Let Us Now Praise Incompletely Theorized Cost Control
One of the vexing things about the health reform “debate” leading up to the Affordable Care Act was that, despite considerable success in co-opting potentially adverse interest groups, efforts to bridge the divide with the partisan political opposition were a total failure.
After observing that there still isn’t a lot of constructive engagement on the issues, Don Taylor reaffirms his belief that we need bipartisan compromise on the framework of reform to move ahead to the tough issues of cost control. Certainly reform would be easier if undertaken cooperatively, but I question the need for a grand compromise.
As I see it, there are basically three ways to get major reforms done: (1) one side could win on coverage and keep winning, getting cost reform done unilaterally; (2) the two sides could reach a negotiated bipartisan agreement on coverage and cost; or (3) one side could win on coverage, and cost reform could move ahead despite the losing side’s misgivings about the coverage framework.
It is more or less inevitable that power will alternate between the two parties in at least one of the three elected bodies of government, so path (1) is extremely unlikely, essentially impossible. I think path (2) is possible but only when the stars are perfectly aligned. That is, only in the rare times when a significant legislative achievement would not be credited to the president in a way that seemed likely to boost the electoral prospects of the president’s party. That leaves path (3).
If you’ve thought this through before, you’ll probably recognize path (3). It’s where we are now, after passage of the ACA. And it’s where we’ll stay, absent judicial intervention. A certain amount of throat-clearing is de rigeur here—the ACA doesn’t go far enough on cost control, is just the first step, and all that—but given that we don’t actually know yet how to tame cost growth, it’s hard to imagine a more promising approach that is anywhere near as realistic about the politics of reform. And that goes for both interest-group politics and partisan legislative politics.
In the last analysis, as Taylor says, cost control will mean reducing patients’ care or reducing providers’ incomes or both. But the theory of the ACA is that, with ingenuity and concerted effort, we can ease into reform, making smart adjustments as we go, mitigating adverse effects. Igor Volsky sketches the ACA’s early-stage efforts at cost-control:
[The ACA] eliminates overpayments to private insurers and slowly phases-in payment adjustments that encourage providers to deliver care more efficiently. The law also gives [CMS] greater discretion to experiment with alternative payment systems — so that providers are compensated for delivering care more efficiently, rather than just ordering more tests — and establishes an innovation center for payment reform.
The genius of the ACA’s strategy on costs is, or was, that it does not determine in advance which sectors will bear the greater burdens of reform, and thus it does not, or did not, immediately or disproportionately threaten major stakeholders in the healthcare system. It’s an incompletely theorized agreement of sorts.
The ACA can credibly promise cost containment that is politically tenable even in the absence of bipartisan support because it combines incompletely theorized notions of cost-effective care with a mechanism, the Independent Payment Advisory Board (IPAB), designed to circumvent routine political obstruction in Congress and to turn Congressional status quo bias into a structural force for reform.
One Sentence to End the Mandate Controversy
Tax day is probably as good a time as any to remind folks that the constitutional controversy over the individual mandate could be resolved by amending the ACA with a single sentence. Something like this:
Section 1501 of this Act is enacted under the power of Congress to lay and collect taxes to provide for the general welfare of the United States, and under the power to lay and collect taxes on incomes, pursuant to Article I, Section 8 and Amendment XVI of the Constitution of the United States.
This is admittedly (a) not going to happen and (b) a problematic sequencing of Congressional action and Congressional expression of intent. But (b) doesn’t really matter; it should be sufficient to create a judicial presumption that the mandate was enacted under the taxing power.
As for (a), the lesson should be clear. If indeed the lawsuits were motivated by concern for fidelity to the Constitution, rather than by less high-minded interests, Congressional Republicans could put this scourge behind us by the end of the week.
