July 15, 2012
The most obvious moral to the health care debate is that no good deed — or attempt at compromise — goes unpunished. Instead of proposing universal Medicare, which would have been denounced as socialized medicine, Mr. Obama adopted a conservative plan, already enacted under a Republican governor.58 His reward was to be denounced as a socialist, his plan as slavery. The conservative Supreme Court declared that the heart of the conservative plan, the individual mandate, could not be upheld under the Commerce Clause.
Chief Justice Roberts wrote the majority opinion in National Federation of Independent Business v. Sebelius , which considered the constitutionality of the Affordable Care Act. It considered, as a preliminary matter, whether the Anti-injunction Act required dismissal of the challenges to the ACA. The former statute bars suits to restrain the assessment or collection of a tax; taxes ordinarily may be challenged only after they are paid, by suing for a refund. A majority (Roberts and the liberals) held that, since Congress did not call the penalty for failing to have insurance a tax, it isn’t a tax for purposes of the Anti-injunction Act. Therefore the Court could reach the merits.
Roberts’ meandering opinion declared that the statute is constitutional, but did so grudgingly and illogically, giving rise to speculation that he voted to uphold the act in order to save the reputation and credibility of the Court, while laying down markers concerning the commerce power and states’ rights. Whether that was his motivation, that was the result. Roberts, joined by the other four conservatives,59 held that the individual mandate is not a valid use of Congress’ authority under the Commerce Clause, even though none of the Justices seemed to doubt that Congress could have reached the same result, near-universal health care, directly through a Medicare-style program. Those five also held that certain penalties attached to the Medicaid expansion 60 amounted to illegitimate coercion of the states, and ruled that the government could not enforce them. Joined by the four liberals, Roberts held that the individual mandate is valid under Congress’ power to tax, even though the penalty for failing to obtain insurance isn’t called a tax, and even though, for purposes of the Anti-injunction Act, those five held it isn’t a tax. Obviously something other than tight reasoning led to the results. The only coherent opinion is that of Justice Ginsburg, who would have upheld the statute in its entirety.
The Commerce power
The Commerce Clause is contained in Article I, Section 8 of the Constitution, which provides that "The Congress shall have Power To regulate Commerce . . . among the several States . . ." In considering whether the mandate could be upheld under that provision, the Chief Justice first worried about the novelty of the claim. "Congress has never attempted to rely on [the commerce] power to compel individuals not engaged in commerce to purchase an unwanted product." He recognized that a new approach is not automatically unconstitutional:
Legislative novelty is not necessarily fatal; there is a first time for everything. But sometimes "the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent" for Congress’s action. . . . At the very least, we should "pause to consider the implications of the Government’s arguments" when confronted with such new conceptions of federal power.
The conservatives presented two interrelated rationales for limiting that reach: in requiring the purchase of insurance, Congress was creating commerce, not regulating it; and the commerce power may regulate only activity, not inactivity.
The Chief Justice put the first rationale this way: "The language of the Constitution reflects the natural understanding that the power to regulate assumes there is already something to be regulated."61 Well, there is: the sale of health care insurance. However, we’re told that won’t do: the person who does not purchase insurance isn’t in that stream of commerce. "The individual mandate . . . does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce." As the Joint Dissent put it, "To be sure, purchasing insurance is ”Commerce”; but one does not regulate commerce that does not exist by compelling its existence."
There is another stream of commerce, the system by which health care is provided. No, they say, that doesn’t help, because the non-purchaser of insurance isn’t part of that either: "those regulated by the individual mandate are not currently engaged in any commercial activity involving health care . . . ." Novelty may not necessarily be fatal, but for the Chief Justice it is a problem here: "The proposition that Congress may dictate the conduct of an individual today because of prophesied future activity finds no support in our precedent."
It isn’t clear why "the conduct of an individual" is the test. Commerce in health care exists; the statute aims to affect, i.e., regulate it. Where did we get the notion that the Commerce Clause only reaches persons as opposed to commercial streams?
In any case, as to some people, no prophesy is required: uninsureds are at the moment receiving health care. That point is not addressed; those (presumably) few don’t carry enough weight, and even though every non-purchaser of insurance will, at some point, almost certainly be a consumer of health care, that does not matter either: "for most of those targeted by the mandate, significant health care needs will be years, or even decades, away." Apparently the majority situation at any given moment —non-use of health care by the uninsured — controls.
