Kingdom Come
Albrecht Dürer, The Four Horsemen of the Apocalypse, a woodcut. Germany, AD 1498.
Vaughan Bell has an interesting piece at Slate about research into how followers of apocalyptic cults cope when their end-of-the-world predictions don’t pan out. The answer is that they don’t. That is, they don’t ever really face up to it, because to them, the great clash of theory and fact never happens. That’s because they’ve rigged their theories so that contrary facts may not disturb the integrity of the theory. Bell concludes:
For those not waiting for the world to end in a storm of fire and light it is easy to write off the believers as deluded, but Festinger was not so wide of the mark when he suggested that we adapt to even the most unlikely of contradictions using nothing more than our methods of everyday rationalization. The faithful could just as easily be those who stubbornly stand by disgraced politicians, failed ideologies, dishonest friends, or cheating spouses, even when reality highlights the clearest of inconsistencies. Armageddon is unlikely to arrive this weekend, but most of us have lived through it many times before.
Via Mind Hacks. Also interesting to see, via Kevin Drum, that the crackpot behind this particular rapture theory spent upwards of $100 million publicizing it, with the result that we’ve all had a good time making fun of it.
That said, in time the sun and stars will all burn out, and human life will be extinguished forever.
The Kit, the Caboodle, and Judge Vinson
Judge Vinson’s decision (pdf) to strike down the ACA’s individual mandate was expected, as was much of the substance of his reasoning. Less expected, though not entirely surprising, was the judge’s ruling that the individual mandate was not severable from the rest of the Act and that therefore the entire ACA, including all the parts that are constitutional, would be invalidated.
As I mentioned in my last post (which, incidentally, is now up at Care and Cost), there are a great many provisions of the ACA that have nothing to do with the individual mandate or with health-insurance reform at all. Judge Vinson mentions a few, including one that requires employers to allow new mothers break time for lactation at work. But even the insurance-reform provisions (Title I of the ACA), which are related to the mandate in some sense, are not contingent on the existence of the mandate. There is after all no reason we can’t go ahead and create health-insurance exchanges and subsidize the purchase of insurance for those who can’t afford it, even without a coverage mandate. The only real problem for the viability of the ACA sans individual mandate, I think, would be adverse selection. But that problem arises from specific elements of the ACA’s regulation of insurer risk selection (a.k.a., “cherry-picking”)—namely, guaranteed-issue and community-rating requirements, which make coverage available to any buyer at a uniform price, regardless of the buyer’s health status. Research clearly establishes that regulation of insurer risk selection can lead to serious disruption or market failure in the absence of a well-integrated risk pool or universal coverage.
The problem is, severability analysis does not turn on whether the statute would be workable in the absence of the unconstitutional provision. Workability is necessary, but not sufficient. Unfortunately the analysis has more to do with what, in the judge’s view, Congress “thought” about the importance of the offending provision to the greater statutory scheme. The rule is that the court should sever unconstitutional parts of a law from its valid parts unless Congress would not have enacted the valid parts alone. Thus, as Kevin Walsh notes, severability doctrine calls for a kind of hypothetical, counterfactual inquiry to determine whether the enacting Congress would have preferred the truncated statute, or no statute at all.
The policy choices embedded in the decision about how to sever are legislative judgments, and thus it might seem appropriate for courts to seek guidance in legislative intent. But judges are not well-equipped to reconstruct legislative intent, particularly not counterfactual legislative intent. In fact, no one is well-equipped to do it, for one of two reasons: either because aggregate human volition is indeterminate and time is unidirectional, thus making reconstruction an impossible task; or because “it” is just a meaningless jumble of words. (In the comments, Lee has…er…a pithier take.) What happens instead is judges simply decide and then couch the decision in terms of legislative intent, colored with favorable bits found in the statute’s legislative history.