The Uses of Legislative History
Ezra Klein revisits the Senate’s Dec. 23, 2009 vote on a constitutional point of order raised by Sen. John Ensign (R-Nev.) against the ACA’s individual mandate. The point of order was defeated by a party-line vote of 60-39, but the interesting thing about it, says Ezra, is that every Senate Republican (minus one absentee) implicitly endorsed Ensign’s description of the individual mandate as a tax, “an onerous tax,” on those who choose not to get health insurance. That’s interesting because a key argument of the mandate’s constitutional challengers is that the penalty for failing to maintain minimum coverage is not a tax—that is, not an exercise of the taxing power of Article I, Section 8 and the 16th Amendment. Notably, 32 of the very same Republican Senators who voted for the Ensign point of order later filed an amicus brief (pdf) against the constitutionality of the individual mandate (though, to their credit, they did not explicitly argue that the penalty is not a tax).
Now, as Ezra recognizes, this episode is not going to dispose of the issue in court. For one thing, its significance is not unambiguous. The purpose of the vote was to declare the mandate unconstitutional, not to declare it a tax. And if the purpose had been to declare it a tax, the whole basis of the constitutional point of order would have been transparently self-defeating. But also, if you take the 39 Republican votes as an endorsement of the proposition that the penalty is a tax, shouldn’t you then count the 60 Democrats’ votes as a rejection of that proposition?
Legislative history is tricky terrain, and the notion that there is something called the “intent of Congress” that may be reconstructed from legislative history is dubious at best. Trolling through the Congressional Record is not going to tell us definitively whether Congress intended to exercise its taxing authority or not.
But there are uses for legislative history. It can give us—or a judge—a sense of the range of fair readings of statutory language; not whether a certain interpretation is right or wrong, but whether it is fair. It can give us a sense of whether the meaning of a given provision was widely agreed upon or in dispute, or whether it was contemplated at all. In other words, legislative history can serve as a source of second-order facts about how legislators understood the legislation in question. And those second-order facts can be useful, not because they reveal the true intent of Congress, but because they can help us measure the relative strength of competing inferences about legislative intent.
In rejecting the Administration’s contention that the penalty is an exercise of the taxing power, Judge Vinson’s October ruling (pdf) in the Florida case emphasized that the ACA in its final form refers to penalties, not taxes, in describing the monetary assessments imposed for failure to comply with the individual mandate, whereas the House bill and various Committee bills referred to those assessments as taxes. For Judge Vinson, the change of label from “tax” to “penalty” marked a clean break between the ACA’s mandate provisions and the mandate provisions of earlier bills, making it “manifestly clear” that Congress intended not to exercise its tax power. And by that description, the legislative history does seem to offer compelling support for the inference that Congress did not intend to act under its taxing power.
But measured against evidence like Sen. Ensign’s remarks on Dec. 23 and the floor speeches of Democratic Senators who continued to justify the mandate as an exercise of the taxing power, that inference does not look as strong. And by contrast, when you note the fact that the basic mechanism of the penalty—assessed and collected by the IRS through income-tax forms—did not change or vary significantly among the many health-reform bills considered in the run-up to PPACA’s enactment, and that lawmakers consistently referred to the penalty as a tax throughout the process, the inference of intent to exercise the taxing power looks comparatively strong.
And so, the way I see it, even if episodes like the one Ezra dug up can’t establish that the penalty is a tax, they can blunt the force of inferences to the contrary. Maybe Senate Democrats should take up that argument in an amicus brief of their own.
Big MOE
Health and Human Services Secretary Kathleen Sebelius has given the state of Arizona the go-ahead to pare back its Medicaid program by dropping coverage for 250,000 childless adults, a move which could cut the state’s budget deficit in half, saving about $541 million. In general, the Affordable Care Act’s maintenance-of-effort (MOE) requirements make it very hard for states to reduce Medicaid or CHIP coverage—that is, their “eligibility standards, methodologies, or procedures”—any time before 2014. If they do so for any period in the interim, they will lose all federal Medicaid funds for that period.
