It is perhaps a common mis-perception of the laypublic that Supreme Court Justices are, for all intents and purposes, absolute free agents. Understandable. Justices cannot be fired or rejected at the polls in the next election, and there is no higher level of review. Their decisions are final and they, strictly speaking, can decide however they please.
But, in practice Justices are constrained, by centuries of precedent, by self-imposed rules (called Canons of Judicial Review), and by - quite frankly - the enormous gravity of the power they wield. Despite being wrong sometimes, some them frequently, they are to a man and to a woman serious, sober and thoughtful jurists. They do not act arbitrarily or capriciously even when they do err.
First, and foremost, that is why I'm not worried that the Supreme Court might even possibly overturn any part of the Patient Protection and Affordable Care Act ("PPACA"). But follow me below to find out more.
At last count, thirteen state Attorneys General have filed or are preparing to file suit in various federal courts in an effort to undo the PPACA. I will leave aside, for purposes of this diary, my own feeling about the motivations and characters of these Attorneys General. Let us review the chances of their success.
Nil.
Why?
The lawsuits each advance only one or two grounds as to why the PPACA should be held unconstitutional: that the imposition of the individual mandate is an invalid extension of Congress' Commerce Clause power; and that the 10 Amendment reserves all power to regulate indivudal behavior to the states. With respect to the 10th Amendment argument, for reasons that I will NOT go into here, it is utterly and unquestionably laughable. Any reader who disagrees with me on this point can write his or her own diary. That leaves, as the sole colorable basis for invalidating the individual mandate, the Commerce Clause argument.
It is widely assumed that this matter will ultimately and necessarily reach the Supreme Court. I agree, and I believe that no more than one or two of the current Justices would possibly vote to invalidate the individual mandate, but even in the worst case scenario (the best case for the Attorneys General), even if Roberts, Scalia, Alito and Thomas all vote to overturn that provision of the statute, I firmly hold that Justice Kennedy will not. And since in that worst case/best case scenarios Stevens, Breyer, Ginsberg and Sotomayor will certainly vote to uphold the individual mandate, Kenendy's vote becomes all-important.
As an initial matter, the Commerce Clause states:
The Congress shall have power [...] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes
During his tenure Justice Kennedy has joined in three significant decisions concerning the scope of the Commerce Clause powers of Congress. In two such cases, the seminal United States v. Lopez, 514 U.S. 549 (1995) and United States v. Morrison, 529 U.S. 598 (2000), Kennedy sided with the majority in what are widely seen as ‘conservative’ rulings that constricted the reach of Congress’ Commerce Clause power. Lopez involved a prosecution under the federal Gun-Free School Zone Act of 1990 with the Court holding that the Act went beyond Congress’ constitutional authority to regulate commerce because the possession of a gun in proximity to a school was so attenuated from interstate commercial activity. The Lopez Court rejected the argument that fear of violence in and around the schools would indirectly impact tourism and other interstate activity. Justice Kennedy somewhat reluctantly concurred with this opinion, noting first, however:
The 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 counsels great restraint before the Court determines that the Clause is insufficient to support an exercise of the national power. That history gives me some pause about today’s decision, but I join the Court’s opinion with these observations on what I conceive to be its necessary though limited holding.
His concurrence also noted:
[...] the Court as an institution and the legal system as a whole have an immense stake in the stability of our Commerce Clause jurisprudence as it has evolved to this point.
Kennedy, therefore, viewed Lopez as a limited holding which should not be used as precedent to destabilize the long history of Commerce Clause jurisprudence. This same conclusion obtains from Kennedy’s participation in Morrison, a matter in which the Court invalidated the Violence Against Women Act of 1994 as being an unconstitutional extension of the Commerce Clause power to sexual assault crimes.
Despite these two cases, Justice Kennedy joined the more ‘moderate’ or ‘liberal’ justices in Gonzalez v. Raich, 545 U.S. 1 (2005) to decline overturning the Controlled Substances Act as an unconstitutional intrusion on California’s Medical Marijuana law. The majority, including Kennedy, found that unless the federal government were able to control the interstate activity under the Commerce Clause, the federal regulation of marijuana was unsustainable – even though the production of medical marijuana in California for purely personal use was conceivably an intrastate activity. Kennedy joined Stevens’ opinion, which went all the way back to the New Deal case of Wickard v. Filburn, 317 U.S.111 (1942) for support. In Wickard the Supreme Court affirmed a prosecution of a wheat farmer for violating a federal law restricting wheat production. The farmer asserted that he was growing the wheat for his personal consumption and that, therefore, the law was an unconstitutional extension of the Commerce Clause to proscribe intrastate activity. The Court held that the farmer’s consumption of his own wheat would affect larger markets because he would not be purchasing wheat for his consumption and that Congress may constitutionally regulate intrastate activity under its Commerce Clause powers so long as the activity, in the aggregate, exerted a measurable effect on interstate commerce. (See also, Mulford v. Smith, 307 U.S. 38 (1939)(holding that regulations promulgated under a federal statute establishing control over the marketing of tobacco was within the ambit of the Commerce Clause).
So what does all of this mean with respect to the PPACA? Well, context is important in understanding Kennedy’s view of the Commerce Clause power and its possible application to the individual mandate in the health care reform statute. Two of the cases discussed above, Lopez and Raich, directly involved criminal statutes, federal laws criminalizing individual behavior. Morrison, however, facially concerned a law establishing a private right to sue for civil damages in the federal courts. Nevertheless, the rationale for the exercise of Commerce Clause power in promulgating the Violence Against Women Act was the cumulative economic impact of crimes against women. In all three cases, therefore, the basis for Congress’ actions were what it asserted were the substantial impact, in the aggregate, of local criminal activity on interstate commerce.