Severability doctrine is well-settled, but unlovable. As David Gans argues, what’s needed is to shift the standard from one focused on legislative intent to one focused on limiting judicial lawmaking. Rather than focus on what the legislature would have wanted, the courts should focus on how to salvage the statute with minimal judicial intervention.
Sometimes that will mean total invalidation, but only where severance demands massive judicial rewriting of the statute. The risk of total invalidation does give Congress an incentive to attend to the constitutionality of legislation before enactment. And that’s important. But the downside of a total-invalidation approach is the possibility that it would create a chilling effect on legislative innovation. Lawmakers might shy away from solving hard problems with clever new ideas for fear that all their work will be lost if the courts invalidate those new ideas. That would be…not good. Legislative straightjackets are already in ample supply.
Why Did the Administration Retreat on Advance Directives?
Just days after taking effect on Jan. 1, 2011, new Medicare regulations authorizing reimbursement to physicians for end-of-life care planning were retracted by the administration. Austin Frakt, pleading for someone to explain the “Medicare end-of-life planning flip-flop,” asks: “Did the Administration follow proper procedure or not?” The stated reason for the retraction was that the rule had been adopted without sufficient notice or opportunity to comment on the issue. I think the legal question, now moot of course, was a close call, but the administration was right to retract. There’s a fairly strong case that notice was inadequate and, therefore, that the rule was procedurally defective.
Background
During the debate leading up to passage of the Affordable Care Act (ACA), a proposal for Medicare to cover end-of-life care planning became a lightning rod for conservative opposition, which branded the proposal as the first step on the road to death panels. The provision was dropped, and the ACA as finally enacted on March 23, 2010 (and amended March 30) did not include Medicare coverage of EOL planning.
On July 13, 2010, the Centers for Medicare and Medicaid Services (CMS) published a Notice of Proposed Rulemaking in the Federal Register (75 FR 40246 [pdf]), announcing its intent to promulgate a new Medicare physician fee schedule implementing, among other things, Annual Wellness Visits established by the ACA. The Notice included the text of the proposed rules and invited public comments on them. There was no mention of reimbursement for advance-care planning in the Notice, and it was not included in the Proposed Rule.
In the ensuing comment period, health professionals urged CMS to include payment for voluntary advance-care planning as part of Medicare’s new Annual Wellness Visits. CMS agreed. Citing evidence that advance planning yields improvements in the quality of EOL care and that patients would welcome the opportunity to discuss such plans with their doctor, the agency incorporated payments for voluntary advance-care planning into its Final Rule, published Nov. 29, 2010 (75 FR 73170).
The provision went largely unnoticed in the media until reported by Robert Pear in the NYT on Dec. 25. Controversy then started brewing, and detractors and supporters alike criticized the administration for trying to slip the provision into the regs on the sly in spite of its notorious failure to pass Congress. The Final Rule took effect Jan. 1, 2011. Its repeal was announced just days later, effective Jan. 10, 2011 (76 FR 1366 [pdf]).
Discussion
The rulemaking process is governed by §553 of the Administrative Procedure Act, which requires federal agencies to provide notice of proposed rulemaking and an opportunity for interested persons to submit written comments. The agency must address major issues raised by commenters and explain its decisions in a “concise general statement” published with its final rule, 30 days before the rule takes effect.
There is no hard-and-fast, bright-line standard as to what constitutes adequate notice. But the purpose of the notice requirement is clear enough: to give “interested persons” (stakeholders, the public) an opportunity to participate in the process. Typically notice is given—as it was by CMS in this instance on July 13—by publishing an invitation to comment along with the full text of a proposed rule in the Federal Register. The agency may of course decide to change the proposed rule in response to public comments. But if it modifies the proposed rule, it must consider whether stakeholders had adequate notice of the final, modified rule.
