This posting addresses the hottest politico-legal question of the day: whether Congress can require individuals to purchase health insurance by virtue of its “Power ... To regulate Commerce ... among the several States ....”[1] This posting (I) sets forth the relevant governing principles of current commerce-power law, (II-IV) describes the three cases which have addressed the question thus far, and (V) concludes with some thoughts of my own. The issues are not simple, so this posting is not short. Nonetheless, I hope that at least some people here will find it helpful in understanding what is going on and why one or more of the cases – of which numerous others are pending – addressing the question will almost certainly end up in the Supreme Court.
1. U.S. Constitution, Art. I, Sec. 8.
Thus far, three U.S. District Courts have decided whether the “individual mandate provision” (which also goes by various other names) of the Patient Protection and Affordable Care Act (“PPACA”), which essentially requires people to purchase health insurance,[2] is within Congress's commerce power. The cases decided in the Eastern District of Michigan in October (Thomas More) and the Western District of Virginia in November (Liberty University) hold that it is; the case decided in the Eastern District of Virginia in December (Virginia) holds that it is not.[3]
2. “According to the ‘Requirement to Maintain Minimum Essential Coverage,’ every ‘applicable individual’ must obtain ‘minimum essential coverage’ for each month or pay a penalty, which is included with the individual’s tax return. An ‘applicable individual’ is any individual except one who qualifies for a religious exemption, who is not a United States citizen, national, or an alien lawfully present in the United States, or who is incarcerated.” (Liberty University at 3 (citations omitted).) “An ‘applicable individual’ may still be exempted from the requirement to purchase health insurance if she cannot afford such coverage because the required contribution exceeds eight percent of her household income. Taxpayers with income under 100 percent of the poverty line, members of Indian tribes, and individuals determined to suffer ‘a hardship’ with respect to the capability to obtain coverage are also exempted.” (Liberty University at 3 n. 5.)
3. Thomas More Law Center v. Obama, No. 10-CV-11156 (E.D.Mich. 7 October 2010); Liberty University, Inc. v. Geithner, No. 6:10-cv-00015-nkm (W.D.Va. 20 November 2010); Virginia v. Sebelius, No. 3:10CV188-HEH (E.D.Va. 13 December 2010).
Four Supreme Court cases are central to the analyses in Thomas More, Liberty University, and Virginia. In 1942, in Wickard, the Supreme Court upheld a regulatory limit, part of a price-support program, on the number of acres of wheat a farmer could plant, even though the farmer involved in the case did not sell any of his wheat on the open market. In 1995, in Lopez, the Supreme Court struck down a statute making it a federal crime to possess a gun within a “school zone”. In 2000, in Morrison, the Supreme Court struck down a statute creating a federal cause of action (basis for a civil lawsuit) for gender-motivated violence. And in 2005, in Raich, the Supreme Court upheld the federal prohibition of marijuana for personal use, even though the marijuana at issue was being used for medicinal purposes and had never traveled across a State line.[4]
4. Wickard v. Filburn, 317 U.S. 111 (1942); U.S. v. Lopez, 514 U.S. 549 (1995); U.S. v. Morrison, 529 U.S. 598 (2000); Gonzalez v. Raich, 545 U.S. 1 (2005). Lopez marked the first time the Supreme Court had struck down a statute as exceeding Congress’s commerce power since the New Deal; it came as rather a surprise.
1. U.S. Constitution, Art. I, Sec. 8.
Thus far, three U.S. District Courts have decided whether the “individual mandate provision” (which also goes by various other names) of the Patient Protection and Affordable Care Act (“PPACA”), which essentially requires people to purchase health insurance,[2] is within Congress's commerce power. The cases decided in the Eastern District of Michigan in October (Thomas More) and the Western District of Virginia in November (Liberty University) hold that it is; the case decided in the Eastern District of Virginia in December (Virginia) holds that it is not.[3]
2. “According to the ‘Requirement to Maintain Minimum Essential Coverage,’ every ‘applicable individual’ must obtain ‘minimum essential coverage’ for each month or pay a penalty, which is included with the individual’s tax return. An ‘applicable individual’ is any individual except one who qualifies for a religious exemption, who is not a United States citizen, national, or an alien lawfully present in the United States, or who is incarcerated.” (Liberty University at 3 (citations omitted).) “An ‘applicable individual’ may still be exempted from the requirement to purchase health insurance if she cannot afford such coverage because the required contribution exceeds eight percent of her household income. Taxpayers with income under 100 percent of the poverty line, members of Indian tribes, and individuals determined to suffer ‘a hardship’ with respect to the capability to obtain coverage are also exempted.” (Liberty University at 3 n. 5.)
3. Thomas More Law Center v. Obama, No. 10-CV-11156 (E.D.Mich. 7 October 2010); Liberty University, Inc. v. Geithner, No. 6:10-cv-00015-nkm (W.D.Va. 20 November 2010); Virginia v. Sebelius, No. 3:10CV188-HEH (E.D.Va. 13 December 2010).
Four Supreme Court cases are central to the analyses in Thomas More, Liberty University, and Virginia. In 1942, in Wickard, the Supreme Court upheld a regulatory limit, part of a price-support program, on the number of acres of wheat a farmer could plant, even though the farmer involved in the case did not sell any of his wheat on the open market. In 1995, in Lopez, the Supreme Court struck down a statute making it a federal crime to possess a gun within a “school zone”. In 2000, in Morrison, the Supreme Court struck down a statute creating a federal cause of action (basis for a civil lawsuit) for gender-motivated violence. And in 2005, in Raich, the Supreme Court upheld the federal prohibition of marijuana for personal use, even though the marijuana at issue was being used for medicinal purposes and had never traveled across a State line.[4]
4. Wickard v. Filburn, 317 U.S. 111 (1942); U.S. v. Lopez, 514 U.S. 549 (1995); U.S. v. Morrison, 529 U.S. 598 (2000); Gonzalez v. Raich, 545 U.S. 1 (2005). Lopez marked the first time the Supreme Court had struck down a statute as exceeding Congress’s commerce power since the New Deal; it came as rather a surprise.
I. Basic Principles of Commerce-Power Law
“In the body of jurisprudence interpreting the Commerce Clause, the Supreme Court has set out a three-prong analysis to determine [whether] a federal law properly falls within” Congress’s commerce power.[5] Thus, “[t]he Perez[[6]] Court divided traditional Commerce Clause powers into three distinct strands. First, Congress can regulate the channels of interstate commerce. Second, Congress has the authority to regulate and protect the instrumentalities of interstate commerce and persons or things in interstate commerce. Third, Congress has the power to regulate activities that substantially affect interstate commerce.” “It appears from the tenor of the debate in [these cases] that only the third category of Commerce Clause power” – “which deals with local activities that in themselves do not participate in interstate commerce, but which nonetheless ‘substantially affect’ interstate commerce” – “is presently at issue.”[7]
5. Thomas More at 12.
6. Perez v. U.S., 402 U.S. 146 (1971).
7. Virginia at 11 (first, second, and fourth quotations); Thomas More at 12 (third quotation); accord Liberty University at 22 (“The third category is the focus of this claim.”).
The third prong of the Supreme Court’s Commerce Clause analysis has two sub-prongs. First, “Congress may regulate even intrastate activities if they are within a class of activities that, in the aggregate, substantially affect interstate commerce.” That is, “Congress’ power to regulate activities that substantially affect interstate commerce extends to regulation of ‘purely local activities that are part of an economic class of activities that have a substantial effect on interstate commerce’”; “[l]ocal activity, regardless of whether it is commercial in nature, may still be reached by Congress if it ‘exerts a substantial economic effect on interstate commerce.’” Second, “[t]he Supreme Court [has] recognized Congress’s power to regulate wholly intrastate, wholly non-economic matters that form ‘“an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.”’” Thus, “Congress can regulate ‘purely intrastate activity that is not itself “commercial” ... if it concludes that the failure to regulate that class of activity would under cut the regulation of the interstate market in [the] commodity [at issue].’”[8]
8. Virginia at 12 (first quotation); Liberty University at 22-23 (second quotation) and 23 (third quotation) (both quoting Raich at 17); Thomas More at 18 (fourth quotation) (quoting Raich at 24-25 (quoting in turn Lopez at 561)); Liberty University at 23 (fifth quotation) (quoting Raich at 18) (ellipsis in Liberty University).
Three other general principles are relevant. First, “the Court ... must presume the constitutionality of federal legislation,” so “[t]he burden is Plaintiffs to make a ‘plain showing that Congress has exceeded its constitutional bounds.’”[9] Second, as at least suggested in the previous paragraph, what matters is not whether what an individual does substantially affects interstate commerce or undercuts a regulatory scheme; what matters is the combined effect of all of the instances of people’s doing that thing. “In other words, ‘[w]here the class of activities is regulated and that class is within reach of federal power, the courts have no power “to excise, as trivial, individual instances” of the class.’”[10] Third, courts review purported exercises of the commerce power under the rational basis test – the standard of review most deferential to the judgment of Congress – so “‘[ i]n assessing the scope of Congress’ authority under the Commerce Clause,’ the Court’s task ‘is a modest one.’” The upshot is that “[t]he Court need not itself determine whether the regulated activities, ‘taken in the aggregate, substantially affect interstate commerce in fact, but only whether a “rational basis” exists for so concluding’” or for “believ[ing that] the failure to regulate [those activities] would undercut ... [a] larger regulatory scheme ....”[11]
9. Virginia at 9 (first quotation); Liberty University at 21 (second quotation) (quoting Morrison at 607).
10. Virginia at 13-14 (quoting Raich at 23 (quoting in turn Perez at 154)) (brackets in Virginia).
11. Liberty University at 22 (first and second quotations) (both quoting Raich at 22); Thomas More (also first and second quotations) (also both quoting Raich at 22); Liberty University at 29 (third quotation).
