Constitutional Challenges to ACA Medicaid Reforms Would Be a Lot Stronger If They Had a Constitutional Principle To Support Them
At oral arguments over the health reform law last week, the Eleventh Circuit panel showed a surprising amount of interest in the other constitutional challenge to the Affordable Care Act (ACA)—the states’ claim that the ACA’s Medicaid provisions are unconstitutionally coercive, effectively commandeering state governments into doing the federal government’s bidding. Brad Joondeph reviews the arguments presented by former Solicitor General Paul Clement on behalf of the states.
First there’s an argument from “sheer volume”: the enormity of federal Medicaid funding unconstitutionally tips the balance of federalism in favor of the feds. The difficulty with this argument is that, if the sheer volume of Medicaid makes new conditions on federal spending unconstitutionally coercive, then every new amendment that has increased states’ program costs in the past several decades must also have been unconstitutional.
Then there’s an argument from the disproportionality of new conditions: a state’s noncompliance with the new conditions jeopardizes all its federal funds, not just funds newly dedicated in the ACA. Same problem as before. If new conditions on existing federal funding were unconstitutionally coercive, then you’d have to explain why the Supreme Court reached the exact opposite conclusion in South Dakota v. Dole.
And then there’s a third argument that Joondeph sums up like this:
[T]he ACA (a) imposes an individual mandate on all Americans to acquire health coverage, (b) applies that mandate to everyone, including Americans below the poverty line, but (c) provides no subsidy for those persons falling below the poverty level (though it does provide subsidies for those between 133% and 400% of poverty). Thus, the ACA on its face assumes that every state will comply with the Act’s Medicaid conditions, for this is the only way envisioned by the Act for indigent Americans to satisfy the mandate.
So Congress imposed the mandate assuming that the states will comply with new Medicaid conditions, and therefore . . . the ACA is coercive? Hmmm. Well, the first problem with this argument is that it is not an argument—it doesn’t connect premises to a conclusion. 
But even if we spot them a major premise to be articulated later, there are two other, fatal problems with it: it confuses states with the people who live in them; and it does not take into account that the ACA provides exemptions to the mandate for those who cannot afford qualifying coverage.
If State XX decided to quit Medicaid rather than accept new conditions on federal funds, the formerly Medicaid-eligible population of XX would likely be less than enthused, mandate or no. But here’s the thing. Even if they were subject to the mandate, the fact that Congress had imposed that burden on them would have precisely nothing to do with the state and its former Medicaid program. In no sense does the individual mandate place demands on the states in their sovereign capacity. It is touching that these states would equate a mandate upon its less fortunate citizens as a mandate upon the sovereign state itself. Touching, but false. And irrelevant. The mandate has nothing to do with Medicaid and nothing to do with the states (except in the minor sense that state officials in the Exchanges might certify compliance with the mandate).
What’s more, if Medicaid coverage were not available, the mandate would not apply to many people with incomes under 133% of the poverty level (FPL). This gets pretty complicated, so I’m going to save the details for another post. Suffice it to say that the mandate may not apply to people earning under 100% FPL, and people between 100% FPL and 133% FPL will either have access to subsidies or will be exempt due to the ACA’s provision excusing anyone for whom the cost of the cheapest qualifying plan would be more than 8% of their income.
In fairness, it is probably best not to think of these as separate arguments. Each fails on its own, but together they loosely approximate plausibility. As Joondeph wrote in an earlier post:
Perhaps, as the states’ brief seems to suggest, it is not any one of these factors in isolation, but the three in combination, in the context of a singularly enormous federal spending program, which renders the ACA’s Medicaid expansion unconstitutional. This is not implausible. But it is also hard to figure out how the Court could ever articulate a rule or principle of constitutional law that actually operationalizes the idea. Even if one could articulate it, the implications could be extremely destabilizing for constitutional law, and in an area that really matters (and matters on a regular, ongoing basis).
As I’ve written before, the Supreme Court’s precedents have left the door open to this kind of challenge, but they don’t illuminate a distinct line between what is and isn’t coercion. Probably because there isn’t one.
Is the Mandate Penalty a Penalty?
Arguments for the constitutionality of the individual mandate as an exercise of the taxing power often start by noting that the penalty is reported on income tax returns, calculated as a percentage of income (with a flat minimum and a cap), and codified in the Internal Revenue Code. They go on to detail the ways the ACA’s penalty differs from typical penalties: there is no scienter requirement (one’s state of mind is irrelevant to assessment of the penalty); criminal punishments are not available to enforce payment; the amount of the penalty is reasonable, not exorbitant, and limited to the actual cost of qualifying coverage; and it is imposed in proportion to the frequency of noncompliance, month by month. These points have been fixtures of the United States’ briefs throughout the ACA litigation.
Two weeks ago, arguing before the Fourth Circuit, Acting Solicitor General Neal Katyal went momentarily off script and made a point I don’t recall seeing before. At around 1:15:28 of the audio for the argument in Liberty University v. Geithner (mp3 available here), Katyal says:
Unlike any other kind of criminal penalty which I’m familiar with, when you pay the penalty here, you are excused altogether from the underlying thing that the government is asking you to do, which is to have insurance.
This is a surprisingly tricky argument to tease out. First, a quick set up: Katyal wants to establish that the mandate is an exercise of the taxing power. To do that, he is arguing that the mandate penalty operates like a tax and that it does not operate like all or most other penalties. By distinguishing other penalties, Katyal hopes to strengthen the inference that the mandate is a tax. The more essential or fundamental the distinction, the stronger the inference. So that’s where we are.
Now, note that Katyal couldn’t possibly mean you are generally or prospectively excused from the mandate when you pay a penalty for past noncompliance. You will still be required to get insurance in the future, or else pay another penalty. This is no different from any other kind of penalty. If you are a hospital administrator and you get hit with a “civil monetary penalty” (a fine) for some improper HIPAA disclosures, obviously payment of that penalty does not give you free license to go hog-wild releasing even more personal health information.
What Katyal must mean instead is that paying the mandate penalty excuses you from correcting past noncompliance. Without undertaking a systematic inquiry, it seems plausible that other laws’ penalty schemes typically do require corrective action in addition to payment of penalties. HIPAA imposes higher penalties for uncorrected violations. Violations of Stark, the law prohibiting physician self-referrals, incur stiff penalties and require the physician to return the proceeds derived from prohibited referrals. Pay your taxes late, you pay a penalty—and you pay your taxes. In various ways, each of these penalties requires corrective action. The ACA does not. So that’s a promising interpretation of Katyal’s argument. Now let’s evaluate it.
