Health Care and the Commerce Clause

A friend asked me, in all sincerity, how I plan to teach National Federation of Independent Business v. Sebelius—the Health Care Cases—in my constitutional law class next spring. It’s a good question. Chief Justice Roberts’s opinion discusses and alters commerce and spending clause doctrine and elaborates on the taxing power—the case could be its own course in Congressional authority under Article I of the Constitution. (My friend also said she’s still trying to figure out whether Roberts actually called balls and strikes in Sebelius or “if he took the ball away from the pitcher and told everyone to go home because the game was over”).

What may pose the greater challenge is how to incorporate into discussion of the constitutionality of the Affordable Care Act’s individual mandate some sense of the decision’s political dimensions. Democrats have praised the decision and commentators have expressed respect for the Chief Justice’s decision to side with the so-called liberal justices. But at a certain level his decision appears motivated less by fidelity to constitutional principles than a desire to protect the integrity of an institution—the U.S. Supreme Court—that has surprisingly often in the past decade paid slight deference to the work of the elected and politically accountable branches of the federal government.

Indeed, as my colleague Louis Schulze has noted, in this case there were five votes for the proposition that an individual decision to freeload when it comes to health care, which has a demonstrable—and profound—impact on interstate commerce, is somehow not activity within Congress’s reach. This conclusion, as Justice Ruth Bader Ginsburg notes in her opinion in Sebelius, is hardly self-evident in light of the Court’s commerce clause precedents, and it arguably fails to respect the legislature’s competence to make judgments about the aggregate effect of economic decision-making. Given that, as one appeals court judge noted, “it is possible to restate most actions as corresponding inactions with the same effect,” the Court’s new activity-inactivity distinction may simply be an invitation to judges to engage in subjective assessments about the validity of a wide range of federal regulations.

As discussion begins about the long-term implications of this new commerce clause principle, it would be good to remember that experiments with formalistic constitutional doctrines that effectively cabin the federal government’s ability to regulate have been relatively short-lived. For instance, in the 1995 case United States v. Lopez, the Court held that Congress can only regulate activity that is inherently economic under the commerce clause—and then ten years later concluded in Gonzales v. Raich that Congress may regulate even non-economic activity when it is part of a broad effort to regulate a national market, effectively embracing a means by which Congress can get around Lopez. The Court may soon discover that in order for the federal government to address some of the truly national problems the country now faces, it will have to develop a way for Congress to get around its new activity-inactivity distinction, too.

Lawrence Friedman

The Health Care Cases: “Democrats Win the Battle, but Lose the War … and Don’t Even Seem to Know it Yet” or “How Chief Justice Roberts Got to Have his Cake and Eat it, Too"

I’m baffled by the reaction to today’s ruling in National Federation of Independent Businesses v. Sebelius (which is quickly attaining the nickname “The Health Care Cases.”).  Democrats seem to be rejoicing “a win,” in that the Affordable Care Act was upheld.  What everyone seems to be ignoring is the fact that the Court also held that:  (a) Congress lacked the power to enact the individual mandate under the Commerce Clause; and (b) it also lacks the power under the Spending Clause to withhold Medicare funding to states who refuse to participate in the Medicare expansion.  In crowing about this “victory” for the President, I honestly don’t think that Democrats have quite figured out the long-term consequences of what Chief Justice Roberts just pulled off today.  But, know this:  his feat today is downright historic…

Most people probably don’t care about the Commerce Clause or the Spending Clause.  These were just some words of jargon that lawyers were throwing around, and what people really cared about was whether Obamacare would still exist.  The elation to be heard outside the Supreme Court building seems to confirm this, and even the commentary by talk radio pundits in the first hours after the decision seemed to focus only on the survival of the ACA.  What folks are missing is the fact that the Supreme Court just fundamentally altered (or put back into place, depending upon where you’re standing) the balance of power between states and the federal government.

To be clear, the Commerce Clause is the source of power for the vast majority of federal social legislation.  Georgetown Constitutional Law Professor Randy Barnett, the architect of the challenge to the ACA and longtime advocate for curtailing federal power has stated that the original meaning of Congress’s power under the Commerce Clause is that it only extends to “trade in things – goods” and that it merely creates a free-trade zone among the states with Congress regulating matters within the stream of commerce.  Barnett’s theory on the ACA is that even if insurance can be deemed a “good,” it still is beyond the reach of the Commerce Clause because the individual mandate compels citizens to enter into commerce rather than merely regulating what is already in it.  By seemingly agreeing with this theory today, the Supreme Court arguably calls into question such fundamental social reforms as the Civil Rights Act, workplace safety laws, and minimum wage laws … and yet Democrats are celebrating.

