in constitutional terms. Why? Because of the Necessary and Proper Clause, which is, in my view, the critical provision regarding ACA and the individual mandate. In the 1819 case, McCulloch v. Maryland, Chief Justice Marshall explained the Necessary and Proper Clause:
[T]he Constitution of the United States has not left the right of Congress to employ the necessary means for the execution of the powers conferred on the Government to general reasoning. To its enumeration of powers is added that of making '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 thereof.' [...]In a concurring opinion in Gonzales v.Raich, Justice Scalia explained his view of the Necessary and Proper clause:
[T]he Constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the Constitution, are Constitutional.
Congress’s authority to enact laws necessary and proper for the regulation of interstate commerce is not limited to laws directed against economic activities that have a substantial effect on interstate commerce. Though the conduct in Lopez was not economic, the Court nevertheless recognized that it could be regulated as “an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.” 514 U.S., at 561. This statement referred to those cases permitting the regulation of intrastate activities “which in a substantial way interfere with or obstruct the exercise of the granted power.” Wrightwood Dairy Co., 315 U.S., at 119; see also United States v. Darby, 312 U.S. 100, 118—119 (1941); Shreveport Rate Cases, 234 U.S., at 353. As the Court put it in Wrightwood Dairy, where Congress has the authority to enact a regulation of interstate commerce, “it possesses every power needed to make that regulation effective.” 315 U.S., at 118—119.Justice Scalia's language is sweeping: there is not a "substantial effects" test for the exercise of the Necessary and Proper clause when the regulation of a conduct is "an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." Like the individual mandate is to ACA. What to do in the face of this broad pronouncement? What fig leaf can be offered to Justice Scalia? The activity/non-activity distinction.
Although this power “to make … regulation effective” commonly overlaps with the authority to regulate economic activities that substantially affect interstate commerce,2 and may in some cases have been confused with that authority, the two are distinct. The regulation of an intrastate activity may be essential to a comprehensive regulation of interstate commerce even though the intrastate activity does not itself “substantially affect” interstate commerce. Moreover, as the passage from Lopez quoted above suggests, Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce. See Lopez, supra, at 561. The relevant question is simply whether the means chosen are “reasonably adapted” to the attainment of a legitimate end under the commerce power. See Darby, supra, at 121.
What is the activity/non-activity distinction, and is it supported by any case law (other than decisions on ACA)? Here is how the state challengers describe it:
The provisions immediately surrounding the Commerce Clause confirm that the power to regulate does not encompass the power to create the thing to be regulated. In the only two other provisions of Article I, section 8 that grant Congress a power to regulate, the Constitution first grants Congress the separate power to bring into existence the object of regulation. [...] While Congress unquestionably has the power to regulate (and perhaps “direct” or “command”) individuals when they choose to participate in commerce, that is a far cry from the power to command individuals to enter into commerce in the first place. Cf. New York v. United States, 505 U.S. 144, 176 (1992) (recognizing distinction between permissible regulation of States’ participation in commerce and impermissible “command[s] to state governments” to regulate commerce).While the state challengers drone on for 50 pages or more in this vein, that is the argument. But what of the Necessary and Proper clause? What of Justice Scalia's admonition that the Necessary and Proper clause empowers the federal government to regulate when the regulation of a conduct is "an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated"?
The state challengers argue:
The power to compel individuals into commerce is exercised not to effectuate regulation of existing commerce, but rather to create commerce so that Congress may regulate it. That is a “great substantive and independent power”—indeed, as noted, it is a power that would rival if not exceed the power to “raise and support armies” in degree of controversy—that “cannot be implied as incidental to” the power to regulate commerce. Id.This is certainly one of the weakest arguments I've seen. In essence, the state challengers are arguing that Congress was wrong to consider the individual mandate as necessary to ACA. But the Supreme Court is not in the business of deciding whether Congress is right or wrong in its policy rationales and decisions. As the Court articulated in the 2010 case United States v. Comstock, the exercise of a Necessary and Proper power is judged on a rational basis test:
The federal government maintains the mandate is not an end in itself, but merely a means of “mak[ing] effective the Act’s core reforms of the insurance market,” namely, the guaranteed issue and community ratings provisions. Govt.’s Br. 24. That argument distorts the concept of a law that serves “the purpose of effecting something else.” McCulloch, 17 U.S. at 411. The problem with the guaranteed issue and community ratings provisions is not that they would be ineffective without the individual mandate. Quite the contrary, the problem is that those provisions would work far too well—many would “tak[e] advantage of” those guarantees by “‘wait[ing] to purchase health insurance until they needed care.’” Govt.’s Br. 29 (quoting ACA § 1501(a)(2)(I)). Congress deemed the mandate necessary to counteract the effectiveness of those provisions by forcing individuals to purchase a product they may neither want nor need. The Constitution authorizes Congress to “carry into Execution” its enumerated powers, not to expand its enumerated powers by creating problems in need of extraconstitutional solutions. See Raich, 545 U.S. at 38 (Scalia, J., concurring) (“the power to enact laws enabling effective regulation of interstate commerce … extends only to those measures necessary to make the interstate regulation effective”).
