commerce clause

The health care bills backed by the President require that individuals buy health insurance if it is not provided by their employer. Is that unconstitutional? It may well exceed Congress’s power under the Commerce Clause and other constitutional provisions. But would the courts strike that down as unconstitutional? Probably not, if Obama gets to replace one of the five moderate or conservative justices on the Supreme Court with a more liberal appointee. This is just one of several potential constitutional violations in the bill.

Obamacare is certainly controversial, with most Americans opposing it. It would reduce lifesaving medical innovation, raise many taxes, drive up insurance premiums and the deficit, break many campaign promises, and impose heavy burdens on state budgets. It would also jeopardize the quality of medical care for many, while imposing restrictions that failed when tried at the state level, and ignoring advice from federal and academic experts, and lessons from countries with universal healthcare, about how to keep costs down.

But bad policy is not synonymous with unconstitutionality. If the “individual mandate” is struck down, it will be because of Congress imposed it directly, rather than as a condition of states receiving federal funds, and clumsily drafted the penalties for the mandate in way that takes them outside the reach of its tax powers.

Unlike state governments, the federal government does not have a broad power to legislate in any way it sees fit, as long as it does not violate an individual right. Instead, it can only legislate under a power specifically enumerated in the Constitution — such as its broad powers to regulate interstate commerce, spend money for the general welfare, or impose taxes. So while states can (and the Commonwealth of Massachusetts in fact does) mandate that individuals buy health insurance as a matter of course, that is not necessarily the case for the federal government

The most common argument given by Senators like Max Baucus (D-Mont.) for imposing the individual mandate is that it is authorized by Congress’s power to regulate interstate commerce. But that power has limits, and, under the Supreme Court’s decision in United States v. Morrison, 529 U.S. 598 (2000), cannot be used to regulate non-economic activity, even if the activity affects the national economy. (The Morrison case invalidated Subtitle II-C of the Violence Against Women Act, which federalized gender-based violence, rejecting arguments that such violence was subject to Congressional regulation under the Commerce Clause because of uncontroverted claims that it affected the national economy by billions of dollars every year and sometimes caused people employed in commerce to quit their jobs. I was one of Morrison’s lawyers).

The Morrison decision, however, was a 5-to-4 ruling, joined in by the Supreme Court’s conservatives (Scalia, Rehnquist, and Thomas) and moderates (Kennedy and O’Connor) over a dissent from the Court’s four liberal justices. If Obama gets to pick another justice to replace one of the moderate or conservative justices, that decision may be disregarded or overruled in any future challenge to health care reform. Lower court judges are obliged to follow it, but a future Supreme Court may not.

Defenders of the “individual mandate” have argued that it is acceptable under the Supreme Court’s 2005 decision in Gonzales v. Raich, 545 U.S. 1 (2005), which upheld federal drug laws against a commerce-clause challenge. But drugs are an economic commodity subject to federal regulation. By contrast, the individual mandate applies to young people who never consume health care, much less need health insurance. As a young man, there was a 10-year period when I never went to the doctor or dentist (even during the periods in which I had health insurance), and never purchased any over-the-counter drug. I was simply never ill. Forcing people like my younger self to buy health insurance is not a regulation of economic activity, or even non-economic activity (which Congress cannot do under the Morrison decision), but rather of total inactivity.

Some have suggested that even non-economic activity can be regulated under Raich if it is “necessary and proper” to regulate a national industry like the health care system effectively (an ironic argument given that America has 50 different state health insurance markets, not a truly national health insurance market, since interstate commerce in health insurance is largely banned). But Raich treated drugs as commercial commodities. And, in any event, Congress cannot regulate purely local activity, much less inactivity, simply because it is part of a larger regulation aimed at promoting the economy. As the Supreme Court observed in Kansas v. Colorado, 206 U.S. 46, 91-92 (1907), even if it is the case that “no power is adequate” to advance economic improvement “other than that of the national government,” “if no such power has been granted, none can be exercised.”