There’s something a little weird about the idea of correcting the fact that you were uninsured at some time in the past. If it were just a matter of money being in the wrong place, like a late tax payment that’s in your bank instead of the U.S. Treasury, you could easily fix that: just move the money. But there’s not really anything you could do to correct your past insurance status, so it’s not exactly clear that there’s anything for the law to excuse you from. I suppose we might say you are excused from having to get retroactive health insurance, but that would be a purely notional benefit to you, because there is no such thing as retroactive health insurance. The law might as well excuse you from giving birth to yourself.
The question then is whether excusing people from corrective action tells us that (a) the ACA penalty is not like other penalties in an important way; or that (b) the ACA penalty differs only as a result of the peculiar nature of ”the underlying thing that the government is asking you to do.” Whether or not (a)—Katyal’s thesis—is right, I think (b) is wrong. It would be a mistake to think that the above-mentioned weirdness arises only because insurance is involved. The weirdness arises because the fact that you did not have insurance is irreversible.
But other things can be just as irreversible. When a HIPAA violation occurs and someone’s protected health information has been disclosed, you can stop further disclosures from happening and fix whatever caused this one, but you can’t un-disclose the disclosed information. You can’t just wipe the memories of anyone who happened to see it. The genie is out of the bottle and can’t be stuffed back in. However, unlike the ACA, HIPAA does require that you correct the cause of your noncompliance. If your patients’ records aren’t secured, you’ll have to secure them. Which is to say, in the context of HIPAA, “corrective action” is not about undoing past violations—it’s about preventing future ones.
And that brings us to a clear, meaningful difference with the individual mandate. The ACA penalty scheme is fundamentally indifferent to the causes of noncompliance, past or future. It is more incentive than corrective or deterrent. It offers you a choice—get coverage or pay the penalty—but there are no enforcement consequences beyond the penalty. In the eyes of the law, failing to get insurance will be like making early withdrawals from your 401(k). You are free to do it, for any reason or none, but you will pay a price for it on your taxes.
A Surprising Concession on Severability
Brad Joondeph comments on a surprising development in the United States’ reply brief (pdf) before the Eleventh Circuit Court of Appeals:
[T]he United States is now conceding that the ACA’s community-rating and guaranteed-issue provisions are not severable from the minimum coverage provision. The government had essentially conceded as much in a hearing before the district court, but I think this may be the first time it has done so in a brief.
There is a fair amount of strategic sense to this. First, making such a concession only bolsters the government’s argument that the minimum coverage provision is essential to the ACA’s broader regulation of the health insurance or health care services markets. Second, it makes the government seem more reasonable. Third, it essentially forces the Supreme Court’s hand a bit when the case ultimately gets there: if the justices want to take down the mandate (which might be politically popular), they will also have to bring down the ACA provisions that overwhelming majorities of Americans support. And that would not be so popular.
The background, of course, is that when District Court Judge Roger Vinson ruled the Affordable Care Act’s minimum coverage provision (i.e., the individual mandate) unconstitutional in Florida v. HHS, he struck down the entire ACA on the grounds that its many provisions were “inextricably bound together in purpose and must stand or fall as a single unit.” I’ll take Joondeph’s word that there is strategic sense to the administration’s concession, but it’s questionable whether the law really requires non-severability of the guaranteed-issue and community-rating provisions. Certainly there is strong evidence that such regulations can destabilize insurance markets in the absence of a coverage mandate. But it is not, I think, generally desirable that we put judges in the position of conducting severability analysis based on their sense of what policy outcomes are more workable than others.
Severing unconstitutional provisions from a statute necessarily calls for some measure of legislative judgment. But if the focus of the analysis is on limiting the extent of judicial lawmaking, rather than on the workability of various policy alternatives, it’s not clear that the right result would be to lump the guaranteed-issue and community-rating provisions in with the mandate.
Was the Fourth Circuit Baffled by the Inactivity Argument?
The Fourth Circuit Court of Appeals heard oral arguments on the constitutional challenges to the ACA in Liberty University v. Geithner and Virginia v. Sebelius on Tuesday. Tim Jost has an authoritative overview and summary at Health Affairs, and Brad Joondeph has some insightful notes at the ACA Litigation blog. After listening to the audio, the single dominant impression I’m left with is something I already knew: Acting Solicitor General Neal Katyal has got some serious game.
The arguments have sparked some interesting intramural debate at the Volokh Conspiracy about whether and why the judges might have been skeptical of, or baffled by, the challengers’ Commerce Clause argument and its reliance on the much-ballyhooed distinction between activity and inactivity. Orin Kerr points out that the criminal-law treatment of acts and omissions is not always a model of clarity, and that the common-law “actus reus” requirement—the requirement that there be a “guilty act” and not just a “guilty mind”—may be satisfied by an omission or failure to act in certain instances. When someone is under a legal duty to act and fails to do so—i.e., is inactive—the actus reus requirement is met and the government may impose punishment on the person even in the absence of a specific, affirmative act.
If the proposed activity requirement for Commerce Clause regulation were modeled on the doctrine of actus reus, it would have zero effect in the context of the individual mandate. Consider: The mandate imposes a kind of legal duty, the duty to obtain health insurance; the “inactivity” of the uninsured is the failure to carry out that duty; and failure to carry out the duty to obtain health insurance triggers the federal government’s authority to regulate, which it does by means of a monetary assessment (or “penalty”) on your annual income tax.
Now, obviously the analogy is imperfect, and it’s important to note that no one is specifically advocating that the activity/inactivity distinction be patterned after the common law act/omission distinction. It wouldn’t have to be. But Kerr wants to make the broader point that we don’t really know what the distinction will mean when elevated to constitutional doctrine, given the vagueness and ambiguity it carries. I sympathize, though I don’t think the point is unanswerable. There’s a lot of vagueness and ambiguity in legal doctrine. There’s a lot of vagueness and ambiguity in everything, at the margins. But as Jonathan Adler responds, paraphrasing somebody (Edmund Burke maybe?), “[W]e know the difference between day and night even if twilight blurs the line of demarcation.”