We have since made clear that, in determining whether the Necessary and Proper Clause grants Congress the legislative authority to enact a particular federal statute, we look to see whether the statute constitutes a means that is rationally related to the implementation of a constitutionally enumerated power. Sabri v. United States, 541 U. S. 600, 605 (2004) (using term “means-ends rationality” to describe the necessary relationship); ibid. (upholding Congress’ “authority under the Necessary and Proper Clause” to enact a criminal statute in furtherance of the federal power granted by the Spending Clause); see Gonzales v. Raich, 545 U.S. 1, 22 (2005) (holding that because “Congress had a rational basis” for concluding that a statute implements Commerce Clause power, the statute falls within the scope of congressional “authority to ‘make all Laws which shall be necessary and proper’ to ‘regulate Commerce … among the several States’ ” (ellipsis in original)); see also United States v. Lopez, 514 U. S. 549, 557 (1995); Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U. S. 264, 276 (1981).Aware of this problem, the state challengers engage in some hand waving:
A power to compel individuals to enter into commerce would amount to a plenary power to compel individuals to live their day-to-day lives according to Congress’ dictates. That is not a power “narrow in scope,” Comstock, 130 S. Ct. at 1964, but rather could be exercised as least as broadly as (and far more intrusively than) the commerce power itself. Congress could use such a power to control every “class” of decisions that has a substantial effect on interstate commerce, which is to say, nearly every decision. To read such an extraordinary and invasive power into the Constitution “would require [the Court] to conclude that the Constitution’s enumeration of powers does not presuppose something not enumerated,” Lopez, 514 U.S. at 567, which the Necessary and Proper Clause does not license the Court to do.This is, in essence, the famous "make you eat broccoli argument." Of course the problem with this argument is that the right encompassed in the 14th Amendment would not allow willy nilly compulsion of action, even as part of a proper regulatory scheme. That would include, in my view, a requirement to eat broccoli.
One of the logical problems the state challengers face here is that the individual mandate does not raise any true federalism concerns; the individual mandate imposes no obligations on the "States qua States." The requirement is imposed on individuals. A nice federalism argument would have been right in the wheelhouse of the conservative justices. It just isn't available here.
So what do the state challengers offer to respond to Justice Scalia's concurrence? In my view, nothing but handwaving. The reality is the state challengers' appeal is a "they can't do that" argument. It is not truly a legal argument and has nothing in the case law to support it.