But Arizona’s current coverage of childless adults is part of a special agreement (known somewhat confusingly as a “waiver” because it operates outside the terms of the State Medicaid Plan) between the state and HHS to expand coverage beyond the minimum essential categories of eligibility. Under certain narrow circumstances, the ACA allows states to let such waivers expire:
During the period that begins on January 1, 2011, and ends on December 31, 2013, the requirement under paragraph (1) shall not apply to a State with respect to nonpregnant, nondisabled adults who are eligible for medical assistance under the State plan or under a waiver of the plan at the option of the State and whose income exceeds 133 percent of the poverty line (as defined in section 2110(c)(5)) applicable to a family of the size involved if, on or after December 31, 2010, the State certifies to the Secretary that, with respect to the State fiscal year during which the certification is made, the State has a budget deficit, or with respect to the succeeding State fiscal year, the State is projected to have a budget deficit.
PPACA § 2001. So, a state can drop coverage for non-pregnant, non-disabled adults with incomes over 133% FPL, if the state has a budget deficit. Only a handful of states extend coverage to childless, low-income adults. My guess is that Arizona is not the only one projecting a budget deficit.
Hat tip Don Taylor.
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.
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.
The Costanza Strategy
The main draw of the healthcare reform panel in Berkeley last week was, for me, Jonathan Oberlander. Unfortunately, though, his short talk didn’t ever really get beyond the historical backdrop and explanation of the Obama legislative strategy. What he did say was engaging and entertaining, to be sure, but I’d really hoped to hear more about present and future policy challenges related to implementation of the ACA. (More like this, for example.)
It was obvious that Oberlander would have had much more to say, given the chance. But unfortunately the moderator was lax on timekeeping for the panel’s ACA detractors, and Sally Pipes and Alain Enthoven essentially filibustered away the discussion time. Consequently the whole arch of discussion seemed weirdly disengaged from the actual contents of the law enacted some eight months ago. (By the way, who comes to Berkeley and argues that the public option was a bad idea because it would have led to Medicare for all? Sally Pipes, that’s who. As if the reductio ad single-payer would close the deal here. Lady, this is Berkeley! At least half the room must have thought she was for the public option when she said it would lead to single-payer.)
Oberlander framed Obama’s approach as the “George Costanza strategy,” referring to an episode of Seinfeld in which George decides to do the opposite of everything he’d done before, because everything he’d done before was wrong. Similarly, to avoid the failures of past administrations’ efforts to reform the healthcare system—and particularly the Clinton effort—Obama’s strategy would be to just do the opposite of what had failed in the past. The natural implication of framing the story this way is that Obama swung too far towards deference to Congress. I didn’t get the impression that Oberlander himself believed that was the case, necessarily, but a lot of people clearly do.
The Costanza trope is cute, but I think it feeds a false impression. Namely, that any given president can choose whether and how much to defer to the congressional lawmaking process. Whether the president is successful in enacting a legislative agenda is not first and foremost a reflection of political acumen, gamesmanship, character, backbone, or whatever. Those things matter on the margins, but they pale next to the structural forces in explaining political behavior. In a strongly partisan atmosphere, with a fragile coalition of 60 votes in the modern 60-vote Senate, the test of presidential leadership turns on whatever any one of those 60 senators wants. If senators want pork, then a “great” president will lasso pigs. But if senators are determined to spend months on end in the vain pursuit of a veneer of bipartisanship, then a great president will discover that the better part of valor is discretion. That’s because a great president is one who succeeds, and the only way to succeed in passing legislation is to secure a majority of votes in the House and a 3/5 supermajority of votes in the Senate. The only people who have votes in the House and Senate are members of Congress who must be persuaded that it is in their political interest before they will vote for a bill. There is no other way to make laws in the United States Congress.
Anyway, this was just one event and not really indicative of anything. But I do think it illustrates a significant problem: It is proving to be very hard to de-presidentialize health reform. And because of that, the “issue” remains too hot for political opponents to pass up any chance they might have to obstruct its implementation.
