Monday, March 22, 2010

More on the Constitutionality of Healthcare Reform: A Warning to Conservatives

According to multiple news sources, several state attorneys general are poised to bring legal challenges to the healthcare reform legislation.  According to most sources, the legal challenges will center around the constitutionality of the individual mandate.

Commerce Clause and Taxation Power
Most legal analysis I have found on this subject concludes that Congress has at least two sources of authority to mandate the purchase of health insurance. These include the commerce clause and the taxation power. The individual mandate is literally drafted as a tax on uninsured individuals. It is also part of a larger statute regulating interstate commerce -- which is a standard that the Supreme Court, including Justice Scalia, has approved to test the legitimacy of regulations of noneconomic activity. I have written on this subject before. Please feel free to read that analysis.

There is an interesting irony in many of the conservative objections to the individual mandate. Conservatives argue that Congress cannot use its commerce power to compel individuals to enter into commerce (i.e., purchase health insurance). While I would argue that Congress is really using its commerce and taxing power to entice people to cover the risks associated with their own health, that is a side argument.

Most importantly, conservative arguments in this area unwittingly support more expansive regulation. Here's why.

Conservatives believe that Congress cannot mandate that individuals purchase insurance. In order to avoid this outcome, Congress could have raised taxes on everyone, created a public plan, and fully subsidized participation by indigent uninsured individuals. This alternative is more expansive than the voted upon exchange system, coupled with a mandate. The latter option uses a market based approach. The public plan, however, represents government sponsorship of health care.  Yet, because the public plan would not involve coercion, it is presumably fine under existing commerce clause and taxation precedent -- according to conservative logic.

Clearly, conservatives cannot contest a public plan on constitutional grounds, as this is the same as Medicare, Medicaid, TRICARE, SCHIP and other government-sponsored plans.  Accordingly, Congress could have chosen this more expansive route, but this is certainly not what conservatives want.

Conservatives also argue that Congress has never used its commerce power to force individuals to engage in commercial activities. That point is not true.

Take two leading cases on the commerce clause: Wickard v. Filburn and Gonzales v. Raich. In Wickard, the Court upheld a production limit on wheat as applied to someone who produced and consumed "home grown" wheat. Congress did not want suppliers to produce more than the statutory maximum because doing so would result in lower prices.  The law was a basic price control. But for the homegrown wheat consumer, enforcement of this requirement would mean individuals had to purchase wheat on the open market.  The Court, however, validated this outcome.

In Raich, the Court (a 7-2 majority, including Justice Scalia) upheld the enforcement of federal drug laws that ban possession of marijuana. The Court concluded that the federal government could enforce the laws against someone who used homegrown marijuana for medical purposes. Consequently, the individual would have to purchase some alternative treatment on the open market (as in Wickard). This outcome, however, did not render enforcement unconstitutional.

Similarly, with respect to the insurance mandate, Congress has determined that the alternatives to having almost universal coverage are an impediment to commerce. Removing this impediment will require a few consumers who are uninsured to purchase insurance, but this is not a novel concept. It is true that the regulations in the other cases did not directly mandate that individuals engage in commerce, but this was the impact of the regulations in those cases.

Even assuming that the Supreme Court finds the mandate unconstitutional, the Court would not then invalidate the entire statute. Instead, it would only invalidate the mandate itself. This would leave intact the many other components of the legislation that conservatives presumably loathe. Many conservatives, however, seem to believe that if the mandate is declared unconstitutional, that they have defeated healthcare reform. That is untrue. They will simply have defeated the mandate, which President Obama campaigned against in the first place.

Furthermore, if the Court invalidates the mandate, Congress could implement a voluntary public plan option (see above). It could also expand the income limits for Medicaid or lower the age requirements for Medicare to cover many uninsured individuals. Also, Congress could (and almost certainly would) continue to subsidize the purchase of insurance by individuals who cannot afford to do so. Accordingly, attacking the mandate does not seem to carry much promise for opponents of the legislation.  It could, in fact, open the door to more expansive approaches.

See also: Is Healthcare Reform "Unconstitutional"? No -- Why Rivkin and Casey Are Wrong

UPDATE: It is unclear that a state attorney general would even have standing to bring a suit in federal court regarding the mandate. The mandate applies to individuals, not to state governments. Also, the mandate does not take effect immediately. Federal courts could avoid this litigation altogether if standing does not exist.


james said...

I was wondering if it would remove the mandate or the entire bill. Thanks for the information.

Ellena said...

First of all, I would like to thank you for taking the time to write such well-researched and detailed posts about this subject. I'm a Bioethicist and Philosophy PhD, so please forgive me for my ignorance regrading Constitutional and legal matters.

1) Is it true, that the Healthcare Bill violates the Tenth Amendment?

2) What happens to the states that have passed legislation (ie. Idaho Health Freedom Act) to 'protect it's citizens from unconstitutional mandates'? Doesn't Federal law usurp state law? And can governors sign into law, legislation that requires state's Attorney General's to sue the federal government?