5. Thomas More at 12.
6. Perez v. U.S., 402 U.S. 146 (1971).
7. Virginia at 11 (first, second, and fourth quotations); Thomas More at 12 (third quotation); accord Liberty University at 22 (“The third category is the focus of this claim.”).
The third prong of the Supreme Court’s Commerce Clause analysis has two sub-prongs. First, “Congress may regulate even intrastate activities if they are within a class of activities that, in the aggregate, substantially affect interstate commerce.” That is, “Congress’ power to regulate activities that substantially affect interstate commerce extends to regulation of ‘purely local activities that are part of an economic class of activities that have a substantial effect on interstate commerce’”; “[l]ocal activity, regardless of whether it is commercial in nature, may still be reached by Congress if it ‘exerts a substantial economic effect on interstate commerce.’” Second, “[t]he Supreme Court [has] recognized Congress’s power to regulate wholly intrastate, wholly non-economic matters that form ‘“an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.”’” Thus, “Congress can regulate ‘purely intrastate activity that is not itself “commercial” ... if it concludes that the failure to regulate that class of activity would under cut the regulation of the interstate market in [the] commodity [at issue].’”[8]
8. Virginia at 12 (first quotation); Liberty University at 22-23 (second quotation) and 23 (third quotation) (both quoting Raich at 17); Thomas More at 18 (fourth quotation) (quoting Raich at 24-25 (quoting in turn Lopez at 561)); Liberty University at 23 (fifth quotation) (quoting Raich at 18) (ellipsis in Liberty University).
Three other general principles are relevant. First, “the Court ... must presume the constitutionality of federal legislation,” so “[t]he burden is Plaintiffs to make a ‘plain showing that Congress has exceeded its constitutional bounds.’”[9] Second, as at least suggested in the previous paragraph, what matters is not whether what an individual does substantially affects interstate commerce or undercuts a regulatory scheme; what matters is the combined effect of all of the instances of people’s doing that thing. “In other words, ‘[w]here the class of activities is regulated and that class is within reach of federal power, the courts have no power “to excise, as trivial, individual instances” of the class.’”[10] Third, courts review purported exercises of the commerce power under the rational basis test – the standard of review most deferential to the judgment of Congress – so “‘[ i]n assessing the scope of Congress’ authority under the Commerce Clause,’ the Court’s task ‘is a modest one.’” The upshot is that “[t]he Court need not itself determine whether the regulated activities, ‘taken in the aggregate, substantially affect interstate commerce in fact, but only whether a “rational basis” exists for so concluding’” or for “believ[ing that] the failure to regulate [those activities] would undercut ... [a] larger regulatory scheme ....”[11]
9. Virginia at 9 (first quotation); Liberty University at 21 (second quotation) (quoting Morrison at 607).
10. Virginia at 13-14 (quoting Raich at 23 (quoting in turn Perez at 154)) (brackets in Virginia).
11. Liberty University at 22 (first and second quotations) (both quoting Raich at 22); Thomas More (also first and second quotations) (also both quoting Raich at 22); Liberty University at 29 (third quotation).
II. The Thomas More Case
In Thomas More, “[t]he crux of plaintiffs’ argument [was] that the federal government has never attempted to regulate inactivity, or a person’s mere existence within our Nation’s borders. It [was] plaintiffs’ position that if the [PPACA] is found constitutional, the Commerce Clause would provide Congress with the authority to regulate every aspect our lives, including our choice to refrain from acting.” The government, on the other hand, claimed “that as part of a comprehensive reform to reduce the ranks of the uninsured, the [PPACA] regulates economic decisions regarding the way in which health care services are paid for. [It contended] that the Individual Mandate falls within Congress’s authority under the Commerce Clause for two principal reasons. First, the economic decisions that the [PPACA] regulates as to how to pay for health care services have direct and substantial impact on the interstate health care market. Second, the [individual mandate] provision is essential to the [PPACA’s] larger regulation of the interstate business of health insurance.”[12]
12. Thomas More at 11 (first quotation) and 15-16 (second quotation); see also Thomas More at 15 (“In its legislative findings, Congress explains that it enacted the [PPACA] to address a national crisis – an interstate health care market in which tens of millions of Americans are without insurance coverage and in which the cost of medical treatment has spiraled out of control.”).
The Thomas More court discussed the four Supreme Court cases and then held in favor of the government on both of its contentions. It observed that in Wickard, “[f]or purposes of Congress[’s] invoking its Commerce Clause power, the [Supreme] Court held [that] it was sufficient that the existence of home-grown wheat, in the aggregate, could ‘suppl[y] a need of the man who grew it which would otherwise be reflected by purchase in the open market,’ thus undermining the efficacy of the federal price stabilization scheme.” In Raich, “the Supreme Court sustained Congress’s authority to prohibit the possession of home-grown marijuana intended solely for personal use[, because t]he Controlled Substances Act ‘regulates the production, distribution, and consumption of commodities for which there is an established, and lucrative, interstate market[,]’ [and t]he restriction on home-grown marijuana for personal use was essential to the Act’s broader regulatory scheme.”[13]
13. Thomas More at 13 (both quotations) (quoting, respectively, Wickard at 128 and Raich at 26) (fifth brackets in Thomas More).
The Thomas More court also observed that in Lopez, the government had argued that Congress could prohibit the “possession of a gun within a statutorily defined school zone” under the Commerce Clause, because “possession of a firearm in a school zone may result in violent crime ... the costs of violent crime are substantial, and via insurance those costs are spread throughout the population ... violent crime reduces the willingness of individuals to travel to areas that are perceived to be unsafe ... [and] the presence of guns in public schools threatens the educational process, which will result in a less productive citizenry.” But “[t]he Lopez court held that Congress could not ‘pile inference upon inference’ to find a link between the regulated activity and interstate commerce ... [and that] possessing a gun in a school zone was not an economic activity. Nor was the prohibition ... ‘an essential part[] of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.’”[14]
14. Thomas More at 13 (first quotation), 13-14 (second quotation), and 14 (third quotation) (quoting Lopez at, respectively, 567 and 561).
The Thomas More court further observed that in Morrison, the Supreme Court rejected the claim that Congress’s commerce power reached “gender-motivated violence [which] deters ‘potential victims from traveling interstate [and] from engaging in employment in interstate business ... and ... diminish[es] national productivity ....’” The Supreme Court reached that result in order “to preserve the ‘distinction between what is truly national and what is truly local.’”[15]
15. Thomas More at 14 (first quotation) (quoting Morrison at 615) (first and third ellipses in Thomas More) and 14-15 (second quotation) (quoting Morrison at 617-618).
The Thomas More court decided that whether the commerce power reaches inactivity was an open question. The plaintiffs in Thomas More pointed to “the common fact that each of the regulations that survived Supreme Court scrutiny under the Commerce Clause regulated an economic ‘activity,’ as opposed to the ‘inactivity’ they have demonstrated by merely existing and not purchasing health care insurance.” The Thomas More court recognized that the Supreme Court “has never needed to address the activity/inactivity distinction advanced by plaintiffs because in every Commerce Clause case presented thus far, there has been some sort of activity. In this regard, the [PPACA] arguably presents an issue of first impression.”[16]
16. Thomas More at 15 (both quotations).
But the Thomas More court both rejected the activity/inactivity distinction and held that deciding not to purchase health insurance is an activity. With respect to the distinction, it stated that “[t]he Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause.” And it held that although “plaintiffs describe the Commerce Clause as reaching economic activity, the government’s characterization of the Commerce Clause [as] reaching economic decisions is more accurate.”[17]
17. Thomas More at 17 (both quotations) (citing Raich, Wickard, and “Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (Commerce Clause allows Congress to regulate decisions not to engage in transactions with persons with whom plaintiff did not wish to deal)” (italics in Thomas More).
The Thomas More court also held that the plaintiffs had not engaged in mere inactivity: “The health care market is unlike other markets. No one can guarantee his or her health, or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. The question is how participants in the health care market pay for medical expenses – through insurance, or through an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties. This phenomenon of cost-shifting is what makes the health care market unique. 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, [thereby] collectively shifting billions of dollars, $43 billion in 2008, onto other market participants,” because “[t]he costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers.”[18]
18. Thomas More at 16-17 (first quotation) (emphasis added) and 16 (second quotation).
Based on that, the Thomas More court further held that “plaintiffs have not opted out of the health care services market because, as living, breathing [human] beings ... they cannot opt out of this market. As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive.”19
19. Thomas More at 17 (emphasis added).
Therefore, the Thomas More court upheld the individual mandate provision as a proper exercise of Congress’s commerce power over economic activities whose aggregated effects on interstate commerce are substantial: “There is a rational basis to conclude that, in the aggregate, decisions to forego [sic] insurance coverage in preference to attempting to pay for health care out of pocket drives up the cost of insurance. ... The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance. ... How participants in the health care services market pay for such services has a documented impact on interstate commerce. Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.”[20]
20. Thomas More at 16-17.
The Thomas More court also upheld the individual mandate provision as being “‘“an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.”’” The court observed that in Wickard and Raich, “the Supreme Court sustained Congress’s power to impose obligations on individuals who claimed not to participate in interstate commerce, because those obligations were components of broad schemes regulating interstate commerce.” The court further observed that the PPACA “regulates a broader interstate market in health care services ... [and that t]he uninsured, like plaintiffs, benefit from the ‘guaranteed issue’ provision [requiring insurers to cover everyone] ... which enables them to become insured even when they are already sick.”[21]
21. Thomas More at 18 (first quotation) (quoting Raich at 24-25 (quoting in turn Lopez at 561)), 13 (second quotation), and 18 (third quotation).
Therefore, the Thomas More court concluded: “Without the [individual mandate] provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times. ... [T]his would aggravate current problems with cost-shifting and lead to even higher premiums. The prospect of driving the insurance market into extinction led Congress to find that the [individual mandate] provision was essential to the larger regulatory scheme of the [PPACA]. The [individual mandate] provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal.”[22]
22. Thomas More at 18-19. Because the court upheld the individual mandate provision under the Commerce Clause, it was “unnecessary for the court to address the issue of Congress’s alternate source of authority to tax and spend under the General Welfare Clause.” (Thomas More at 19.)