In its reply brief (PDF)—the government of course filed an opening brief (PDF)—the challengers restate all the arguments defending the individual mandate. The federal government responds to these arguments as you would expect:
In attacking the minimum coverage provision, and with it the entire Act, respondents seek to elevate a policy dispute over the means Congress chose to accomplish its concededly valid objectives-a means advocated for decades in national policy debates as a responsible free-market approach to meeting those objectives-into an issue of constitutional dimension. But respondents have identified no principle of constitutional law nor any precedent that would justify the grave step of overturning the judgments of the democratically accountable Branches of government about what means would best address the Nation's health-care crisis. Instead, respondents invite this Court to impose novel limits on Congress's Article I authority based on an intrusive and largely standardless approach to reviewing economic legislation that would mark a sharp departure from the approach this Court has historically followed. The Court should decline that invitation and uphold the Act.Yes indeed, the challengers are asking for judicial activism of historic proportions. The federal government continues:
A law is "necessary" if it is "convenient, or useful, or essential" to the execution of an enumerated power. McCulloch, 17 U.S. (4 Wheat.) at 413. Once that standard is satisfied, further inquiry "into the degree of its necessity * * * would be to pass the line which circumscribes the judicial department, and to tread on legislative ground." I d. at 423. Private respondents nonetheless spend nearly half their brief demanding the very type of judicial second-guessing the Court has eschewed since McCulloch. NFIB Br. 28-56. They cite no decision from this Court invalidating a law on the ground that Congress erred in the legislation "necessary" to achieve its legitimate ends. Under the long-settled standard of review, McCulloch, 17 U.S. (4 Wheat.) at 413, the minimum coverage provision is plainly constitutional.The federal government's reply also hammers home that the individual mandate raises no federalism concerns:
Respondents invoke New York v. United States, 505 U.S. 144 (1992), and Printz v. United States, 521 U.S. 898 (1997), but their reliance on those decisions underscores the misconceived nature of their argument.In short, there is no true legal argument to defeat the constitutionality of the individual mandate. Federalism does not avail. Arguments that the Commerce power has been exceeded do not avail. Arguments that the Necessary and Proper power are exceeded do not avail. What's left? Liberty? But there is not liberty interest at stake here. The federal government's brief explains:
In both cases, this Court emphasized that Congress may not commandeer States or their officers (and thereby infringe state sovereignty), but that the Constitution provides Congress "ample power" to exercise authority "directly upon the citizens." New York, 505 U.S. at 162 (citation omitted); see Printz, 521 U.S. at 919-921; U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779,838 (1995) (Kennedy, J., concurring). In the Affordable Care Act,
Congress used its "substantial powers to govern the Nation directly," New York, 505 U.S. at 162, by "acting directly on the people," McCulloch, 17 U.S. (4 Wheat.) at 404, in conformity with the constitutional structure.
It is therefore baffling that respondents contend that the Act compromises the constitutional value of accountability recognized in New York and Printz. There is no
doubt that "it will be federal officials that suffer the consequences if the decision turns out to be detrimental or unpopular." New York, 505 U.S. at 168.
This would be an especially poor setting in which to invoke such generalized liberty-based notions, given that respondents assert a freedom of contract, NFIB Br. 61-62; cf. United States v. Darby, 312 U.S. 100, 125 (1941), in a context in which the uninsured are already engaged in the economic activity for which the minimum coverage provision governs the manner of payment. [...] By their logic, a minimum-wage law impermissibly forces employers into "disadvantageous contracts." See AdkinsYes, the specter of pre-1937 Supreme Court jurisprudence is invoked. The Court will surely not rely on the challengers' arguments on these points.
v. Children's Hosp., 261 U.S. 525, 544-562 (1923) (invaliding minimum-wage law because "[t]o the extent that the [wage] exceeds the fair value of the services rendered, it amounts to a compulsory exaction from the employer for the support of a partially indigent person"), overruled by West Coast Hotel Co. v. Parrish, 300 U.S. 379, 397-398 (1937). As the Court held in Wickard v. Filburn, 317 U.S. 111 (1942), "[t]he conflicts of economic interest between the regulated and those who advantage by [regulation] are wisely left under our system to resolution by the Congress under its more flexible and responsible legislative process." Id. at 129; see United States v. Rock Royal Co-op., Inc., 307 U.S. 533,572 (1939).
What's left? Where we started—the artificial activity/inactivity distinction. Is it supported in the case law and by logic? Certainly not, absent the invocation of a liberty of contract interest. But it will suffice, if the Court wants it to.
Now, it has been clear for some time that the most articulate opponents of the mandate (who include such formidable intellects as Richard Epstein, Randy Barnett, and Gary Lawson) have just this in mind. They despise the modern state and want to blow it up. But the Supreme Court has no such revolutionary ambitions. The challenge for the challengers of the law, then, is to come up with a theory that lets them win this case without committing the Court to the end of American civilization as we know it. Clement evidently could not figure out how to do that (other than – here he shows excellent sense – being coy about the implications of his argument). If you accept his brief’s logic, then it is not clear how, say, the Environmental Protection Agency could survive, since there is no enumerated power to keep the country’s air breathable or its water drinkable.Regarding Clement's supposed "desperation," Koppleman concedes a lot of good faith to the Court. I am more sanguine.