3) Does Article 1, Section 8 trump the Tenth Amendment?

4) In the Washington Post's article, "Is Health-care reform constitutional?" (3-21-10), Randy Barnett says, ..."the individual mandate extends the commerce clause's power beyond economic activity, to economic *inactivity.* The is unprecedented." What does he mean by "inactivity"? Is this the same thing as 'noneconomic activity'?

Basically, I would like to conceptually understand if the Conservative have a Constitutional leg to stand on, in opposing this bill.

I appreciate your time. And thanks again for all of the helpful info.

Darren Lenard Hutchinson said...

James: no problem

Ellena: long list - but here goes (in short answer format).

I am not aware of anything in the statute that violates the 10th Amendment. The Court has held that Congress cannot use its authority over commerce to "commandeer" state governments. One example -- the Brady Handgun law required states to perform background checks on persons purchasing guns. This mandate upon states was unconstitutional (see the Printz case). I am not aware of any part of this statute that similarly commandeers state governments.

Validly enacted federal law trumps state law (see the Supremacy Clause of the Constitution - Art. VI).

Article I does not trump the 10th Amendment, but I am not aware of anything in the statute that violates the 10th Amendment.

Barnett is correct; the mandate requires persons to do things that they otherwise are not doing -- i.e., purchase health insurance. I am not sure the court would fall for an action/inaction distinction in this area. In any event, the taxation power provides an additional source of power for Congress to issue the mandate. And if all else fails, the mandate is severable from the statute.

In my opinion, Congress really should have just funded a public plan, but that's another story. That would have been unassailable from a constitutional perspective.

Ellena said...

Thanks, Darren. This certainly clarifies things.

Jim said...

"legislation to 'protect it's citizens from unconstitutional mandates'"
Isn't that kind of like buying a second umbrella to protect from wet rain? There are already outlets to defend against unconstitutional mandates - they're called federal courts. The statute doesn't really help.

Darren Lenard Hutchinson said...

Jim - if you are describing the move in states like Virginia to create laws countering the mandate -- I agree. They aren't worth the paper they are written on. Only a court can determine if the mandate is unconstitutional. If it is, then the law is invalid; if it is not - then it trumps state law.

Josh said...

Filburn and Raich have a huge difference: both involved action, specifically producing and consuming something. This would truly be an unprecedented first for applying the Commerce Clause to pure inaction. That is unless simply living is deemed to be enough action to warrant regulation under the Commerce Clause...

I see the central issue being weighing individual sovereignty against the collective costs of society. Essentially, my right to risk my own life as long as I don’t harm others vs society’s argument that my potential cost to them is enough harm to remove my individual right.

Josh said...

Also, it would take at least 4 years for a real person to get standing, but there's a 1st Amendment angle to this as well:

Boycotting health insurance is protected under the 1st Amendment. In 1966 down in Mississippi, the NAACP organized a boycott against white merchants in order to induce compliance with laws guaranteeding equal treatment under the law regardless of race. The businesses successfully sued the NAACP for lost revenue. The NAACP appealed to the Mississippi Supreme Court and lost. Then they appealed to the US Supreme Court and won. In N.A.A.C.P. v. Clairborne Hardware Company, 458 U.S. 886 (1982), the U.S. Supreme Court held that the First Amendment protects nonviolent boycott activity. The individual mandate prohibits boycotting a specific industry and therefore restricts free speech if indeed boycotting is free speech. It is akin to passing a law that you may not write disparaging comments about the insurance industry. Would that violate the First Amendment? If so, then this mandate also violates the First Amendment.

An even better parallel is Griswold v. Connecticut (1965) where CT tried to criminalize the use of contraceptives and the Supreme Court said you have a right to privacy regarding your own personal body and health.

Darren Lenard Hutchinson said...

Josh - your First Amendment argument will NEVER work. People have claimed all types of constitutional liberties to avoid paying taxes or satisfying other financial burdens imposed by the government. They always lose. This is a nonstarter.

Also, Griswold recognized a right to marital privacy over procreation. This doesn't help people who do not want to purchase health insurance. The government is not making anyone get health care. Instead, it is making sure that people who get health care are insured.

Darren Lenard Hutchinson said...

Josh - your inaction argument fails to see the similarities between Wickard, Raich and the mandate. All of these scenarios force individuals into commerce. Also, in the case of the mandate, the government is not regulating inaction; instead, it is regulating uninsured medical transactions. There is a rational relationship between requiring that people purchase insurance and stopping uninsured transactions.

Josh Dowlut said...

Wickard and Raich didn't force anyone into commerce, they only broadened the definition of commerce beyond what one might initially think. Filburn and Raich were both growing (action) and consuming (action) a fungible commodity for which there is an established interstate market. Not buying health insurance is pure inaction.

To make Filburn fully support this mandate you would have to turn the case around. The point of the grow quota was to limit supply and support the price of wheat. Had the government pursued a policy of pushing demand instead of limiting supply and mandated individuals buy a certain amount of wheat and had the SCOTUS found that to be constitutional then I'd say Filburn was a pretty good precedent.