Activity and inactivity were much discussed at Tuesday’s hearing, but metaphysical unpleasantness was largely avoided. In Katyal’s hands, the government’s argument seems a little tighter and more refined, while following broadly the same outline: The individual mandate is a regulation of economic activity—an activity in which we all partake, eventually—namely, the consumption of healthcare services. Its purpose is to stabilize the financing of healthcare services through the private insurance system. These are appropriate means and ends for a valid exercise of authority under the Commerce Clause. But even if the courts were to construe the mandate as regulation of inactivity, it would still be authorized under the Necessary and Proper Clause as a rational means to effectuate the ACA’s comprehensive scheme of insurance regulation. Thus, Katyal argued, it doesn’t matter whether the courts do or do not recognize an activity requirement under the Commerce Clause. The mandate should be upheld either way.
How the Justices Will Decide
In his new article in the journal Publius, Brad Joondeph discusses three factors that will go into the Court’s ultimate decision (pdf) on the constitutional challenges to the Affordable Care Act. The first two are the ideological preferences of the justices and institutional pressures on the Court itself (e.g., the potential for public or congressional backlash). The third factor, perhaps less appreciated among the non-lawyer set, is the imperative of doctrinal coherence:
[T]here is another factor that conventional political analysis might understate: the degree to which a particular legal argument would create doctrinal complications for the Court in its ongoing attendance to the details of constitutional law. The principal intellectual task in which the justices are engaged, in every case they consider or decide, is managing the coherence of legal doctrine, particularly as it pertains to the Constitution. Regardless of their deeper instincts and motivations, the justices must justify their votes in written opinions that attempt to rationalize and harmonize the mass of doctrinal rules that govern federal law (Friedman 2006). This is why the briefs lawyers submit to the Court, and the justices’ questions at most oral arguments, focus principally on the broader implications of the parties’ claims or legal theories. No matter how sympathetic a party’s plight might be in a given case, if the theory on which her claim rests portends a range of far-reaching implications— implications that would seriously disrupt the justices’ task of rationalizing legal doctrine—it is unlikely to prevail. To be sure, other variables may be more significant in explaining the justices’ behavior in a particular case, or across the full run of the Court’s decisions. But it seems clear that, as a general rule, the justices are disinclined to sustain legal arguments that carry disruptive doctrinal implications.
It seems like Joondeph is trying to salvage a bold point from a squishy one here, but I’m not sure it works. Attending to doctrinal coherence is what judges do, but the extent to which that explains how judges decide is pretty limited.
It definitely seems right to say that “rationalizing legal doctrine” is the principal mode in which the justices undertake their work; and this explains the prevalence of analogy in appellate argument (and, in the present context, a curious preoccupation with hypothetical broccoli mandates). But coherence is a pretty low bar. As a rule, in closely contested appellate cases, there will be coherent solutions available on both sides. Coherence does not get you a single, uniquely determined outcome in these cases.
The universe of legal reasoning is open-ended; its rules and principles are often vague; novel issues and changing circumstances virtually guarantee that meaningful (or meaningful-enough) distinctions can be drawn to avoid disruptive implications. If Joondeph is saying that Supreme Court justices make decisions with due consideration of doctrinal coherence, he is right. But if he is saying that the imperative of coherence will determine what decision the justices reach, to the exclusion of other factors (like ideological preferences), he overstates the point.
But the more modest, squishy point is still worth making. People sometimes talk as if they think the justices pursue ideologically preferred outcomes without any constraints whatsoever. But they don’t. They pursue ideologically preferred outcomes within a host of normative constraints, including that of maintaining a reasonably coherent body of jurisprudence.
Roberts’ Rule?
Brad Joondeph has an excellent article on the legal challenges to the ACA (pdf) in Publius: The Journal of Federalism.
Perhaps the most interesting tidbit is that Joondeph thinks the Supreme Court’s decision may hinge not on Justice Kennedy’s vote but on Chief Justice Roberts’. Roberts joined Justice Breyer’s majority opinion in U.S. v. Comstock (May 2010), which advanced a strong view of the Necessary and Proper Clause according to which government action will be upheld so long as it is “rationally related to the implementation of a constitutionally enumerated power.”
In the parlance of constitutional law, a requirement of rational relation—known as a “rational basis test”—ordinarily means the Court will be deferential to the government, giving Congress the benefit of the doubt. In the ACA litigation context, such a strong rendering of the Necessary and Proper Clause would be highly favorable to the Administration’s defense, because it would only need to show that the individual mandate was rationally related to the regulation of insurance markets, an undisputedly valid exercise of the Commerce power.
Justices Kennedy and Alito also concurred in the result of Comstock, but they each wrote separate opinions to qualify their views and distance themselves from the majority opinion. Justice Kennedy’s concurrence specifically called out the majority for its use of the rational basis language, which he notes is imported from Due Process doctrine and not native to the Necessary and Proper context. My read on Kennedy at this point is that he has been carving out the space he’d need to justify striking down the individual mandate, whether he intends to actually do so or not.
The fact that Chief Roberts signed on to Breyer’s opinion but did not feel compelled to qualify his views—at a time when he would likely have been cognizant of the implications for the ACA litigation, as Joondeph notes—may mean that Roberts, not Kennedy, is the “median justice” in this case.
That’s an interesting bit of informed speculation, given that the CW is that it will come down to a 5-4 decision with Justice Kennedy deciding the winner.
Via Joondeph’s aca litigation blog.
The Not-So-Long Road to October
Federal Courts of Appeals have begun scheduling hearings on the various ACA lawsuits, and the schedules they’re adopting are pretty aggressive. Brad Joondeph writes that the Supreme Court is likely to hear the case in its October 2011 term, which means we could have a decision well in advance of the 2012 election.
Of course, it’s also possible that things will drag on. There are a number of ways the Court could delay matters, if it were so inclined.
Legislative History on the Tax Issue, A Compilation of Selected Sources
In my last post I discussed the role of legislative history in the legal argument over whether the penalty for failure to comply with the ACA’s individual mandate is a tax. I’ve been doing some digging, and I’ve compiled excerpts from some of the relevant materials here, in three categories: (A) early drafts and committee bills, (B) the Senate Finance Committee debate transcripts, and (C) floor debate from the Congressional Record.