12. Thomas More at 11 (first quotation) and 15-16 (second quotation); see also Thomas More at 15 (“In its legislative findings, Congress explains that it enacted the [PPACA] to address a national crisis – an interstate health care market in which tens of millions of Americans are without insurance coverage and in which the cost of medical treatment has spiraled out of control.”).
The Thomas More court discussed the four Supreme Court cases and then held in favor of the government on both of its contentions. It observed that in Wickard, “[f]or purposes of Congress[’s] invoking its Commerce Clause power, the [Supreme] Court held [that] it was sufficient that the existence of home-grown wheat, in the aggregate, could ‘suppl[y] a need of the man who grew it which would otherwise be reflected by purchase in the open market,’ thus undermining the efficacy of the federal price stabilization scheme.” In Raich, “the Supreme Court sustained Congress’s authority to prohibit the possession of home-grown marijuana intended solely for personal use[, because t]he Controlled Substances Act ‘regulates the production, distribution, and consumption of commodities for which there is an established, and lucrative, interstate market[,]’ [and t]he restriction on home-grown marijuana for personal use was essential to the Act’s broader regulatory scheme.”[13]
13. Thomas More at 13 (both quotations) (quoting, respectively, Wickard at 128 and Raich at 26) (fifth brackets in Thomas More).
The Thomas More court also observed that in Lopez, the government had argued that Congress could prohibit the “possession of a gun within a statutorily defined school zone” under the Commerce Clause, because “possession of a firearm in a school zone may result in violent crime ... the costs of violent crime are substantial, and via insurance those costs are spread throughout the population ... violent crime reduces the willingness of individuals to travel to areas that are perceived to be unsafe ... [and] the presence of guns in public schools threatens the educational process, which will result in a less productive citizenry.” But “[t]he Lopez court held that Congress could not ‘pile inference upon inference’ to find a link between the regulated activity and interstate commerce ... [and that] possessing a gun in a school zone was not an economic activity. Nor was the prohibition ... ‘an essential part[] of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.’”[14]
14. Thomas More at 13 (first quotation), 13-14 (second quotation), and 14 (third quotation) (quoting Lopez at, respectively, 567 and 561).
The Thomas More court further observed that in Morrison, the Supreme Court rejected the claim that Congress’s commerce power reached “gender-motivated violence [which] deters ‘potential victims from traveling interstate [and] from engaging in employment in interstate business ... and ... diminish[es] national productivity ....’” The Supreme Court reached that result in order “to preserve the ‘distinction between what is truly national and what is truly local.’”[15]
15. Thomas More at 14 (first quotation) (quoting Morrison at 615) (first and third ellipses in Thomas More) and 14-15 (second quotation) (quoting Morrison at 617-618).
The Thomas More court decided that whether the commerce power reaches inactivity was an open question. The plaintiffs in Thomas More pointed to “the common fact that each of the regulations that survived Supreme Court scrutiny under the Commerce Clause regulated an economic ‘activity,’ as opposed to the ‘inactivity’ they have demonstrated by merely existing and not purchasing health care insurance.” The Thomas More court recognized that the Supreme Court “has never needed to address the activity/inactivity distinction advanced by plaintiffs because in every Commerce Clause case presented thus far, there has been some sort of activity. In this regard, the [PPACA] arguably presents an issue of first impression.”[16]
16. Thomas More at 15 (both quotations).
But the Thomas More court both rejected the activity/inactivity distinction and held that deciding not to purchase health insurance is an activity. With respect to the distinction, it stated that “[t]he Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause.” And it held that although “plaintiffs describe the Commerce Clause as reaching economic activity, the government’s characterization of the Commerce Clause [as] reaching economic decisions is more accurate.”[17]
17. Thomas More at 17 (both quotations) (citing Raich, Wickard, and “Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (Commerce Clause allows Congress to regulate decisions not to engage in transactions with persons with whom plaintiff did not wish to deal)” (italics in Thomas More).
The Thomas More court also held that the plaintiffs had not engaged in mere inactivity: “The health care market is unlike other markets. No one can guarantee his or her health, or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. The question is how participants in the health care market pay for medical expenses – through insurance, or through an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties. This phenomenon of cost-shifting is what makes the health care market unique. 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, [thereby] collectively shifting billions of dollars, $43 billion in 2008, onto other market participants,” because “[t]he costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers.”[18]
18. Thomas More at 16-17 (first quotation) (emphasis added) and 16 (second quotation).
Based on that, the Thomas More court further held that “plaintiffs have not opted out of the health care services market because, as living, breathing [human] beings ... they cannot opt out of this market. As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive.”19
19. Thomas More at 17 (emphasis added).
Therefore, the Thomas More court upheld the individual mandate provision as a proper exercise of Congress’s commerce power over economic activities whose aggregated effects on interstate commerce are substantial: “There is a rational basis to conclude that, in the aggregate, decisions to forego [sic] insurance coverage in preference to attempting to pay for health care out of pocket drives up the cost of insurance. ... The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance. ... How participants in the health care services market pay for such services has a documented impact on interstate commerce. Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.”[20]
20. Thomas More at 16-17.
The Thomas More court also upheld the individual mandate provision as being “‘“an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.”’” The court observed that in Wickard and Raich, “the Supreme Court sustained Congress’s power to impose obligations on individuals who claimed not to participate in interstate commerce, because those obligations were components of broad schemes regulating interstate commerce.” The court further observed that the PPACA “regulates a broader interstate market in health care services ... [and that t]he uninsured, like plaintiffs, benefit from the ‘guaranteed issue’ provision [requiring insurers to cover everyone] ... which enables them to become insured even when they are already sick.”[21]
21. Thomas More at 18 (first quotation) (quoting Raich at 24-25 (quoting in turn Lopez at 561)), 13 (second quotation), and 18 (third quotation).
Therefore, the Thomas More court concluded: “Without the [individual mandate] provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times. ... [T]his would aggravate current problems with cost-shifting and lead to even higher premiums. The prospect of driving the insurance market into extinction led Congress to find that the [individual mandate] provision was essential to the larger regulatory scheme of the [PPACA]. The [individual mandate] provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal.”[22]
22. Thomas More at 18-19. Because the court upheld the individual mandate provision under the Commerce Clause, it was “unnecessary for the court to address the issue of Congress’s alternate source of authority to tax and spend under the General Welfare Clause.” (Thomas More at 19.)
III. The Liberty University Case
Liberty University is much like, and relies in part on, Thomas More. The plaintiffs argued that “the conduct regulated by the [individual mandate] provision – the failure to purchase health insurance – is a decision not to engage in interstate commerce, and consequently it is not a form of activity ... [but] inactivity or ‘simply existing’” and that “the failure to purchase health insurance is not commercial in nature, and does not result in substantial direct economic effects on interstate commerce.”[23] The government, on the other hand, argued “[1] that every individual must choose a way to finance the health care services that he or she will inevitably require ... [2] that by making these choices one becomes an active market participant, not a passive bystander,” and “[3] that the decisions to forego [sic] health insurance coverage are economic and substantially affect the interstate health care market because the uninsured, when sick, are able to obtain emergency room care for little or no money, shifting the costs for that uncompensated care on to health care providers, the insured population in the form of higher premiums, and the government.”[24]
23. Liberty University at 23 (both quotations).
24. Liberty University at 24 (first quotation) and 23 (second quotation) (italics in original).
The Liberty University court reviewed the four Supreme Court cases. Wickard “upheld the application of the [statute at issue] to wheat grown on the farm solely for personal consumption, reasoning that Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.” In Lopez, “[t]he Gun-Free School Zones Act ‘by its terms ha[d] nothing to do with “commerce” or any sort of economic enterprise’ ... the link between the regulated activity and any effects on interstate commerce was too attenuated ... [and t]he statute ... regulated a single subject, the possession of a firearm in a school zone, and was not ‘an essential part of a larger regulation of economic activity ....’” Morrison struck down the Violence Against Women Act’s provision for a federal cause of action, because “the regulated conduct was noneconomic and of a criminal nature.” Raich upheld the federal ban on personal medical marijuana possession, because “[ i]t was rational for Congress to believe that the failure to include locally cultivated marijuana for personal use in the law’s regulatory scope would undermine the orderly enforcement of the entire regulatory scheme and significantly impact ‘the supply and demand sides of the market for marijuana.’”[25]
25. Liberty University at 25 (first quotation), 24-25 (second quotation) (quoting Lopez at 561), 25 (third quotation), and 26 (fourth quotation) (quoting Raich at 30).
The Liberty University court summarized the Supreme Court’s holdings in Wickard and Raich: “Congress has broad power to regulate purely local matters that have substantial economic effects, even when the regulated individuals claim not to participate in interstate commerce.”[26]
26. Liberty University at 26.
The Liberty University court echoed the Thomas More court with respect to the near inevitability of needing health care services, the nature of decisions about how to pay for health care services as being economic activity, the shifting of billions of dollars in costs onto other market participants, and the driving up of insurance premiums: “Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care. The ‘fundamental need for health care and the necessity of paying for such services received’ creates the market in health care services, of which nearly everyone is a participant. Regardless of whether one relies on an insurance policy, one’s savings, or the backstop of free or reduced-cost emergency room services, one has made a choice regarding the method of payment for the health care services one expects to receive. Far from ‘inactivity,’ by choosing to forgo insurance, Plaintiffs are making an economic decision to pay for health care services later, out of pocket, rather than now, through the purchase of insurance. As Congress found, the total incidence of these economic decisions has a substantial impact on the national market for health care by collectively shifting billions of dollars on to other market participants and driving up the prices of insurance premiums.”[27]
27. Liberty University at 27-28 (quoting Thomas More at 18) (citations omitted).
The Liberty University court also articulated how the case before it was parallel to Wickard and Raich. “Plaintiffs’ preference for paying for health care needs out of pocket rather than purchasing insurance on the market is much like the preference of the plaintiff farmer in Wickard for fulfilling his demand for wheat by growing his own rather than by purchasing it. Plaintiffs do not consider themselves to be engaging in commerce at all, but as in Wickard, economic activity subject to regulation under the Commerce Clause need not involve transacting business in the marketplace. See Wickard, 317 U.S. at 128 (‘[T]he power to regulate commerce includes the power to regulate ... the practices affecting’ the prices of commodities in interstate commerce.) (emphasis added).” “The plaintiffs [in Raich], neither of whom bought or sold marijuana, claimed that they were not participating in commerce at all. But the [Supreme] Court held that it was rational to conclude that growing marijuana, whatever the nature of that activity, exerted in the aggregate a substantial 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.”[28]
28. Liberty University at 28 (first quotation) (brackets, ellipsis, and italics in original) and 29 (second quotation) (citation omitted).