Despite the impact of today’s ruling on the Commerce Clause, Democrats seem just about ready to canonize Chief Justice Roberts, given that he – and not Justice Kennedy, as had been widely expected – provided the swing vote for saving the ACA.  Little to do they know, apparently, that what the Chief Justice pulled off today was nothing short of a masterstroke.  As a longtime advocate of a conservative approach to interpreting the constitution, the Chief Justice no doubt seeks to reinforce the power dynamic between the states and the federal government.  As a former law clerk to then-Associate Justice Rehnquist, he no doubt relishes the opportunity to complete the federalism revolution his former boss started.  At the same time, though, Chief Justice Roberts also appreciates the impact of the Court’s actions on its legitimacy and has openly strived to avoid closely-divided or blatantly partisan rulings from the Court.

Today, he somehow was able to achieve those two seemingly incompatible results simultaneously.  By narrowing the Commerce Clause, he has substantially undermined the federal government’s power to involve itself in citizen’s lives; but, by casting the deciding vote to uphold the ACA’s individual mandate as a permissible “tax,” he achieves the pragmatic goal of deferring to one of the elected branches of government and showing that the Court is still above politics.  He literally got to have his cake and eat it, too, and it shouldn’t be too long until the cognoscenti begin to recognize the sage brilliance of this maneuvering.

So, for now, Democrats are celebrating.  Hopefully, the Affordable Care Act will work as advertised and provide health insurance to millions of people who otherwise would have suffered.  But, in the not too distant future, we will certainly have to reckon with the real results of today’s decision:  “The New Commerce Clause.”  Whether that occurs when the Supreme Court invalidates some crucial social policy or whether it occurs when Congress is too timid to legislate, one thing is certain: Chief Justice John Roberts will be in the SCOTUS Hall of Fame, because this guy just pulled off the Kobayashi Maru of constitutional adjudication.

Louis Schulze

The Constitution, Congress, and the Repeal Amendment

When Congress acts pursuant to its enumerated powers and does not infringe upon an individual right or liberty, the U.S. Supreme Court has traditionally treated the legislation with deference. This approach lately has come under fire. Randy E. Barnett, who teaches constitutional law at Georgetown, has endorsed the enactment of the so-called “repeal amendment” – an amendment to the Constitution which would provide for the repeal of a particular federal law or regulation “when the legislatures of two-thirds of the several states approve resolutions” favoring the same.

Such an amendment is contrary to the intentions of the framers as reflected in the text and structure of the Constitution itself. They met in Philadelphia in 1787 to address the inadequacies of government under the Articles of Confederation, finally recognizing that, in order for the young nation to move forward – for its economy to thrive, for its borders to be protected, for its people to be secure in the world – it needed a government to both represent and speak for all citizens – a government of the United States, supreme by design in matters of national policy both domestic and foreign. 

By subjecting every national policy to review by the people acting through their state legislatures, the repeal amendment would threaten the most vital aspects of the governmental plan adopted by the framers. As my late colleague George Dargo put it, “[t]o provide states with a mechanism for disapproving of federal laws would not only undermine the institution of Judicial Review, but it would fundamentally alter the architecture of American government as we have come to know it in the past two hundred years.”

Of course, altering the architecture of the American government is the point of the repeal amendment. Which begs the question whether our constitutional architecture, as understood by the Supreme Court, has truly failed us.  Proponents of the amendment assert that the federal government is out of control – an assertion that assumes the federal government is divorced from the people it serves. Indeed, Professor Barnett has argued, in the context of the challenge to the Patient Protection and Affordable Care Act, that, “[i]f Congress can mandate that citizens do anything that is convenient to its regulation of the national economy,” then sovereignty lies with the federal government rather than the people and “Congress has the prerogative powers of King George III.”

But that is not right: unlike an unelected king, Congress is not an entity separate from the people – it is the people. And if the people don’t like the individual mandate, or indeed any federal policy, they have ample means at their disposal to make that view known to their congressional representatives, as indeed many have since the Affordable Care Act became law.

The people, moreover, cannot reliably be expected to enforce the Constitution. When the Court reviews a Congressional enactment, it is engaged in the process of determining the law’s constitutional validity, a process dictated by established doctrines that describe the boundaries of acceptable Congressional action and at the same time respect the limits of the judiciary’s institutional role in our governmental system. These doctrines serve to direct and constrain judicial discretion, to push judges to exercise legal rather than political or emotional judgments about the action Congress has taken.

