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 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.
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.
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.
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.”
Navigating the Hudson Decision
There were no major surprises in Judge Henry Hudson’s ruling on Monday that the ACA individual mandate is unconstitutional. The key holdings of the opinion (pdf) were:
Retro Henry Hudson
- that the individual mandate is a regulation of “inactivity” (i.e., the status of being uninsured);
- that Congress has no authority to regulate inactivity under the Commerce Clause;
- that the Necessary and Proper Clause does not extend the commerce power to reach inactivity;
- that the mandate penalty is a regulatory penalty and not a tax and therefore not an exercise of the taxing power.
Also significant was Judge Hudson’s finding that the minimum coverage provision was severable from the rest of the statute: striking down that one provision, the judge found, would not invalidate any other parts of the law not overtly tethered to it by specific statutory reference. And though the legislative scheme of the ACA is aptly described as a three-legged stool—propped up by the individual mandate, the insurance regulations, and subsidies to help individuals buy insurance—the interdependence of the legislation’s policy purposes does not makes its provisions legally inextricable from one another.
Many legal commentators have taken issue with Judge Hudson’s treatment of the Necessary and Proper Clause (N&P). Orin Kerr thinks Hudson simply made an error, noting that the whole point of N&P is that it expands congressional means beyond the enumerated powers in order to ensure that those powers are effective.
Jonathan Adler and Jason Mazzone each respond that Hudson is not arguing that N&P adds nothing to the Commerce Clause, but just that it too must be limited by some objective principle, and that the activity requirement is that principle. In other words, N&P may extend the commerce power beyond regulation of interstate economic activity to regulation of intrastate activity, or even non-economic activity, but not to regulation of inactivity.
To which ACA supporters rejoin that (a) the individual mandate aims to regulate not based on inactivity but based on the aggregate effects of behaviors (viz. economic decisions) on healthcare and insurance markets over time, and (b) there is no activity requirement in the first place. Making the latter point, Michael Dorf writes:
There is no constitutional prohibition on Commerce Clause regulation of inactivity, at least where that inactivity is economic in nature. Judge Hudson accorded talismanic significance to the fact that prior cases had used the phrase “economic activity,” without ever pausing to explain why the government cannot regulate inactivity that is in its nature economic. Consider, in this regard, the provisions of federal labor law and federal antitrust law that have been construed to forbid secondary boycotts . A boycott, of course, is economic inactivity–a refusal to purchase goods or services from the target–in exactly the same way that the non-purchase of health insurance is economic inactivity. Under Judge Hudson’s analysis, such prohibitions are constitutionally invalid, even though no one even thought to question them on these grounds during the decades they have been enforced.
But doesn’t the case law require that the underlying predicate for regulation be some sort of affirmative activity? The short answer is no. Although the cases talk about “economic activity,” that’s only because the predicate for regulation in the prior cases happened to be activity rather than inactivity. Consider a quite closely related question. In Gonzales v. Raich, the Supreme Court for the first time defined the “economic” aspect of “economic activity,” borrowing from Webster’s dictionary: “the production, distribution, and consumption of commodities.” Does this mean that the purchase of services is not economic activity for Commerce Clause purposes? Of course not. The Court in Raich had before it a case involving a commodity (marijuana) and so it chose a definition that focuses on commodities. In a subsequent case involving services the Court will undoubtedly say that they are included too. In the meantime, it would take a particularly obtuse district court judge to think that because of the definition in Raich, services are not covered by “economic activity.” Likewise, the use of the term “activities” must be understood as a product of the context of the cases in which the term was used, rather than any consideration of the constitutional difference between activity and inactivity.
(Bold added.) I find that persuasive, but I also see the need to articulate a limiting principle on the commerce power. Brad Joondeph thinks that emphasizing the unique character of health insurance markets could be the key. Maybe so, but I think we need to remain open to the possibility that the Constitution leaves it to the political process to determine its own “logical limitation.”
Judge Strikes Down Individual Mandate
As expected, Judge Hudson of the Eastern District of Virginia has issued his decision holding that the ACA’s minimum coverage provision—a.k.a. the individual mandate—is unconstitutional. The opinion (pdf) is up at the ACA Litigation blog. I haven’t read the whole thing yet, but here’s the key line, via Brad Joondeph:
Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market. [Op. at 24.]
Adventures in Statutory Interpretation
In theory, there are three distinct modes of statutory interpretation: textualism (adhering to the plain meaning of the text), intentionalism (adhering to the specific meaning intended by the legislators), and purposivism (adhering to the overall statutory purpose). In practice, judges are pragmatic and engage selectively in all three modes, though they may lean in one direction or another. So when a question of statutory meaning arises, you will most often look at it from all three angles to build your best argument.
It may be instructive, as a quick exercise, to consider from each of these angles the question of whether the monetary assessment imposed by PPACA for failure to maintain minimum health-insurance coverage is a tax or a regulatory penalty.
Looking first at the text of the statute alone, you’d have to conclude the assessment is a penalty. It’s never referred to as a tax and never justified as an exercise of the taxing power, even while extensively supported by legislative findings pertaining to the commerce power.
Second, brushing aside plagues of conceptual problems inherent in the notion of legislative intent, note that while identifying the intent of Congress is always tricky, one clue that Congress intended the penalty to be a penalty is that they consistently referred to it using the term “penalty.” But here you might note that in earlier drafts of the legislation the mandate penalty was identified as an exercise of the taxing power, and that we may surmise that it was intended to be an exercise of both the taxing and commerce powers, even if the tax language was dropped in the shuffle between committees (or whatever).