The basic story these sources tell is this: Early drafts of health-reform legislation plainly and directly called the penalty a tax. The Senate HELP bill was the only exception. Lawmakers on both sides openly discussed the penalty as a tax, with a few instances of Democrats being a little cagey. Then Harry Reid unveiled his merged Senate bill, the Patient Protection and Affordable Care Act (pdf, as passed), which dropped the “tax” label entirely even as it preserved all the functional mechanics of the earlier bills’ mandates. The change of label does not seem to have registered in the public debate or affected the politics or rhetoric very much on either side, if at all. (My research has not been exhaustive.)
A. Early Drafts and Committee Bills
- H.R. 3200 (pdf), Early House bill (introduced July 14, 2009)
Sec. 401, “Tax on Individuals without Acceptable Health Care Coverage” would have amended Internal Revenue Code (IRC) with a new Sec. 59B:
(a) TAX IMPOSED.—In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of—
- H.R. 3962 (pdf), House bill (introduced Oct. 29, 2009, passed Nov. 7, 2009)
Sec. 501, “Tax on Individuals without Acceptable Health Care Coverage” (same as § 401 of H.R. 3200) would have amended IRC with new Sec. 59B:
(a) TAX IMPOSED.—In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of—
- S.1679 (pdf), Senate HELP bill (introduced Sept. 17, 2009)
Sec. 161 institutes “shared responsibility payments.” For individuals without qualifying coverage, “there is hereby imposed for the taxable year…an amount” to be specified by HHS. Not a penalty or a tax, but “an amount.” The HELP bill is the least forthright of all the pre-PPACA bills on this question. However, it goes on to specify that “The amount imposed by this section shall not be treated as a tax” for certain purposes, but “shall be treated as if it were a tax” for certain other purposes. One might quibble with the “as if it were a tax,” but this is consistent with an understanding that the payments would be a proper exercise of the taxing power. If Congress expressed its intent that something be a tax for at least one purpose, any argument that it did not intend to exercise its taxing power is foreclosed.
- Senate Finance Chairman’s Mark (pdf), Baucus draft (introduced Sept. 22, 2009)
Excise Tax. The consequence for not maintaining insurance would be an excise tax. If a taxpayer’s MAGI is between 100-300 percent of FPL, the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the maximum penalty for the taxpayer unit is $1,500. If a taxpayer’s MAGI is above 300 percent of FPL the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year. However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.
- S.1796 (pdf), Baucus bill (introduced Nov. 19, 2009)
Sec. 1301. EXCISE TAX ON INDIVIDUALS WITHOUT ESSENTIAL HEALTH BENEFITS COVERAGE
[...]
(b) IMPOSITION OF TAX.— ‘‘(1) IN GENERAL.—If an applicable individual fails to meet the requirement of subsection (a) for 1 or more months during any calendar year beginning after 2013, then, except as provided in subsection (d), there is hereby imposed a tax with respect to the individual in the amount determined under subsection (c).
Both H.R. 3200 and H.R. 3962 specified that the mandate penalty would not be treated as a tax for certain purposes (namely, calculating tax credits). The fair implication of this proviso—following a canon of statutory construction known by the Latin Expressio Unius—is that the penalty would be treated as a tax for other purposes.
B. Senate Finance Committee Debate
On Sept. 22, 2009 the Senate Finance Committee began a series of executive sessions on health reform for the purpose of debating and marking up Sen. Max Baucus’s “Chairman’s Mark,” an outline of what would later become “the Baucus bill,” S.1796 (pdf). Here, with my notes, are relevant excerpts from the transcript of that day’s session. In [brackets] are page numbers to the pdf of the transcript.
[32] Sen. Hatch says mandate penalties raise $20 billion in new taxes, are “a new tax on middle-class families.”
[57] Sen. Bunning mocks the President’s and other Democrats’ attempts to finesse their way around calling the mandate penalty a “tax”:
And I was stunned when I heard the President say this past weekend that the individual mandate, which is an amendment to the Tax Code and is specifically called an excise tax in the Chairman’s mark, is not really a tax. Perhaps we should change the name of the Tax Code to “A Shared Responsibility Code” so we are not really imposing taxes on the American people.
[72] Sen. Crapo remarks that “it is pretty clear . . . that the consequences for not maintaining insurance would be an excise tax.”
I noted that this weekend there was quite a bit of talk in the news shows about whether or not this proposal even contains a tax or not. I think that it is pretty clear–the proposal itself states that the consequences for not maintaining insurance would be an excise tax and makes it clear that the excise tax would be assessed through the Tax Code and apply it [sic] as an additional amount of Federal tax owed. Yet the President is saying that there is no new tax in the bill, that his pledge to avoid increasing taxes for those who make under $250,000 is honored. Yet last year, in September, he indicated that under his plan no family making less than $250,000 a year will see any form of a tax increase, not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes. And yet we see this major new proposal for more taxes before us now.
[196-97] Sen. Grassley has an exchange with Mr. Barthold, Chief of Staff of the Joint Committee on Taxation:
Senator Grassley. [. . .] So Mr. Barthold, is the penalty here not an excise tax, and will it not affect people making under $250,000 a year?
Mr. Barthold. Senator Grassley, the penalty proposed in the Chairman’s mark is, as you observed,structured as a penalty excise tax. We have other penalty excise taxes in the Internal Revenue Code. We have not separately analyzed. We have worked in conjunction with Dr. Elmendorf and his colleagues at the Congressional Budget Office in terms of the overall effects of what sort of people might purchase insurance through the exchange who would not have insurance provided by their employer, and where the individual mandate or the employer free rider penalty would arise.
We have not done a combined distribution analysis across income to specifically answer your question, but to the extent that, yes, we think that some people would be subject to the penalty excise tax when everything shakes out, we would expect that some would have incomes less than $200,000.
[197-98] Sen. Baucus then jumps in and tries to distinguish the penalty from a tax, saying that IRS collection is only incidental, and that HHS or some other agency could collect the mandate penalty.
Let me just say on that point, it is an interesting question. This is really a penalty that is being collected by the Internal Revenue Service. It could be collected by another body, another entity,another agency, perhaps HHS.
The modification, too, will reduce the penalty significantly, will cut it in half, so it is much smaller than it otherwise was. But somebody is going to have to collect it to the degree that there is one, and it is this committee’s determination–at least it is my determination so far–that the better, more efficient is for the IRS, which is set up to collect these kinds of penalties. So it is really a penalty that we are talking about here, just the IRS, not HHS, is collecting the penalty.