The repeal amendment, by contrast, invites the exercise of political and emotional judgments. People will favor the repeal of particular federal policies simply because they don’t like those laws. State legislative resolutions favoring repeal accordingly will be the result of passion, not reasoned judgment about the national policies Congress is constitutionally authorized to pursue.

In the end, then, proponents of the repeal amendment seek to achieve political and not necessarily constitutional goals. Luckily for them, we already have at hand the means through which we can control our representatives in Congress, and thereby control the reach of the federal government: they are called elections, every two years for Representatives, every six for Senators.

Lawrence Friedman

Congress, Commerce and the Health Care Law

Writing in Slate in early February, Dahlia Lithwick opined:

If the odds of success for the health care law [in the U.S. Supreme Court] have tilted in recent months, it’s not because the suits [challenging the law] have somehow gained more merit. It’s because the public mood and the tone of political discourse have shifted dramatically—emboldening some federal judges willing to support constitutional idea whose time, in their view, has finally come.

That constitutional idea is that there are judicially-enforceable limits on Congress’s power under the Commerce Clause. Until the Supreme Court’s 1995 decision in United States v. Lopez, the federal courts had regarded the exercise of the commerce power deferentially—legislation would be upheld so long as Congress had a rational basis for concluding that intrastate activity would have a substantial effect on interstate commerce.

In Lopez, the Supreme Court signaled that the commerce power had at least one judicially-enforceable limit: to be subject to regulation, intrastate activity must be inherently economic. Mere possession of a gun, the Court concluded in that case, is not inherently economic.

A decade later, however, in Gonzales v. Raich, the Court confirmed that Congress could regulate even non-economic intrastate activity, if that regulation was a part of a larger, comprehensive scheme to manage a national market—in Gonzales, the market in controlled substances. Gonzales suggested cases like Lopez might remain outliers.

Now, as Lithwick observes, popular criticism of the new health care law has found its champions. In two recent cases, United States District Courts in Virginia and Florida have declared the law unconstitutional because, they reason, it does not regulate economic activity, but rather inactivity—namely, an individual’s decision not to obtain health insurance.

These courts have thus erected a new barrier to Congressional regulation under the Commerce Clause: the distinction between activity and inactivity. Setting aside the lack of precedent supporting the existence of such a distinction, it is enough to say that this new rule does not exactly lend itself to consistent application over time. Is a decision not to purchase health insurance really inactivity, when the economic consequences of that decision are measurable and, in the aggregate, have a significant effect on interstate commerce?

The effort to make and justify such a distinction is a fool’s errand. It is not the responsibility of the federal courts to protect a political majority from itself. As Chief Justice John Marshall reasoned in Gibbons v. Ogden, the first great Commerce Clause case, Congressional discretion ultimately will be controlled by the people. And, as the great Chief Justice might have predicted, the most recent national elections and even more recent polls indicate that the forces opposed to the health care law appear to need no help from the judiciary.

It remains to be seen whether the U.S. Supreme Court will agree with Marshall’s view that, where commerce is concerned, deference to our elected officials is warranted. Many commentators are, as Lithwick notes, predicting a close decision. As in so many close cases, the meaning of our constitution likely will come down to the vote of Justice Anthony Kennedy. At some point, the American people may seriously begin to wonder how it is that we arrived at this place, where one justice’s vote may deny the people’s representatives both the ability to make policy for the nation and the opportunity to change it in response to their constituents’ wishes.

Lawrence Friedman

Is the Health Care Law Beyond the Commerce Power?

In his decision this week in Virginia v. Sebelius finding the Patient Protection and Affordable Care Act unconstitutional, United States District Judge Henry E. Hudson explains that Congress cannot, under Article I’s Commerce Clause, compel individuals to purchase health care insurance by assessing them a penalty if they choose not to do so. He distinguishes this case from Wickard v. Filburn. In that case, the Supreme Court concluded that Congress can regulate the activity of the individual wheat farmer, because such activity in the aggregate has a substantial effect on interstate commerce even if the wheat transactions of each individual farmer do not.

But wouldn’t there be a significant effect on interstate commerce—as Congress believes—if individuals declined to purchase health care insurance (assuming they are not otherwise covered)? Indeed, isn’t that the whole point of the new health care law—to avoid that effect by creating incentives, through the assessment of a tax penalty, for individuals to purchase coverage?