The Liberty University court came to the same conclusions as had the Thomas More court: “[T]he conduct regulated by the individual [mandate] provision – individuals’ decisions to forego [sic] purchasing health insurance coverage – is economic in nature,” and “there is a rational basis for Congress to conclude that individuals’ decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market.” “The conduct regulated by the individual [mandate] provision is also within the scope of Congress’ powers under the Commerce Clause because it is rational to believe [that] the failure to regulate the uninsured would undercut the [PPACA’s] larger regulatory scheme for the interstate health care market.” “For these reasons,” the Liberty University court ultimately held, “the individual [mandate] provision is a valid exercise of federal power under the Commerce Clause, even as applied to the facts of this case.”[29]
29. Liberty University at 27 (first and second quotations) and 29 (third, fourth, and fifth quotations). Because the court held that the individual mandate provision is “within Congress’ authority under the Commerce Clause, it [was] unnecessary to consider whether the provision[] would be [a] constitutional exercise[] of power pursuant to the General Welfare Clause or the Necessary and Proper Clause.” (Liberty University at 21.)
23. Liberty University at 23 (both quotations).
24. Liberty University at 24 (first quotation) and 23 (second quotation) (italics in original).
The Liberty University court reviewed the four Supreme Court cases. Wickard “upheld the application of the [statute at issue] to wheat grown on the farm solely for personal consumption, reasoning that Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.” In Lopez, “[t]he Gun-Free School Zones Act ‘by its terms ha[d] nothing to do with “commerce” or any sort of economic enterprise’ ... the link between the regulated activity and any effects on interstate commerce was too attenuated ... [and t]he statute ... regulated a single subject, the possession of a firearm in a school zone, and was not ‘an essential part of a larger regulation of economic activity ....’” Morrison struck down the Violence Against Women Act’s provision for a federal cause of action, because “the regulated conduct was noneconomic and of a criminal nature.” Raich upheld the federal ban on personal medical marijuana possession, because “[ i]t was rational for Congress to believe that the failure to include locally cultivated marijuana for personal use in the law’s regulatory scope would undermine the orderly enforcement of the entire regulatory scheme and significantly impact ‘the supply and demand sides of the market for marijuana.’”[25]
25. Liberty University at 25 (first quotation), 24-25 (second quotation) (quoting Lopez at 561), 25 (third quotation), and 26 (fourth quotation) (quoting Raich at 30).
The Liberty University court summarized the Supreme Court’s holdings in Wickard and Raich: “Congress has broad power to regulate purely local matters that have substantial economic effects, even when the regulated individuals claim not to participate in interstate commerce.”[26]
26. Liberty University at 26.
The Liberty University court echoed the Thomas More court with respect to the near inevitability of needing health care services, the nature of decisions about how to pay for health care services as being economic activity, the shifting of billions of dollars in costs onto other market participants, and the driving up of insurance premiums: “Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care. The ‘fundamental need for health care and the necessity of paying for such services received’ creates the market in health care services, of which nearly everyone is a participant. Regardless of whether one relies on an insurance policy, one’s savings, or the backstop of free or reduced-cost emergency room services, one has made a choice regarding the method of payment for the health care services one expects to receive. Far from ‘inactivity,’ by choosing to forgo insurance, Plaintiffs are making an economic decision to pay for health care services later, out of pocket, rather than now, through the purchase of insurance. As Congress found, the total incidence of these economic decisions has a substantial impact on the national market for health care by collectively shifting billions of dollars on to other market participants and driving up the prices of insurance premiums.”[27]
27. Liberty University at 27-28 (quoting Thomas More at 18) (citations omitted).
The Liberty University court also articulated how the case before it was parallel to Wickard and Raich. “Plaintiffs’ preference for paying for health care needs out of pocket rather than purchasing insurance on the market is much like the preference of the plaintiff farmer in Wickard for fulfilling his demand for wheat by growing his own rather than by purchasing it. Plaintiffs do not consider themselves to be engaging in commerce at all, but as in Wickard, economic activity subject to regulation under the Commerce Clause need not involve transacting business in the marketplace. See Wickard, 317 U.S. at 128 (‘[T]he power to regulate commerce includes the power to regulate ... the practices affecting’ the prices of commodities in interstate commerce.) (emphasis added).” “The plaintiffs [in Raich], neither of whom bought or sold marijuana, claimed that they were not participating in commerce at all. But the [Supreme] Court held that it was rational to conclude that growing marijuana, whatever the nature of that activity, exerted in the aggregate a substantial 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.”[28]
28. Liberty University at 28 (first quotation) (brackets, ellipsis, and italics in original) and 29 (second quotation) (citation omitted).
The Liberty University court came to the same conclusions as had the Thomas More court: “[T]he conduct regulated by the individual [mandate] provision – individuals’ decisions to forego [sic] purchasing health insurance coverage – is economic in nature,” and “there is a rational basis for Congress to conclude that individuals’ decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market.” “The conduct regulated by the individual [mandate] provision is also within the scope of Congress’ powers under the Commerce Clause because it is rational to believe [that] the failure to regulate the uninsured would undercut the [PPACA’s] larger regulatory scheme for the interstate health care market.” “For these reasons,” the Liberty University court ultimately held, “the individual [mandate] provision is a valid exercise of federal power under the Commerce Clause, even as applied to the facts of this case.”[29]
29. Liberty University at 27 (first and second quotations) and 29 (third, fourth, and fifth quotations). Because the court held that the individual mandate provision is “within Congress’ authority under the Commerce Clause, it [was] unnecessary to consider whether the provision[] would be [a] constitutional exercise[] of power pursuant to the General Welfare Clause or the Necessary and Proper Clause.” (Liberty University at 21.)
IV. The Virginia Case: Crucial Distinctions From Thomas More and Liberty University
The Virginia court approached the matter rather differently. Like the Thomas More and Liberty University courts, the Virginia court analyzed the four Supreme Court cases, but it drew different conclusions from them.
“In Wickard, the Supreme Court upheld the power of Congress to regulate the personal cultivation and consumption of wheat on a private farm. The Court reasoned that the consumption of such non-commercially produced wheat reduced the amount of commercially produced wheat purchased and consumed nationally.”[30] “At issue in [Raich[31]] was whether the aggregate effect of personal growth and consumption of marijuana for medicinal purposes under California law had a sufficient impact on interstate commerce to warrant regulation under the Commerce Clause. The Supreme Court concluded that ‘[like] the farmer in Wickard, respondents are cultivating, for home consumption, a fungible commodity for which there is an established, albeit illegal, market. ... Here too, Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions.’”[32]
30. Virginia at 14.
31. Unlike Thomas More and Liberty University, Virginia refers to Gonzalez v. Raich as “Gonzalez”. For consistency, I have substituted “Raich” for “Gonzalez”.
32. Virginia at 14 (quoting Raich at 18-19) (brackets and ellipsis in Virginia).
“In Lopez, the [Supreme] Court found that the Gun-Free School Zones Act ... by its terms had nothing to do with commerce or any sort of economic enterprise ... [and] could not be sustained ‘under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.’” In Morrison, the Supreme Court “concluded that the Commerce Clause did not provide Congress with the authority to impose civil remedies under the Violence Against Women Act. ... The Court in Morrison ultimately rejected the argument that Congress may regulate noneconomic, violent criminal conduct based solely on that conduct’s aggregated effect on interstate commerce.”[33]
33. Virginia at 22 (both quotations) (quoting Lopez at 561).
Leading up to the first crucial distinction between Virginia on one hand and Thomas More and Liberty University on the other, the Virginia court summarized its take on the four Supreme Court cases. “The Court in Lopez and Morrison constrained the boundaries of Commerce Clause jurisdiction to activities truly economic in nature and that had a demonstrable effect on interstate commerce.” “[T]he Supreme Court ... insisted that the perimeters of legislation enacted under Commerce Clause powers square with the historically-accepted [sic] contours of Article I authority delineated by the Supreme Court in Perez .... Pertinent to the immediate case, the Court in Perez stated that Congress has the power to regulate activities that substantially affect interstate commerce.” “Wickard is generally acknowledged to be the most expansive application of the Commerce Clause by the Supreme Court, followed by [Raich].” “In Wickard and [Raich], the Supreme Court staked out the outer boundaries of Commerce Clause power. In both cases, the activity under review was the product of a self-directed affirmative move to cultivate and consume wheat or marijuana. This self-initiated change of position voluntarily placed the subject within the stream of commerce. Absent that step, governmental regulation could have been avoided.”[34]
34. Virginia at 22 (first quotation), 21 (second and fourth quotations) (italics in Virginia), and 14 (third quotation).
Which brings us to the first crucial distinction: “In surveying the legal landscape, several operative elements are commonly encountered in Commerce Clause decisions. First, to survive a constitutional challenge the subject matter must be economic in nature and affect interstate commerce, and second, it must involve activity. Every application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction, or deed placed in motion by an individual or legal entity.”[35]
35. Virginia at 23 (emphasis added).
Recall that the Thomas More court construed the absence of any Supreme Court decision on whether Congress’s commerce power reaches inactivity as leaving that question open: “The [Supreme] Court has never needed to address the activity/inactivity distinction advanced by plaintiffs because in every Commerce Clause case presented thus far, there has been some sort of activity. In this regard, the [PPACA] arguably presents an issue of first impression.”[36] That opened the way for the Thomas More court to hold that although the “plaintiffs describe the Commerce Clause power as reaching economic activity, the government’s characterization of the Commerce Clause [as] reaching economic decisions is more accurate.”[37]
36. Thomas More at 15; see also Liberty University at 27 (“the unique nature of the market for health care and the breadth of the [PPACA] present a novel set of facts for consideration”).