Arguments like this just aren’t going to get us anywhere. The evidence of intent almost always cuts both ways, for one thing. The obvious response is to say: no, the fact that the language was dropped is evidence that Congress intended to drop it; if they’d wanted to invoke the taxing power, they would have left that language in the final draft. This is why the use of legislative history in statutory interpretation is often derided as “looking over a crowd to find your friends.”
The third and last method involves assessing the meaning of provisions in light of the overall purposes of the statute. Here too it looks like the analysis would lean towards a penalty. Clearly the main purpose of the penalty is to enforce the mandate; it aims to nudge people into coverage and thereby to relieve the systemic threat of adverse selection in the insurance markets.
Now, it wouldn’t be unreasonable to say, in addition, that the penalty serves a secondary purpose of raising revenue—about $4 billion a year, CBO estimated. Except that the drafters studiously avoided even the suggestion that the penalty would be a revenue generator—no doubt to preempt political opponents from using that to argue the mandate was a tax. Which is, of course, why this whole fiasco is so maddening: Democrats bent over backwards to shield the healthcare bill from all manner of political attack but, in doing so, seemingly allowed the bill to become dangerously vulnerable to legal attack.
Moon on the Mandate Penalty
While upholding the health reform law’s individual mandate under the Commerce Clause yesterday, Judge Moon of the Western District of Virginia basically shot down the administration’s alternative argument that the mandate penalty provisions are also authorized by the taxing power:
After considering the prevailing case law, I conclude that the better characterization of the exactions imposed under the Act for violations of the employer and individual coverage provisions is that of regulatory penalties, not taxes. In the Act, Congress called them a “penalty” and an “assessable penalty.” Congress specifically chose not to label them as taxes when drafting the Act, although it described several other exactions in the Act as taxes. [...] To be sure, both mandatory coverage provisions are placed in the section of the tax code entitled “Miscellaneous Excise Taxes,” but the tax code itself instructs that no inference of legislative construction is to be drawn from the location or grouping of any particular provision of the tax code. 26 U.S.C. § 7806(b).
Even more importantly, the assessments function as regulatory penalties—they encourage compliance with the Act by imposing a punitive expense on conduct that offends the Act. [T]he statutory fees were enacted in aid of Congress’ regulatory powers under the Commerce Clause. In its lengthy statutory findings on the individual coverage provision, § 1501(a), not once does Congress indicate that it was exercising its taxing authority to impose the penalties. [...] Although the penalties are expected to raise revenue, they were not included among the “Revenue Provisions” of Title IX of the Act, which indicates that generating revenue was not their main purpose. Indeed, Defendants do not seek to deny the regulatory purpose of the penalties. For these reasons, the Anti-Injunction Act does not divest this Court of jurisdiction to hear the present challenge.
Op. at 20-21 (pdf) (emphasis added) (citations omitted).
This issue has turned out to be much more serious and challenging than I thought it would be and, while you might expect that from some penny-ante blogger, it’s also been proving more serious than heavyweight constitutional lawyer Jack Balkin or health law über-scholar Timothy Jost thought it would be. More on that apparent misdiagnosis in the near future.
Now, technically Judge Moon did not rule that the mandate could not be authorized under the taxing power, just that it wasn’t a tax for purposes of the Anti-Injunction Act (which therefore did not bar plaintiffs’ standing to sue). In footnote 13, he writes that “Congress enacted the provisions as an amendment to the Internal Revenue Code, which might weigh in favor of finding that the penalties are taxes…. In this case, however, it is neither necessary nor advisable to determine whether the penalties would be constitutionally authorized under Congress’ taxing power…. It is enough that the penalties are a constitutional exercise of the power to regulate commerce….” But the above block-quoted reasoning should apply with equal force in this analysis, and it’s a safe bet that the result would be the same: it’s a penalty, not a tax.
Mandate Upheld Again, Liberty Univ. v. Geithner Dismissed
Another federal district court judge has upheld the ACA’s individual mandate in a decision on the merits. Judge Norman Moon of the Western District of Virginia dismissed the challenge to the minimum coverage requirement and other provisions in the case of Liberty University v. Geithner (pdf). Brad Joondeph has the details:
Judge Moon found that the plaintiffs had standing to challenge the ACA (and that their claims were ripe). But he held that each failed to state a plausible claim under Federal Rule of Civil Procedure 12(b)(6).
In their complaint, the plaintiffs pressed several constitutional challenges, ranging from one grounded in the Free Exercise Clause to one that the ACA violated the Guarantee Clause. The one that really matters is their contention that the minimum coverage provision exceeds Congress’s enumerated powers. Judge Moon addresses the claim at length, but here are two critical passages. First, Judge Moon concluded that an individual’s decision whether to purchase health coverage is “economic in nature,” and thus within Congress’s commerce power under a straightforward application of Lopez[.]
[...] Additionally, Judge Moon concluded that section 1501(b) is within Congress’s commerce power under the logic of Raich and Wickard, as a necessary component of a larger regulatory scheme, which regulatory scheme plainly regulates interstate commerce (namely, the health insurance market)[.]
An important point on which Judge Moon’s decision differs from that of Judge Steeh, who upheld the mandate in the Michigan case, is that Judge Moon held that the mandate penalty is not a tax (for purposes of the Anti-Injunction Act, which bars suits challenging a tax before the tax has been levied), a question which Judge Steeh did not reach. Judge Moon draws on many of the same arguments made by Judge Vinson in the Florida case (Florida v. HHS) and Judge Hudson in the other Virginia case (Virginia v. Sebelius) to the effect that the exaction for not complying with the mandate is a regulatory penalty, not a tax. I’ll have more to say about that later. But this is a crucial issue, because if the individual mandate is not an exercise of the taxing power, then it must be justified under the commerce power. And the conservatives on the Supreme Court are likely to be much less deferential to the mandate if they find that Congress has acted under the commerce power and not the taxing power.
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.
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.
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