(MINNEAPOLIS) – A vivid drama played out in the dignified chambers of the Supreme Court this week. Over three days – an unusual length of time – the court heard lawyers on the Patient Protection and Affordable Care Act, popularly known as “Obamacare”.
A serious, complex issue
The vast length of the law itself has become well known. The arguments about the law have produced a much larger pile of words. The eleventh circuit court of appeals decided that part of the law was unconstitutional in a decision running to 305 pages. One compilation of just academic arguments for and against the law runs to just over 50 authors, some with multiple articles. The court received briefs from the main litigants and from over 80 other organizations and groups not formally a part of the lawsuit. There may be as many as 30 individual law suits pertaining to the law, some settled and some held pending the outcome of the current Supreme Court case.
Of course this is a deeply political issue. But even a court as politicized as the current Supreme Court is not directly considering questions of what is the best policy for health care. The arguments are made in terms of legal concepts.
What can the government do?
While it can appear, especially in the last ten years, that the federal government can do anything it wants, its powers are limited by the Constitution. The legal debate over the heath care law is fundamentally about whether or not the government has the power to do what it passed in the law. And as we’ll see, this is neither as simple or as obvious as either side claims.
The power to tax
The Constitution provides that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises” but that “all Duties, Imposts and Excises shall be uniform throughout the United States” and that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census.”
The law imposes penalties on someone who fails to get health insurance. Is that a tax? And if a tax, is it not a uniform tax, and therefore unconstitutional? Even this seemingly obscure issue did not come to the court in a simple form. In the years after the Civil War, Congress passed the “Anti-Injunction Act” which prohibited lawsuits about taxation until after the tax had been collected – and the individual mandate hasn’t gone into force yet. This was enough for the fourth circuit court of appeals to dismiss suits against the law.
This question was the subject of the first day of arguments. Neither the government nor those challenging the health care law thought the penalty was a tax. The court had to ask a third party to argue that position. The court seemed unimpressed by the argument that the penalty was a tax.
Some had thought the court might say the penalty was a tax, declare that Congress could tax what it liked and thus avoid the other issues. Others thought the court would declare the penalty was a tax, and then use that as an excuse to delay deciding the entire question until the tax came into effect – safely after the 2012 presidential election. Courts do sometimes appreciate the chance to dodge political controversy and find excuses to do so. But it appears, from the overall tone of remarks by judges on Monday, that the court will not take this route.
The commerce clause
The constitution provides that Congress has power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” What is “interstate commerce”? Over the years, this clause has come to be interpreted very expansively. Almost any economic activity of any scale crosses state boarders and thus is seen to be able to be regulated by the federal government. The reason this is relevant is that the health care law contains what has become known as “the individual mandate.”
If you can afford health insurance (defined as it being less than 8% of your monthly income) you have to buy health insurance. People making less will get a subsidy. If you fail to purchase health insurance, you will pay a penalty.
The reason this is in the bill is that there is also a provision in the law that prohibits insurance companies from refusing coverage to those with pre-existing conditions. If there was no penalty, people who are healthy would have an incentive to decline to obtain health care coverage until they became sick. This would leave insurance companies paying for people with claims, but not able to spread the cost over a population of people who were healthy.
This individual mandate was the subject of the second day of arguments on Tuesday.
Requiring economic activity?
So does this individual mandate force people to participate in economic activity who otherwise wouldn’t? This seems new and different. If you decide to sell a product across state lines, the government can regulate your activity. But you always have the option just not to offer the product for sale, and then the regulations don’t apply to you and no one will force you to sell the product.
Opponents of the law make much out of this idea that the government is forcing you to purchase a product from a private vendor, or penalizing you if you don’t. Their claim is that this is unprecedented.
Is it really new? We are required to buy insurance if we drive a car, and buy it from a private company. But, you can decide to go without a car, and some do, even if that would be impossible for most of us.
Corey Rayburn Yung of the University of the Kansas Law School contends that “Federal criminal law contains scores of provisions that facially or in application punish inactivity by individuals. These criminal statutes regulating inaction include not just traditional crimes by omission, where a common law duty is violated, but also offenses related to registration, record keeping, possession, receipt, preventive measures, nondisclosure, organizational, misprision, and obstruction.”
But are these cases really parallel? These don’t seem to require everyone to participate, they just impose duties on those who choose to participate.