37. Thomas More at 17 (italics in original).
The Virginia court, however, construed the absence of any Supreme Court decision on whether Congress’s commerce power reaches inactivity as requiring activity and precluding regulation of inactivity: Because “[e]very application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action ... placed in motion by an individual or legal entity[, t]he constitutional viability of the [individual mandate provision] in this case turns on whether or not a person’s decision to refuse to purchase health care insurance is such an activity.”[38]
38. Virginia at 23; see also Virginia at 11 (“Critical to the [government’s] argument is the notion that an individual’s decision not to purchase health insurance is in effect ‘economic activity.’”). The Virginia court also drew support for its conclusion from the Supreme Court’s statement in Perez, since repeated numerous times, that “Congress has the power to regulate activities that substantially affect interstate commerce.” (Virginia at 21 (italics in original).) That is a somewhat stronger argument, because a negative implication from something that the Supreme Court has said is stronger than a negative implication from the Supreme Court’s not having said anything. Still, the Supreme Court did not say that only activities, as distinct from inactivities, which substantially affect interstate commerce are subject to Congress’s commerce power, for the simple reason that no one had asked the Supreme Court to address that question.
That leads to the other crucial distinction between Virginia on one hand and Thomas More and Liberty University on the other. Recall that both the Thomas More and Liberty University courts rejected the claim that the decision not to purchase health insurance is merely inactivity: “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.” Even more explicitly, the Liberty University held that “decisions to pay for health care without insurance are economic activities ....”[39]
39. Liberty University at 27 (first quotation); Thomas More at 16 (also first quotation) (continuing (at 17): “collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.”); Liberty University at 28 (second quotation) (“The conclusion that decisions to pay for health care without insurance are economic activities follows from the Supreme Court’s rulings in Wickard and Raich.”).
The Virginia court, however, came to the opposite conclusion: “In [its] argument, the [government] urges an expansive interpretation of the concept of activity. [It] posits that every individual in the United States will require health care at some point in [her or his] lifetime, if not today, perhaps next week or even next year. [Its] theory further postulates that because near universal participation is critical to the underwriting process, the collective effect of refusal to purchase health insurance affects the national market. Therefore, [the government] argues, requiring advance purchase of insurance based upon a future contingency is an activity that will inevitably affect interstate commerce. Of course, the same reasoning could apply to transportation, housing, or nutritional decisions. This broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence.”[40]
40. Virginia at 23. The phrasing “requiring advance purchase of insurance ... is an activity that will inevitably affect interstate commerce” is unfortunate, because it suggests that the issue is whether what the government does is an economic activity affecting interstate commerce. It is clear from the portions of the opinion just quoted, however, that the Virginia court correctly understood the activity or inactivity in question to be the individual’s decision to go without insurance, not the government’s requiring the individual to purchase insurance. (See also Virginia at 24 (“an individual’s decision to purchase – or [to] decline to purchase – health insurance from a private provider is beyond the historical reach of the Commerce Clause”).)
Those two crucial distinctions lead to Virginia’s ultimate result: “The power of Congress to regulate a class of activities that in the aggregate has a substantial and direct effect on interstate commerce is well settled. This even extends to noneconomic activity closely connected to the intended market. But these regulatory powers are triggered by some type of self-initiated action. Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter [sic] the stream of commerce by purchasing a commodity in the private market. In doing so, enactment of the [individual mandate provision] exceeds the Commerce Clause powers vested in Congress under Article I.”[41]
41. Virginia at 23-24 (citations and footnote omitted). Virginia says that “[t]he core of the [government’s] primary argument under the Commerce Clause is that the [individual mandate provision] is a necessary measure to ensure the success of its larger reforms of the interstate health insurance market.” (Virginia at 12 (footnote omitted).) It then notes that the government “appears to sidestep the independent freestanding constitutional basis for the [individual mandate p]rovision,” which I take to mean the argument that individuals’ decisions about how and when to pay for health care are activities that in the aggregate directly affect the interstate health care market. (Virginia at 24 n. 7.) Given the language of the Virginia opinion, however, I see no reason to think that its holding does not apply to both aspects of Congress’s power to regulate activities that substantially affect interstate commerce.
“In Wickard, the Supreme Court upheld the power of Congress to regulate the personal cultivation and consumption of wheat on a private farm. The Court reasoned that the consumption of such non-commercially produced wheat reduced the amount of commercially produced wheat purchased and consumed nationally.”[30] “At issue in [Raich[31]] was whether the aggregate effect of personal growth and consumption of marijuana for medicinal purposes under California law had a sufficient impact on interstate commerce to warrant regulation under the Commerce Clause. The Supreme Court concluded that ‘[like] the farmer in Wickard, respondents are cultivating, for home consumption, a fungible commodity for which there is an established, albeit illegal, market. ... Here too, Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions.’”[32]
30. Virginia at 14.
31. Unlike Thomas More and Liberty University, Virginia refers to Gonzalez v. Raich as “Gonzalez”. For consistency, I have substituted “Raich” for “Gonzalez”.
32. Virginia at 14 (quoting Raich at 18-19) (brackets and ellipsis in Virginia).
“In Lopez, the [Supreme] Court found that the Gun-Free School Zones Act ... by its terms had nothing to do with commerce or any sort of economic enterprise ... [and] could not be sustained ‘under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.’” In Morrison, the Supreme Court “concluded that the Commerce Clause did not provide Congress with the authority to impose civil remedies under the Violence Against Women Act. ... The Court in Morrison ultimately rejected the argument that Congress may regulate noneconomic, violent criminal conduct based solely on that conduct’s aggregated effect on interstate commerce.”[33]
33. Virginia at 22 (both quotations) (quoting Lopez at 561).
Leading up to the first crucial distinction between Virginia on one hand and Thomas More and Liberty University on the other, the Virginia court summarized its take on the four Supreme Court cases. “The Court in Lopez and Morrison constrained the boundaries of Commerce Clause jurisdiction to activities truly economic in nature and that had a demonstrable effect on interstate commerce.” “[T]he Supreme Court ... insisted that the perimeters of legislation enacted under Commerce Clause powers square with the historically-accepted [sic] contours of Article I authority delineated by the Supreme Court in Perez .... Pertinent to the immediate case, the Court in Perez stated that Congress has the power to regulate activities that substantially affect interstate commerce.” “Wickard is generally acknowledged to be the most expansive application of the Commerce Clause by the Supreme Court, followed by [Raich].” “In Wickard and [Raich], the Supreme Court staked out the outer boundaries of Commerce Clause power. In both cases, the activity under review was the product of a self-directed affirmative move to cultivate and consume wheat or marijuana. This self-initiated change of position voluntarily placed the subject within the stream of commerce. Absent that step, governmental regulation could have been avoided.”[34]
34. Virginia at 22 (first quotation), 21 (second and fourth quotations) (italics in Virginia), and 14 (third quotation).
Which brings us to the first crucial distinction: “In surveying the legal landscape, several operative elements are commonly encountered in Commerce Clause decisions. First, to survive a constitutional challenge the subject matter must be economic in nature and affect interstate commerce, and second, it must involve activity. Every application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction, or deed placed in motion by an individual or legal entity.”[35]
35. Virginia at 23 (emphasis added).
Recall that the Thomas More court construed the absence of any Supreme Court decision on whether Congress’s commerce power reaches inactivity as leaving that question open: “The [Supreme] Court has never needed to address the activity/inactivity distinction advanced by plaintiffs because in every Commerce Clause case presented thus far, there has been some sort of activity. In this regard, the [PPACA] arguably presents an issue of first impression.”[36] That opened the way for the Thomas More court to hold that although the “plaintiffs describe the Commerce Clause power as reaching economic activity, the government’s characterization of the Commerce Clause [as] reaching economic decisions is more accurate.”[37]
36. Thomas More at 15; see also Liberty University at 27 (“the unique nature of the market for health care and the breadth of the [PPACA] present a novel set of facts for consideration”).
37. Thomas More at 17 (italics in original).
The Virginia court, however, construed the absence of any Supreme Court decision on whether Congress’s commerce power reaches inactivity as requiring activity and precluding regulation of inactivity: Because “[e]very application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action ... placed in motion by an individual or legal entity[, t]he constitutional viability of the [individual mandate provision] in this case turns on whether or not a person’s decision to refuse to purchase health care insurance is such an activity.”[38]
38. Virginia at 23; see also Virginia at 11 (“Critical to the [government’s] argument is the notion that an individual’s decision not to purchase health insurance is in effect ‘economic activity.’”). The Virginia court also drew support for its conclusion from the Supreme Court’s statement in Perez, since repeated numerous times, that “Congress has the power to regulate activities that substantially affect interstate commerce.” (Virginia at 21 (italics in original).) That is a somewhat stronger argument, because a negative implication from something that the Supreme Court has said is stronger than a negative implication from the Supreme Court’s not having said anything. Still, the Supreme Court did not say that only activities, as distinct from inactivities, which substantially affect interstate commerce are subject to Congress’s commerce power, for the simple reason that no one had asked the Supreme Court to address that question.