Sen. Baucus’s remark there is the only clear instance I’ve found of a Congressional Democrat denying (or flirting with denying) that the mandate penalty is a tax. But of course, Baucus’s Chairman’s Mark and subsequent bill (see S.1796 [pdf]) are unmistakably clear that the penalty is a tax. (See the excerpts from those draft bills above.)
[303-] Sen. Hatch in another exchange with Mr. Barthold and Mr. Reeder, Senior Benefits Counsel on the Democratic Senate Finance Committee staff:
Senator Hatch. Let us go further. While we are on the topic of upholding the Constitution, the -– legislation would require all U.S. citizens and legal residents to purchase a certain level of health insurance coverage.
They must record qualified coverage on the federal income tax return. Failure to do so would result in an excise tax of $750 on individuals applied as an additional amount of federal tax owed. Would that be a direct tax?
Mr. Barthold. If we applied an excise tax on all individuals –-
Senator Hatch. But you are not. I am told that this would be the first time in our history that Americans would be faced with the situation where they were ordered to do some specific act by the federal government which if they refuse to do it they would be subject to a tax. Is that correct?
Mr. Barthold. I do not know, Senator.
Senator Hatch. I think it is.
Mr. Reeder. If I could jump in here and just add that the code, the Internal Revenue code is replete with excise taxes that are applied as penalties. [typos in transcription, corrected here –JH]
Senator Hatch. Well, this is on a person, not a service or product.
Mr. Reeder. There are lots of excised taxes that are applied to an individual.
Senator Hatch. I guess I’m asking do you believe this individual mandate raises possible Constitutional issues as I have been told? It sure seems like it to me.
Mr. Barthold. Senator, it is just not something that I am qualified to answer. An excise tax applied on activities by all individuals would not seem to be beyond the flush of the Constitution’s authority for the Congress to assess a tax. But I am not the right person to engage in a Constitutional discussion. I’m sorry.
Senator Hatch. It would be a tax on a person for doing absolutely nothing. I mean, can anyone on the panel say whether the mandate of excise tax would be constitutional? Anybody?
The Chairman. Well, I will. This is an equally applied penalty for all persons meeting a certain category. I think it is a stretch to say this is unconstitutional. I will take that argument any day that it is not constitutional. It is constitutional.
Mr. Reeder. We did refer this to CRS and we got guidance from them that it is.
Senator Hatch. To be honest with you, I do not think it is at all. Let me move on. [...] According to the Chairman’s mark, the individuals who failed to maintain health insurance are subject to an excise tax, right?
Mr. Barthold. It is the penalty, excise tax penalty.
Senator Hatch. The penalty for excise tax. The excise tax would be assessed with a tax code and applied as an additional amount of federal tax owed. However, there are various rules protecting those who are uninsured for less than three months or to the extent that the cost of the health insurance premium exceeds 10 percent of adjusted gross income. Are there any excise taxes in the current tax system that are treated this way? And are there any other excise taxes that vary based on the taxpayer’s income? Are there any other taxes at all in our current tax system that are furthered by the failure of the taxpayer to take some action?
Mr. Barthold. Well, as Mr. Reeder noted, there are some penalty excise taxes that apply to individuals for either actions that they take or in some instances for not having taken an appropriate action.
We have penalty excise taxes on excess distributions or premature distributions from qualified retirement plans. There is excise taxes in the tax exempt organization area for, I guess for lack of a better term, for inappropriate activities or decisions made by management of the tax exempt order.Senator Hatch. But are they based on the taxpayer’s income?
Mr. Barthold. None of those are based on taxpayer’s income. The excise taxes on the distribution indirectly are based on income in the penalty taxes for early withdrawals for example key off of the size of the withdrawal.
Sen. Hatch then confuses the mandate penalty “excise tax” with the mark’s other excise tax, the “Cadillac tax” on high-cost plans.
[329] And later:
Senator Hatch. I have a few [questions] now. The CRS report concludes the government can require individuals to obtain health insurance and penalize you if you do not. However, the penalty must be something the government has already given you and can take away, such as the right to a deduction. Now, this is an excise tax imposed on you, regardless of if you have a tax liability or not. I think the CRS has not analyzed the Chairman’s proposal.
And at [352], Hatch refers to his amendment to strike “the new individual mandate tax proposed in this bill.”
Other relevant discussions occurred on subsequent days of the Committee markup. Democrats more or less dodged the debate, and Republicans showed no sign of straying from their normal m.o. in which things that are bad and things that are taxes are conceptually indistinguishable, more or less.
On October 1, Sen. Hatch presents a much more polished constitutional argument and directly challenges the proposition that the penalty qualifies as an “excise tax” as it was described in the Chairman’s Mark. If it is a tax at all, Hatch contends, it must be a “direct tax”:
The second constitutional problem with the individual mandate arises because the penalty for failing to purchase health insurance is, in fact, not the excise tax that the Chairman’s mark calls it. An excise tax is a tax on the manufacturer and sales of goods or services. The gasoline tax would be a good example. The tax imposed upon people who failed to purchase health insurance, however, is the exact opposite. It occurs not when there has been the sale of something, but when there has been no sale of anything at all.
This actually works more like a fine, but the Chairman’s mark said it is an excise tax to be assessed through the Tax Code and collected by the IRS. If this is a tax at all, it is certainly not an excise tax. Instead, it is a direct tax. And while the Constitution requires that excise taxes must be uniform throughout the United States, it requires that direct taxes must be apportioned among the States by population.
Now, just as the excise tax on high-premium plans is not uniform, this direct tax on individuals who do not purchase health insurance is not apportioned. In an analysis just published in the well-respected B&A Daily Tax Report, they looked at this question. I would ask, Mr. Chairman, consent that this be placed in the record at this point.
Sen. Hatch had by this point developed the argument into a fairly sophisticated analysis. It’s just not clear that any other Senators were on board with that analysis. I haven’t found any instances of other Senators picking up the argument, or responding to it specifically. But, as shown below, it is clear that Democrats did not abandon the taxing-power justification of the mandate, and they continued to cite that authority right through the passage and enactment of PPACA.
C. Congressional Record, Floor Speeches
- Rep. George Miller (D-Cal.), 156 Cong. Rec. H1854, H1882 [pdf] (Mar. 21, 2010):
The bill contains an individual mandate to either obtain health insurance or pay a penalty. This provision is grounded in Congress’s taxing power but is also necessary and proper—indeed, a critical linchpin—to the overall effort to reform the health care market and bring associated costs under control throughout interstate commerce.