My Opinion about Public Opinion
Last week I attended a healthcare reform panel discussion in Berkeley. Mollyann Brodie of the Kaiser Family Foundation’s opinion research group gave a presentation about KFF’s monthly surveys of public attitudes towards health reform. The most important thing to note about the results of these surveys is that, even though people indicate favorable and unfavorable views of the health reform law in roughly the same proportion, large majorities consistently say they support nearly all the major components of the law (all except for the individual mandate).
According to Brodie, the polls illustrate that the public is largely confused about what’s in the new law and that opposition to the Affordable Care Act is superficial. Because of these facts, Brodie reasoned, messaging is extraordinarily important for those who wish to keep up public support and make health reform a success.
A few thoughts:
First, there is nothing actually incoherent about opposing the ACA while favoring many or most of its essential components. You might like every provision but one—one you hate so much you’d rather scuttle the whole merry ship than see such a baneful provision enacted. Or you might support all the key parts separately but reject the whole package, because you think the sum of their effects includes something objectionable. Or you might just be a pessimist about the prospects of complex, large-scale public programs in general. The point is, it’s not necessarily the case that the public is confused about what they want.
Confused or not, it is quite likely that people are taking cues from opinion leaders, as political scientist Jonathan Bernstein has suggested. And because there are still approximately zero Republican leaders at the national level who publicly support the “Obamacare” package—even though they too endorse many of its constituent elements—a large chunk of the public is holding firm in opposition to the whole, while favoring its parts.
Second, to the extent that there is elasticity in public opinion about the ACA, I don’t think that elevates the relative importance of messaging. I do not doubt that messaging makes a difference for some people. But if you can get people to change their minds about healthcare reform simply by telling them about the ACA’s insurance regulations, the subsidies, closing the doughnut hole, and so on, then obviously their opinions are not very deeply held.
It seems to me very unlikely that more messaging will make them hold favorable opinions any more deeply than the unfavorable ones they initially professed to have. For that, you need results. The law must succeed in providing people with real benefits—benefits they don’t want to give up, When that happens—if it happens—opinion will congeal.
Far more than messaging, health reform needs results. Now—if not sooner.
Chart credit: Kaiser Family Foundation (pdf).
Will the Election Affect the Supreme Court’s Decision on Healthcare?
Brad Joondeph thinks so. As Michael Dorf recently wrote, the “framing power” of the politics makes it very hard to predict what judges will do.
We’re seeing that already. And the bigger the case gets—that is, the greater the public pressure on the Justices becomes—the more political its results are likely to be. The signs are pointing to this being the biggest, most politically volatile case since Bush v. Gore.
Here’s Joondeph, writing on the eve of the election:
[T]he election results are apt to affect the outcome of the ACA litigation in two ways. First, there seems little doubt that the federal courts generally, and the Supreme Court in particular, are influenced by the views of the other powerful institutions in our constitutional system. Thus, if the House and Senate are controlled by majorities that are hostile to the ACA, that will leave judges greater room to rule in favor of the states. Second, and perhaps more important, if tomorrow is a landslide for Republicans, and the narrative that takes hold (particularly in elite circles) is that the Democrats lost power due largely to the ACA–for instance, if attention is paid to those House members who lost their seats allegedly because of that vote–then the election may well be seen, at least in large part, as a rejection of the ACA by the American people. To the extent this occurs–regardless of its accuracy as a matter of political science–it would create an environment in which it was far easier for the Supreme Court to invalidate the ACA. For it would reduce the degree to which the Court would be attacked politically for such a decision, increase the likelihood that such a decision would be supported by the public, and diffuse some of the media and academic criticism.
In short, 18 months from now, we may well look back at [the election] as the single most important moment in the states’ constitutional challenges to the ACA.
All bets are off.
Brief, Anti-Brief
Briefs and motions for summary judgment in the Florida ACA lawsuit were filed last week in the District Court in Pensacola. I have a few thoughts in response to the administration’s brief (pdf).