Justice Kennedy voted to invalidate that rational in Lopez and Morrison, on the grounds that the government did not carry the argument on substantial impact of that criminal activity, but he upheld it in Raich, issued just five years ago. What was different in Raich, for Kennedy, was the existence of an inarguably vast and important – albeit illegal – commercial enterprise: the interstate production, transportation and sale of marijuana. Kennedy joined in Justice Steven’s opinion (meaning that he agreed with both its reasoning and conclusion) that Congress could regulate all aspects of that commerce.
The question, therefore, is whether the health care and health insurance industry is more like the possession of a gun in a highly localized area or a criminal assault on a woman, ie., an essentially non-commercial activity, or more like the interstate drug trade – an inarguably commercial activity? Fortunately, the Supreme Court long ago answered that question in United States v. South-Eastern Underwriters Association, 322 U.S. 533 (1944). There the Supreme Court ruled so incontrovertibly in the affirmative that to undo this case now would literally stand all of Commerce Clause jurisprudence on its head. Here is what the Court said, in part:
The modern insurance business holds a commanding position in the trade and commerce of our Nation. Built upon the sale of contracts of indemnity, it has become one of the largest and most important branches of commerce. [...] Perhaps no modern commercial enterprise directly affects so many persons in all walks of life as does the insurance business. Insurance touches the home, the family, and the occupation or the business of almost every person in the United States. This business is not separated into 48 distinct territorial compartments which function in isolation from each other. Interrelationship, interdependence, and integration of activities in all the states in which they operate are practical aspects of the insurance companies' methods of doing business. [...] The result is a continuous and indivisible stream of intercourse among the states composed of collections of premiums, payments of policy obligations, and the countless documents and communications which are essential to the negotiation and execution of policy contracts.
[...]
Our basic responsibility in interpreting the Commerce Clause is to make certain that the power to govern intercourse among the states remains where the Constitution placed it. That power, as held by this Court from the beginning, is vested in the Congress, available to be exercised for the national welfare as Congress shall deem necessary. No commercial enterprise of any kind which conducts its activities across state lines has been held to be wholly beyond the regulatory power of Congress under the Commerce Clause. We cannot make an exception of the business of insurance.
With regard to health care spending and health insurance, Congress enacted the PPACA with specific reference to facts demonstrating that the numbers of insured and uninsured persons have an undeniably substantial impact on the interstate commerce of health care and insurance:
Health insurance and health care services are a significant part of the national economy. National health spending is projected to increase from $2,500,000,000,000, or 17.6 percent of the economy, in 2009 to $4,700,000,000,000 in 2019. Private health insurance spending is projected to be $854,000,000,000 in 2009, and pays for medical supplies, drugs, and equipment that are shipped in interstate commerce. Since most health insurance is sold by national or regional health insurance companies, health insurance is sold in interstate commerce and claims payments flow through interstate commerce.
The [individual mandate] requirement, together with the other provisions of this Act, will add millions of new consumers to the health insurance market, increasing the supply of, and demand for, health care services. According to the Congressional Budget Office, the requirement will increase the number and share of Americans who are insured.
The requirement achieves near-universal coverage by building upon and strengthening the private employer-based health insurance system, which covers 76,000,000 Americans nationwide. In Massachusetts, a similar requirement has strengthened private employer based coverage: despite the economic downturn, the number of workers offered employer-based coverage has actually increased.
Half of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.
Under the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health Service Act (42 U.S.C. 201 et seq.), and this Act, the Federal Government has a significant role in regulating health insurance which is in interstate commerce.
Under sections 2704 and 2705 of the Public Health Service Act (as added by section 1201 of this Act), if there were no requirement, many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.
Administrative costs for private health insurance, which were $90,000,000,000 in 2006, are 26 to 30 percent of premiums in the current individual and small group markets. By significantly increasing health insurance coverage and the size of purchasing pools, which will increase economies of scale, the requirement, together with the other provisions of this Act, will significantly reduce administrative costs and lower health insurance premiums. The requirement is essential to creating effective health insurance markets that do not require underwriting and eliminate its associated administrative costs.
Not only is the regulation of insurance more like Raich than Lopez or Morrison, but the PPACA does not involve a criminal statute – which arguably caused the Rehnquist court to more closely scrutinize the rationale for Congress’ action, to ensure that the individual criminal activity did in fact impinge significantly on interstate commerce. As expressed above, there can hardly be any debate on that point in the case of the PPACA, but it is also significant that Justice Kennedy has never voted to invalidate the exercise of Commerce Clause power in any context other than a federal criminal statute.
So where is Justice Kennedy likely to stand on health care reform? The question here is whether the PPACA regulates an interstate commercial enterprise, and not a criminal activity with an essentially local impact. The reliance in Raich on the Wickard v. Filburn case is telling, because under the long line of case following Wickard federal regulation of intimately individual and intrastate activities (the decisions of whether and how to produce, sale, market or consume commodities) are perfectly valid exercises of Commerce Clause power when, in the aggregate, there is a substantial interstate commercial impact of those activities. The question here, therefore, is one that Justice Kennedy will answer, as in Raich, by affirming the constitutionality of Congress’ efforts.
