Is the new health care law constitutional?

A series of court cases are highlighting constitutional complexities related to the recent health care legislation passed by Congress and signed into law by President Obama.

The most contested issue is whether or not Congress possesses the power to force people to purchase health insurance — the “individual mandate.”

The individual mandate has been the most controversial aspect of the new health care law.

Progressives have derided it as a sell-out and gift to the insurance companies:  customers who are legally forced to enter the market and buy insurance.

Conservatives have derided it as coercive and authoritarian:  forcing people to enter into private transactions.

Four federal district courts have addressed whether the individual mandate is constitutional.  Two courts — the Western District of Virginia and the Eastern District of Michigan — ruled the individual mandate is constitutional.

Two other courts — the Eastern District of Virginia and the Northern District of Florida — ruled that Congress cannot force people to purchase health insurance.

The issue boils down to the limits of Congressional authority under the Commerce Clause.

The Commerce Clause gives Congress the power to regulate “commerce . . . among the several states.”  That’s all it says.

Since the New Deal, the courts have given Congress wide authority to pass legislation under the Commerce Clause.

The Civil Rights Act of 1964, for example, is based in part on the Commerce Clause.

In the 1990s, though, the Supreme Court began to place limits on the reach of the Commerce Clause.

In the 1994 decision United States v. Lopez, the Supreme Court struck down the “Gun Free School Zones Act,” a federal law that penalized the possession of a firearm at a school.

The Court, writing 5-4, held that Congress’ rationale for passing the law — guns hurt school children and the classroom environment, which then has a negative impact on the economy, which then affects interstate commerce — was too attenuated from actual interstate commerce to be valid.

Relying on Lopez, the Supreme Court struck down parts of the Violence Against Women Act in the 2000 case United States v. Morrison.  The Violence Against Women Act provided a federal civil remedy for victims of gender-based violence.  As in Lopez, the Court wrote that the rationale provided by Congress was too attenuated from actual interstate commerce to be based on the Commerce Clause.

The outer limits of the Commerce Clause were subsequently redefined in the 2005 case, Gonzales v. Raich.  The issue was whether Congress had the authority to penalize the growing of marijuana, even when a person grows marijuana in his or her home, for medicinal purpose, and never sells the marijuana on the market.

The Court departed from Lopez and Morrison and relied on a 1942 case, Wickard v. Filburn, in deciding that Congress could continue to penalize marijuana that is never bought or sold.

In each of these cases, the Supreme Court has struggled to define the boundary between federal and state power.  

Without limits to the Commerce Clause, Congress could pass a law about anything.

And if it can do that, then the distinction between the federal government and various state governments becomes meaningless.

Justice Clarence Thomas made this point in his dissent in Raich:

Respondents Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything — and the Federal Government is no longer one of limited and enumerated powers.

So then, how about the individual mandate?  Can people be forced to purchase health insurance?

On the one hand, and as the Western District of Virginia stated, no one can deny that health care has tremendous impacts on the economic well being of the United States, and that there is a health care crisis in this country.  Unlike Lopez andMorrison, the health care law is economic in nature, and Wickard and Raich permit Congress to regulate individual decisions that may not be in interstate commerce if those decisions, in the aggregate, affect interstate commerce.

Quotes from the Western District of Virginia decision:

The conduct regulated by the individual coverage provision—individuals’ decisions to forego purchasing health insurance coverage—is economic in nature, and so the provision is not susceptible to the shortcomings of the statutes struck down by the Court in Lopez andMorrison . . . 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.

Raich is equally applicable.   The plaintiffs there, neither of whom bought or sold marijuana, claimed that they were not participating in commerce at all.  But the Court held that it was rational to conclude that growing marijuana at home, whatever the nature of that activity, exerted in the aggregate a substantial economic effect on interstate commerce because it affected the supply and demand in the national market for marijuana.  Here, similarly, the choice of individuals to go uninsured affects national market conditions for health insurance, reducing the supply of consumers of health insurance who are in good health, and thereby increasing the cost of covering the insured population.

On the other hand, and as the Northern District of Florida recently ruled, making people purchase insurance is an unprecedented scope of Congressional authority.  This is not akin to the fact patterns in Wickard and Raich, where individuals were already engaged in an activity.  Congress may very well have the power to regulate the actions of people who decide to buy insurance; but it cannot force people to actually enter the market itself — turning “inactivity” into “activity.”

Quotes from the Florida decision:

It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause. If it has the power to compel an otherwise passive individual into a commercial transaction with a third party merely by asserting — as was done in the Act — that compelling the actual transaction is itself “commercial and economic in nature, and substantially affects interstate commerce” , it is not hyperbolizing to suggest that Congress could do almost anything it wanted.

The Commerce Clause originally applied to the trade and exchange of goods as it sought to eliminate trade barriers by and between the states. Over the years, the Clause’s reach has been expanded from covering actual interstate commerce (and its channels and instrumentalities) to intrastate activities that substantially affect interstate commerce. It has even been applied to activities that involve the mere consumption of a product (even if there is no legal commercial interstate market for that product). To now hold that Congress may regulate the so-called “economic decision” to not purchase a product or service in anticipation of future consumption is a “bridge too far.” It is without logical limitation and far exceeds the existing legal boundaries established by Supreme Court precedent.

What happens now?  Appellate review, and then finally Supreme Court review.  The Supreme Court will have to define the contours of the Commerce Clause and harmonize the tension between Lopez and Morrison on the one hand, which place strict limits on Congressional power, and Wickard and Raich on the other, which give Congress broad authority to regulate activity that never touches interstate commerce.

This is a tough balancing act.  I hesitate to speculate, but it’s not unimaginable thatRaich‘s reliance on the ancient holding in Wickard was because the case dealt with marijuana: perhaps some of the justices could not envision an America without drug laws.  It is interesting to note that Justices Rehnquist, O’Connor, and Thomas dissented from Raich.

For whatever reason, Congress and the President chose the individual mandate as its preferred vehicle for dealing with health care costs in America.  A number of other proposals would have easily passed Constitutional muster.  For example, offering a voluntary public health plan to compete with private insurance companies — the “public option” — would have had no constitutional barrier.  No one argues that Medicare is illegal, for example.

But Congress and the President chose the individual mandate because it seemed the best way to bring insurance companies on board with health care reform.  

Now, the courts may decide that such government-sponsored partnership is unconstitutional.  

In my view, this could be a blessing in disguise, as it might galvanize efforts to pass more meaningful (and less constitutionally troublesome) reform.

The real problem is that insurance companies have become far too powerful in the economy to effectively regulate. Congress can — and should — do more to tackle that.