The government, in Tuesday’s oral arguments made a different case. They contended that everyone is in fact engaged in the market for health care, that there is no choice about participation. The issue isn’t “buying health insurance”, the issue is who uses health care. Justice Kagen made the point on Tuesday (page 65 of the transcript): “…health insurance exists only for the purpose of financing health care. The two are inextricably interlinked. We don’t get insurance so that we can stare at our insurance certificate. We get it so that we can go and access health care.”
If you don’t buy health insurance, you will wind up in the emergency room and hospitals will be required to care for you, and that care is subsidized, in part, by those who have health insurance. This is classically termed the “free rider” problem. If you listen to PBS but don’t subscribe, then those that do subscribe are paying for you and you are “riding along” for free.
And just how significant is this free rider argument? Does the cost of paying for the uninsured really drive up our heath care costs? How much would it have to increase costs in order to matter?
But the issue may get sliced up in a different way: that there really is no such thing in health care as “not being in the market.” This point, was also made by Justice Kennedy on Tuesday, as reported by the ACA Litigation blog. You have to use health care at some point in your life, and so this is not optional economic activity, it is universal. So what the government is regulating is an economic decision: pay for health expenses directly or pay through insurance. Both then are economic activities and the commerce class would allow it.
However convincing this might be in legal terms, it would probably not look convincing in political terms to those opposed to the law.
But if the government can require this individual mandate, can it then require everything? Could it mandate you get all sorts of insurance on the same principle? Force you to eat healthy foods? To floss your teeth? So then, judges are looking for some principle that limits the scope of the decision.
This matters because the Supreme Court doesn’t just decide an individual case. It sets rules and principles in place that will get used in other cases unrelated to health care.
The government argued on Tuesday that health care was unique. It may not matter. Congress and the courts have so expanded the Commerce clause that it seems that anything goes.
And, as David Orentlicher observes Congress forces you to buy seat belts and catalytic converter when you buy a car, smoke alarms when you purchase a mobile home, and many other things. As far back as 1942, the Supreme Court ruled that growing your wheat to make your own bread is economic activity subject to regulation under the interstate commerce clause.
Severability
But there is more to come. On Wednesday the court will hear arguments on whether the individual mandate could be ruled unconstitutional by itself (being severed from the rest of the law) or if the entire law must be ruled out if the mandate is declared unconstitutional.
Health care providers are arguing (as I wrote earlier) that forcing them to provide coverage to everyone cannot work without the individual mandate. Several courts of appeals have said otherwise. But the legal issue may not only turn on fairness or on economic analysis. It may also turn, writes Lyle Denniston of ScotusBlog, on the court attempting to figure out if Congress wanted half of the law to come into force by itself or not.
The government position actually is to sever the law in a different place. They contend that the sections on preexisting condition and limitations on premiums will have to go if the mandate falls, but the rest of this very complicated law can survive. So the court may have to decide where to sever the law.
Predicting the court
So how will the court decide? Predicting decisions is a leading spectator sport among court watchers, but it is easy to be fooled. If a justice strongly attacks one side during oral arguments it could mean he rejects the argument, or it sometimes means he likes the argument and wants to get more ammunition to convince his fellow judges, or to fully convince himself.
Much speculation centers around Justice Kennedy as the supposed swing vote between four conservative judges (Roberts, Scalia, Thomas and Alito) and four liberal ones (Kagan, Sotomayor, Breyer and Ginsburg). However, some have thought that perhaps Scalia might be persuaded to support the law, given his expansive interpretation of the commerce clause in a case involving medical marijuana. In oral arguments Chief Justice Roberts seems to have given some credence to the government position. But these are reading very weak signals indeed.
The decision is expected in June – about the time the political conventions are gearing up. Should a divided court take more time to reach a decision, and it come down during the fall election campaign, it could be a major development in the race.
“Hard cases make bad law”
When Judge Rolfe observed (perhaps for the first time in a court decision) in 1842 that complex cases did not always result in the best policy outcomes he could have had in mind issues like the health care law. The actual mix of legal arguments is certainly more complex than I’ve covered here.
The health care law was itself a complex compromise and not what most wanted. If it was struck down, perhaps it might drive more effort into passing a truly universal health care system. Opponents of the health care law generally seem to concede that Medicare is in fact, constitutional. Perhaps it would have been better to expand Medicare rather than pass such a complex law.
It would be the oddest outcome of all if a victory for Obamacare actually impeded the implementation of a truly universal health care system.