The government attempted to merge the two streams of commerce, but that was no more successful:
The Government says that health insurance and health care financing are "inherently integrated." . . . But that does not mean the compelled purchase of the first is properly regarded as a regulation of the second. No matter how “inherently integrated” health insurance and health care consumption may be, they are not the same thing: They involve different transactions, entered into at different times, with different providers.
In the second rationale, the Chief Justice asserted that Congress may regulate only activity, not inactivity; in other words, it may prohibit, but not command, action. "As expansive as our cases construing the scope of the commerce power have been, they all have one thing in common: They uniformly describe the power as reaching ‘activity’.” The government argued that the individual mandate fell within the commerce power because the failure to purchase insurance "has a substantial and deleterious effect on interstate commerce" by shifting the cost of the uninsureds’ health care to the hospital, insurers, insurance premium payers and taxpayers. In other words, there is a present and persisting phenomenon in commerce, the shifting of costs, which requires regulation.
Chief Justice Roberts acknowledged the general, but not constitutional, merit of the argument:
To an economist, perhaps, there is no difference between activity and inactivity; both have measurable economic effects on commerce. But the distinction between doing something and doing nothing would not have been lost on the Framers, who were “practical statesmen,” not metaphysical philosophers. . . . As we have explained, “the framers of the Constitution were not mere visionaries, toying with speculations or theories, but practical men, dealing with the facts of political life as they understood them, putting into form the government they were creating, and prescribing in language clear and intelligible the powers that government was to take.” . . . The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this understanding. There is no reason to depart from that understanding now.
Musing about the practical bent of the Founders doesn’t establish that the Commerce Clause cannot reach "inactivity." One might think that the distinction drawn by the Chief Justice is a bit metaphysical. In any case, it isn’t found in the text of the Constitution.
As to prior decisions, Wickard v. Filburn 62 held that Congress could tell a farmer not to raise wheat for his own consumption because he then would not purchase wheat, which impacted commerce. Gonzales v. Raich 63 held that Congress could prohibit the cultivation and possession of marijuana, legal under state law for medicinal purposes, on similar reasoning. The Chief Justice and the Joint Dissenters analyzed those decisions as reaching only activity: growing something. However, as Justice Ginsburg pointed out regarding Wickard, " ‘[F]orcing some farmers into the market to buy what they could provide for themselves’ was, the Court held, a valid means of regulating commerce." The same analysis applies to Raich, decided only seven years ago. In addition, in that case, the statute upheld by the Court prohibited not only growing and using marijuana, but also possessing it. Under the Roberts-Joint Dissent analysis, mere possession must be activity.
The Chief Justice more or less conceded that Wickard upheld forcing the farmer to purchase wheat: "The aggregated decisions of some consumers not to purchase wheat have a substantial effect on the price of wheat, just as decisions not to purchase health insurance have on the price of insurance. Congress can therefore command that those not buying wheat do so, just as it argues here that it may command that those not buying health insurance do so." However, he drew a distinction: "The farmer in Wickard was at least actively engaged in the production of wheat, and the Government could regulate that activity because of its effect on commerce. The Government’s theory here would effectively override that limitation, by establishing that individuals may be regulated under the Commerce Clause whenever enough of them are not doing something the Government would have them do." That hardly follows; there would have to be "a substantial economic effect on interstate commerce.”64
The Joint Dissent quoted a statement in Gibbons v. Ogden as defining the commerce power: "the power to regulate commerce is the power ‘to prescribe the rule by which commerce is to be governed’ " The Chief Justice did the same: Gibbons "defin[ed] the commerce power as the power ‘to prescribe the rule by which commerce is to be governed.’ ” Each seemed to think that the quote supported the notion that only persons actively in commerce may be regulated. However, it merely says that rules may be prescribed for the conduct of commerce, exactly what the ACA does.65
There was much talk of markets, and the government attempted to bring those affected by the mandate within a market in order to avoid the "inactivity" problem, but without success: "The Government repeats the phrase ‘active in the market for health care’ throughout its brief [describing the uninsured], . . . but that concept has no constitutional significance." Yes, but that’s also true of "the market" and the of notion that only present activity of persons may be the subject of regulation under the Commerce Clause. The Chief Justice continued, confusing matters still further:
The phrase “active in the market” cannot obscure the fact that most of those regulated by the individual mandate are not currently engaged in any commercial activity involving health care, and that fact is fatal to the Government’s effort to “regulate the uninsured as a class.”. . . Our precedents recognize Congress’s power to regulate “class[es] of activities,” . . . not classes of individuals, apart from any activity in which they are engaged . . . .However, as noted, the Court insists on regulating individuals rather than regulating commerce as such.