- Sen. Ensign (R-Nev.), 155 Cong. Rec. S13830 (Dec. 23, 2009):
In this case, if you choose to not do something — in other words, if you do not choose health insurance — this bill will actually tax you. It will act as an onerous tax.
Via Ezra Klein. I discussed the significance of this episode here.
- Sen. Leahy (D-Vt.), 155 Cong. Rec. S13751, S13753 [pdf] (Dec. 22, 2009):Sen. Leahy argues in favor of PPACA, remarks on constitutionality under both commerce power and tax power, citing noted constitutional law scholar Erwin Chemerinsky’s op-ed in the L.A. Times (from Oct. 6, 2009). Note that Chemerinsky’s piece was written and published long before Sen. Reid’s merged bill appeared, so it wouldn’t be properly taken as an opinion about the constitutionality of the actual language of PPACA. But Leahy’s reference counts as another instance of how the Reid bill’s removal of the tax label had no discernible effect on Congressional debate or Members’ talking points.
- Sen. Max Baucus (D-Mont.) 155 Cong. Rec. S13558, S13581-82 [pdf] (Dec. 20, 2009):Sen. Baucus stated his belief that there is “ample authority for Congress to enact such a provision under the Commerce Clause, and also under the congressional authority to tax and spend for the general welfare provided for in the Constitution,” and he submitted an article by Mark Hall, law professor at Wake Forest Univ, for the record.
Conclusion
If you were one of the litigators challenging the individual mandate in court, you would want to find instances of Democrats arguing, in an official forum, that the mandate/penalty is not a tax. I’m not aware that any exist. There’s President Obama’s noted Sept. 20, 2009 interview with George Stephanapoulos, which Judge Vinson cites in his October ruling (pdf). What the President meant by his statement that “the responsibility to get health insurance is absolutely not a tax increase” is arguable. I tend to think he meant the mandate itself is not a tax—not that the penalty isn’t. But then again, I doubt he was really drawing that distinction, so I concede that the other interpretation is fair. In any case, it would be exceedingly strange if an interview with George Stephanopoulos were regarded as a proper source of legislative history.
Other than that, there’s Sen. Baucus’s cagey remark from the Sept. 22 transcript (above). And that’s all I’ve found so far. I’ll update this post if I come across anything worthy of note.
The Unbuttered Slide to Broccoli Mandates
When Austin Frakt comes to a slippery slope, he levels it:
[T]he slippery slope has relevance only in instances for which it isn’t necessary. The government isn’t holding back from mandating broccoli consumption because there is no legislative precedent regulating an “inactivity.” It’s held back because there’s simply no incentive to mandate broccoli eating. If there were, Congress would have already considered it, or ought to. In that case, one need not appeal to a slippery slope, though one certainly could. That is, it’s superfluous.
If passage of broccoli and insurance mandates did relate, the relationship would not be a causal one.
It’s always good to work these things out, and it’s better to know why a particular form of argument is fallacious than just to know that it is fallacious. But I’d just like to make this plain: the slippery slope is an argument fallacy. You should avoid it.
I don’t think Austin’s takedown of the slippery slope is specifically directed at the legal arguments against the individual mandate, but he cites this Andrew Koppelman article, which definitely does attack the legal arguments on those grounds, and with gusto. (Koppelman also posted the slippery-slope portion of his paper at Balkinization.) Koppelman’s point, and Austin’s, boils down to this: Congress won’t mandate broccoli consumption because there’s no need to, and if there were a need, it wouldn’t be the result of the need for the individual mandate. The individual mandate does not in fact make a broccoli mandate more likely, so: no slippery slope.
But I don’t think this is the best way to understand the legal argument the mandate’s challengers are making by raising the hypothetical broccoli mandate. That argument isn’t really a slippery-slope argument at all, although it obviously resembles one (especially when deployed as political rhetoric). The giveaway is captured by Austin’s own observation that “the relationship would not be a causal one.” The heart of the slippery slope is an unsupported prediction that decision A will cause an increase in the likelihood of event B. But the challengers aren’t literally arguing that a broccoli mandate or any other purchase mandate will be made more likely if Congress is allowed to regulate “inactivity.” They are trying to illustrate through hypotheticals what they believe would be flaws in Commerce Clause doctrine were it interpreted to allow the mandate. In other words, they are testing the logical implications of doctrine through the use of analogy.
Argument by analogy is probably the most common form of legal reasoning, though it most often proceeds by analogy to established precedents than by analogy to hypothetical future acts of Congress. In his book, Legal Reasoning and Political Conflict, Cass Sunstein writes: ”American constitutional law is often constructed from analogies—not from text or history, not from moral theory, and not from existing social consensus. Constitutional law is a form of casuistry.” (By “casuistry,” Sunstein means case-by-case decision-making.) But where caselaw does not supply the analogies needed to explore the key issues in a case, they must be explored in hypotheticals. Hence, as Yglesias dubbed it, the dread broccoli mandate.
The real danger here is closer to the criticism Andrew Sabl has made—that the broccoli argument begs the question by assuming a broccoli mandate would be unconstitutional. Consider:
- If the individual mandate is constitutional, then a broccoli mandate is constitutional.
- A broccoli mandate is unconstitutional.
- Therefore, the individual mandate is unconstitutional.
In a sense, a lot of the commentary about slippery slopes amounts to an objection to the first premise here. That’s what all the “healthcare is different/unique” talk is about. If healthcare is different enough, the circumstances may be such as to justify an individual mandate for health insurance but not to justify a mandate to buy or consume broccoli. Then again, maybe circumstances could justify a broccoli mandate, too—if you’re creative enough, you can always construct a hypothetical scenario to fit the bill. In that case, you might grant Premise (1), but why should you grant Premise (2)? The mandate’s challengers want you to think a broccoli mandate would be absurd, because it would be absurd if it were passed today. But if a comet grazes the earth and causes mysterious mass plant extinctions, leaving only broccoli, and the WTO has adopted strict rules forbidding all agricultural subsidies…?
In fairness, the mandate’s challengers don’t really need to prove that a hypothetical mandate to buy broccoli or whatever would actually be unconstitutional. For their purposes it could suffice just to draw attention to the need for “logical limitation” on the scope of the commerce power. However, they should at least have to explain why factual limitations that exist won’t do. There may be a way to do that, but it would require a vegetable far more absurd than broccoli to convince me with this argument.
