Difficult Legal Issues in the Healthcare Case Before the Supreme Court

March 27, 2012
Difficult Legal Issues in the Healthcare Case Before the Supreme Court


By R Tamara de Silva
March 27, 2012

Arguments began yesterday before the United States Supreme Court on the future of President Obama's healthcare bill, the Patient Protection and Affordable Care Act ("ACA" or "Obamacare"). The question of whether President Obama's national health care plan would withstand the Constitutional challenges brought by the Attorneys General in twenty-six states was destined to be determined by the Supreme Court when after August 2011, the Court of Appeals for the Eleventh Circuit issued a 304 page opinion that the ACA would violate the powers of Congress under the Commerce Clause. After the Eleventh Circuit's ruling there were two conflicting Circuit Court opinions on the law because the Sixth Circuit had upheld the ACA as not violative of the Constitution in June of 2011. The Supreme Court will decide upon the Constitutionality of the ACA based upon three criteria, the Commerce Clause, the Taxing Clause and the Necessary and Proper Clauses within the United States Constitution. None of the arguments are quite as clear cut, however as many people believe.

The Supreme Court's ultimate decision is of monumental importance to either keeping the Government's powers under the Commerce Clause checked, or allowing them to be let upon this nation, unbounded, limitless and absolute. The future of this decision will affect nothing less than whether Congress is ever again, held back from regulating absolutely everything in America under its ability to regulate commerce or what are called its Commerce powers.

In Marbury v. Madison, 5 U.S. 137 (1803), Chief Justice John Marshall established the United States Supreme Court's power of judicial review. In this case, Justice Marshall pointed out words that are still forceful today- that the Constitution was "the fundamental and paramount law of the nation" and that "an act of the legislature repugnant to the constitution is void."[1] The Constitution is the nation's highest law and when an act of Congress conflicts with it, that act is to be held invalid. The Supreme Court examines President Obama's healthcare law under the authority of this old and venerable case.

Commerce Clause

Chief Justice John Marshall wrote almost two hundred years ago in Gibbons v. Ogden, 22 U.S. 1 (1824), that Congress' power under the Commerce Clause is the power, "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."[2] Congress has long had the power to regulate insurance and as such, health insurance.[3]

Perhaps the most helpful discussion of the Commerce Clause arguments is within the Eleventh Circuit case. In that case, twenty-six states sued the Government for using the Commerce Clause to have Congress require by law that Americans must buy health insurance from "birth to death" from a private company or pay a penalty-in effect legislate that every American buy a product from a private vendor whether they want it or not.

The Government has argued that those who do not have health insurance and use the emergency room or public hospitals when sick (what are called "cost-shifters" in the court opinion) affect interstate commerce and fall within the ambit of the Commerce Clause because they shift an economic cost on those who have health insurance and the insurance industry as a whole.[4]

President Obama's defense before the Eleventh Circuit asserts that by merely breathing, individuals affect interstate commerce, "and therefore Congress may regulate them at every point of their life." This argument would seek to expand Congress' powers under the Commerce Clause beyond current law and give the Federal Government absolute unfettered power to regulate any activity that had but the most tenuous connection to interstate commerce.

There are two questions the Supreme Court must decide: 1) whether the decision not to purchase health insurance is an economic one; and 2) whether not purchasing health insurance is an activity or an inactivity. These questions are important in deciding whether the decision not to purchase health insurance is an economic decision. Some would consider that my decision not to buy health insurance is an act of economic inactivity-not an activity at all. The proponents of the ACA would differ and argue that the decision to not purchase health insurance is an economic decision to self-insure and discount the future risks of ill health. In other words, is an inactivity (not buying insurance) tantamount to an activity (buying health insurance) for purposes of the Commerce Clause? Are the two the same if when measured in the aggregate, they have a substantial enough impact on economic activity? The strongest defense of the ACA would be the argument that for the purposes of the Commerce Clause, there is no distinction between activity and inactivity. The decision not to buy health insurance (an inactivity) is arguably an economic decision for purposes of the Commerce Clause if when you take the aggregate of all people that make this economic decision, there is a substantial effect on inter-state commerce.

However, Eleventh Circuit Justices Joel Dubina and Frank Hull questioned whether the Commerce Clause subjects those outside of the stream of commerce to Congress' authority over commerce. People that do not buy health insurance are, "not making a voluntary decision to enter the stream of commerce, but this choice is being imposed on them by the Federal Government." [5]

The Eleventh Circuit Court of Appeals points out the instances of when Congress has actually mandated personal action on United States citizens solely because they are American are relatively few: serving on juries, registering for the draft, filing tax returns and responding to the census. Before the ACA, Congress has not been able to compel Americans to engage in an activity, even one with substantial economic consequences-for example, no one is required by law to purchase flood insurance even if they live in a flood plain or for that matter stop building homes in flood plains. Congress has not yet required that people abandon New Orleans, nor hurricane prone areas or other geographic areas proven to attract recurring and costly natural disasters.

