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March 27 2012

Judgment Day for the Individual Mandate

Hadley Heath

This is cross-posted at HealthCareLawsuits.org.

 

Today was an historic day at the Supreme Court.  Not only does the future of the health care law hang in the balance, but the future of the limits on Commerce Clause as well - which could have huge effects on our individual freedoms.  Here were a few themes I heard from today's audio file.  (Or read the transcript here!)

But Health Insurance is Different!

Right out of the gate, federal government lawyer General Verrilli faced an uphill task today.  One of the vital defenses of the individual mandate is that health insurance is a unique purchase.  Health insurance, Verrilli argued, is just a means of payment for health care services.

Throughout this case and others, judges and lawyers have jokingly asked if giving Congress the power to mandate the purchase of goods would result in a so-called “broccoli mandate,” requiring Americans to eat healthy (and thus reduce health costs and aid with the national regulatory scheme in health care).

Broccoli didn’t get much play today, but other analogies did:

[Roberts:] So, can the government require you to buy a cell phone because that would facilitate responding when you need emergency services? You can just dial 911 no matter where you are?

[Alito:] Suppose that you and I walked around downtown Washington at lunch hour and we found a couple of healthy young people and we stopped them and we said: You know what you're doing? You are financing your burial services right now because eventually you're going to die, and somebody is going to have to pay for it, and if you don't have burial insurance and you haven't saved money for it, you're going to shift the cost to somebody else.

[And later, Scalia:] The something else is everybody has to exercise, because there's no doubt that lack of exercise cause -- causes illness, and that causes health care costs to go up. So, the Federal government says everybody has to join a -- an exercise club. That's the something else.

Later, Justice Kagan and the lawyer representing the states, Paul Clement, got to the heart of the disagreement about “health insurance as unique” when they exchanged remarks about the definition of insurance:

Kagan: I mean, health insurance exists only for the purpose of financing health care. The two are inextricably interlinked. We don't get insurance so that we can stare at our insurance certificate. We get it so that we can go and access health care

Clement: Well, Justice Kagan, I'm not sure that's right. I think what health insurance does and what all insurance does is it allows you to diversify risk. And so it's not just a matter of I'm paying now instead of paying later. That's credit. Insurance is different than credit. Insurance guarantees you an upfront, locked-in payment, and you won't have to pay any more than that even if you incur much great risk.

Even "swing" Justice Kennedy expressed skepticism about the "uniqueness" of this provision.  He said, " And the government tells us that's because the insurance market is unique. And in the next case, it'll say the next market is unique."  But he follows this by saying most questions in life are questions of degree, leaving us, as always, scratching our heads about what's inside of his.

Regulating Commerce or Creating Commerce?

One very important division between Verrilli’s defense of the law and Clement’s challenge is this question: Does the individual mandate regulate commerce (that is already going on) or does it create commerce?

Justice Breyer brought up the creation of the national bank (in McCullough v. Maryland) multiple times as an example of how the government had created something new out of thin air.  Verrilli agreed with him that this, among other examples, depends not on a principle but “on the situation.”

But Clement’s answer to this was that the appropriate analogy would be if the government had opened the bank and required every American to deposit money directly into it.

Verrilli generally kept to his argument that everyone already participates in the health care market, and health insurance is the means of payment, so the mandate is simply commerce regulation. He said multiple times (with the help of a few friendly Justices who helped him stay on track), that the mandate requiring the purchase of health insurance is simply “a matter of timing.”

But Clement warned that this instead creates something new by forcing some individuals into the stream of commerce.  He agreed with Justice Sotomayor that government does have the power to regulate commerce, but he warned about stretching this power:

Once you're in the commerce power, there -- this Court is not going to police that subject maybe to the Lopez limit. And that's exactly why I think it's very important for this Court to think seriously about taking an unprecedented step of saying that the commerce power not only includes the power to regulate, prescribe the rule by which commerce is governed, the rule of Gibbons v. Ogden; but to go further and say it's not just prescribing the rule for commerce that exists but is the power to compel people to enter into commerce in the first place.

When Michael Carvin, lawyer for the NFIB, began his arguments, he criticized Verrilli’s defense by saying the mandate’s intention is to “promote commerce” – something Congress doesn’t have the power to do.  He also pointed out that U.S. v. Morrison (the Violence Against Women case) made it clear that just because an activity has “beneficial downstream effects” for commerce doesn't mean government can compel it:

But -- but -- my basic point is, is that notwithstanding its very profound effect on the health care market, this Court said the activity being regulated, i.e., violence against women, is outside the Commerce Clause power. So regardless of whether it has beneficial downstream effects, we must say no, Congress doesn't have that power. Why not? Because everything has downstream effects on commerce and every compelled purchase promotes commerce. It by definition helps the seller…

We Shouldn’t Look at Labels

Finally, the taxing power.

Each of the lawyers in their arguments today had to address the government’s fall-back defense of the mandate: that it is a valid exercise of Congress’s taxing power.

Everyone struggled to sort out how the “penalty” (that, according to yesterday’s arguments, no one wants to call a tax) could technically not be a tax, but could at the same time be a valid exercise of the taxing power.

But Kagan takes a more post-modern approach, suggesting we get away from “labeling” things as taxes, penalties, fees, etc.  But she asks a good question:

I suppose, though, General, one question is whether the determined efforts of Congress not to refer to this as a tax make a difference. I mean, you're suggesting we should just look to the practical operation. We shouldn't look at labels. And that seems right, except that here we have a case in which Congress determinedly said, this is not a tax, and the question is why should that be irrelevant?

None of the Justices seemed to indicate that they would be satisfied upholding this provision under the taxing power.

That means, of course, that to uphold it, the Court would have to rely on the Commerce Clause defense.  To do so, they’d have to buy the premise that health insurance is unique from everything else in the whole economy, and that forcing people to buy something is a part of commerce regulation.  If nothing else was clear from today, it is that, if they want to vote to uphold the law, Justices will have their work cut out for them in writing their opinions.  Verrilli did them no favors – even at times the audio offers a moment of relief from his fumbling when Kagan, Ginsberg, or Sotomayor step in with a thinly disguised “question” posed as, “I think your main point is… Is that right?”

On the other hand, Clement and Carvin did an excellent job articulating what an unprecedented overstep of the constitutional limits of government the mandate is.  Its future is now in the Justices’ hands.

 

Important Links:

Audio file of today's oral argument

Transcript of today's oral argument

Live blog during today's arguments

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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