That leads to the other crucial distinction between Virginia on one hand and Thomas More and Liberty University on the other. Recall that both the Thomas More and Liberty University courts rejected the claim that the decision not to purchase health insurance is merely inactivity: “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.” Even more explicitly, the Liberty University held that “decisions to pay for health care without insurance are economic activities ....”[39]
39. Liberty University at 27 (first quotation); Thomas More at 16 (also first quotation) (continuing (at 17): “collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.”); Liberty University at 28 (second quotation) (“The conclusion that decisions to pay for health care without insurance are economic activities follows from the Supreme Court’s rulings in Wickard and Raich.”).
The Virginia court, however, came to the opposite conclusion: “In [its] argument, the [government] urges an expansive interpretation of the concept of activity. [It] posits that every individual in the United States will require health care at some point in [her or his] lifetime, if not today, perhaps next week or even next year. [Its] theory further postulates that because near universal participation is critical to the underwriting process, the collective effect of refusal to purchase health insurance affects the national market. Therefore, [the government] argues, requiring advance purchase of insurance based upon a future contingency is an activity that will inevitably affect interstate commerce. Of course, the same reasoning could apply to transportation, housing, or nutritional decisions. This broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence.”[40]
40. Virginia at 23. The phrasing “requiring advance purchase of insurance ... is an activity that will inevitably affect interstate commerce” is unfortunate, because it suggests that the issue is whether what the government does is an economic activity affecting interstate commerce. It is clear from the portions of the opinion just quoted, however, that the Virginia court correctly understood the activity or inactivity in question to be the individual’s decision to go without insurance, not the government’s requiring the individual to purchase insurance. (See also Virginia at 24 (“an individual’s decision to purchase – or [to] decline to purchase – health insurance from a private provider is beyond the historical reach of the Commerce Clause”).)
Those two crucial distinctions lead to Virginia’s ultimate result: “The power of Congress to regulate a class of activities that in the aggregate has a substantial and direct effect on interstate commerce is well settled. This even extends to noneconomic activity closely connected to the intended market. But these regulatory powers are triggered by some type of self-initiated action. Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter [sic] the stream of commerce by purchasing a commodity in the private market. In doing so, enactment of the [individual mandate provision] exceeds the Commerce Clause powers vested in Congress under Article I.”[41]
41. Virginia at 23-24 (citations and footnote omitted). Virginia says that “[t]he core of the [government’s] primary argument under the Commerce Clause is that the [individual mandate provision] is a necessary measure to ensure the success of its larger reforms of the interstate health insurance market.” (Virginia at 12 (footnote omitted).) It then notes that the government “appears to sidestep the independent freestanding constitutional basis for the [individual mandate p]rovision,” which I take to mean the argument that individuals’ decisions about how and when to pay for health care are activities that in the aggregate directly affect the interstate health care market. (Virginia at 24 n. 7.) Given the language of the Virginia opinion, however, I see no reason to think that its holding does not apply to both aspects of Congress’s power to regulate activities that substantially affect interstate commerce.
V. Some Thoughts of My Own
As I have posted before, I think that Wickard was wrongly decided. I cannot accept the combination of propositions that (a) by choosing to engage in interstate commerce, one subjects oneself to Congress’s commerce power; and (b) by choosing not to engage in interstate commerce, one also subjects oneself to Congress’s commerce power. There is no other available option – how could one possibly choose neither to engage nor not to engage in interstate commerce? – so Congress can regulate every choice to engage in any commercial transaction that (even in the aggregate) substantially affects interstate commerce, and Congress can regulate every choice not to engage in any commercial transaction that (even in the aggregate) substantially affects interstate commerce.
If the Constitution means that Congress can regulate virtually all commercial transactions, it should say “Power ... To regulate Commerce,” period. But it does not. It says “Power ... To regulate Commerce ... among the several States ....” And if it means that Congress can “regulate commerce” by regulating the choice not engage in commerce, it should say so. But it does not.
That, however, does not necessarily dispose of the present issue. The thrust of the government’s argument is that in reality, there is no such thing as choosing not to participate in the interstate health care services market. If that is true, then Congress has no power to regulate the behavior of those who choose not to participate in the interstate health care services market, because no such people exist.
Even if Wickard was correctly decided, I still think that Raich was incorrectly decided. The Court in Raich held that “Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly [to Wickard] affect price and market conditions.”[42] But the California statute did not legalize all or even most “home-consumed marijuana”. It legalized only medical marijuana, and it included a regulatory apparatus designed to ensure that only the possession of medical marijuana would be exempt from prosecution. The Supreme Court should have asked whether Congress had a rational basis for concluding that marijuana smoked at home solely for medicinal purposes would substantially affect the national non-medical marijuana market.
42. Raich at 19.
Moreover, in Wickard, Congress’s “purpose [was] to stimulate trade [in wheat] at increased prices.” “By consuming their own grain, Filburn and thousands of farmers like him cut the overall demand and depressed the market price of wheat.” “The [Supreme] Court upheld application of the [statute] to wheat grown on the farm solely for personal consumption, [because] Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.”[43]
43. Liberty University at 29 (first quotation); The Oxford Companion to the Supreme Court of the United States (2d ed. 2005) at 1088 (second quotation); Liberty University at 25 (third quotation).
In Raich, however, Congress’s purpose was to obliterate the nationwide non-medical marijuana market. If the medical marijuana users’ conduct affected the nationwide non-medical market at all, it actually served the congressional purpose by “cut[ting] the overall demand.” Indeed, in prohibiting home-grown, home-consumed medical marijuana, Congress may well have subverted its own purpose by creating greater demand for marijuana in the commercial market. The Supreme Court should have asked whether Congress had a rational basis for concluding that the non-commercial home cultivation and consumption of marijuana for medicinal purposes would have substantially undermined Congress’s objective of obliterating the nationwide commercial marijuana market – a market which consists overwhelmingly of marijuana bought and sold for non-medical purposes.
I think that Lopez and Morrison were correctly decided. The asserted commerce power justifications for the Gun-Free School Zones Act were that “possession of a firearm in a school zone may result in violent crime ... the costs of violent crime are substantial, and via insurance those costs are spread throughout the population ... violent crime reduces the willingness of individuals to travel to areas that are perceived to be unsafe ... [and] the presence of guns in public schools threatens the educational process, which will result in a less productive citizenry.” The asserted commerce power justifications for the Violence Against Women Act were that “gender-motivated violence deters ‘potential victims from traveling interstate [and] from engaging in employment in interstate business ... and ... diminish[es] national productivity ....’”[44] If justifications such as those were sufficient to support the exercise of Congress’s commerce power, then I think it at least very difficult, and perhaps impossible, to imagine anything that Congress could not regulate under its commerce power. I cannot accept the proposition that “Power ... To regulate Commerce ... among the several States” means “power to regulate everything”.
44. Thomas More at 13-14 (first quotation) and 14 (second quotation) (quoting Morrison at 615) (first and third ellipses in Thomas More).
But I do not think that Lopez and Morrison shed light on the constitutionality or unconstitutionality of the individual mandate provision. Neither the possession of a firearm in a school zone nor the commission of a gender-motivated crime is an economic activity, and the decision to do or not to do either of those things is not an economic decision. Regardless of whether the individual mandate provision is constitutional or unconstitutional, however, the choice to purchase or not to purchase health insurance is, even if not an economic activity in itself, at least a decision about an economic activity.
As to the constitutionality of the individual mandate provision, I have not yet come to a conclusion. I want to see more decisions from the trial courts and some decisions from the appellate courts, so I hope that the Supreme Court does not grant expedited review. Nor do I see any need for expedited review: The individual mandate provision does not take effect until 2014.[45]
45. See Thomas More at 2; Liberty University at 3; Virginia at 1.
Under current commerce power law – with which, as mentioned, I do not agree – I do not find the argument that Congress cannot compel individuals to purchase products in the private market persuasive. As the Liberty University court pointed out, in Wickard, the Supreme Court upheld the pertinent provision of the Agricultural Adjustment Act of 1938 on the ground that “Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.”[46] The line between making it so that a person “ha to purchase ... wheat on the market” and directly compelling a person to buy wheat on the market seems very fine.
46. Liberty University at 25.
It is true that the farmer did not have to purchase wheat at all; he could have fed his family (and his livestock) on something else. But the Agricultural Adjustment Act of 1938 imposed mandatory price supports on corn, cotton, and wheat, and it imposed permissive price supports on butter, dates, figs, hops, turpentine, rosin, pecans, prunes, raisins, barley, rye, grain sorghum, wool, winter cover-crop seeds, mohair, peanuts, and tobacco.[47] As far as I can tell, Congress is free to make the same kinds of rules for all food products as the rules for wheat at issue in Wickard. That is, the government apparently can prohibit people from producing any of their own food. And everyone needs to eat, so everyone would have to purchase food from private sellers of food. How is that meaningfully different from directly compelling people to purchase food from private sellers of food?
47. See Congressional Research Service, Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition at CRS-9.
Be that as it may, it seems to me that – as is so often the case – a great deal depends on how one frames the issue. If the Supreme Court frames the issue as whether people can avoid regulation under Congress’s commerce power by choosing not to engage in interstate commerce (and assuming that the Supreme Court adheres to the expansive view of the commerce power expressed in Wickard and Raich), then the individual mandate provision is likely to be held constitutional, because “[t]he Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause.”[48] But if the Supreme Court frames the issue as whether Congress can compel people to purchase a product in the private market, then the individual mandate provision is less likely to be held constitutional, because the Supreme Court has “stated that Congress has the power to regulate activities that substantially affect interstate commerce” and has never “extended Commerce Clause powers to compel an individual to involuntarily enter [sic] the stream of commerce by purchasing a commodity in the private market.”[49]
48. Thomas More at 17 see also Liberty University at 28-29 (“Plaintiffs do not consider themselves to be engaging in commerce at all, but as in Wickard, economic activity subject to regulation under the Commerce Clause need not involve transacting business in the marketplace. ... Plaintiffs cannot avoid extension of the [PPACA] to their conduct just because they allege [that] they provide for their own care and will not, in fact, obtain uncompensated care at the expense of other market participants.”).