There is absolutely no precedent for Congress using the Commerce Clause to enforce a purely economic mandate. All previous government mandates of individual behavior that have an economic consequence primarily affect an American's responsibilities as a citizen with the United States. The government's mandate of a draft, filing a tax return and serving on a jury, all affect a citizen's interaction with the government itself and affect how government defends itself and operates. However, mandated health care would affect and mandate that every citizen interact with a private company-a requirement never before asked by the Government under the Commerce Clause.

President Obama's lawyers will make the argument in favor of mandating that an individual purchase a good or service just because the decision not to purchase a good or service, if taken in the aggregate of all person who similarly made this decision, have a substantial impact on interstate commerce. However, the Eleventh Circuit cited Lopez v. United States, which held that the a Congressional finding of the aggregate effect of economic activity was not sufficient to hold legislation a valid exercise of the Commerce Clause, "Simply because Congress may conclude that a particular activity substantially affects interstate commerce does not necessarily make it so."[6]

Proponents of the ACA would point to the very same the Lopez case which hold that Congress can regulate intrastate "economic activity" when that activity, "viewed in the aggregate, substantially affects" commerce between borders.[7]

Were the Supreme Court to find the Administration's arguments persuasive, their reasoning would mean that Congress might use the Commerce Clause to mandate every conceivable economic decision, even decision lacking what the courts have historically required, "a nexus" or connection or a regulated economic activity. Even areas that have historically been under the jurisdiction of the states such as marriage, divorce, child custody, choice of education and all have substantial economic effects in the aggregate and would theoretically be candidates for regulation under the Commerce Clause. Health care has historically been regulated by the states.

If the Government can mandate the purchase of private health insurance, it can mandate every other private purchase. The Eleventh Circuit's opinion points out the Constitutionally untenable nature of the defendants' position,

"In sum, the individual mandate is breathtaking in its expansive scope. It regulates those who have not entered the health care market at all. It regulates those who have entered the health care market, but have not entered the insurance market (and have no intention of doing so). It is overinclusive in when it regulates: it conflates those who presently consume health care with those who will not consume health care for many years into the future. The government's position amounts to an argument that the mere fact of an individual's existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life. This theory affords no limiting principles in which to confine Congress's enumerated powers."
[8]


Consider the case of a famous Molotov cocktail in which it was held that Congress' power under the Commerce Clause did not extend to holding the arson of a private residence a Federal crime. In 1998, in Fort Wayne, Indiana, a certain Dewey Jones from Detroit decided the best way to dispose of a Molotov cocktail was to throw it into his cousin, James Walker, Jr's house. Predictably, Jones was convicted in U.S. District Court of violating 18 U.S.C. section 844(i), which holds that it is Federal crime to "maliciously damage or destroy, ...by means of fire or an explosive, any building... used in interstate or foreign commerce or in any activity affecting interstate or foreign commerce." Jones' lawyers unsuccessfully argued that section 844(i), when applied to the arson of a private residence, exceeds the authority vested in Congress under the Commerce Clause of the Constitution.

The Supreme Court in a unanimous opinion, delivered by Justice Ruth Bader Ginsburg, agreed. The Court ruled that an owner-occupied private residence not used for any commercial purpose does not qualify as property "used in" commerce or commerce-affecting activity, such that arson of such a dwelling is not subject to federal prosecution under section 844(i). Justice Ruth Bader Ginsburg wrote for the Court that "[w]ere we to adopt the Government's expansive interpretation of section 844(i), hardly a building in the land would fall outside the federal statute's domain." [9]

What is most interesting about the Jones case is that in it the Supreme Court Justices asked the Government's lawyer what if anything he thought would not be included in the Government's suggested reading of the Commerce Clause--he could not seem to come up with limitation.

Taxing Clause

Proponents of the ACA will argue that the Congressional mandate of the ACA was a tax under the Taxing and Spending Clause. The Eleventh Circuit Court declined to see it thus pointing out how many times, Congress describes the mandate not as a tax but as a penalty and in its legislative history makes clear the ACA was intended as a penalty and not exclusively a revenue-raising mechanism. This is arguably the weakest defense of the ACA because only one court has even considered this a valid defense and bipartisan judges who have upheld the Constitutionality of the ACA have not found the Taxing Clause defense of the ACA persuasive.

Necessary and Proper Clause

Article I, Section 8 of the Constitution grants Congress the power, "to make all laws which shall be necessary and proper for carrying into execution" it's other Federal powers. This language is the basis of the Necessary and Proper Clause and in my opinion, perhaps what may constitute the strongest defense of the ACA. One of the reasons being is the Necessary and Proper Clause is simply not perfectly clear what powers are given to the Federal Government and not the states to effectuate Federal laws and the powers of the Legislative and Executive Branches. Also, it is the Commerce Clause that has been invoked far more than the Necessary and Proper Clause, giving all a clearer sense of the latter's meaning.

Looking at original intent for hints on its intended scope is not exactly helpful either as it was the subject of heated debate between Alexander Hamilton, who believed it to authorize many implied and un-enumerated powers and Thomas Jefferson, who believed that necessary meant actually "necessary." The problem with Hamilton's meaning is that it would seem to justify so many recent laws and executive orders many in this country would argue are neither necessary or Constitutional. Necessary is in the eye of the beholder and would be capable of being used indiscriminately. What is more, the Necessary and Proper Clause can be invoked on matters that do not have an economic effect.