The answer to that depends on how substantially the rule is changed. Courts considering such cases have invoked various “tests” to gauge the adequacy of notice: whether the final rule is a “logical outgrowth” of the proposed rule; whether the final rule “substantially departs” from the terms of the proposed rule; whether the notice was misleading with respect to the changes incorporated in the final rule.1 At an abstract level, the inquiry here is about the fairness of the process. If the court is persuaded that, all things considered, the rule’s challengers should have anticipated the changes, then it will likely find notice adequate.
So, should opponents of Medicare coverage for EOL planning have anticipated that CMS would include such coverage in its Final Rule? Well, there are arguments in both directions. You might argue: No. There was no mention of advance-care or end-of-life care planning in the Proposed Rule, and a similar proposal was conspicuously removed by Congress from the ACA itself. And so, even if it is within CMS’ substantive authority to adopt a rule covering advance-planning payments, it would not be fair or reasonable to expect all stakeholders to have anticipated that such a rule would be adopted without further opportunity for public comment.
Or you could argue: Yes. The terms of the Final Rule should have been anticipated and were indeed a “logical outgrowth” of the Proposed Rule covering preventive services in the Annual Wellness Visit. For one thing, Medicare already covers such voluntary advance-care planning as part of the “Welcome to Medicare” physical exam. Other similarities between the two visits should have alerted interested parties to the possibility that advance planning would be incorporated into the new rules.
So, it’s debatable whether CMS’ rule was procedurally defective. But under the circumstances, I think retraction was prudent. The rule probably would have faced legal challenge, with results uncertain. By retracting the rule promptly, the administration can face the problem head on (or not), on its own terms. The defect can easily be cured with another round of notice and comment, and there is no reason the rule could not be adopted once more in identical form within a few months. CMS appears to have all the substantive authority it would need to institute the rule.
But, apart from any strategic calculus, there’s also something to be said for making good on our commitments to procedural fairness and openness, commitments which at times must trump the pursuit of substantive policy objectives. Supporters of the policy may be dismayed at the administration for yielding to politics over evidence. I sympathize, to a degree. Particularly with regard to substance, it is distressing to see death-panel nonsense accorded any respect. But the procedural issues raise special concerns. The whole administrative apparatus of government is organized around more or less vague, aspirational objectives. Administrative procedure is also vague and aspirational, but it is the best means we have devised to apply neutral, ex ante constraints on the bureaucracy. It represents our best efforts at ensuring that public policy is informed by evidence and expertise and is responsive to public needs and interests.
Procedural fairness is instrumental to substantive ends, but there are times when it is itself more about politics than evidence. This is one of those times.
- See, e.g., Chocolate Mfrs. Assn. v. Block, 755 F.2d 1098 (4th Cir. 1985). In that case, the Fourth Circuit invalidated a rule removing “flavored milk” from the WIC nutritional assistance program. The court found notice insufficient because, while the agency specifically invited comments about sweetened cereals and other foods, it did not do so with regards to flavored milk, which had long been included in the program for women and non-infant children. [↩]
Annals of Evolution: What Are Goosebumps?
Like hiccups, goosebumps are a QWERTY phenomenon. They are relics of our evolutionary heritage. Rob Dunn explains:
When our ancestors were covered in fur, muscles in their skin called “arrector pili” contracted when they were upset or cold, making their fur stand on end. When an angry or frightened dog barks at you, these are the muscles that raise its bristling hair. The same muscles puff up the feathers of birds and the fur of mammals on cold days to help keep them warm. Although we no longer have fur, we still have fur muscles just beneath our skin. They flex each time we are scared by a bristling dog or chilled by a wind, and in doing so give us goose bumps that make our thin hair stand uselessly on end.
Interestingly, it’s these kind of traits—ones that don’t really make sense or contribute to an organism’s current adaptive fitness—that make the most compelling arguments for the theory of natural selection. More examples in Dunn’s piece at the Smithsonian.
How to Get Things Done
Here’s a handy summary of evidence-based suggestions of the optimal psychological states one should maintain in order to get stuff done.
- To avoid procrastinating on a task, focus on its details and use self-imposed deadlines.