But first, an aside: The administration’s lawyers cite the 1877 Supreme Court case of Pensacola Telegraph Co. v. Western Union Tel. Co., 96 U. S. 1 (1877), a case which is not at all on point, but which has some local historical interest in Pensacola. Of course, Judge Vinson is from Pensacola (and used to live a few blocks from where I grew up—though all I know about him is that he is really into camellias), and so one might well view this citation as a tasteless attempt at ingratiation. Personally, I think it’s a nice touch. And the case does provide a serviceable, if tangential, quotation about the adaptability of federal commerce regulation to new economic circumstances. So there’s that.
Now a few points about the administration’s brief. Recall that Judge Vinson ruled that the mandate penalty is not a tax, so it all comes down to the Commerce Clause. (Summary here. There is a separate issue about whether the ACA’s Medicaid reforms amount to federal coercion of state government, but there aren’t many people who think this claim has legs.)
The brief cites other federal laws requiring individuals to purchase insurance. It appears that each of these requirements is predicated on receipt of a federal benefit of some kind. For example, federal law requires you to get flood insurance if you live in a flood zone—if you want a federally subsidized mortgage, that is. I’m not sure that generalized benefits—like the availability of hospital care supported by federal funds—are sufficiently similar to these specific ones to make a neat analogy. For one thing, it’s extremely hard to imagine making the availability of federally subsidized hospital services conditional upon each individual’s insurance status. Denying someone a mortgage is easy; but barring the hospital door? In any case, no such conditions are attached to the insurance mandate in PPACA.
The brief is fairly persuasive in its treatment of Commerce Clause doctrine, arguing that there is no activity requirement in the Constitution and that the Court has never relied on one. (That horse has been, and will no doubt continue to be, well-flogged here.)
The brief also argues that there is no general bar against the federal government compelling individual citizens to act, pointing to forced sales of property through eminent domain and to compulsory military service through the draft. It is true of course that the commerce power is not a “second-class enumerated power” next to these, but it seems to me that there is an essential difference between the power to regulate commerce and each of the other powers cited. Those other powers include by their very nature the authority to impose certain affirmative obligations concomitant to them. The power to force land sales is inherent in the power to take private property for public use (with just compensation). The power to compel payment of taxes is inherent in the power to tax. The power to compel military service is (historically, if not logically) inherent in the power to raise armies. But I would hesitate to say that the power to compel engagement in commercial activity is inherent in the power to regulate commerce.
It’s the difference between saying “all bachelors are male” and saying “the sky is blue.” The first, as philosophers would say, is analytically true—i.e., true by virtue of the meanings of the words. The second just happens to be true (sometimes) as a matter of empirical observation. Similarly, the powers of eminent domain, raising armies, and taxation (and others like those) may entail the power to compel action by the very nature of what those powers are, or what they have historically meant. But the power to regulate commerce does not necessarily entail such a power to impose affirmative obligations. It might do so, but it need not necessarily do so. It could instead be limited to restrictions on regulable activities.
To conclude, I’m not taking one side or the other here. The whole question is really up in the air for me.
Incidental Reminder
Austin Frakt reminds us that health reform is about health, and that the Patient Protection and Affordable Care Act is good for you.
Let’s look beyond Washington. Doing so, we can recognize the most important benefit of health reform. It was, is, good for health. The principal way in which health reform is good for health is that it provides access to insurance for tens of millions of Americans. A secondary way is that it aims to increase the efficiency and quality of our health system through payment incentives and reduction of health care of low marginal value, in exchange for increasing provision of health care with high marginal value.
[...] Given the importance of health reform for health, the interpretation of the question “Was health reform worth it?” in political terms, and only political terms, misses a lot. Even if health reform is responsible for a significant part of the mid-term’s outcome–and I don’t think it was–that it was worth it is not even a question in my mind. If one thinks that our health insurance system requires major reform, and I believe it does (who doesn’t?), then that’s the right thing to do. In fact, it was the right thing to do years ago.