The conservatives’ rationale, in Roberts’ opinion and in the Joint Dissent, centered on the notion that the commerce power is exclusively prohibitory — cannot be mandatory — a possible but not compelling interpretation of the Commerce Clause. To bolster it, they presented a parade of horribles. According to the Joint Dissent, “if we were to accept the Government’s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulate” The Chief Justice agreed: "Indeed, the Government’s logic would justify a mandatory purchase to solve almost any problem." Then came the broccoli:
To consider a different example in the health care market, many Americans do not eat a balanced diet. That group makes up a larger percentage of the total population than those without health insurance. . . . The failure of that group to have a healthy diet increases health care costs, to a greater extent than the failure of the uninsured to purchase insurance. . . . Those increased costs are borne in part by other Americans who must pay more, just as the uninsured shift costs to the insured. . . . Under the Government’s theory, Congress could address the diet problem by ordering everyone to buy vegetables.Justice Ginsburg noted that someone buying an automobile or broccoli "will be obliged to pay at the counter before receiving the vehicle or nourishment." There will be "no free ride or food, at the expense of another consumer forced to pay an inflated price." Health care and the payment therefor are in a different class. "Upholding the minimum coverage provision on the ground that all are participants or will be participants in the health-care market would therefore carry no implication that Congress may justify under the Commerce Clause a mandate to buy other products and services."
In the paragraph following his discussion of vegetables, the Chief Justice said this: "People, for reasons of their own, often fail to do things that would be good for them or good for society. Those failures — joined with the similar failures of others — can readily have a substantial effect on interstate commerce. Under the Government’s logic, that authorizes Congress to use its commerce power to compel citizens to act as the Government would have them act." He acknowledges that failure to act can have an impact on commerce, but denies Congress’ power to address it. Why is that ? Because such regulation would not be part of "the country the Framers of our Constitution envisioned."
The key to the commerce discussion is the small-government fantasy of the conservatives, one aspect of which is a protective attitude toward the states. The Chief Justice worried that the government’s position would carry us far from "the notion of a government of limited powers." Tyranny, or socialism, awaits: "The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. Any police power to regulate individuals as such, as opposed to their activities, remains vested in the States." According to the Joint Dissent, "if every person comes within the Commerce Clause power of Congress to regulate by the simple reason that he will one day engage in commerce, the idea of a limited Government power is at an end." The individual mandate "threatens our constitutional order. . . . because it gives such an expansive meaning to the Commerce Clause that all private conduct (including failure to act) becomes subject to federal control, effectively destroying the Constitution’s division of governmental powers." This is adjudication by hysteria.
As Justice Ginsburg observed of the Roberts opinion, "This rigid reading of the Clause makes scant sense and is stunningly retrogressive. . . . The Chief Justice’s crabbed reading of the Commerce Clause harks back to the era in which the Court routinely thwarted Congress’ efforts to regulate the national economy. . . ."
The taxing (and spending) power
Article I, Section 8 also provides that Congress has power "To lay and collect Taxes . . . to pay the Debts and provide for the common Defence and general Welfare of the United States. . . ." The individual mandate was rescued by treating the penalty for failure to obtain insurance as a tax. The theory is that the penalty is a tax for constitutional purposes — even though it wasn’t for Anti-injunction purposes — is plausible, but no more than that. The objections raised in the Joint Dissent aren’t entirely convincing, but neither are Roberts’ responses to them. The issue comes down to a dispute over whether there is any precedent for treating as a tax something Congress has called a penalty. The Dissent contended that the Court has "never — never — treated as a tax an exaction which faces up to the critical difference between a tax and a penalty, and explicitly denominates the exaction a ‘penalty’. ” Apparently novelty is not always a hurdle for the Chief Justice.