- To stick to a task, while actually carrying it out, now it is beneficial to keep the ultimate, abstract goal in mind.
- When evaluating progress on a hard task, when the chance of failure is high, stay focused on the details of the task.
- Once tasks are easier or the end is in sight, a more abstract, goal focus is once again the psychological approach to choose.
From PsyBlog.
Navigating the Hudson Decision
There were no major surprises in Judge Henry Hudson’s ruling on Monday that the ACA individual mandate is unconstitutional. The key holdings of the opinion (pdf) were:
Retro Henry Hudson
- that the individual mandate is a regulation of “inactivity” (i.e., the status of being uninsured);
- that Congress has no authority to regulate inactivity under the Commerce Clause;
- that the Necessary and Proper Clause does not extend the commerce power to reach inactivity;
- that the mandate penalty is a regulatory penalty and not a tax and therefore not an exercise of the taxing power.
Also significant was Judge Hudson’s finding that the minimum coverage provision was severable from the rest of the statute: striking down that one provision, the judge found, would not invalidate any other parts of the law not overtly tethered to it by specific statutory reference. And though the legislative scheme of the ACA is aptly described as a three-legged stool—propped up by the individual mandate, the insurance regulations, and subsidies to help individuals buy insurance—the interdependence of the legislation’s policy purposes does not makes its provisions legally inextricable from one another.
Many legal commentators have taken issue with Judge Hudson’s treatment of the Necessary and Proper Clause (N&P). Orin Kerr thinks Hudson simply made an error, noting that the whole point of N&P is that it expands congressional means beyond the enumerated powers in order to ensure that those powers are effective.
Jonathan Adler and Jason Mazzone each respond that Hudson is not arguing that N&P adds nothing to the Commerce Clause, but just that it too must be limited by some objective principle, and that the activity requirement is that principle. In other words, N&P may extend the commerce power beyond regulation of interstate economic activity to regulation of intrastate activity, or even non-economic activity, but not to regulation of inactivity.
To which ACA supporters rejoin that (a) the individual mandate aims to regulate not based on inactivity but based on the aggregate effects of behaviors (viz. economic decisions) on healthcare and insurance markets over time, and (b) there is no activity requirement in the first place. Making the latter point, Michael Dorf writes:
There is no constitutional prohibition on Commerce Clause regulation of inactivity, at least where that inactivity is economic in nature. Judge Hudson accorded talismanic significance to the fact that prior cases had used the phrase “economic activity,” without ever pausing to explain why the government cannot regulate inactivity that is in its nature economic. Consider, in this regard, the provisions of federal labor law and federal antitrust law that have been construed to forbid secondary boycotts . A boycott, of course, is economic inactivity–a refusal to purchase goods or services from the target–in exactly the same way that the non-purchase of health insurance is economic inactivity. Under Judge Hudson’s analysis, such prohibitions are constitutionally invalid, even though no one even thought to question them on these grounds during the decades they have been enforced.
But doesn’t the case law require that the underlying predicate for regulation be some sort of affirmative activity? The short answer is no. Although the cases talk about “economic activity,” that’s only because the predicate for regulation in the prior cases happened to be activity rather than inactivity. Consider a quite closely related question. In Gonzales v. Raich, the Supreme Court for the first time defined the “economic” aspect of “economic activity,” borrowing from Webster’s dictionary: “the production, distribution, and consumption of commodities.” Does this mean that the purchase of services is not economic activity for Commerce Clause purposes? Of course not. The Court in Raich had before it a case involving a commodity (marijuana) and so it chose a definition that focuses on commodities. In a subsequent case involving services the Court will undoubtedly say that they are included too. In the meantime, it would take a particularly obtuse district court judge to think that because of the definition in Raich, services are not covered by “economic activity.” Likewise, the use of the term “activities” must be understood as a product of the context of the cases in which the term was used, rather than any consideration of the constitutional difference between activity and inactivity.