Was health reform worth it? Looking beyond Washington and focusing on health, the answer is clearly “yes.” Even if the politics don’t justify it, the health of Americans does.
Hear, hear!
Metaphysical Gymnastics
In his decision (pdf) for the federal District Court in Michigan upholding the ACA’s individual mandate, Judge Steeh claimed to have resolved the issue without resorting to “metaphysical gymnastics.” He seems to have meant that it did not take long chains of inference and speculation to reach his conclusion, but only simple articulation of the effects of uninsurance on interstate markets in healthcare services and financing. Those effects are direct, in the form of $43 billion in unreimbursed-service costs shifted onto other market participants.
Having no love for gymnastics or metaphysics myself, I would gladly agree that the twain should not meet to determine the outcome of this case. The trouble is, while I appreciate the judge’s sentiment, his use of the phrase drew my attention to a serious defect in the opinion: its central holding turns largely on abstract manipulations of semantics and logic best described by the phrase “metaphysical gymnastics.”
The Supreme Court has set the outer bounds of the Commerce Clause at regulation of “activities that substantially affect interstate commerce.” The problem, for ACA supporters, is that being uninsured is not really an activity in any straightforward way. In plain English, it’s what we call a “status.” In ACA-litigation-ese, the challengers refer to it as “inactivity.”
Steeh’s key move is to say that Congress may regulate individuals’ “economic decisions” that substantially affect interstate commerce. “Far from ‘inactivity’,” says the judge, these decisions have very important consequences.
Well, ok. But inactivity can have important consequences, too. Having consequences does not make the difference between act and omission, or activity and inactivity. And while it’s true that many people, including the Thomas More Law Center plaintiffs, do actively decide not to obtain insurance, you don’t actually have to make such a decision to be uninsured. But if you are uninsured in 2014—whether you decided to be or not—the ACA will hit you with a penalty.
Judge Steeh cites cases (Raich, Wickard, Heart of Atlanta Motel) supporting the notion that the Commerce Clause may reach people who have decided not to engage in certain commercial transactions. But these cases are pretty easy to distinguish; they involved plaintiffs who first voluntarily undertook some economic activity that subjected them to regulation, and then sought exemption from regulation for some incidental activities or decisions. The regulations were upheld in those instances because the plaintiffs were already on the hook.
Here, the individual mandate does not target people who engage in a specific, voluntary activity that brings them within the ambit of the ACA’s regulation of interstate commerce in health insurance. The only way a court can find otherwise is to posit a new class of “activity” that bridges the gap between the kinds of transactional activities typically subject to regulation and the negative relational status of not engaging in such activities.
Or look at it this way: Congress may regulate interstate commerce in insurance markets, including transactions for the purchase of insurance. So if you buy insurance, federal regulations may govern your duties under your insurance contract. But under the ACA’s individual mandate, federal insurance regulations also purport to impose duties on you even if you do not transact to purchase insurance. Indeed, under Judge Steeh’s reasoning, it is your very decision not to buy insurance that subjects you to the ACA’s insurance regulations—even if you did not actually make such a decision.
There’s a nice phrase to describe such reasoning.
Outlining the Case for an Activity Requirement
For years it has been de rigueur in Commerce Clause cases to quote the rule that sets its outer bounds at regulation of “activities that substantially affect interstate commerce.” But the Supreme Court has never directly faced the question of whether the target of congressional regulation under the Commerce Clause must be an activity per se.
It’s possible that “activities” was just chosen as a sort of generic sentence-filler noun that sounded more supreme courtly than, say, “stuff that substantially affects commerce.” That is, it’s possible that the Court never really meant that the target of regulation must be an activity, but just that it must be something that substantially affects commerce.
Possible. But anyway, the question now is: should there be an activity requirement? There’s a reasonable case that such a requirement follows from background constitutional principles.