As I’ve noted in a different context, when a lawyer as good as Clement makes arguments this bad, it tells you a lot about how desperate his case is.
The other question to be argued today involves whether the mandate and penalty are lawful exercises of the Taxing power. The federal government argues:
[R]espondents' attempt to artificially subdivide the minimum coverage provision-rather than read this single statutory section as one integrated whole establishing conditions for tax liability-fails. Functionally, Section 5000A is identical to the statute suggested by Judge Kavanaugh that would "definitively" be within Congress's tax power. Gov't Br. 60 (internal citation omitted); see License Tax Cases, 72 U.S. (5 Wall.) 462, 471-472 (1867) (discussed at Gov't Br. 57).I have no opinion on the merits of this argument. Jack Balkin says it is a tax:
To the extent the constitutionality of Section 5000A depends on whether Subsection (a) creates an independent legal obligation, the Court should construe it not to
do so. Gov't Br. 61-62; see, e.g., License Tax Cases, 72 U.S. (5 Wall.) at 471. New York is directly on point. That case involved a provision that, read in isolation, appeared to establish a mandate ("[e]ach State shall be responsible for" disposing of radioactive waste), with separate provisions establishing "[p Jenalties" for failure to comply with that "[rJequirement." Gov't Br. 61-62 (internal citations omitted; first two pairs of brackets in original). To avoid a conclusion that the statute violated the Tenth Amendment, the Court interpreted it as creating financial incentives rather than a freestanding command backed by sanctions. I d. at 62. Section 5000A is structurally and functionally identical. It is implausible to suggest that it would be "plainly contrary to the intent of Congress," New York, 505 U.S. at 170 (citation omitted), to interpret the provision as establishing tax incentives to purchase health insurance rather than a separate statutory command to maintain insurance- especially given that the only consequence of failing to maintain insurance is the shared responsibility payment and that construing the provision in this way would not defeat any statutory objective. [...]
Respondents insist that Congress must expressly invoke its tax power in order to exercise it, so that it cannot "use the courts to impose taxes that it lacks the
political support to enact." States Br. 56. That remarkable suggestion is contrary to both the settled rule that "the fact that an exaction is not labeled a tax does not vitiate Congress's power under the Taxing Clause," and the equally settled principle that "[t]he question of the constitutionality of action taken by Congress does not depend on recitals of the power which it undertakes to exercise." Seven-Sky, 661 F.3d at 48 n.37 (Kavanaugh, J., dissenting) (citations omitted). Nothing in the Constitution justifies such judicial superintendence of the political dynamics of enacting legislation, whether in
Congress's exercise of its Article I powers in general or its tax power in particular. Compare Skinner v. MidAmerica Pipeline, 490 U.S. 212, 219-223 (1989) (no special
non-delegation limitation on Congress's exercise of tax power).
it is not actually a mandate. It is a tax, which people would not have to pay if they purchased health insurance. The House bill imposes a tax of 2.5% on adjusted gross income if a taxpayer is not part of a qualified health insurance program. The Senate bill imposes what is called an “excise tax” — a tax on transactions or events — or a “penalty tax” — a tax for failing to do something (e.g., filing your tax return promptly). The tax is levied for each month that an individual fails to pay premiums into a qualified health plan.The argument is sure to be interesting. This is the one to watch.
Congress has the power to pass legislation that falls within any of its powers enumerated in the Constitution. There are two obvious sources of congressional power. The first, described in the General Welfare Clause, is the power “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States.” The second, laid out in the Commerce Clause, is the power “to regulate commerce . . . among the several states.”
The individual mandate is a tax. Does it serve the general welfare? The constitutional test is whether Congress could reasonably conclude that its taxing and spending programs promote the general welfare of the country.1 This test is easily satisfied. The new health care reform bill insures more people and prevents them from being denied insurance coverage because of preexisting conditions. Successful reform requires that uninsured persons — most of whom are younger and healthier than average — join the national risk pool; this will help to lower the costs of health insurance premiums nationally. [...]
If the individual mandate falls within Congress's power to tax and spend, no other constitutional authority is necessary.