(Bold added.) I find that persuasive, but I also see the need to articulate a limiting principle on the commerce power. Brad Joondeph thinks that emphasizing the unique character of health insurance markets could be the key. Maybe so, but I think we need to remain open to the possibility that the Constitution leaves it to the political process to determine its own “logical limitation.”
Straight to SCOTUS?
Some conservative pols are calling for immediate Supreme Court review of the district court rulings on the constitutionality of the ACA individual mandate, a move which would overstep the regular appeals process in the circuit courts.
Kevin Drum tentatively agrees, saying “I mean, everyone knows this is going to end up at the Supreme Court anyway, and everyone knows that the Supreme Court quite plainly couldn’t care less what any of the lower courts say about it. All those lower court decisions are no better than waste paper.” Drum does acknowledge that he may be “missing some important process issues that make it unwise to just hand this off to the Supremes right away.” He should embrace his inner doubter.
The Supreme Court does care what the lower courts have to say, especially the Circuit Courts, for a number of reasons. Not least is that appellate judges and lawyers are generally very smart people and have lots of experience and expertise on the issues. SCOTUS will let the process play out in order to have the benefits of the work done at the trial and circuit levels. This (usually) helps the Court to avoid embarrassing mistakes. Also, the process has a way of crystallizing the legal issues at stake and isolating the logical pressure points. It’s a dialectic. As the pressure ratchets up, arguments are synthesized and refined.
Then, of course, the Court is free to cast all that aside and bend judicial doctrine to achieve the desired outcome of the majority of its members. But, even so, the process helps the Court weigh the consequences of various pettifogging cop-outs, so as to avoid unnecessary institutional damage in the fallout.
Another ACA Challenge Dismissed
Another federal district court judge has dismissed a challenge to the ACA’s individual mandate and other provisions. This is now the second case to be dismissed for the plaintiffs’ lack of standing. Brad Joondeph:
Judge Susan D. Wigenton (United States District Court for the District of New Jersey) today issued her judgment dismissing the plaintiffs’ complaint in New Jersey Physicians v. Obama on the ground that none of the plaintiffs have standing. You can find the opinion here [pdf].
Judge Wigenton concluded that, with respect to the private individual Doe–who claimed to be injured by the minimum coverage provision–it was purely speculative as to whether he would either lack health insurance or be liable for the penalty come January 2014. The judge distinguished the other district court opinions concluding that the plaintiffs had standing to challenge 1501(b) on the ground that, in those cases, the plaintiffs had alleged they were experiencing a current financial impact (in the form of advance planning). Here, the plaintiff made no such factual allegation. (Honestly, this seems like a rather trivial basis for distinction; the plaintiff could presumably now amend his complaint to include such an allegation.)
The court also concluded that a plaintiff doctor and the New Jersey Physicians Group (of which he is a member) also failed to demonstrate any injury stemming from the individual mandate, as (a) it was unclear how the individual mandate would harm the doctor in how he was paid (which he had alleged), and (b) he had made no factual allegations showing that he would be covered by the employer mandates.
Altogether that makes four cases to reach final resolution in the district courts, all favorable to the ACA: two dismissals for lack of standing and two decisions upholding the ACA on the merits. Two more decisions are coming relatively soon—one in Virginia and the big one in Pensacola, Florida—but both of those are expected to result in wins for the challengers.
The FOMC Is about 42% Unconstitutional
The Federal Open Market Committee (FOMC) is powerful, weird, and about 42% unconstitutional.
Powerful. The FOMC is a core policymaking body of the U.S. Federal Reserve System. It is the part of the Fed responsible for manipulating interest rates (which it does by means of “open market operations,” i.e., buying and selling Treasury bonds to modulate the supply of cash in the economy). Basically, in conjunction with the Fed’s Board of Governors, it is the Mother Brain of the U.S. economy.