One of those background principles is that federal government is a government of limited powers. That’s not necessarily an idea that is determinative here, because we’re arguing about how limited those powers are. But it is important to bear in mind, as it is the kind of traditional, doctrinal gloss the Supreme Court is sensitive to. The Court’s conservatives, in particular, can be expected to look for ways to confine the Commerce Power within traditional boundaries.
Also in the background is the “anti-commandeering principle.” This is the (here, greatly simplified) idea that the federal government can’t just order state governments to do things. It must have a hook. It can regulate where the states are already engaged in doing something, and it can give them (non-coercive) incentives to do things. But generally, it can’t just say: do this. Libertarian legal scholar Randy Barnett has gotten some traction lately with his argument (pdf) that this principle applies also to federal government action vis-a-vis private individuals, not just vis-a-vis states.
Another part of the rationale here is that an activity requirement would give citizens a chance to avoid regulation if they wish. That is, it would give meaning to the idea that the government should give citizens fair notice of the laws and regulations to which they are subjected. Notice is isn’t much good if the citizenry can’t conduct themselves in such a way as to avoid application of the law they’ve been given notice of.
Boiling it all down: you need a volitional act, with fair warning of the consequences for that act. If that volitional act, alone or in conjunction with other acts of the same ilk, substantially affects interstate commerce—or, if regulation of that act is essential to a comprehensive scheme of regulating interstate commerce—then Congress would be permitted to regulate that act under the Commerce Clause. A private individual would be exempt from federal regulation until she took some positive action to bring her within the sphere of federal power.
The activity requirement would be like a line in the sand. Cross it, and you’re subject to the feds. Now, an act/omission distinction of this type does not necessarily present a perfect, bright line. Orin Kerr has posed some interesting questions exploring this territory. But I think the important thing about a line in the sand is not that it clearly divides the space on either side of it, but that it causes people to be mindful of where they step in relation to it. That signaling function, I think, also serves as fair warning to those stepping in any gray area around the line.
The Heart of the Matter
The key to last week’s federal District Court decision (pdf) upholding the ACA’s individual mandate is how Judge Steeh dispenses with the challengers’ arguments that the Commerce Clause does not authorize Congress “to regulate inactivity, or a person’s mere existence within our Nation’s boundaries.”
Here’s the crucial passage:
Far from “inactivity,” by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants. As this cost-shifting is exactly what the Health Care Reform Act was enacted to address, there is no need for metaphysical gymnastics of the sort proscribed by [the Supreme Court's decision in] Lopez.
Let’s tease that out a bit:
The challengers say Congress may only regulate activities under the Commerce Clause; being uninsured is a status1, not an activity; the individual mandate is a regulation of status; and therefore, it is not within congressional authority under the Commerce Clause to impose the individual mandate.
Judge Steeh says no, Congress can regulate “economic decisions” that affect interstate commerce, and the plaintiffs’ and others’ decisions not to get health insurance has a substantial aggregate effect on healthcare markets.
Who’s right? The answer, I think, is that we don’t know. It’s an open question—an “issue of first impression,” as they say in the biz. Until now, as Judge Steeh notes, the Supreme Court has never had occasion to examine the activity/status (or “activity/inactivity”) distinction with respect to the commerce clause and has never actually spelled out an activity requirement.
As a supporter of health reform in general and the ACA’s regulatory scheme in particular,
I’m happy about the outcome of the Michigan case, but deeply suspicious of its reasoning. That’s partly because skepticism is in my nature. But partly it’s because, when it comes to metaphysics, I don’t like gymnastics.
I’ll elaborate in another post.
- Actually, they say that being uninsured is a kind of “inactivity.” I don’t find that to be the most helpful formulation. But there’s a reason for it: the challengers want to emphasize that there is a “mandate” that applies to everyone—not just a “penalty” that applies to the uninsured. The distinction makes a difference—I think—with respect to the question of whether the minimum coverage provisions are a valid exercise of the taxing power. [↩]
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