49. Virginia at 21 (italics in original) and 24.
Of course, current commerce power law is not immutable. The Supreme Court could decide to retreat from the expansive holdings of Wickard and Raich. But what would be the new position? I very much doubt that the Supreme Court will hold that no activity which occurs in a single State is subject to Congress’s commerce power. That would mean, for example, that Congress could not prohibit carrying explosives from Cincinnati OH to Columbus OH on a train traveling on an interstate railroad, that Congress could not criminalize robbing a train traveling on an interstate railroad if the robbery occurred in a single State, that Congress could not prohibit monopolizing the nationwide market in a commodity of the acts by which the monopoly was created occurred within a single State,[50] and so forth.
50. In 1895, the Supreme Court held that Congress could not prohibit monopolization in such circumstances. (See U.S. v. E.C. Knight Co., 156 U.S. 1 (1895).) Just a decade later, however, the Supreme Court held that a price-fixing agreement, although entered into in a single State, was subject to Congress’s commerce power, because it was intended to fix prices in the interstate market in beef. (See Swift & Co. v. U.S., 196 U.S. 375 (1905).)
So by what standard(s) would the Supreme Court decide what is and what is not within Congress’s commerce power? A big factor in the Supreme Court’s adoption of the “substantial effects” test – which is widely regarded as the Supreme Court’s throwing its hands up in despair and letting Congress do just about anything it wants – was the intractability of the problems which that question had been presenting for decades. The increasing complexities of commercial arrangements and transactions, as well as the rapid growth of trade in nationwide markets, had made distinctions such as those between manufacturing and commerce and between direct and indirect effects on interstate commerce increasingly unworkable.
Those problems were made even more befuddling by inconsistent decisions about the “dormant Commerce Clause” – if Congress has the power to regulate a subject but has not done so, can States regulate that subject? – which led to such unpredicted results as a conservative Supreme Court’s unintentionally ushering in the modern era of federal economic regulation.[51] Those problems were compounded further by Congress’s using the Commerce Clause to effectuate its “national police power,”[52] and they were compounded still further by an activist conservative Supreme Court’s penchant for striking down, although inconsistently, not only federal economic regulations but State economic regulations as well.[53]
51. The Supreme Court held in 1877 that because Congress had not regulated interstate railroad rates, States could regulate rates on the intrastate portions of interstate railroads. (See Peik v. Chicago and Northwestern Railway Co., 94 U.S. 164 (1877).) Less than a decade later, the Court reversed itself and held that because Congress had the power to regulate interstate railroad rates, States could not regulate rates even on the intrastate portions of interstate railroads and even though Congress had not done any of the regulating which it had the power to do. (See Wabash, St. Louis & Pacific Railway Co. v. Illinois, 118 U.S. 557 (1886).) That meant that unless Congress acted, railroad rates would not be regulated at all. Congress responded by enacting the Interstate Commerce Act of 1887, the first federal nationwide economic regulatory statute of any real significance, and that opened the floodgates.
52. For example, the Supreme Court upheld federal laws prohibiting the transportation of lottery tickets across State lines, the transportation of women across State lines for “immoral purposes,” and knowingly driving a stolen car across a State line; but it struck down a federal law prohibiting the shipment in interstate commerce of products made in factories or mines by children under fourteen years of age. (See Champion v. Ames, 188 U.S. 321 (1903); Hoke v. U.S., 227 U.S. 308 (1913); Brooks v. U.S., 267 U.S. 432 (1925); Hammer v. Dagenhart, 247 U.S. 251 (1918).)
53. For example, the Supreme Court struck down a maximum-hours law for bakers, upheld a maximum-hours law for women, struck down a law prohibiting “yellow dog” contracts (employment contracts making joining a labor union a ground for termination), upheld a maximum-hours law for all factory and mill workers, struck down a minimum-wage law for women, upheld a maximum-price law for milk, struck down a minimum-wage law for women and children, and on and on and on. (See Lochner v. New York, 198 U.S. 45 (1905); Muller v. Oregon, 208 U.S. 412 (1908); Coppage v. Kansas, 236 U.S. 1 (1915); Bunting v. Oregon, 243 U.S. 426 (1917); Adkins v. Children’s Hospital, 261 U.S. 525 (1923); Nebbia v. New York, 291 U.S. 502 (1934); Morehead v. New York, 298 U.S. 587 (1936).)
If the Supreme Court does retreat from Wickard and Raich – especially if it abandons the “substantial effects” test entirely – it will have to come up with something else. And I am at a loss to discern what that something else might turn out to be.
Finally, it seems to me that if the Supreme Court invalidates the individual mandate provision – which would evidently be the death-knell for the entire plan, because “the [individual mandate provision] is the linchpin which provides financial viability to the other critical elements of the overall regulatory scheme”[54] – that would pave the way for a single-payer system. If the Supreme Court makes it impossible to achieve universal coverage, including coverage of people with preexisting conditions, through the private insurance market, the only realistic alternative to the crisis in which we now find ourselves will be a single-payer system. (As far as I can tell, the Republicans’ belated tinkering proposals will not solve that crisis.)
54. Virginia at 15; see also Liberty University at 27 (quoting PPACA, sec. 1501(a)(2)(I)) (“Without [the individual mandate provision], Congress found that healthy individuals would wait to purchase health insurance until they needed care, driving up the cost of health insurance premiums. Congress stated that the [individual mandate provision] ‘is essential to creating effective health insurance markets’ with broad health insurance pools including healthy individuals.”).
The argument for a single-payer system might run something like this: “Okay, according to the Supreme Court, we cannot use the commerce power to compel people to buy health insurance. So we cannot achieve universal coverage through the private insurance market. But it is settled that we can use the taxing and spending power to tax people to pay for old age pensions and unemployment benefits,[55] so we should be able to use the taxing and spending power to tax people to pay for health insurance. No one has any better idea, so let’s do that.” If that happens, a conservative Supreme Court will have unintentionally brought about a single-payer system for health insurance, just as a previous conservative Supreme Court unintentionally kicked off the modern era of federal economic regulation.[56] And I will savor the delicious irony.
55. See Helvering v. Davis, 301 U.S. 619 (1937) (old age pensions); Steward Machine Co. v. Davis, 301 U.S. 548 (9137) (unemployment benefits).
56. See note 51 and accompanying text.
Again, I hope that this is, at least to some modest degree, illuminating. And I am curious what others think about the issues involved.
If the Constitution means that Congress can regulate virtually all commercial transactions, it should say “Power ... To regulate Commerce,” period. But it does not. It says “Power ... To regulate Commerce ... among the several States ....” And if it means that Congress can “regulate commerce” by regulating the choice not engage in commerce, it should say so. But it does not.
That, however, does not necessarily dispose of the present issue. The thrust of the government’s argument is that in reality, there is no such thing as choosing not to participate in the interstate health care services market. If that is true, then Congress has no power to regulate the behavior of those who choose not to participate in the interstate health care services market, because no such people exist.
Even if Wickard was correctly decided, I still think that Raich was incorrectly decided. The Court in Raich held that “Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly [to Wickard] affect price and market conditions.”[42] But the California statute did not legalize all or even most “home-consumed marijuana”. It legalized only medical marijuana, and it included a regulatory apparatus designed to ensure that only the possession of medical marijuana would be exempt from prosecution. The Supreme Court should have asked whether Congress had a rational basis for concluding that marijuana smoked at home solely for medicinal purposes would substantially affect the national non-medical marijuana market.
42. Raich at 19.
Moreover, in Wickard, Congress’s “purpose [was] to stimulate trade [in wheat] at increased prices.” “By consuming their own grain, Filburn and thousands of farmers like him cut the overall demand and depressed the market price of wheat.” “The [Supreme] Court upheld application of the [statute] to wheat grown on the farm solely for personal consumption, [because] Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.”[43]
43. Liberty University at 29 (first quotation); The Oxford Companion to the Supreme Court of the United States (2d ed. 2005) at 1088 (second quotation); Liberty University at 25 (third quotation).
In Raich, however, Congress’s purpose was to obliterate the nationwide non-medical marijuana market. If the medical marijuana users’ conduct affected the nationwide non-medical market at all, it actually served the congressional purpose by “cut[ting] the overall demand.” Indeed, in prohibiting home-grown, home-consumed medical marijuana, Congress may well have subverted its own purpose by creating greater demand for marijuana in the commercial market. The Supreme Court should have asked whether Congress had a rational basis for concluding that the non-commercial home cultivation and consumption of marijuana for medicinal purposes would have substantially undermined Congress’s objective of obliterating the nationwide commercial marijuana market – a market which consists overwhelmingly of marijuana bought and sold for non-medical purposes.
I think that Lopez and Morrison were correctly decided. The asserted commerce power justifications for the Gun-Free School Zones Act were that “possession of a firearm in a school zone may result in violent crime ... the costs of violent crime are substantial, and via insurance those costs are spread throughout the population ... violent crime reduces the willingness of individuals to travel to areas that are perceived to be unsafe ... [and] the presence of guns in public schools threatens the educational process, which will result in a less productive citizenry.” The asserted commerce power justifications for the Violence Against Women Act were that “gender-motivated violence deters ‘potential victims from traveling interstate [and] from engaging in employment in interstate business ... and ... diminish[es] national productivity ....’”[44] If justifications such as those were sufficient to support the exercise of Congress’s commerce power, then I think it at least very difficult, and perhaps impossible, to imagine anything that Congress could not regulate under its commerce power. I cannot accept the proposition that “Power ... To regulate Commerce ... among the several States” means “power to regulate everything”.