The most famous case fleshing out the meaning of the Necessary and Proper Clause was McCulloch v. Maryland, in which the Supreme Court ruled that,

The Government of the Union, though limited in its powers, is supreme within its sphere of action, and its laws, when made in pursuance of the Constitution, form the supreme law of the land. There is nothing in the Constitution which excludes incidental or implied powers. If the end be legitimate, and within the scope of the Constitution, all the means which are appropriate and plainly adapted to that end, and which are not prohibited, may be employed to carry it into effect pursuant to the Necessary and Proper clause.
[10]

Justice Scalia has suggested in Gonzales v. Raich that the question of whether an intrastate activity has a "substantial effect" on interstate commerce could alternatively be seen as a matter under the Necessary and Proper Clause. [11]

In Raich, the Supreme Court upheld the use of the Controlled Substances Act (a Federal law) to regulate and interfere with the wholly intrastate production of locally grown, medical marijuana as a valid exercise of the Government's powers under the Commerce Clause and the "cumulative effect" of intrastate activity. Intrastate activity could be regulated if it were to touch on a broader Federal regulatory framework affecting interstate commerce. The Supreme Court's decision in Raich may herald a judicial approval in the present healthcare case of the Federal Government's regulation of purely instrastate activity. Justice Scalia in his concurring opinion set the stage for prospectively using the Necessary and Proper Clause to allow the Federal Government to regulate intrastate activity that would affect a larger system of regulation of interstate commerce through the Commerce Clause.[12]


Complexity of Implications

The Constitution creates a limited federal government with powers that are not enumerated belonging to the people and the individual states. Yet every expanded use of the Government power through the mandate of Federal law, for the purposes of this writing, the Commerce Clause, is one less power to be held by the states or retained by the individual in determining how to live.

How to live has been a fundamental question posed by philosophers from the time of Plato and Aristotle and arguably earlier in ancient Buddhist texts. Today concerns about individual liberty are so often dismissed as the political diatribe of the libertarians or Ron Paul supporters. It is as if popular political discourse rendered in simple ideological terms has hijacked the need for meaningful analysis or discourse. What is lost is that every power surrendered to the Federal government through the Commerce Clause is one less that the individual states and the individual may retain in deciding how to live.

One of the grave implications of a Supreme Court decision upholding the ACA would be that if everything that affects interstate commerce (which, by the reasoning of President Obama's lawyers in defending the ACA, is every imaginable activity) then the states and the individual American are merely custodians or temporary repositories of power, powers, affecting every aspect of American life and powers that may be reclaimed by the Federal government at any time.

This would mean that there are few powers left exclusively to the states. The Federal government would discover its political reach, one power at a time.

The Commerce Clause simply states that Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." The Commerce Clause was intended to facilitate interstate commerce by allowing Congress to prevent states from passing discriminatory restrictions on the free-flow of interstate commerce.[13] To allow Congress to regulate all manner of activities far removed from that end, is to turn our system of a government of limited and enumerated powers on its head. Justice Marshall would find the ACA unconstitutional.

However, if the Supreme Court does not strike down the ACA as unconstitutional, and find the ACA to not violate the Commerce Clause, it would seem to be allowing for the very first time, Congress to use the Commerce Claus to mandate an activity on the part of an American and therefore open the flood gates to mandating any private action.@
R. Tamara de Silva

March 27, 2012 Chicago, Illinois

R. Tamara de Silva is an independent trader and lawyer

Footnotes:
1. 11. 5 U.S. 137 (1803)

2. Id. at pp. 196
3. Think of ERISA, CORBRA, HIPAA, et. al.
4. Interestingly, under the ACA, the largest cost-shifters-illegal aliens that account of $8.1 billion in health care costs and low-income persons that will be covered by an expansion of Medicaid (currently costing $15 billion in costs to health care system) will be exempt from the mandated health care regime of ACA. Shifting the purchasing mandate of the ACA to healthy and voluntarily uninsured individuals-requiring that this group and not the costliest cost-shifters purchase private insurance. See pp. 140 of Eleventh Circuit Opinion
5. Eleventh Circuit opinion at pp. 123
6. 514 U.S. at 557 n.2, 115 S. Ct. at 1629 n.2
7. Id. at 561
8. Eleventh Circuit Opinion at pp. 130-131
9. Jones v. United States, 529 U.S. 848 (2000)
10. 17 U.S. 316, 4 Wheat. 316, 4 L. Ed. 579 (1819)
11. "The regulation of an intrastate activity may be essential to a comprehensive regulation of interstate commerce even though the intrastate activity does not itself "substantially affect" interstate commerce. Moreover, as the passage from Lopez quoted above suggests, Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce." Gonzales v. Raich, 545 U.S. !, 33-55 (2005) (Justice Scalia concurring)
12. Id.
13. United States v. Lopez, 514 U.S. 549 (1995) and see also, United States v. Morrison, 529 U.S. 598 (2000)