All Roads Lead to Justice Kennedy
This seems like a really big deal to me:
Justice Anthony M. Kennedy added that individuals had a role to play in cases that at first blush seem to implicate only a clash between federal and state sovereignty.
“Your underlying premise,” Justice Kennedy told Mr. McAllister, “is that the individual has no interest in whether or not the state has surrendered its powers to the federal government, and I just don’t think the Constitution was framed on that theory.”
That’s from Adam Liptak’s NYT story covering oral arguments at the Supreme Court last week, in a case which Liptak notes “will probably offer only limited guidance on the health care law’s prospects.” Which is true, of course, because the case has nothing to do with mandates or health care. It does have to do with a charge that the federal government has exceeded one of its constitutionally enumerated powers and impinged on the traditional authority of the states. But the contexts are so different, I wouldn’t expect much from the comparison with the ACA litigation.1
But that Kennedy quote is a gem—rare, strange, and possibly radioactive. It means that Kennedy considers individuals’ interests integral to questions of the scope of the enumerated powers of the federal government. In other words, individual liberty will be a component in Kennedy’s analysis of the constitutionality of the individual mandate. And that is not good news for health reform.
- Incidentally, there was a truly awesome irony at this argument, which deserves notice. Mike Dorf:
Finally, I’ll point to an irony of the case that perhaps someone else has already noted. Mr. McAllister was appointed to make an argument on behalf of the federal government even though the federal government does not want to make that argument. He then argued that private parties should not have third-party standing to make arguments on behalf of states when those states do not want to make the argument. One almost expects this argument to swallow itself or vanish in a puff of logic. I expect the next-best thing: a unanimous decision that Bond [the plaintiff] has standing.
[↩]
What’s Federalism Got to Do with It?
David Cole thinks the legal battle over the individual mandate is not about liberty:
Near the end of his decision, Judge Hudson writes: “At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it’s about an individual’s right to choose to participate.” Virginia Attorney General Ken Cuccinelli, who brought the suit, echoed that point the day the decision came down, insisting that “this lawsuit is not about health care. It’s about liberty.” But that is exactly what the case is not about. A decision that Congress lacks the power to enact the individual mandate says nothing about individual rights or liberty. It speaks only to whether the power to require citizens to participate in health insurance, a power that states indisputably hold, also extends to the federal government. The framers sought to give Congress the power to address problems of national or “interstate” scope, problems that could not adequately be left to the states. The national health insurance crisis is precisely such a problem. The legal question in the case is about which governmental entities have the power to regulate; not whether individuals have a liberty or right to refuse to purchase health care insurance altogether.
It’s certainly true that liberty itself is not at issue in these lawsuits. There are no viable due process claims involved, for instance. But the suits are about the scope of the national government’s powers in the federal system. That is, they are about federalism. And federalism is, or was, or is supposed to be, one of the arrangements by which the Constitution guards our many interests, including liberty interests. So, I think maybe the suits are at least a little bit about liberty. Indirectly.
It may seem odd that the mandate controversy is not about whether individuals have the right to be let alone but is instead largely about the distribution of power between the federal and state governments. If you’re wondering why states’ powers have anything to do with it, well, I feel you.
The Constitution does not grant the state governments their powers, as it does to the federal government. It does take powers away, though, leaving states with a set of negatively defined residual powers—what Justice Kennedy described last year as “the whole, undefined residuum of power remaining after taking account of powers granted to the National Government.” And though it is possible for the states and the Feds to share coextensive powers in some areas, it is also possible that federal law will simply preempt any state laws in the same area. So basically, whenever federal powers expand, state powers are diminished.
But what’s sort of interesting about this is that the key arguments of the mandate’s challengers don’t directly address the potential diminution of state power, yet they do seem to deploy federalism, indirectly, in a couple of ways.
One way is as a pseudo-principle of constitutional interpretation: when constitutional authority is in doubt, federalism demands that the doubt be resolved against expansion of federal power. This obviously begs the question (you can’t assume federalism precludes federal expansion if the dispute is about whether federalism permits federal expansion), but is implicit in some originalist arguments against the individual mandate.
Another way is as a means of upping the rhetorical ante: if the commerce power is interpreted to allow “regulation of inactivity,” federalism will be rendered meaningless, challengers say; there will be no “logical limitation” to the expansion of federal power; state power will dwindle; and the whole system will unravel. We will all die, and no one will ever be happy again. Here federalism serves as little more than a diversion into hyperbole.
An Open Question
When Jonathan Cohn looks at the legal challenges to the ACA, he doesn’t see judicial restraint:
What bothers me (well, one of the things that bothers me) is that so many critics of the Affordable Care Act act as if it is the individual mandate itself, not their interpretation of the constitution, that represents a radical break with the past. I just don’t see that and neither, apparently, do a lot of other people who follow the law more closely than I do.
This bothers me, too. But I’m also bothered that so many ACA supporters cannot see its critics’ legal arguments as anything other than “a radical break with the past.” Virtually no one is willing to admit that the other side’s position is reasonable. Which is fine. Law, like war, is politics by other means, and all that. It’s just that, in this case, there are reasonable legal arguments on both sides, and I don’t think any of them are a radical assault on the Constitution. (Cohn at least admits it’s possible to make an “honest” argument that the mandate is unconstitutional.)
Striking down the individual mandate will certainly have a radical effect on healthcare reform. But the effect on constitutional law will be modest. It will not sweep away the post-New Deal paradigm of constitutional jurisprudence or “unravel the fabric of modern American government.” It will be a rather small tweak of Commerce Clause doctrine which will affect precisely one statute in the entire U.S. Code and will do so in a way that would be laughably easy to avoid in future legislation by acting explicitly under the taxing power. (Political control of Congress is another matter.)
And on the other hand, if the mandate is upheld under the Commerce Clause and/or Necessary and Proper Clause, the Court will strengthen and clarify a doctrine that is, yes, radically different than that which held sway 100 years ago, but only minutely different from what we’ve had for the last 70 years or so. We will be protected from the dread broccoli mandate just as we are today: by the political process. Nothing in the Constitution prevents Congress from enacting a tax scheme consisting of massive transfers of wealth to broccoli consumers at the expense of those who are “inactive” in the broccoli market.