44. Thomas More at 13-14 (first quotation) and 14 (second quotation) (quoting Morrison at 615) (first and third ellipses in Thomas More).
But I do not think that Lopez and Morrison shed light on the constitutionality or unconstitutionality of the individual mandate provision. Neither the possession of a firearm in a school zone nor the commission of a gender-motivated crime is an economic activity, and the decision to do or not to do either of those things is not an economic decision. Regardless of whether the individual mandate provision is constitutional or unconstitutional, however, the choice to purchase or not to purchase health insurance is, even if not an economic activity in itself, at least a decision about an economic activity.
As to the constitutionality of the individual mandate provision, I have not yet come to a conclusion. I want to see more decisions from the trial courts and some decisions from the appellate courts, so I hope that the Supreme Court does not grant expedited review. Nor do I see any need for expedited review: The individual mandate provision does not take effect until 2014.[45]
45. See Thomas More at 2; Liberty University at 3; Virginia at 1.
Under current commerce power law – with which, as mentioned, I do not agree – I do not find the argument that Congress cannot compel individuals to purchase products in the private market persuasive. As the Liberty University court pointed out, in Wickard, the Supreme Court upheld the pertinent provision of the Agricultural Adjustment Act of 1938 on the ground that “Congress could have rationally believed that a farmer’s choice to grow his own wheat, when he otherwise would have had to purchase that wheat on the market, would substantially undermine the statute’s purpose to control wheat prices.”[46] The line between making it so that a person “ha to purchase ... wheat on the market” and directly compelling a person to buy wheat on the market seems very fine.
46. Liberty University at 25.
It is true that the farmer did not have to purchase wheat at all; he could have fed his family (and his livestock) on something else. But the Agricultural Adjustment Act of 1938 imposed mandatory price supports on corn, cotton, and wheat, and it imposed permissive price supports on butter, dates, figs, hops, turpentine, rosin, pecans, prunes, raisins, barley, rye, grain sorghum, wool, winter cover-crop seeds, mohair, peanuts, and tobacco.[47] As far as I can tell, Congress is free to make the same kinds of rules for all food products as the rules for wheat at issue in Wickard. That is, the government apparently can prohibit people from producing any of their own food. And everyone needs to eat, so everyone would have to purchase food from private sellers of food. How is that meaningfully different from directly compelling people to purchase food from private sellers of food?
47. See Congressional Research Service, Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition at CRS-9.
Be that as it may, it seems to me that – as is so often the case – a great deal depends on how one frames the issue. If the Supreme Court frames the issue as whether people can avoid regulation under Congress’s commerce power by choosing not to engage in interstate commerce (and assuming that the Supreme Court adheres to the expansive view of the commerce power expressed in Wickard and Raich), then the individual mandate provision is likely to be held constitutional, because “[t]he Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause.”[48] But if the Supreme Court frames the issue as whether Congress can compel people to purchase a product in the private market, then the individual mandate provision is less likely to be held constitutional, because the Supreme Court has “stated that Congress has the power to regulate activities that substantially affect interstate commerce” and has never “extended Commerce Clause powers to compel an individual to involuntarily enter [sic] the stream of commerce by purchasing a commodity in the private market.”[49]
48. Thomas More at 17 see also Liberty University at 28-29 (“Plaintiffs do not consider themselves to be engaging in commerce at all, but as in Wickard, economic activity subject to regulation under the Commerce Clause need not involve transacting business in the marketplace. ... Plaintiffs cannot avoid extension of the [PPACA] to their conduct just because they allege [that] they provide for their own care and will not, in fact, obtain uncompensated care at the expense of other market participants.”).
49. Virginia at 21 (italics in original) and 24.
Of course, current commerce power law is not immutable. The Supreme Court could decide to retreat from the expansive holdings of Wickard and Raich. But what would be the new position? I very much doubt that the Supreme Court will hold that no activity which occurs in a single State is subject to Congress’s commerce power. That would mean, for example, that Congress could not prohibit carrying explosives from Cincinnati OH to Columbus OH on a train traveling on an interstate railroad, that Congress could not criminalize robbing a train traveling on an interstate railroad if the robbery occurred in a single State, that Congress could not prohibit monopolizing the nationwide market in a commodity of the acts by which the monopoly was created occurred within a single State,[50] and so forth.
50. In 1895, the Supreme Court held that Congress could not prohibit monopolization in such circumstances. (See U.S. v. E.C. Knight Co., 156 U.S. 1 (1895).) Just a decade later, however, the Supreme Court held that a price-fixing agreement, although entered into in a single State, was subject to Congress’s commerce power, because it was intended to fix prices in the interstate market in beef. (See Swift & Co. v. U.S., 196 U.S. 375 (1905).)
So by what standard(s) would the Supreme Court decide what is and what is not within Congress’s commerce power? A big factor in the Supreme Court’s adoption of the “substantial effects” test – which is widely regarded as the Supreme Court’s throwing its hands up in despair and letting Congress do just about anything it wants – was the intractability of the problems which that question had been presenting for decades. The increasing complexities of commercial arrangements and transactions, as well as the rapid growth of trade in nationwide markets, had made distinctions such as those between manufacturing and commerce and between direct and indirect effects on interstate commerce increasingly unworkable.
Those problems were made even more befuddling by inconsistent decisions about the “dormant Commerce Clause” – if Congress has the power to regulate a subject but has not done so, can States regulate that subject? – which led to such unpredicted results as a conservative Supreme Court’s unintentionally ushering in the modern era of federal economic regulation.[51] Those problems were compounded further by Congress’s using the Commerce Clause to effectuate its “national police power,”[52] and they were compounded still further by an activist conservative Supreme Court’s penchant for striking down, although inconsistently, not only federal economic regulations but State economic regulations as well.[53]
51. The Supreme Court held in 1877 that because Congress had not regulated interstate railroad rates, States could regulate rates on the intrastate portions of interstate railroads. (See Peik v. Chicago and Northwestern Railway Co., 94 U.S. 164 (1877).) Less than a decade later, the Court reversed itself and held that because Congress had the power to regulate interstate railroad rates, States could not regulate rates even on the intrastate portions of interstate railroads and even though Congress had not done any of the regulating which it had the power to do. (See Wabash, St. Louis & Pacific Railway Co. v. Illinois, 118 U.S. 557 (1886).) That meant that unless Congress acted, railroad rates would not be regulated at all. Congress responded by enacting the Interstate Commerce Act of 1887, the first federal nationwide economic regulatory statute of any real significance, and that opened the floodgates.
52. For example, the Supreme Court upheld federal laws prohibiting the transportation of lottery tickets across State lines, the transportation of women across State lines for “immoral purposes,” and knowingly driving a stolen car across a State line; but it struck down a federal law prohibiting the shipment in interstate commerce of products made in factories or mines by children under fourteen years of age. (See Champion v. Ames, 188 U.S. 321 (1903); Hoke v. U.S., 227 U.S. 308 (1913); Brooks v. U.S., 267 U.S. 432 (1925); Hammer v. Dagenhart, 247 U.S. 251 (1918).)
53. For example, the Supreme Court struck down a maximum-hours law for bakers, upheld a maximum-hours law for women, struck down a law prohibiting “yellow dog” contracts (employment contracts making joining a labor union a ground for termination), upheld a maximum-hours law for all factory and mill workers, struck down a minimum-wage law for women, upheld a maximum-price law for milk, struck down a minimum-wage law for women and children, and on and on and on. (See Lochner v. New York, 198 U.S. 45 (1905); Muller v. Oregon, 208 U.S. 412 (1908); Coppage v. Kansas, 236 U.S. 1 (1915); Bunting v. Oregon, 243 U.S. 426 (1917); Adkins v. Children’s Hospital, 261 U.S. 525 (1923); Nebbia v. New York, 291 U.S. 502 (1934); Morehead v. New York, 298 U.S. 587 (1936).)
If the Supreme Court does retreat from Wickard and Raich – especially if it abandons the “substantial effects” test entirely – it will have to come up with something else. And I am at a loss to discern what that something else might turn out to be.
Finally, it seems to me that if the Supreme Court invalidates the individual mandate provision – which would evidently be the death-knell for the entire plan, because “the [individual mandate provision] is the linchpin which provides financial viability to the other critical elements of the overall regulatory scheme”[54] – that would pave the way for a single-payer system. If the Supreme Court makes it impossible to achieve universal coverage, including coverage of people with preexisting conditions, through the private insurance market, the only realistic alternative to the crisis in which we now find ourselves will be a single-payer system. (As far as I can tell, the Republicans’ belated tinkering proposals will not solve that crisis.)
54. Virginia at 15; see also Liberty University at 27 (quoting PPACA, sec. 1501(a)(2)(I)) (“Without [the individual mandate provision], Congress found that healthy individuals would wait to purchase health insurance until they needed care, driving up the cost of health insurance premiums. Congress stated that the [individual mandate provision] ‘is essential to creating effective health insurance markets’ with broad health insurance pools including healthy individuals.”).
The argument for a single-payer system might run something like this: “Okay, according to the Supreme Court, we cannot use the commerce power to compel people to buy health insurance. So we cannot achieve universal coverage through the private insurance market. But it is settled that we can use the taxing and spending power to tax people to pay for old age pensions and unemployment benefits,[55] so we should be able to use the taxing and spending power to tax people to pay for health insurance. No one has any better idea, so let’s do that.” If that happens, a conservative Supreme Court will have unintentionally brought about a single-payer system for health insurance, just as a previous conservative Supreme Court unintentionally kicked off the modern era of federal economic regulation.[56] And I will savor the delicious irony.
55. See Helvering v. Davis, 301 U.S. 619 (1937) (old age pensions); Steward Machine Co. v. Davis, 301 U.S. 548 (9137) (unemployment benefits).
56. See note 51 and accompanying text.
Again, I hope that this is, at least to some modest degree, illuminating. And I am curious what others think about the issues involved.
