Thursday, October 7, 2010

PPACA: No Way Around Commerce Clause Precedent

Late today, a federal judge in Michigan's Eastern District ruled that the individual mandate is constitutional, and is authorized by the commerce clause. In Thomas Moore Law Center et al. v. Obama (pdf), the plaintiffs seek a preliminary injunction against the enactment of the individual mandate. This is a slightly different issue from the States' claims in FL v. DHHS, but the commerce clause logic should work the same. As a spokesperson for the Department of Justice points out, this is the first time in which the merits of challenges to the Patient Protection and Affordable Care Act have been grounds for a decision.

Plaintiffs, two individuals and a public interest group, have standing. The issue is ripe for judicial decision. The remedy is allowed for under the Anti-Injunction Act. Let's play ball!

Plaintiffs argued that Congress has never had the power to regulate commercial inactivity, whereas the individual mandate seeks to penalize individuals who do not purchase health insurance. The district court finds that the authority of Congress to mandate individual coverage is found in the doctrine stated in US v. Lopez, 514 U.S. 549 558-559 (1995): "Those activities that substantially affect interstate commerce." The court dutifully follows instructions from Gonzales v. Raich 545, U.S. 1, 22 (2005) that it merely should look to whether there is a reasonable basis for the belief that such a relationship between the activity and interstate commerce exists.

Reading the text, it seems that the judge, George Steeh, a Clinton appointee, personally does not think that the commerce clause originally intended to reach thus far, as he ascribes the extent of congressional power under the commerce clause to the Supreme Court's activity (i.e. "The Supreme Court has expanded the reach of the Commerce Clause to reach purely local, non-commercial activity simply because it is an integral part of a broader statutory scheme that permissibly regulates interstate commerce.") However, the job of the lower courts is to implement the policy of the higher courts, and the sentence is true enough.

The key part of the decision is that between Wickard and Raich, Steeh draws the common line that the government had lawfully regulated inactivity. "In both Wickard and Raich, the Supreme Court sustained Congress's power to impose obligations on individuals who claimed not to participate in interstate commerce, because those obligations were components of broad schemes of regulating interstate commerce."

The 'inactivity' argument is central to the FL v. DHHS claim as well, so we'll dig into the logic here a bit more. It is also not enough to say that Wickard and Raich disprove the theory that lack of economic activity cannot be prohibited. After all, there was a non-economic activity going on. The government's position in this suit is that the government is merely regulating how individuals pay for the health insurance that they will inevitably need at some point in their lives. Steeh says "The health care market is unlike other markets. No one can guarantee his or her health or ensure that he or she will never participate in the health care market." This is an eery, if true point, and the one which other bloggers have latched on to. Steeh here says that individual decisions to not carry insurance create cost-shifting to other patients. Hospitals must pick up the bill from patients who cannot afford to pay for their care and do not carry insurance. This drives up health care costs for everybody. In addition, health care providers maintain a huge amount of capacity which goes unused on a daily basis. This extra capacity is in place to deal with public health emergencies: outbreaks, terrorism, or natural disasters. Those not paying insurance are not paying for their share of the extra capacity.

Wickard, Raich, Lopez, and Morrison are not exactly on point in this case because all of the petitioners ended up before a court because they were engaged in an activity of their own choosing (growing wheat, growing marijuana, bringing a gun to school, violence against women, respectively). The most appropriate precedent for this 'inactivity' argument is Heart of Atlanta Motel v. United States 379 U.S. 241 (1964), in which the motel proprietor refused service to African Americans who attempted to lodge therein. No activity occurred; persons offered economic activity (buying a room for the night) and these offers were declined. This ran afoul of the Civil Rights Act's accommodation provision which prohibited discrimination in lodging open to the public. The Supreme Court held that the Civil Rights Act was within Congress's authority, even though the law as applied would force the Heart of Atlanta Motel into an economic transaction in which it did not which to engage. The government argues that the common thread between Heart of Atlanta and Wickard, Raich, Lopez, and Morrison is that the court may regulate economic decisions, but not non-commercial activity.

Finally we come to the taxing issue. It has been accepted for... well, for as long as I can remember that if Congress has the power to regulate it, it has the power to tax it. The principle is more or less from Mcculloch v. Maryland, 17 U.S. 316 (1819), "The power to tax is the power to destroy." Congress would be able to lay taxes "as a means of constraining and regulating what may be considered by the Congress as pernicious or harmful to commerce." Rodgers v. United States 138 F.2d 992, 995 (6th Cir. 1943). Outside of this power, i.e. if the plaintiffs win on appeal that the activity/inactivity distinction is relevant and excepts plaintiffs' economic decisions from Congressional regulation, the power to tax remains. Though in this case, the power must be used to raise revenue. If it had to, Congress could simply tax everybody the extra 2.5% that they would under the PPACA and provide a full rebate for this tax to any individual who purchased health care. Honestly, I don't know why they didn't do that in the first place.

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