It’s in the meta-narratives that the debate gets so distorted. But I can and do see why people think the individual mandate is a radical break with history. Because it’s different! That is, understood as an exercise of the power to regulate commerce—rather than the power to tax—the mandate is quite unlike anything else the federal government does. It’s a lot like stuff you’d expect to figure into your taxes and a little bit like draft registration or maybe militia readiness in 1792 or whatever. But constitutional law is highly compartmentalized, and none of those comparisons carries over to the Commerce Clause context. In that context, the federal government has never before imposed affirmative obligations upon people not already engaged in the regulated market or related activity in some way. (It is not a given that, because everyone needs healthcare, they will thereby enter or affect the relevant market in the relevant sense.) More plainly, Congress has never before used its commerce power to make just about everybody do something. Quibble if you want, but my point is not that the mandate is unconstitutional because it’s different, but only that the mandate is in fact different.
Whether or not the individual mandate is a valid exercise of the power to regulate interstate commerce is, in the end, an open question.
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.
Logical Bare Necessities
Andrew Koppelman at Balkinization calls Judge Vinson’s opinion a “bizarre collection of non sequiturs.” I’ve also noticed instances of the opposite: super-sequiturs—conclusions which logically follow from any premise whatsoever because they are necessarily true. Here’s one:
[T]he record seems to strongly indicate that Congress would not have passed the Act in its present form if it had not included the individual mandate.
(p. 66-67 of the opinion [pdf])(oomphasis added). I don’t know about the record, but the law of material equivalence strongly indicates that Vinson is right: if Congress had passed the ACA without the individual mandate, Congress would not have passed the ACA in its present form—with the individual mandate.
Reading more charitably, Vinson appears to be saying that Congress would not have passed anything if it hadn’t passed the package of insurance reforms. But is that right? Obviously we’ll never know. But it’s certainly not necessarily or indisputably right. Here’s Vinson:
Moreover, the defendants have conceded that the Act’s health insurance reforms cannot survive without the individual mandate, which is extremely significant because the various insurance provisions, in turn, are the very heart of the Act itself.
* * *
In other words, the individual mandate is indisputably necessary to the Act’s insurance market reforms, which are, in turn, indisputably necessary to the purpose of the Act.
(p. 68, 71). The insurance reforms are in Title I of the ACA. But there are 8 other titles in the ACA, and none of them are directly related to the mandate. Those titles cover Medicare and Medicaid reforms, quality of care, preventive care, the healthcare workforce, innovation, the CLASS Act disability insurance, etc. In terms of page quantity, Title I constitutes around 16%-18% of the whole Act.
It seems to me there are two things going on here. First, Judge Vinson is eliding the relationship between the mandate and the insurance reforms with the relationship between the insurance reforms and everything else in the ACA. The insurance reforms “cannot survive without” the mandate, and they “are the very heart of” the whole Act. Maybe so, but that does not mean the other 8 titles “cannot survive without” the mandate. No doubt the insurance reforms are centrally important. But that does not make them the sine qua non of the rest of the ACA. It seems distinctly possible that, had Congress failed to pass the ACA, it would have tried to save face and pass the less controversial parts of the ACA in a separate bill or two.
Second, Judge Vinson seems to have conflated the severability analysis with the Necessary and Proper Clause analysis. (In fairness, the Administration’s attorneys may have done so, too.) Both can be glossed as an assessment of how “essential” a provision is. But they are really very different. Michael Dorf extricates us from the confusion:
[T]he relatedness threshold for satisfying the Necessary and Proper Clause is lower than the relatedness threshold for saying that a provision of law is non-severable from another provision. In order to find that some measure satisfies the Necessary and Proper Clause, a court need only find that the provision is “convenient” or “useful” for accomplishing an end that is within an enumerated power such as the regulation of Commerce. That language doesn’t come from some post-New Deal/Warren Court expansion of the scope of federal power, but from the leading case on the scope of Congressional power, CJ John Marshall’s 1819 opinion in McCulloch v. Maryland.
By contrast, to find that a provision is non-severable from otherwise valid provisions requires a court to conclude that “the balance of the legislation is incapable of functioning independently.” (That’s a quote from Alaska Airlines v. Brock). That is on its face a tougher test to satisfy than the Necessary and Proper test.
Thus, the government can consistently argue: 1) that the mandate is sufficiently closely related to the other provisions of the Act that the mandate is necessary and proper to the regulation of the interstate commercial market in health insurance; but 2) that the mandate is not so closely related to those other provisions that they are incapable of functioning without it.
In other words, the mandate may be necessary to the implementation of federal regulation of insurance markets without being necessary to the implementation of the other 8 titles of the ACA.
Vinson Analysis Teaser
So, my sister’s third-grade teacher’s spouse declared the health reform law unconstitutional the other day. Now, it really wouldn’t have been a big deal if my third-grade teacher’s spouse or your third-grade teacher’s spouse had declared the law unconstitutional. But my sister’s third-grade teacher’s spouse happens to be federal Judge Clyde Roger Vinson of the United States District Court for the Northern District of Florida, and when he declares a law unconstitutional, there are consequences. Namely, the law actually becomes unconstitutional—nay, it ceases to be a law at all. It is void ab initio, as they say. Like it never existed. Sort of, anyway. At least as far as the parties to that particular suit are concerned. But only in certain jurisdictions. And not if the judgment is stayed. Or the Eleventh Circuit Court of Appeals reverses. Or the Supreme Court…. But still!
Judge Vinson is the second federal judge to strike down the ACA’s individual mandate. But the news is bigger this time, for at least two reasons. One is that there was a lot more skin in this game; 26 state governments and several private plaintiffs joined in the suit. The other reason the news is bigger this time is that Judge Vinson did not simply strike down the section of the law which creates the individual mandate—a.k.a., the minimum coverage provision, §1501(b)—as Judge Hudson had done in the Virginia case. Rather, Judge Vinson struck down the whole thing. All of it. Not just §1501(b). Not just the mandate and related insurance provisions. The entire Patient Protection and Affordable Care Act, in all its glorious 2700-odd pages. Tanning tax, menu-labeling requirements, lactation breaks, and all.
I’ll have something more substantial to say about the decision soon, I hope. But for now I’ll just pass along the best two pieces of one-word analysis I’ve come across:
Brad Joondeph: “Wow.”
Aaron Carroll: “Chill.”
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