However, all of this is more or less beside the point, because the heart of the his opinion on the tax issue is this:
[T]the statute reads more naturally as a command to buy insurance than as a tax, and I would uphold it as a command if the Constitution allowed it. It is only because the Commerce Clause does not authorize such a command that it is necessary to reach the taxing power question. And it is only because we have a duty to construe a statute to save it, if fairly possible, that §5000A can be interpreted as a tax.In other words, the extensive discussion of reasons for treating the penalty as a tax is not to be taken too seriously; declaring it to be a tax is merely a way to do what Chief Justice Roberts belatedly decided to do, and certainly not the best way.
The Medicaid extension
The controversy under this heading rests on an interpretation of the ACA and the underlying Medicaid statute which I find more than a little baffling. However, everyone seems to agree on that interpretation, which is more or less as follows: The health care act contains a significant expansion of Medicaid coverage. As Medicaid is a joint federal-state program, and Congress wanted to ensure that all of the states joined the new program, it imposed, in effect, a penalty for non-participation. That was accomplished by leaving in place a provision under the pre-ACA Medicaid statute which allowed the government to withhold all of a state’s Medicaid grants if the state failed to follow federal guidelines. Following adoption of the ACA, that was interpreted to permit, in the event of failure to join the Medicaid expansion, the withholding of all Medicaid funds, not just those attached to the expansion. I think that’s it. Here’s how the Chief Justice summarized the issue: "The States . . . claim that Congress is coercing the States to adopt the changes it wants by threatening to withhold all of a State’s Medicaid grants, unless the State accepts the new expanded funding and complies with the conditions that come with it."
The Chief Justice, joined by Justices Breyer and Kagan and by the Joint Dissenters, held that such a threatened action is unconstitutional. Here the oddity of the textual analysis enters in. There isn’t a section of the ACA which directly provides for the threatened penalty. As we will see, the Court therefore didn’t strike down any part of the Act, but merely prohibited the government from doing what the states complained of.
The rationale for invalidating the threatened penalty is that Congress may not "coerce" states into following federal dictates. Here they would be coerced into accepting the extension by the threat of losing pre-ACA grants. Decisions were cited for the principle that states are "sovereign" or "autonomous." The Roberts opinion not only endorsed that principle, but underscored it: "The States are separate and independent sovereigns. Sometimes they have to act like it." Pity the poor states, which usually cower before the federal power, intent on crushing liberty and imposing socialism.
What is coercion and what is gentle persuasion? Well, we don’t know. We know only that the penalty here is in the former category: referring to a 1937 decision, the Chief Justice disposed of the matter thusly: "The Court in Steward Machine did not attempt to ‘fix the outermost line’ where persuasion gives way to coercion. . . . The Court found it ‘[e]nough for present purposes that wherever the line may be, this statute is within it.’ . . . We have no need to fix a line either. It is enough for today that wherever that line may be, this statute is surely beyond it." As with pornography, the Court knows coercion when it sees it; the rest of us can only guess what it will see.
One theory was that the amount of financial loss to the states under the Medicaid expansion penalty is extraordinary: "The threatened loss of over 10 percent of a State’s overall budget . . . is economic dragooning that leaves the States with no real option but to acquiesce in the Medicaid expansion." However, in a footnote to that passage, Roberts declared that "the size of the new financial burden imposed on a State is irrelevant in analyzing whether the State has been coerced into accepting that burden. ‘Your money or your life’ is a coercive proposition, whether you have a single dollar in your pocket or $500." The test may be the amount or it may be the nature of the threat.
However, it may be neither. On the next page, the Chief Justice asserted that the Medicaid expansion "accomplishes a shift in kind, not merely degree." If that is the test, how does one measure such a shift? Who knows? We are not told, apart from a statement that the expansion covers far more people than the original program.
Justice Ginsburg, joined by Justice Sotomayor, would have upheld the penalty. She summarized the Chief Justice’s theory as follows: 1) The Medicaid expansion is a new program, not an addition to the Medicaid program existing before the ACA’s enactment; Congress has threatened States with the loss of funds from the "old" program in an effort to force them to adopt the "new" one. 2) The expansion was unforeseeable by the States when they first signed on to Medicaid. 3) The threatened loss of funding is so large that the States have no real choice but to participate in the Medicaid expansion.