The individual mandate is certainly not essential to any regulation of the health care industry. Universal health insurance could be achieved without any mandate at all through expansion of Medicaid or Medicare, or a single-payer system. Requiring young people to buy health insurance does little to prevent free-rider problems, since they do not use many health care services, and most of them will be forced to pay much more for health insurance under Obamacare than they would incur in medical bills without such insurance (if insurers were allowed to discriminate based on age, an actuarially-sound practice restricted by Obamacare, they could offer cheaper health insurance to young people). They are simply being exploited through such a mandate.

The fact that an individual mandate might marginally advance Congress’s goals is not sufficient to make it a “necessary and proper” way of carrying out Congress’s commerce powers. If it were, Morrison would have been decided differently, since banning gender-based violence certainly helps to eradicate actionable sexual harassment in schools, workplaces, and rental housing, all of which are subject to federal harassment regulations, and all of which are regulated by Congress under the civil rights laws (like Title VII and the Fair Housing Act, which were passed under Congress’s commerce power, and Title IX, which regulates universities, where the alleged gender violence in the Morrison case occurred; gender violence often constitutes sexual harassment, for as the Ninth Circuit observed in Brock v. United States, 64 F.3d 1421 (9th Cir. 1995), “every rape committed in the employment setting is also discrimination based on the employee’s sex.”).

Another argument for the “individual mandate” is that its penalties are authorized under Congress’s tax powers. This is an ironic argument, since the bill’s sponsors argue that the penalties are not a tax at all. In The Washington Post, lawyers David Rivkin and Lee Casey argue that the penalties exceed Congress’s tax powers under a decision by the Supreme Court in Bailey v. Drexel Furniture (1922), which essentially holds that Congress cannot get around the limits on its power under the interstate commerce clause by regulating via taxes. (They agree that Congress cannot use its interstate-commerce power to impose the individual mandate, based on the Morrison case I cited above). I am not sure whether the current Supreme Court would adhere to that 1920s era decision, although even if it did not, it seems dubious to rely on Congress’s power to tax to impose the individual mandate (since the penalties are not a tax on income, as is authorized by the 16th Amendment, nor are they “apportioned” in the manner required for direct taxes by Article I of the Constitution, nor do they tax an event, to qualify as an indirect tax).

Congress could easily have gotten around these limits on its regulatory powers by conditioning federal funds to states on a requirement to impose the individual mandate. States have a general police power that Congress lacks, and can easily mandate that their citizens buy health insurance, regardless of whether this is a good idea. (Massachusetts has done so, resulting in skyrocketing costs, and the “most expensive health insurance premiums in the country“). When Congress wanted to raise the drinking age, which it lacked the power to do directly, it achieved the same result indirectly by conditioning federal highway funding on states raising their drinking age to 21 — which all states eventually did. The Supreme Court upheld this condition on federal funds in South Dakota v. Dole, 483 U.S. 203 (1987). But the drafters of Obamacare have been so heedless of constitutional limits and legal etiquette that they have not even bothered with using the sort of figleaf permitted by the Supreme Court in its Dole decision to indirectly make states carry out Congress’s wishes).

There are other constitutional violations in Obamacare, but they are in provisions that are less central to it, like its racial preferences, which have been criticized by the U.S. Commission on Civil Rights. Obamacare contains both affirmative action that discriminates against whites, and lesser standards of care for institutions that cater to minority patients, which is a form of discrimination against African Americans and Hispanics. This racial discrimination appears to violate court rulings like the Supreme Court’s Adarand decision.

University of Chicago law professor Richard Epstein argues that regulation of insurers by Obamacare will likely result in unconstitutional takings and other violations.  University of Montana law professor Robert Natelson argues that Obamacare will result in violation of the substantive-due process rights of patients and violate federalism-based constitutional limits on Congressional power.