Weird. The weirdness of the FOMC comes in part from its abstruse subject matter and the borderline alchemical vibe of its operations (see previous). But it is also structurally weird. The FOMC is a strange public/private hybrid whose twelve (12) voting members comprise the seven (7) members of the Fed’s Board of Governors plus a rotating contingent of five (5) presidents of the regional Federal Reserve Banks. Members of the Board of Governors are appointed by the President of the United States, subject to approval by the Senate. The presidents of the regional Reserve Banks, by contrast, are chosen by the Banks’ boards of directors, subject to approval by the Board of Governors. (Background here.) Among the vast and varied agencies wielding any measure of power in the federal government, this arrangement is unique—weird, even. And it is patently unconstitutional.
It is worth pausing to let the weirdness sink in. A major portion of the monetary policy of the United States—possibly the singlemost important lever of public control of the economy—is conducted by a committee of individuals, a large fraction (5/12) of whom are not even officers of the United States government. And the fraction is often even greater in practice due to routine vacancies on the Fed Board. When the Board operates with two vacancies, as it did for much of the last couple of years, it occupies only five seats on the FOMC, and the denominator of FOMC votes drops to ten—five from the Board, five from the Banks.
Unconstitutional. Now, you might think this mix creates a sensible balance on the committee, or you might think it an affront to democracy. Either way, it is a clear violation of the Article II Appointments Clause, which provides:
The President . . . shall nominate, and by and with the advice and consent of the Senate, shall appoint ambassadors, other public ministers and consuls, judges of the Supreme Court, and all other officers of the United States, whose appointments are not herein otherwise provided for, and which shall be established by law: but the Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments. (U.S. const. art. II, § 2, cl. 2.)
The Constitution allows for only two ways of appointing officers of the federal government. First (the default): an officer may be appointed by the President with Senate approval. Or second: where lesser offices are concerned, an officer may be appointed by the President, the courts, or department heads without Senate approval.
Voting members of the FOMC are top-level policymakers in a federal government agency; as such they exercise discretionary powers that distinguish officers of the United States from mere civil servants. The five members representing the regional Reserve Banks (“regional members”) are not appointed by the President or confirmed by the Senate and therefore do not satisfy the default appointment criteria. But nor are those regional members appointed by the President, courts, or the head of any department or agency of the federal government. They are appointed by the private and independent boards of directors of the regional Reserve Banks. So they also fail to satisfy constitutional criteria for appointment of inferior officers.
And there you have it. Five of twelve seats violate the Appointments Clause, making the FOMC just about 42% unconstitutional.
Triangulation as Losing to Win
Matt Yglesias pauses to appreciate the properly two-dimensional character of the President’s triangulated deal with congressional Republicans on the tax cuts and more fiscal expansion:
Incidentally, like this tax deal or don’t like this tax deal, I think this counts as a good example of the “triangles are two dimensional” principle. The President struck a deal that the left doesn’t like and that the right doesn’t like, but that also isn’t simply equidistant between the leftwing option (hold firm and let all tax cuts expire unless the GOP caves on tax cuts for the rich) or the rightwing option (hold firm and blame Obama for the expiration of all tax cuts). Instead, reversing a lot of his recent rhetoric, Obama has positioned himself as the guy maximally devoted to securing as much short-term fiscal expansion as is politically feasible.
It seems to me the President is working in a third dimension here, as well. By appearing to “lose” the debate over tax cuts, he has given Republicans the cover they need to make the deal. And while Republicans claim their “win” the President secured at least a modicum of additional stimulus. If any part of the deal contributes to an accelerated recovery, congressional Republicans can try to take credit for that, too. But if people are really feeling the effects of an accelerated recovery by November 2012, it is more likely to be the President and his party that the swing voters of America will credit.