Justice Ginsburg met the first two points effectively. The extension is not a new program, but part of the original plan to aid people in need, and it has been revised numerous times, in some cases, as here, making significant changes. Congress always has reserved the right to modify Medicaid, so there can be no legitimate claim of surprise. She didn’t directly deal with the magnitude of the financial coercion, possibly because the Roberts opinion waffled on that point, but in effect declared that the states have no right to the pre-ACA Medicaid funds. The Chief Justice referred to the cutoff of "existing Medicaid funding" and the Joint Dissent to "pre-existing Medicaid funds." Justice Ginsburg replied, "in fact, there are no such funds. There is only money States anticipate receiving from future Congresses," and Congress may do as it wishes with those.
At bottom, my colleagues’ position is that the States’ reliance on federal funds limits Congress’ authority to alter its spending programs. This gets things backwards: Congress, not the States, is tasked with spending federal money in service of the general welfare. And each successive Congress is empowered to appropriate funds as it sees fit.This may be so, but there is the further question whether Congress in effect tied its hands. The states have created programs, at Congress’ urging, based on the pre-ACA grants, so there is an issue of reasonable reliance which can’t be ignored. Despite the reservation by Congress of the right to make changes, and the history of changes, imposing penalties which are in some sense retroactive seems unfair. Whether that raises a constitutional issue is another matter.
The Chief Justice’s opinion relies on decisions which have considered whether penalties or inducements in federal programs "coerce" the states into compliance. The decision most relied on, New York v. U. S., 66 based its finding of coercion in part on the Tenth Amendment, a favorite of states-righters, but which really doesn’t say anything. Whatever the merits, there is a line of decisions which have tested federal provisions against the presence of coercion, and the health care case falls within their scope. By their standards, the extension penalty could be considered coercive. None of the cases cited by Roberts which invalidated federal legislation due to coercion arose under the taxing-and-spending clause. Accordingly, Justice Ginsburg had a final shot: "The Chief Justice . . . — for the first time ever — finds an exercise of Congress’ spending power unconstitutionally coercive." Again, novelty isn’t fatal.
The odd result of all of this is that ACA survived intact; no part was stricken down, despite the long and perhaps irrelevant 67 disquisition on the commerce power, and despite the conclusion that the "retroactive" penalty is unconstitutional. As to the latter, because there was no part of the ACA or of the Medicaid statute which directly provided for such a penalty, the Court merely held that the government cannot the apply the penalty clause in that fashion. I would be interested to know whether the Court previously has let a statutory provision stand, but directed how or how not it may be employed.
On Wednesday the House voted, again, to repeal the ACA, this time without the pretense of having a substitute: two days wasted on a repetitious political gesture. They really must have better things to do.
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58. For a brief history of support for the individual mandate, see http://www.nytimes.com/2012/02/15/health/policy/health-care-mandate-was-first-backed-by- conservatives.html
59. The Joint Dissent was issued by Justices Scalia, Kennedy, Thomas and Alito. Although not so labeled, it is a partial concurrence, joining the Chief Justice on the Commerce Clause and Medicaid penalty issues.
60. The opinions used "expansion" and "extension" interchangeably, and so have I.
61. Quotes, unless otherwise noted, are from Chief Justice Roberts’ opinion.
62. 317 U. S. 111 (1942)
63. 545 U. S. 1, 17 (2005)
64. Justice Ginsberg, quoting NLRB v. Jones & Laughlin Steel Corp., 301 U. S. 1, 37 (1937)
65. Here is the quote in context:
We are now arrived at the inquiry -- 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. These are expressed in plain terms . . . . If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations, and among the several States, is vested in Congress as absolutely as it would be in a single government, having in its Constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States. . . .66. 505 U. S. 144 (1992)
67. Justice Ginsburg pointed out that, as the Chief Justice’s opinion held the individual mandate valid as a tax, the discussion of its validity under the Commerce Clause was unnecessary because it was "not outcome determinative." Roberts probably included it in order to establish a precedent. However, it could be considered dictum as it was not necessary to the result, and therefore not technically a precedent.
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