What class of regulated activity does the law apply to? Those who did not purchase insurance, another way of saying those who did not act, another way of saying inaction. You would have to turn just living into a class of regulated activity in order to extend the Commerce Clause. You would have to argue the CC is literally limitless.

Josh Dowlut said...

RE: "it is regulating uninsured medical transactions."

If I'm healthy as a horse and never engage in any medical transactions ever the mandate still applies to me. It doesn't regulate uninsured medical transactions. It regulates uninsured people.

Josh Dowlut said...

RE: the 1st Amendment, if this were a tax (or at least a financial burden payable to the federal government instead of a private business) of course it wouldn't fly, but this is not a tax. This is a requirement to enter a contract with a private, for-profit corporation. You can't boycott paying taxes, but you can boycott private businesses unless this mandate can restrict a form of protected speech (boycotting as shown in Claiborne) against a specific industry.

Joe said...

With all due respect Professor, your analysis is a little shallow. No question Congress could use its taxing powers to support government provided healthcare (as opposed to requiring individuals to purchase their own coverage). Congress has nearly limitless powers to tax and spend for the general welfare. But if Congress did what you suggest, Congress would have to pay the political price for raising the necessary taxes. That is precisely why Congress didn't have the fortitude to pursue that course. The political cost was/is too high, particularly in these days of out of control federal taxing and spending.

As for your analysis of Wickard and Raich, you claim too much. Neither case stands for the proposition you allege. Wickard did not require the purchase of wheat and Raich did not require the purchase of medical marijuana. Rather, Wickard prohibited (regulated) on going commercial activity - the growning of wheat for personal use was prohibited because it effected the supply of wheat in the commercial marketplace. No one was required to buy wheat, although that may have been one alternative the wheat grower could have chosen once he was prohibited from growing his own. I suspect you know that.

Similarly, Raich upheld a federal law that prohibited possession of homegrown medical marijuana. No one was required to buy marijuana. Certainly they could have chosen to do so, but no one was required to do so. In this important respect, the cases are inapposite for the proposition cited by you.

Regardless of the technical arguments relating to the constitutionality of the mandate, your analysis misses the real question. The question is whether the continued growth of federal power and the increasing decree to which the federal government is willing and able to usurp areas of traditional state control (such as healthcare) presents illigitmate incursions under our traditional notions of the separation of powers between the federal and state governments. As you know, under Article 1, Section 8 of the US Constitution, federal legislative powers are limited to those enumerated by the Constitution, with all other legislative powers left to the states. Why don't you address whether this careful balance of legislative power, hewn into the very fabric of this republic, is torn asunder by your rather cavalier conclusion that all is well with healthcare reform.

There are issues here much more important than healthcare reform. Indeed, our Revolutionary War was fought over precisely such issues. You and Alexander Hamilton lost the argument that states should be the mere lapdogs of the mighty feds. Rather, the founding fathers envisioned a republic where the major organs of government would be lodged close to the people in the respective statehouses. Until the Constitution is amended to rebalance that division of power, there will be a vigorous battle waged by people of good faith against the slow, but mercilessly relentlessly creep of the federal government.

Hippi Chicki Niki said...

Congrats on beating out the Washington Post for the top spot on google.

Hippi Chicki Niki said...

I had already considered that the commerce clause as a the constitutional grounds upon which Congress had the power to legislate health care reform but your analysis is so much more thorough and elegant.

I am most impressed by the way that your analysis neatly deals with the frequent objection that it regulates people that are uninsured. By pointing out the fact that the right to impose taxes also gives Congress constitutional authority for health care reform, you simplify the argument that health care reform actually regulates us all. The same way that the tax code gives tax incentives to people that bought their first home or people with children in college, there is now a tax incentive to be covered by health insurance. That puts the mandate into an entirely new light. It also serves to counteract the arguments posted above against th cases you use to support your analysis.

Darren Lenard Hutchinson said...

Thanks for your posting, Niki. Let's hope the Supreme Court agrees!

Hippi Chicki Niki said...

sorry for the typos, that's what I get for trying to appear intelligent at 5:30 in the morning. : /

Darren Lenard Hutchinson said...

Joe - What you describe as shallow is factually correct. The Wickard ruling forced the farmer to purchase wheat on the open market; Raich forced the individual to pursue alternative means for her ailments.

Furthermore, that was a minor point. The bigger issue is that the mandate covers "activity" -- the use of medical services by uninsured people. If you are already insured, the mandate does not affect you. If you are not insured, you must obtain insurance or pay a fine. Even though it is probably true that some uninsured persons do not seek healthcare, the Court does not require narrow tailoring in the Commerce Clause context.

Finally, I do not find your federalism arguments persuasive. States can still regulate medicine. But it is abundantly clear that health care markets are national. The Constitution clearly delegates power over interstate commerce to Congress.

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