The Closest Thing to Peer-Review Humor
Via Brad DeLong:
Adventures in Statutory Interpretation
In theory, there are three distinct modes of statutory interpretation: textualism (adhering to the plain meaning of the text), intentionalism (adhering to the specific meaning intended by the legislators), and purposivism (adhering to the overall statutory purpose). In practice, judges are pragmatic and engage selectively in all three modes, though they may lean in one direction or another. So when a question of statutory meaning arises, you will most often look at it from all three angles to build your best argument.
It may be instructive, as a quick exercise, to consider from each of these angles the question of whether the monetary assessment imposed by PPACA for failure to maintain minimum health-insurance coverage is a tax or a regulatory penalty.
Looking first at the text of the statute alone, you’d have to conclude the assessment is a penalty. It’s never referred to as a tax and never justified as an exercise of the taxing power, even while extensively supported by legislative findings pertaining to the commerce power.
Second, brushing aside plagues of conceptual problems inherent in the notion of legislative intent, note that while identifying the intent of Congress is always tricky, one clue that Congress intended the penalty to be a penalty is that they consistently referred to it using the term “penalty.” But here you might note that in earlier drafts of the legislation the mandate penalty was identified as an exercise of the taxing power, and that we may surmise that it was intended to be an exercise of both the taxing and commerce powers, even if the tax language was dropped in the shuffle between committees (or whatever).
Arguments like this just aren’t going to get us anywhere. The evidence of intent almost always cuts both ways, for one thing. The obvious response is to say: no, the fact that the language was dropped is evidence that Congress intended to drop it; if they’d wanted to invoke the taxing power, they would have left that language in the final draft. This is why the use of legislative history in statutory interpretation is often derided as “looking over a crowd to find your friends.”
The third and last method involves assessing the meaning of provisions in light of the overall purposes of the statute. Here too it looks like the analysis would lean towards a penalty. Clearly the main purpose of the penalty is to enforce the mandate; it aims to nudge people into coverage and thereby to relieve the systemic threat of adverse selection in the insurance markets.
Now, it wouldn’t be unreasonable to say, in addition, that the penalty serves a secondary purpose of raising revenue—about $4 billion a year, CBO estimated. Except that the drafters studiously avoided even the suggestion that the penalty would be a revenue generator—no doubt to preempt political opponents from using that to argue the mandate was a tax. Which is, of course, why this whole fiasco is so maddening: Democrats bent over backwards to shield the healthcare bill from all manner of political attack but, in doing so, seemingly allowed the bill to become dangerously vulnerable to legal attack.
Moon on the Mandate Penalty
While upholding the health reform law’s individual mandate under the Commerce Clause yesterday, Judge Moon of the Western District of Virginia basically shot down the administration’s alternative argument that the mandate penalty provisions are also authorized by the taxing power:
After considering the prevailing case law, I conclude that the better characterization of the exactions imposed under the Act for violations of the employer and individual coverage provisions is that of regulatory penalties, not taxes. In the Act, Congress called them a “penalty” and an “assessable penalty.” Congress specifically chose not to label them as taxes when drafting the Act, although it described several other exactions in the Act as taxes. [...] To be sure, both mandatory coverage provisions are placed in the section of the tax code entitled “Miscellaneous Excise Taxes,” but the tax code itself instructs that no inference of legislative construction is to be drawn from the location or grouping of any particular provision of the tax code. 26 U.S.C. § 7806(b).
Even more importantly, the assessments function as regulatory penalties—they encourage compliance with the Act by imposing a punitive expense on conduct that offends the Act. [T]he statutory fees were enacted in aid of Congress’ regulatory powers under the Commerce Clause. In its lengthy statutory findings on the individual coverage provision, § 1501(a), not once does Congress indicate that it was exercising its taxing authority to impose the penalties. [...] Although the penalties are expected to raise revenue, they were not included among the “Revenue Provisions” of Title IX of the Act, which indicates that generating revenue was not their main purpose. Indeed, Defendants do not seek to deny the regulatory purpose of the penalties. For these reasons, the Anti-Injunction Act does not divest this Court of jurisdiction to hear the present challenge.
