President Obama’s signature legislation, the Patient Protection and Affordable Care Act (better known as Obamacare), has been debated in the political arena and all across the country for over two years. Obamacare’s individual mandate, requiring most Americans to purchase private health insurance or face a penalty, remains particularly unpopular. Public opinion aside, however, the question of whether the individual mandate is constitutional is finally before the Supreme Court. A decision is expected by this June. The Supreme Court decided to devote an unusually long six hours over three days to hear oral arguments.
The central issue boils down to the scope of federal government power over individual purchase decisions. Will the constitutional scheme of limited enumerated powers granted to the federal government have any meaning if the Obamacare individual mandate is held to be constitutional?
The answer to this question revolves mostly around two key provisions of the Constitution. They are: the Interstate Commerce Clause, which specifically authorizes Congress “to regulate commerce… among the several states” (Art. I, § 8, cl. 3), and the “Necessary and Proper Clause,” which authorizes Congress to “make all laws which shall be necessary and proper for carrying into execution” its other enumerated powers (Art. I, § 8, cl. 18).
The Obama administration also made the additional argument that the penalty imposed in Obamacare on individuals who do not comply with the mandate to purchase health insurance is a tax, which Congress has the separate enumerated authority to impose (Art. I, § 8, cl. 1).
However, before the Supreme Court could proceed to address the merits of the constitutional challenge to Obamacare, it had to deal with the threshold question of whether it has jurisdiction to decide the constitutional issues at this time. Thus, the first day of oral arguments involved the technical question of whether it was too soon for the Court to consider the constitutional issues because of a congressional statute, the federal Anti-Injunction Act, which prohibits courts from even hearing a lawsuit challenging a tax before the tax is paid.
Both the Obama administration and the parties challenging Obamacare dismissed the relevance of the Anti-Injunction Act to this case. Indeed, in a demonstration of the legal advocate’s version of “having one’s cake and eating it too,” Solicitor General Donald Verrilli Jr. argued on behalf of the Obama administration that the Obamacare penalty should not be considered a “tax” for the purposes of determining whether the Anti-Injunction Act is applicable, but is nevertheless nothing but a “tax” when considering Congress’s constitutional power to impose a penalty on non-complying individuals via the IRS. The Solicitor General’s attempt to put a square peg in a round hole came back to haunt him the next day when the Supreme Court heard his arguments that the penalty, which both Congress and President Obama said was not a tax when Obamacare was being crafted, was indeed a tax after all. His argument on the tax issue was met with skepticism even by the most liberal members of the Court.
In any event, the Supreme Court wanted the Anti-Injunction Act issue argued for the record before proceeding to the merits of the case and enlisted for that purpose an independent advocate to make the argument for invoking the Anti-Injunction Act in this case. After listening to the arguments and raising questions about the jurisdiction of the Court to hear the case at this time and whether the Anti-Injunction Act could be waived, most justices seemed inclined to find a way around this hurdle so that they could rule definitively on the constitutionality of Obamacare.
The second day of oral arguments was devoted to the main event – the issue of whether Congress had the constitutional authority under the Constitution’s Commerce Clause and Necessary and Proper Clause to require individuals to purchase private health insurance as part of Congress’s authority to address and regulate the national interstate health service market. The tax authority issue, for the reasons mentioned above, did not get much traction with the Court.
Supreme Court decisions going back more than a half century have concluded that Congress may regulate not only those intrastate activities that substantially affect interstate commerce, but also, where necessary to make a regulation of interstate commerce effective, Congress may regulate even those intrastate activities that do not themselves substantially affect interstate commerce. The most classic case establishing this principle involved Congress’s authority to even limit how much wheat may be grown on a family farm. Does the Obamacare individual mandate fall within established Supreme Court precedents or does it push the boundaries of congressional constitutional authority beyond recognition?
The Obama administration’s argument begins with the premise that everyone has to consume health services sooner or later as an inherent part of the human condition. The question is how individuals can most efficiently finance their health service needs without unduly shifting the costs of such services to others. It is fundamentally unfair, the argument goes, to let some people forego purchasing any health insurance for themselves in advance of needing health services because they will end up shifting the cost burden to the rest of society for the health services they will inevitably consume some day but may not be able to afford at that time. Congress, the Obama administration contends, has ample authority to regulate the means and timing of individual financing decisions through the health insurance mandate. This is because individuals’ health service financing decisions in the aggregate affect the viability and scope of the national health services market over which Congress has undisputed regulatory power.
Here is an excerpt from the Obama administration brief, which refers to the individual mandate as the “minimum coverage provision.” It provides a roadmap to the administration’s oral argument to the Supreme Court on the individual mandate issue:
The Affordable Care Act expands access to health care services and controls health care costs by reforming the terms on which health insurance is offered and rationalizing the timing and means of payment for health care services…The minimum coverage provision is within Congress’s power to enact not only because it is a necessary component of a broader scheme of interstate economic regulation, but also because, within that scheme, the provision itself regulates economic conduct with a substantial effect on interstate commerce, namely the way in which individuals finance their participation in the health care market. Individuals without insurance actively participate in the health care market, but they pay only a fraction of the cost of the services they consume…In sum, the uninsured as a class presently externalize the risks and costs of much of their health care; the minimum coverage provision will require that they internalize them (or pay a tax penalty). This is classic economic regulation of economic conduct.
In trying to appeal to Justice Kennedy, often the swing vote on close decisions, and possibly even to Justice Scalia who has taken an expansive approach to the Necessary and Proper Clause, the Obama administration’s brief referred frequently to a relevant Supreme Court decision both justices supported. The decision upheld the authority of Congress to prohibit individuals from engaging in a very localized activity. What Congress prohibited involved the growing, possession and use by individuals of their own marijuana for medicinal purposes even in a state where it was legal to do so (Gonzales v. Raich545 U.S. 1 (2005)). Justices Kennedy and Scalia agreed with the majority decision.
In his concurring opinion, Justice Scalia relied heavily on the Necessary and Proper Clause of the Constitution, which he said “empowers Congress to enact laws in effectuation of its enumerated powers that are not within its authority to enact in isolation.” He said that the relevant question was whether the means chosen were “reasonably adapted” to the attainment of a legitimate end under Congress’s interstate commerce power. The Obama administration’s argument applied Justice Scalia’s language in the Raich case to Congress’s decision to require virtually all individuals to purchase health insurance, no matter their present state of health.
The parties challenging the constitutionality of Obamacare – including twenty-six states – argued that the individual mandate goes further than any previous invocation of the Commerce Clause. For the first time Congress was attempting to regulate inactivity by requiring individuals to purchase a product in the private sector market just because they are alive and reside in the United States. Congress did not just prescribe the rules for commerce that already exists but claimed the power to compel people to enter into commerce in the first place.
As Paul D. Clement, the attorney representing the twenty-six states challenging Obamacare put it:
The mandate represents an unprecedented effort by Congress to compel individuals to enter commerce in order to better regulate commerce.
Congress is creating an affirmative duty for individuals to go into commerce, according to this argument, and buy a product at such time as Congress determines and with, at minimum, the specific features that the government dictates, whether or not the individual will ever need all these features. The parties challenging Obamacare questioned where the limits on congressional power would be if such an individual mandate were held to be constitutional. Clement highlighted this point when he said that the government’s justification of the mandate as a regulation of the economic decision to forego the purchase of health insurance is “a theory without any limiting principle.”
A number of justices zeroed in on this “limiting principle” issue during the oral argument.