The answer to the second question is yes—but the answer to the first, according to Judge Hudson, depends on the activity in question. In his view, Congress’s commerce power only reaches activity in a market, not the decision not to participate in a market. Yet in Wickard, the Court allowed Congress to reach wheat farmers who chose not to sell the wheat they produced—just as in this case, where Congress is trying to reach individuals who have chosen not to purchase their own health insurance.

Not so fast, Judge Hudson tells us. In Wickard, the individual farmers could have avoided regulation entirely by choosing not to engage in the production of wheat, while in this case, he argues, individuals cannot avoid the regulation: they must either purchase coverage or pay the penalty.

This reasoning has a superficial appeal, but it ignores the fact that, unlike the farmer who chooses not to grow wheat, no individual living in the United States can help being a part of the health care market. If you choose (for whatever reason) not to have health insurance coverage, that does not mean that you are not participating in the health care market—and it does not mean the health care services you will inevitably receive at some point in your life have no economic value. Rather, you have simply chosen a different way to structure your particular health care transaction—namely, by relying upon the rest of us to pay for the consequences of your decision not to have coverage.

In the end, you may have chosen not to pay for health insurance coverage, but you have not chosen to avoid an economic transaction. Surely Congress has the authority under the Commerce Clause to regulate the aggregate effect on interstate commerce of all those individuals who have chosen to engage in that particular economic transaction.

Lawrence Friedman

Justice Stevens and the Commerce Clause

With the retirement announcement last week of Associate Justice John Paul Stevens, it's not too soon to begin to think about how history will view his 34 years on the high court. As many commentators have noted, Justice Stevens was the last appointed without a televised confirmation, and he may have been the last truly non-partisan pick. Looking over his many opinions, what stands out, particularly in more recent years, is not his leadership of the so-called "liberal" wing of the U.S. Supreme Court, but his unyielding effort to steer the Court away from a formalism that threatened at times to undermine the continuing vitality of our constitutional commitments.

An example is Justice Stevens's opinion for the majority in Gonzales v. Raich. That 2005 case concerned the question whether the federal Controlled Substances Act (CSA) prevented individuals in California from possessing, obtaining, or manufacturing cannabis for their personal medical use. At the time, California was one of several states that authorized individuals to use marijuana for medicinal purposes. Whether these laws ran afoul of the CSA depended in part upon whether the CSA was within Congress's power to enact under the Commerce Clause.

That the Act could be constitutionally challenged was a result of the Court's attempt to rein in Congress's power under the Commerce Clause in two earlier cases, United States v. Lopez, a 1995 decision, and United States v. Morrison, a 2000 decision. In each of those cases, a majority of the Court concluded that Congress could not regulate intrastate activity having a substantial effect on interstate commerce unless that activity has some relation to "commerce" or some some kind of "economic enterprise." In Lopez, the Gun-Free School Zones Act of 1990 failed this test because the Act criminalized mere possession of a gun, which, in the Court's view, was not an inherently commercial or economic activity.

One could reasonably have believed that this reason would apply to a federal law prohibiting marijuana possession for personal medicinal use, and that is precisely what Justice Sandra Day O'Connor argued in her Gonzales dissent--that the "possession and use of marijuana for medicinal purposes has no apparent commercial character." As she correctly observed, "Everyone agrees that the marijuana at issue in this case was never in the stream of commerce."

This line of reasoning, if carried to its logical conclusion, would have severely curtailed the ability of Congress to act under the Commerce Clause. But Justice Stevens, in his Gonzales majority opinion, steered the Court back toward an approach more deferential to Congressional judgments. Under that approach, when Congress elects to regulate a national market in a commodity--and there is no real doubt the CSA is an effort to do just that--the Court will not second-guess Congress's determination that the exemption of local possession of one commodity could have a substantial effect on the larger interstate market.

Of course, the Commerce Clause must have some limits--the Constitution, after all, is a grant of enumerated powers to the federal government. But whether an activity does or does not have a commercial character is a judicially-contrived limit that privileges judicial assessment of just what makes an activity commercial over the decided judgment of the majority of the people's representatives in Congress. So what limit is there on the commerce power? Well, there is democracy: as Chief Justice John Marshall put it nearly two centuries ago, "The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at election are, in this, as in many other instances ... the sole restraints on which they have relied, to secure them from its abuse."

Lawrence Friedman