Op. at 20-21 (pdf) (emphasis added) (citations omitted).
This issue has turned out to be much more serious and challenging than I thought it would be and, while you might expect that from some penny-ante blogger, it’s also been proving more serious than heavyweight constitutional lawyer Jack Balkin or health law über-scholar Timothy Jost thought it would be. More on that apparent misdiagnosis in the near future.
Now, technically Judge Moon did not rule that the mandate could not be authorized under the taxing power, just that it wasn’t a tax for purposes of the Anti-Injunction Act (which therefore did not bar plaintiffs’ standing to sue). In footnote 13, he writes that “Congress enacted the provisions as an amendment to the Internal Revenue Code, which might weigh in favor of finding that the penalties are taxes…. In this case, however, it is neither necessary nor advisable to determine whether the penalties would be constitutionally authorized under Congress’ taxing power…. It is enough that the penalties are a constitutional exercise of the power to regulate commerce….” But the above block-quoted reasoning should apply with equal force in this analysis, and it’s a safe bet that the result would be the same: it’s a penalty, not a tax.
Mandate Upheld Again, Liberty Univ. v. Geithner Dismissed
Another federal district court judge has upheld the ACA’s individual mandate in a decision on the merits. Judge Norman Moon of the Western District of Virginia dismissed the challenge to the minimum coverage requirement and other provisions in the case of Liberty University v. Geithner (pdf). Brad Joondeph has the details:
Judge Moon found that the plaintiffs had standing to challenge the ACA (and that their claims were ripe). But he held that each failed to state a plausible claim under Federal Rule of Civil Procedure 12(b)(6).
In their complaint, the plaintiffs pressed several constitutional challenges, ranging from one grounded in the Free Exercise Clause to one that the ACA violated the Guarantee Clause. The one that really matters is their contention that the minimum coverage provision exceeds Congress’s enumerated powers. Judge Moon addresses the claim at length, but here are two critical passages. First, Judge Moon concluded that an individual’s decision whether to purchase health coverage is “economic in nature,” and thus within Congress’s commerce power under a straightforward application of Lopez[.]
[...] Additionally, Judge Moon concluded that section 1501(b) is within Congress’s commerce power under the logic of Raich and Wickard, as a necessary component of a larger regulatory scheme, which regulatory scheme plainly regulates interstate commerce (namely, the health insurance market)[.]
An important point on which Judge Moon’s decision differs from that of Judge Steeh, who upheld the mandate in the Michigan case, is that Judge Moon held that the mandate penalty is not a tax (for purposes of the Anti-Injunction Act, which bars suits challenging a tax before the tax has been levied), a question which Judge Steeh did not reach. Judge Moon draws on many of the same arguments made by Judge Vinson in the Florida case (Florida v. HHS) and Judge Hudson in the other Virginia case (Virginia v. Sebelius) to the effect that the exaction for not complying with the mandate is a regulatory penalty, not a tax. I’ll have more to say about that later. But this is a crucial issue, because if the individual mandate is not an exercise of the taxing power, then it must be justified under the commerce power. And the conservatives on the Supreme Court are likely to be much less deferential to the mandate if they find that Congress has acted under the commerce power and not the taxing power.
More on Peer Review (or the Lack Thereof)
I hope it was clear that my earlier mention of famous scientific papers that had not been peer reviewed was not meant to denigrate peer review in any way. On the contrary, I was taken aback at the audacity of publishing important scientific research without running it through a process of disinterested expert review. The times have a-changed, I guess. Peer review is now such an integral facet of modern science and scholarship that, as Austin Frakt noted to me by email, credibility is well nigh impossible without it.
Tangentially, I am still dumbfounded by the fact that law reviews are generally not edited by legal scholars, but by students without experience in law or scholarship—or editing, for that matter. Richard Posner articulated an authoritative takedown of the law review system here.
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